IT solution providers post record margins & valuations

Service Leadership has released its 2026 Annual IT Solution Provider Industry Profitability Report, which points to another year of strong margins and rising valuations among top IT solution providers.

Best-in-class IT solution providers recorded adjusted EBITDA of more than 19% for a sixth consecutive year in 2025. Managed service providers increased total revenue growth to 9.6%, up from 7.1% the previous year.

Business valuations and valuation multiples for best-in-class firms reached record highs in 2025. For the average IT solution provider, that contributed to an approximate 15% increase in enterprise value from 2024.

The data also showed a recovery among value-added resellers. Their revenue growth rose to 8.9% in 2025 from 1.8% a year earlier, supported by a rebound in product sales, while adjusted EBITDA dollar growth reached 17.0%.

The report is based on quarterly benchmarking data from IT solution providers across 104 countries. Now in its 21st year, the study tracks financial and operational performance across the sector.

Margin trends

Profitability remained resilient even as revenue growth patterns shifted across different parts of the market. Managed service providers posted adjusted EBITDA growth of 17.1%, outpacing top-line growth and suggesting tighter control over costs and delivery.

The report analyses macroeconomic effects on IT solution provider performance, budgets from 2022 to 2025 and plans for 2026, and regional breakdowns covering Australia and New Zealand, Europe, and North America. It also examines sales and marketing costs among managed service providers and the practices associated with stronger returns.

Another section looks at private equity-backed managed service providers and the points at which scale changes the economics of those businesses. It also studies the impact of artificial intelligence on financial and operational key performance indicators.

Peter Kujawa, Executive Vice President and General Manager of Service Leadership and IT Nation at ConnectWise, said the latest results reflected continued expansion and sustained financial discipline across the sector.

"Managed services growth improved in 2025, while strong profitability persisted, demonstrating both the maturity and overall health of the industry," said Peter Kujawa, Executive Vice President and General Manager of Service Leadership and IT Nation at ConnectWise. "Top-performing IT solution providers are not simply growing faster. They are operating smarter. Continued improvement in wage inflation, combined with a sharper focus on efficiency and AI automation, is helping the best-run businesses expand service gross margin output and build more scalable operating models. As the industry moves toward Predictive IT, the providers that can operationalize this across their business will be best positioned to protect margins, increase enterprise value, and scale with greater confidence."

Valuation focus

The rise in valuations stands out because it came alongside higher profitability, not just revenue growth. That combination tends to matter for investors and acquirers assessing technology services companies, particularly in fragmented markets where scale and recurring income remain central to dealmaking.

The report positions best-in-class operators as distinct from the wider market through stronger margins and more consistent execution. It is intended to show owners and executives which business models and operating practices separate higher-performing firms from their peers.

ConnectWise, the parent company of Service Leadership, has used the benchmark for years in its coverage of managed service providers and other IT solution providers. The latest edition runs to more than 300 pages and includes recurring measures of profitability, growth, valuation, and operational maturity.

The findings come as IT services companies continue to navigate customer demand for outsourced technology management, cybersecurity support, and infrastructure oversight, while also facing pressure on labour costs and service efficiency. In that context, the report suggests stronger operators have been able to protect margins while still lifting sales.

Its global dataset gives the benchmark a broad base across provider types and geographies. That breadth is likely to make the results notable for company owners, investors, and advisers tracking the health of managed services and adjacent IT channel businesses.

Best-in-class IT solution providers achieved 19%+ adjusted EBITDA profitability for the sixth consecutive year, the longest run in the industry's history.