Growth fix in 26 BUSINESS BRIEFING PRINTITRESELLER.UK 35 Valuation of businesses is an integral part of our business. Across the print, IT and comms channel there is a decent level of awareness of valuation metrics, particularly “multiples.” In short, multiples are a useful benchmark that compares how businesses are valued. For example, if a business has £2m of profit and sells for £10, the profit multiple is 5x. The next school of thought is that different market segments attract different multiples. Certainly, as a broad guide to smaller deals, we are seeing higher multiples in the MSP space (7x to 9x) in comparison to Comms (6x to 7x) and Print (4x to 6x). But why is this? From our perspective it has a lot to do with Competition amongst acquirers and investors. During the marketing phase of a sales process, we attract multiple offers and clearly having a strong negotiating hand will result in a high valuation. Investors perceive different levels of long-term risk between the sector and view the MSP world as having a higher long-term potential and want to ensure that their investments (which include most of the acquirers out there) have the best chances of realising value for themselves. Interestingly this has resulted in a wholesale change in company names and descriptions with the channel now boasting a higher number of “MSPs” that at any other time. However, tracking deals over an extending period of time that takes out the impact of technology change and sentiment shows that the two biggest drivers of Value are (1) size and (2) growth. The right strategy and the right team delivering the right products to the right customer will deliver growth (easier to say than do). Service providers from across the Print, IT and Comms channel may all service the same customers, they may also generate similar levels of customer spend from those customers, but the value attributable to those customers varies between sectors based purely on perception and risk assessment of the future risk profile and growth prospects. That perception is a “bet” that growth is more likely to be sustained in certain sectors. However, the longterm view says that any channel business that sustains a high level of organic growth (regardless of technology/sector) will achieve a premium valuation. The channel has proven itself in terms of being able to retain and services customers, the big question is where will you get your growth fix in 2026. www.knightcf.com Adam Zoldan
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