Few business events are as challenging as a merger or acquisition. Even with the best intentions, outcomes rarely align perfectly with expectations. For managed service providers (MSPs), these transactions can create significant uncertainty—but also open doors to new opportunities.
Three types of M&A that impact MSPs
MSPs typically face three scenarios that can reshape their business plans:
- Supplier acquisitions – When a key IT tool or platform provider is acquired, MSPs may need to adjust strategies or renegotiate terms.
- Customer acquisitions – When a client is acquired by an organization already partnered with another MSP, existing relationships can be disrupted.
- MSP-to-MSP mergers – When two MSPs merge, rationalizing overlapping portfolios and service models becomes a complex challenge.
Market trends driving M&A activity
According to consulting firm EY-Parthenon’s new report, deal volume for transactions exceeding $100 million grew 11 percent in 2025, and the trend is on track to continue into 2026. In the technology sector, notable deals included Aligned Data Centers acquired by a BlackRock-led consortium, Wiz acquired by Google’s parent company, and most recently Confluent acquired by IBM and Armis by ServiceNow. Tech-sector M&A jumped 75 percent in 2025, with nearly half of deals over $500 million involving AI, according to a report from Bain & Co.
Much of this activity involved debt financing, which may be less sustainable in 2026; however, with many AI startups struggling to survive, further mergers and acquisitions are likely. For MSPs, AI-driven investments could accelerate mergers—either as a growth strategy or an exit plan—given the significant costs of integrating AI into IT operations. At the same time, the percentage of IT services that MSPs deliver versus an internal IT team is only going to increase through the rest of the decade.
Navigating disruption and seizing opportunity
Mergers between MSPs can be particularly complex. For example, SmarTek21 recently sued TGP GP Management for allegedly “egregiously defective due diligence” after its acquisition of IT Avalon failed to deliver expected revenue. While lawsuits are rare, flawless integrations are even rarer.
MSPs should anticipate disruption—whether from partner, customer, or competitor deals—and respond proactively. Clear communication with customers, contingency planning for service continuity, and readiness to capitalize on competitive openings are essential. When rivals merge, customers often reevaluate providers, creating opportunities for agile MSPs to win new business.
Photo: Fit Ztudio / Shutterstock
This post originally appeared on Smarter MSP.