👨🏻‍💻It Pays to Be IT Nerds: Inside Evergreen’s $1B MSP Empire

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Company Overview

First, what do MSPs do?
MSPs act as outsourced IT departments, remotely managing IT infrastructure, networks, applications, and security on an ongoing basis. Rather than one-off projects, MSPs provide continuous, subscription-based IT services, typically under service contracts that guarantee certain performance and support metrics. Their services are delivered at a predictable recurring fee, which is often cheaper than handling IT in-house.

In essence, MSPs allow small and mid-sized businesses (SMBs) to access enterprise-grade IT support and expertise on a pay-as-you-go basis.

Foundation
Evergreen was started in 2017 with capital support from Alpine Investors. It was a bold bet by Alpine to back a thesis led by its own investment team–Jeff Totten (ex-VP at Alpine) stepped up as co-founder/CEO and Ramsey Sahyoun (ex-Associate at Alpine) stepped up as Head of M&A. Their strategy was envisioned as a holding company model:

Growth Strategy & Timeline
Evergreen’s growth strategy has been aggressive but cohesive:
- In late 2017, Evergreen completed its first acquisition: Wolf Consulting in Pittsburgh.

- By 2018, Evergreen had acquired 13 MSPs. Notably, 6 of these 13 acquisitions were “platform” MSPs designated to operate independently in their regions as regional hubs and even pursue their own tuck-in acquisitions.

- By 2020, Company had ~20+ MSPs in the group, acquiring both additional “platforms” as well as add-ons under several of these platforms:
(i) In 2019 Evergreen took a stake in Tech-Keys, a New Jersey-based MSP
(ii) In 2020, Evergreen’s portfolio companies themselves began making acquisitions: Executech acquired Arizona MSP USPCNET and Wolf Consulting acquired Xpert Technologies in Michigan

- By 2021, Evergreen had ~30+ MSPs:
(i) Entered Canada, acquiring Starport Managed Services in the Toronto area
(ii) Expanded into other niches such as cybersecurity (VirtualArmour acquisition) and voice/data (Telco Experts acquisition)
(iii) Another noteworthy 2021 deal was acquiring Third Wave Business Systems, an MSP specializing in SAP Business One ERP consulting–marking Evergreen’s first foray into the ERP software services niche for SMBs. This would be the foundation for a sub-vertical of MSPs focused on application software partners branded as “Pine Services Group” today.

- Throughout 2022-2025, the company would continue to leverage M&A. Here is a quick timeline:

Today, with over 100 MSPs in the system, Evergreen operates across the United States, Canada, Europe, and Australia.

The timeline of Evergreen’s growth underscores a bold thesis: with patient capital and a focus on recurring-revenue tech services, a highly fragmented industry can be rolled up to create a new market leader.

With that context, let’s dive into the thesis.

Unlike project-based IT firms, MSPs have annual or multi-month contracts that produce subscription-like revenue. For example, Evergreen set out to target MSPs with at least 50% of revenue from managed services contracts.

Here is a run-down of the unit economics with publicly available numbers:

LTV / CAC ratio of 9.5x for a services business is very good. And as we will cover below, MSPs are cheaper than SaaS businesses despite these SaaS-like unit economics.

Per benchmarks from middle market banks, MSPs tend to trade in the ~7–12x EBITDA range depending on size, margin, consistency, growth, and risk profile.

Per one analysis covering 120 MSP deals, the median EV/EBITDA multiple was ~8.9x. Larger MSPs with proven scale, diversification, strong recurring revenue, and growth tend to command premium multiples in the teens.

Let’s run an illustrative math on Evergreen’s $1B acquired revenue assuming 8x average acquisition multiple and 12x platform exit multiple (likely conservative):

While this is a very simplified analysis, you can start to see just how much value ($800M / 1.5x) was created on multiple arbitrage alone. And this is not accounting for any of (i) leverage; (ii) organic growth; and (iii) cost synergies.

This is the beauty of roll-up at massive scale. I think sometimes “Main Street SMB” acquirers who are less exposed to private equity do not realize that this is a lever that they can and should pull with additional capital and M&A expertise.

Let’s agree that this holdco model works for Evergreen because there is an endless number of MSP targets in the U.S. 

The SMB MSP industry (which is estimated at over $10 billion TAM) is enormously fragmented, with tens of thousands of small independent providers. A quick search on Inven also yields tens of thousands of them.

Source: Inven

Once core infrastructure, tooling, and processes are in place, incremental growth is relatively easier (scaling support teams, automation, leveraging systems). And having a family of MSPs can drive cross-sell inside existing clients since the platform can offer all-encompassing services (ranging from network upgrades, cloud migrations, security add-ons, compliance, disaster recovery, to managed services add-ons), whereas individual MSPs would only focus on a few core services.

Evergreen’s research early on proved this out. They learned that larger MSPs were growing 15–20% annually, versus ~9% for typical small MSPs (likely due to a mix of under-optimized sales and lack of streamlined hiring practices).

Again, at scale, this incremental ~5%+ growth translates into a huge value unlock for Evergreen—simple math implies $120M+ incremental value created annually.

There are also clear challenges, especially in today’s market:

1. Intense Competition for MSP Deals
What was once a relatively uncrowded space has become hotly competitive. To quote Evergreen’s Head of M&A: “Seven years ago, there were just a handful of buyers in the MSP space… today there are many well-funded firms interested in this sector.” 
Mitigation: Evergreen has established itself as a proven and methodical acquirer. Plus, Sahyoun mentions that multiples have leveled off since 2022, partly due to higher interest rates. Still, this will probably prevent another Evergreen-style incubated rollup in the MSP space.

2. Talent & Scalability Challenges
By nature, IT services is a people-intensive business – skilled engineers, technicians, and support staff. Mom-and-pop MSPs often struggle to hire fast enough or must pay escalating salaries to secure and retain top talent. Wage inflation or talent scarcity could squeeze MSP margins or limit growth, or both. 
Mitigation: Evergreen does try to mitigate this by offering group-level HR support and making MSP careers more attractive (as part of a larger entity with opportunities for advancement). But we’ve seen the supply constraints dilute margins in frothy markets (e.g., vet clinics) that backfire when multiples drop.

3. Technology Disruption
Ironically, the very force that provides opportunity (technological change driving IT outsourcing demand) can also pose disruption risk. Emerging tech solutions like more user-friendly automation or AI-driven IT support bots might eventually enable smaller businesses to handle more IT internally or with less human labor, challenging the MSP value proposition. 
Mitigation: Across the MSP sector, service providers are rapidly adopting AI and automation to stay relevant. AI-driven monitoring, predictive maintenance, and intelligent ticket routing are reshaping are already leveraged by MSPs. The current trends point to MSPs leveraging AI to offer faster, cheaper service vs. SMBs using AI directly.

When Evergreen Services Group was founded in 2017, it was an experiment. Could you really build a Berkshire Hathaway for small IT firms — a permanent home for hundreds of entrepreneurs in a fragmented industry? 

Eight years and 100 acquisitions later, the answer is increasingly, yes.

I’d be curious to follow Evergreen for the next few years. Rolling up MSPs were (relative to today) easier with cheap debt and less competition. So what happens next–continue grinding through M&A in a tougher market or pivot their operational playbook?

What should I cover next? Send ideas to [email protected]