Evergreen Co-Founder Looks To Berkshire Hathaway As Model For Rolling Up MSPs
‘Seven years ago, there were just a handful of buyers in the MSP space, but today there are many well-funded firms interested in this sector,’ says Ramsey Sahyoun, co-founder and partner of Evergreen Services Group. ‘As long as MSPs continue to perform well financially, I think the demand for them will only grow.’
The co-founder of Evergreen Services Group, a leading player in M&A within the MSP industry, is focused on creating a long-term, sustainable home for businesses — “much like Berkshire Hathaway” — and that’s not changing anytime soon.
“We’ve been consistent in our approach because we genuinely believe in supporting businesses in a way that doesn’t disrupt their culture,” Ramsey Sahyoun, co-founder and partner at San Francisco-based holding company Evergreen, told CRN. “Our mission is to be the best home for businesses and their leaders. That means being a permanent owner and not just renting a business for a few years. It’s about providing stability and long-term value.”
Since its inception, Evergreen has acquired 110 MSPs with 25 alone in 2024.
The broader M&A landscape has remained strong despite rising interest rates, with more buyers entering the market than ever before, he said. And the shift from public to private equity has driven this growth, particularly in the MSP space.
“Even seven years ago, there were only a handful of buyers for MSPs,” he said. “Now, there’s an overwhelming demand, which shows no signs of slowing down. As long as MSPs continue to perform well financially, I think the demand for them will only grow.”
The company’s overarching strategy emphasizes permanence and decentralization with a focus on preserving the identity of the companies they acquire. Its strategy hinges on two main pillars: maintaining the unique identity of each acquired business and operating with a decentralized model that keeps the brands intact. This approach, according to Sahyoun, is fundamental to their success.
“We’ve seen valuations remain relatively flat since 2022, but our approach doesn’t change. We’re focused on finding strong businesses, and we continue to underwrite to the same returns,” he said. “Organic growth is our top priority. Acquisitions only make sense if the businesses we acquire are growing.”
CRN spoke further to Sahyoun about Evergreen’s M&A strategy, the overall M&A market and how the company stays true to its core with a growing portfolio of MSPs.
What is the overarching strategy behind Evergreen’s M&A approach?
At Evergreen, our mission has always been to be the best home for businesses and their leaders. This means two things for us, first we aim to be permanent owners of the companies we acquire, rather than just renting them for a few years. Second, we operate under a decentralized model, where the brands and identities of the companies we bring on board remain intact. This is something we’ve been committed to since we founded the company seven years ago, and it’s still at the heart of our strategy today.
How do you identify potential acquisition targets that align with Evergreen’s values and long-term goals?
We have a robust operation dedicated to deal origination. Our team of 12 actively attends conferences, hosts events and engages in outreach to discover companies that might be a good fit. We don’t rely on just a few relationships, we work hard to connect with companies where they are and share our story. We keep track of 15,000 MSPs in our database, making sure we stay in touch with companies that align with our model.
Can you walk me through your decision-making process when evaluating whether an acquisition is the right fit?
We have a clear set of criteria, which we’ve refined over the years. Some key factors include a minimum of $3 million in revenue, at least $500,000 in EBITDA (earnings before interest, taxes, depreciation and amortization) after normalizing for the owner’s salary and 50 percent recurring revenue. Another major consideration is customer concentration, we avoid companies where a significant portion of revenue comes from one client. Once we’ve identified a company that meets our criteria, we engage in open conversations to validate that it’s a fit, even if that means letting a company know that they currently fall short but could be a good match down the line.
How do you view the current M&A market and its future growth?
Despite higher interest rates, the M&A market remains strong, especially in the MSP sector. There’s a secular shift from public to private investments, which has led to more capital and more buyers in the market. Seven years ago, there were just a handful of buyers in the MSP space, but today there are many well-funded firms interested in this sector. As long as MSPs continue to perform well financially, I think the demand for them will only grow.
Given the current economic environment, do you foresee any significant changes in Evergreen’s approach to acquisitions?
Not much will change for us. Valuations have been flat since 2022, but we’re still focused on finding good businesses and underwriting to the same returns. The interest rates have cooled valuation increases, but our strategy remains consistent, and we’re still looking for strong businesses that align with our model.
How do you balance growth through acquisitions with organic growth initiatives?
Organic growth is a top priority for us. If you don’t decouple acquisitions from organic growth, it’s easy to delude yourself into thinking you’re growing just by buying businesses. We closely track the organic growth of every company we acquire whether they’re adding new customers or retaining existing ones. Our decentralized operating model allows us to maintain visibility into the performance of each individual business, which is critical to ensuring that the growth is real and not just driven by acquisitions.
How does Evergreen ensure smooth integration between acquired companies and their existing cultures?
We see our integration process as more of an onboarding than a full-scale integration. Because of our decentralized model, we don’t impose a universal culture on all the businesses we acquire. We do standardize some things, like getting all companies on a common accounting system. We also bring in new talent, especially in leadership roles like chief revenue officer, to help businesses grow. However, we respect the existing cultures of each company and we aim to solve challenges at the local level, not from a central command.
How do you handle aligning different operational systems and business practices after an acquisition?
Our focus is on aligning key systems that give us visibility into financials and pipelines. The most significant operational change is the integration of a common accounting system, which gives us transparency. We don’t push for a single operational platform across all companies, like forcing everyone onto the same CRM system, because we want to preserve the autonomy of each business while still tracking performance effectively.
Are there any new sectors or types of IT services companies you’re particularly interested in acquiring?
Beyond MSPs, we’re actively looking into two additional areas. One is application service providers (ASPs), particularly those in the ERP (enterprise resource planning) space. With the growth in cloud-based ERP systems, this is an area that’s seeing rapid adoption. We’re also pursuing companies that specialize in government IT services, particularly those working with federal, state and local governments on their digital transformation efforts.
What is your long-term vision for Evergreen, particularly in the context of M&A?
Our vision is to build a long-term, generational company, much like Berkshire Hathaway. We aim to grow our portfolio over the decades, continuously acquiring businesses in the technology services space, particularly MSPs, and other areas like ERP implementation and government IT. As long as I’m around, I want Evergreen to be a permanent home for businesses, supporting them indefinitely, with no grand exit strategy in mind. We’re focused on building a lasting reputation as the best home for businesses in our industry.
