Previously – https://blog.ciaops.com/2026/07/29/the-recurring-problem-a-managed-services-story-chapter-4/

The idea of selling Bridgepoint, or at least taking on a growth investor, had floated around Dave’s head for a couple of years, mostly as a retirement fantasy he indulged on long drives. In March, half out of curiosity and half because losing Lakeside had rattled him more than he wanted to admit, he agreed to a preliminary valuation conversation with an M&A advisory firm that specialized in IT services roll-ups. Marcus had a contact; the meeting cost nothing but an afternoon.

The advisor, a clipped, unsentimental woman named Renata Cole, walked Dave and Priya through Bridgepoint’s financials with the emotional affect of someone reading a weather report. Revenue: $9.4 million. EBITDA: roughly $1.6 million, a healthy-looking 17 percent margin. Dave had always been quietly proud of that number.

“Your EBITDA is fine,” Renata said. “Your multiple is going to be a problem.”

“Explain that to me,” Dave said.

“At your size, with your revenue mix, buyers in this market are going to look at three things before they look at anything else,” she said, ticking them off on her fingers. “First: what percentage of your revenue is contracted, recurring, and sticky, versus one-off project work that could evaporate next quarter. Second: how concentrated your revenue is in your largest clients. Third: whether you have any real differentiation, or whether you’re a generalist competing on relationships and price. On the first, you’re sitting around forty-six percent recurring revenue — buyers want to see north of eighty-five percent before they’ll pay a premium multiple. On the second, your largest client is nineteen percent of revenue, and buyers get nervous well before that; anything over twenty to twenty-five percent concentrated in one account is a red flag they’ll price into the offer. On the third — no offense, Dave — ‘we’ve been doing this for eight years and our clients like us’ isn’t a moat. It’s a headline that every generalist MSP could put on their own website.”

She turned her laptop around so they could see the slide. A business with Bridgepoint’s EBITDA and a strong recurring-revenue base, high client diversification, and a specialized niche could reasonably expect eight to twelve times EBITDA, even higher with a security specialization. A business that looked like Bridgepoint currently looked — generalist, project-dependent, concentrated — was more realistically priced at four to six times, and buyers would likely structure a meaningful chunk of even that as an earnout contingent on retaining the client base through the transition.

Four to six times $1.6 million was, doing the arithmetic Dave really didn’t want to do in front of Renata, somewhere between $6.4 million and $9.6 million — for a company he’d spent eight years and, by his own private accounting, most of his thirties and half his forties building. Not a number to be ashamed of, exactly. But nowhere near what he’d let himself believe it might be worth, and nowhere near enough for the number to represent what it was supposed to represent: proof that the thing had been worth doing.

“I’m not telling you to sell,” Renata said, more gently, watching his face. “I’m telling you what the market is actually pricing, so that if you ever do want to sell — or even if you just want to run a business that isn’t one bad quarter away from a crisis — you know exactly which three levers you’d need to pull. It’s not really about me, or about a buyer. It’s about whether your business model matches the world your clients are actually living in now. Right now, it doesn’t quite.”

Dave didn’t sleep much that night. He kept coming back to something Aisha had said in November, dismissed at the time as youthful overconfidence: You’re spending forty percent of your week resetting passwords. That’s not judgment. That’s just volume.

For the first time, he let himself actually finish the thought he’d been avoiding for a year: Bridgepoint wasn’t losing because it was doing anything badly. It was losing because it was doing, extremely well, a version of the job that increasingly nobody needed done that way anymore.

Previously –  https://blog.ciaops.com/2026/07/28/the-recurring-problem-a-managed-services-story-chapter-3/

Denise Okafor called on a Thursday in February, and this time there was no anger in her voice at all, which was somehow worse. “We’re moving our IT relationship to Meridian Health IT at the end of our contract term,” she said. “They only work with medical practices. Their entire pitch was built around HIPAA and nothing else. Dave, I like you. I’ve liked working with Bridgepoint for six years. But I can’t keep explaining to my board why our IT provider treats a medical practice exactly the same as a landscaping company. We need a security team that speaks our language natively, not one that’s learning it because we complained.”

Bridgepoint’s ninety-day notice clock started that afternoon. $640,000 in annual revenue — nearly seven percent of the company’s total — was walking out the door, and it was walking toward a competitor that had done exactly one thing Bridgepoint hadn’t: picked an industry, gone deep, and built a service around that industry’s specific compliance reality instead of a generic bundle stretched to cover everyone.

Dave took the loss personally, because it was personal — Lakeside had been one of his first ten clients — but the number that actually kept him up that week wasn’t the $640,000. It was something Marcus said almost in passing, trying to soften the blow: “At least it wasn’t Baptiste. If we lost Baptiste on top of this, that’d be real trouble.”

Baptiste Manufacturing was Bridgepoint’s single largest client, at just under 19 percent of total revenue — a family-owned metal fabrication company that Tom Baptiste had built up from his father’s two-man machine shop. Dave hadn’t thought about customer concentration in those terms before. He thought about it constantly after that.

Two weeks later, he got a call from Tom that gave him a preview of exactly how that could go. Baptiste’s plant manager had started using a free AI chatbot to draft supplier emails and, it turned out, to summarize confidential pricing data from a shared drive he didn’t fully understand the access permissions on. Nothing had leaked — yet — but Tom had found out from his own son, who worked on the shop floor and had seen it happening, and he was furious that nobody at Bridgepoint had ever mentioned that this was even a risk worth managing.

“You guys handle our computers,” Tom said. “Isn’t this exactly the kind of thing you’re supposed to be telling us about?”

Dave didn’t have an answer for that either. Bridgepoint had never offered anything resembling a policy for how clients’ own employees used AI tools, because as recently as eighteen months earlier, it hadn’t occurred to anyone that this was IT’s job to manage. It clearly was now. Somebody was going to own that conversation with clients. Dave just didn’t know yet whether it would be Bridgepoint or whoever Bridgepoint’s next competitor turned out to be.