SMB Community Podcast: Business Advice for Small MSP Owners

The episode addresses the push for mandatory adoption of artificial intelligence (AI) tools among employees in MSP and IT service environments, citing cases where use of products like Microsoft Copilot is being enforced under threat of termination. Contributors emphasize that while AI proficiency is becoming a key factor for employability in the technology sector, mandating use through ultimatums is likely to provoke resistance and undermine change efforts. The consensus is that sustainable progress depends on providing structured training and fostering a collaborative culture rather than imposing requirements.

Supporting discussion points include the importance of intentional staff development and recognizing parallels to previous technology shifts, like the migration to cloud services. Resistance to learning new tools can result in employee attrition, reinforcing the need for ongoing education and active change management. Companies are advised to educate and incentivize employees, creating an environment where continuous upskilling is the norm.

Secondary topics include recent Microsoft incentive program adjustments. Panelists note reductions in partner margins for lower-tier licenses, while incentives remain for Business Premium and enterprise plans. New AI-related incentives, such as Copilot bonuses, now require a minimum of 50 users, which may prevent smaller MSPs from participating. The conversation also explores the spread of AI-generated language into everyday business communication and shares practical security incidents observed in the field.

MSPs and IT leaders are advised to manage AI adoption through robust training, transparent communication, and regular review of changing vendor incentive structures. Shifts in vendor programs and rapid technological change require proactive workforce planning, risk mitigation, and careful attention to evolving operational and compliance demands.

1. Show Rundown & Banter: Amy is back from ChannelCon.
2. Question of the Week: Should I force employees to use AI? Discuss technology laggards, employee adoption, and whether forced AI use is really the right approach.
3. In the Economy: 29,000 jobs and 2.2% growth — what does the economy mean for MSPs?
4. Microsoft Incentive Changes: Microsoft is reducing incentives on many cloud programs while rewarding usage growth and partner skills. What does this mean for MSP margins?
5. Are AI Chatbots Changing the Way We Speak? “LLMisms” like “It’s worth noting,” “Here’s the thing,” and “This is the key takeaway” are showing up more in workplace communication.
   https://www.wsj.com/tech/ai/claude-chatgpt-ai-speak-chatbot-cb804933
6. Tales from the Field: Another Tale of Espionage — a former employee continued accessing company systems and transferring client data to a new employer.

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode scrutinized the operational impact of accelerated patch velocity, largely attributed to AI-driven vulnerability discovery. Microsoft’s patch release cadence has intensified, as evidenced by the increase from 200 patches in June to 900 patches in September. Despite this uptick, panelists noted that patch delivery is now consolidated—vulnerabilities are addressed through a single cumulative update per cycle rather than via hundreds of discrete patches. This structural change reduces exposure to widespread outages, but risk must still be evaluated based on deployment timing and organizational context.

Delaying patch deployment by at least one week post-release was advocated as a harm-reduction strategy. The rationale is that “dead body Wednesday”—the day following Patch Tuesday—commonly reveals unforeseen operational disruptions. Forum monitoring and the identification of industry-specific tolerances are recommended, supported by the observation that most incidents arise from edge cases or latent infrastructure flaws exposed by reboot cycles rather than patch malfunction itself. The role of Microsoft in acknowledging and remediating issues was discussed, with a particular emphasis on the lag between incident emergence and vendor acknowledgment.

A secondary focus addressed the expanded risk surface beyond Windows, emphasizing IoT, networking, and edge devices. The lack of standardized, automated patching for non-Windows assets, such as security cameras, printers, and other IoT endpoints, multiplies the challenge for practitioners. Neither firmware nor update methodologies are unified, necessitating manual intervention and physical connectivity in many cases. The episode further touched on IT governance concerns, particularly around excessive permissioning, data management, and the tendency for access requests to escalate rather than contract over time, exacerbating organizational risk.

For MSPs and IT service providers, key implications center on risk-managed operations. Patch deployment processes should be routinely assessed and customized based on client risk profiles, infrastructure complexity, and historic pain points. Increased vulnerability discovery via AI necessitates enhanced organizational discipline around both patch timing and post-patch monitoring. Security governance—especially regarding permissions scopes, data segmentation, and the extensibility of third-party integrations—was underscored as an operational priority. Comprehensive asset management and organizational awareness of fragmented patch ecosystems, especially in IoT and edge contexts, will be essential for maintaining resilience and accountability.

1. Show Rundown & Banter: Amy is joined by longtime Microsoft MVP Susan Bradley, the “Patchaholic,” to discuss Microsoft updates, patching, and what IT professionals need to watch.
2. Question of the Week: How should MSPs change their patching strategy in the age of AI? Microsoft’s updated guidance calls for short quality-update deferrals and faster installation deadlines.
   https://learn.microsoft.com/en-us/windows/deployment/windows-autopatch/references/policies-quality-updates

Tales from the Field: When reimaged machines started failing — Susan shares a story involving Dell machines and unexpected failures. 

Links mentioned in this episode:

Question of the Week
- Microsoft: Windows Autopatch quality update policies (deferral and deadline guidance)
 https://learn.microsoft.com/en-us/windows/deployment/windows-autopatch/references/policies-quality-updates
- Microsoft Mechanics: Deploy Windows updates to counter AI-discovered threats
 https://techcommunity.microsoft.com/blog/microsoftmechanicsblog/deploy-windows-updates-to-counter-ai-discovered-threats/4534505

Resources
- AskWoody, Susan Bradley's newsletter
 https://www.askwoody.com/
- Third Tier, Amy Babinchak's patching series
 https://www.thirdtier.net/?s=patch   ← swap in Amy's exact link

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Public speaking for technical professionals and the development of practical business process automation using AI were identified as areas with tangible operational impacts for MSPs. Structured preparatory practices, such as rehearsals and simulated audiences, were described as beneficial for reducing employee apprehension and improving presentation quality, according to Amy Babinchak. Applying a process-oriented approach, including content development and reference to audience-specific expertise, can support staff development, help mitigate presentation anxiety, and promote more effective communication of technical concepts.

Process automation and AI monetization were explored through concrete examples. Amy Babinchak outlined several applications, including contract obligation tracking through AI agents, automated identification and drafting of overdue invoice notifications via read-only accounting system access, and AI-driven verification of job site photographs. Each was presented as a method for improving operational efficiency and reducing manual workload, with an emphasis on direct business outcomes such as time savings and risk reduction. The discussion cautioned that routine use of generative AI for basic tasks like search and email drafting does not readily produce measurable value unless integrated into broader workflow optimizations.

The episode also addressed marketing tactics relevant to year-end business cycles and inventory management. James Kernan recommended executing inventory reduction campaigns, such as open-box or scratch-and-dent sales, to address stock overages. The timing of client upgrade campaigns was connected to product end-of-life events, specifically referencing Windows Server 2016 and SQL Server 2016, as opportunities to drive sales while reducing client risk associated with unsupported software. The conversation further covered managed service delivery models, identifying potential risks and tradeoffs in offshoring, automation, and outsourcing core client-facing services.

For MSPs and IT leaders, the operational implications are clear: public speaking proficiency and client communication should be built intentionally, involving structured practice to reduce risk of poor delivery. AI and automation initiatives should prioritize process alignment and quantifiable outcomes, not just adoption for novelty’s sake. Inventory and lifecycle management present opportunities for improving both sales and client relationships, but require a disciplined approach to timing and messaging. Regular review of outsourced or automated functions is encouraged, with attention to maintaining a personal client interface and managing the organizational and reputational risks of dehumanized service.

1. Show Rundown & Banter: What’s new?
2. Question of the Week: How can I become a better public speaker? Focus on preparation, simple slides, eye contact, pauses, practice, breathing, and handling mistakes.
3. AI Interest to AI Impact: Help clients move from experimenting with AI to delivering measurable results.
   https://www.channele2e.com/perspective/msps-need-to-push-clients-past-ai-experimentation
4. Marketing Tips – Year-End Campaigns: Promote open-box/year-end projects, address Microsoft end-of-support deadlines, follow up with late payers, and host casual client events.
   https://learn.microsoft.com/en-us/lifecycle/end-of-support/end-of-support-2026
5. Outsourcing Service Delivery: What should MSPs outsource — answering calls, dispatch, L1/L2 support, L3 escalation, or out-of-state projects?
6. GTIA Acquires ASCII: What does the acquisition mean for the MSP community and channel?
7. NinjaOne Browser Security: Discuss NinjaOne’s new browser-based security offering and what it could mean for MSPs.
8. Tales from the Field: Timing is Everything.

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Microsoft's Copilot platform has recorded a 33% growth, growing its user base from 20 million to 30 million seats in a three-month period, according to reported company data. Increased adoption is attributed in part to Microsoft's strategy of bundling Copilot licenses with existing products. Copilot lacks custom code-generation features, instead focusing on business process optimization and employee productivity. Microsoft's switch from OpenAI to Anthropic as the underlying model for Copilot reflects a shift toward features that align more closely with user workflow support.

Supporting this development, comments noted that Fortune 500 and Fortune 1000 organizations are increasing their adoption of Copilot. Analysts highlighted Microsoft’s historical pattern of entering competitive spaces from a less dominant position and gradually increasing market presence. This strategy, combined with integration into widely used platforms, has contributed to the acceleration of Copilot’s uptake. The focus of the current Copilot version remains on facilitating business tasks rather than technical automation.

A secondary discussion covered marketing challenges for MSPs in a business environment shaped by the proliferation of AI tools. Peer group insights stressed that traditional digital marketing channels such as search and online advertisements are declining in effectiveness, with leaders instead reporting positive results from personalized outreach methods. Techniques identified as effective include public speaking at local business events, distributing real-time security and AI tips via email and video, and leveraging social media with authentic, direct content. Separately, a new CISA Insider Threat Guide was highlighted for its practical utility in offboarding, job change, and broader operational security processes.

For MSPs and IT service providers, the reported trends emphasize the need to adjust operational approaches in both services delivered and go-to-market strategies. The rapid expansion of Copilot signals increased customer expectations for workflow-integrated AI features and raises questions of vendor dependency and differentiation. At the same time, the diminishing value of broad digital marketing highlights the risks of relying on legacy lead-generation channels. Instead, practical field examples and security case studies suggest a shift toward higher accountability, lateral risk management, and more direct forms of engagement to mitigate threats and maintain competitiveness.

1. Show Rundown & Banter: What’s up? End of boating season and football season.
2. Question of the Week: AI killed marketing! What’s actually working now?
3. CISA Insider Threat Guide: How MSPs can help clients detect insider threats, manage employee offboarding, secure access, and build an ongoing insider threat program.
   https://www.cisa.gov/
4. Get Clients Ready for Copilot: Copilot adoption is growing. Discuss readiness reports, data governance, and security guidance before rollout.
5. AI Solves a Difficult Math Problem: OpenAI reportedly solved the Navier–Stokes problem using AI agents. Is this progress for mathematics, or could it weaken human scholarship?
6. Tales from the Field: The case of the underquoted bids — a security investigation reveals an employee leaking quotes to a competitor

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode centers on operational best practices and core risk factors for MSPs preparing to sell their businesses. The discussion highlights that a business must be able to function independently of its owner, with Amy emphasizing that the most important prerequisite for sale is organizational self-sufficiency. Buyers prioritize businesses that can maintain their operations, client relationships, and financial health following a change in ownership. The need for clean, auditable financials and contract organization is underscored as key requirements for reducing risk and promoting transaction confidence.

Further guidance is provided regarding exit strategy planning and business positioning. Owners are advised to clarify the desired type of exit—such as complete disengagement versus remaining in the business post-sale—and to consider factors such as buyer preference and legacy concerns. Both buyer and seller risk are increased by high client concentration, undefined leadership teams, and missing or ambiguous vendor commitments. Steady, incremental growth—rather than stagnation or decline—was cited as a marker of business stability and a factor that increases attractiveness to potential acquirers.

Adjacently, the conversation addresses developments relevant to technology and operational security. The discussion notes Microsoft’s release of updates to address over 400 vulnerabilities in Windows in a single month, which represents a four to ten times increase over the previous year’s counts for the same periods. The accelerating pace of vulnerability discovery and exploitation, driven in part by adversarial and defensive use of AI, is causing traditional patching regimens to become inadequate. Amy described this collapse of the patch window as a significant industry risk, with particular exposure in under-patched IoT and embedded systems.

MSPs and IT decision makers are advised to update succession and sale-readiness practices, stressing the importance of organizational hygiene, data transparency, and realistic self-assessment. The acceleration of security threats and increased complexity of vendor landscapes indicate that risk management processes must evolve rapidly. Owners should prioritize eliminating operational dependencies, ensuring rigorous contract and financial management, and modernizing their approach to security and resilience to preserve value—both for ongoing business health and as preparation for potential sale or transition.

What are the top 10 things I should do before I sell my business?

1. Question of the Week: Top 10 things to do before selling your MSP — prepare the business, finances, operations, team, customers, legal documents, and due diligence.
2. Facebook’s $17B Settlement: What does it mean for tech companies and accountability?
   https://www.azag.gov/press-release/attorney-general-mayes-announces-largest-big-tech-settlement-history
3. MSP Market & PSA Trends: Jay McBain’s latest market-share and growth trends.
4. Microsoft Patching: 400+ vulnerabilities fixed in August. What does this mean for MSPs and proving value?
   https://www.techrepublic.com/article/news-microsoft-august-2026-patch-tuesday/
5. Marketing for MSPs: What’s actually working for lead generation?
   https://www.connectwise.com/resources/msp-marketing-report
6. AI Agent Safety: Key safety rules for using AI agents and meeting assistants.
7. Tales from the Field: Why are you selling — burnout or retirement? Get your story straight.

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A primary development addressed is the increasing scrutiny and demands from cyber insurance providers on MSPs and their clients. Amy highlighted a case where an insurer canceled a client policy after the MSP could not produce comprehensive reports and logs verifying device management for all endpoints, including BYOD and personal devices. This incident underscores rising expectations from insurers for documented security controls covering all systems interacting with sensitive data, and the risk of coverage denial when undisclosed devices or unmanaged endpoints are discovered following a breach.

Supporting discussion featured the operational gaps many MSPs face, especially regarding the management of BYOD and personal devices. Amy and James both emphasized that insurance companies are increasingly insistent on verifiable evidence that data protection policies apply to every device with data access. Failure to comply with these mandates, or misrepresenting coverage in pre-insurance questionnaires, may not only result in claim denials but also expose the MSP to downstream liability and litigation risk. They also stressed the need for clear contractual exclusions and robust internal insurance for the MSP to mitigate risk transfer.

A secondary theme centered on the competitive pressure local and regional MSPs face from consolidation through roll-ups and the expansion of national firms. Both speakers identified differentiating on local presence and community engagement, such as sponsoring local events or supporting local causes, as key strategies for smaller providers. Additional discussion covered the new NSITSP accreditation and CE program, designed to establish a credentialing framework for MSPs, analogous to existing models in law and accounting. Amy suggested that the ability to market accredited status would address client needs for objective quality comparison between providers.

Takeaways for MSPs, IT service providers, and decision-makers include the importance of establishing precise, documented security controls aligned with insurance requirements, especially for unmanaged or BYOD endpoints. Clear, detailed contractual language is necessary to define service boundaries and liabilities. Maintaining up-to-date accreditations and engaging in ongoing staff education were discussed as foundational to both risk management and market differentiation. Finally, operational alignment with insurance, accreditation, and community expectations represents both a risk-reduction tool and a practical framework for navigating consolidation and regulatory scrutiny in the current environment.

How do I protect my MSP from roll-ups and national firms?

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Merger and acquisition activity within the MSP sector has accelerated, with data cited indicating a 73% year-over-year increase in transactions for 2026 compared to 2025. Jay McBain’s reported statistics also highlight strong international momentum, particularly in EMEA, and a marked 800% rise in acquisitions specifically targeting managed security service providers (MSSPs). While the consolidated figures suggest heightened activity in large, visible deals, several participants noted that the true frequency of smaller, unreported transactions likely exceeds official tallies, underlining persistent underrepresentation in sector reporting.

According to podcast contributors, small MSP deals often go untracked in industry data, despite anecdotal evidence that hundreds or thousands of such transactions occur annually. Larger deals, such as a $20 million transaction mentioned, receive public acknowledgment, but the majority of M&A activity is conducted without broad disclosure. The consolidation trend among larger entities—exemplified by Charter’s $34 billion merger with Cox and ScanSource’s $220 million acquisition of MicroAge—has resulted in fewer choices for business clients, though new regional providers are emerging as market gaps appear.

Secondary discussions addressed operational and governance topics relevant to MSPs. The adoption and enforcement of AI acceptable use policies (AUPs) was emphasized as an accountability measure for clients whose employees are integrating AI tools into workflows. Additional topics included the stabilization of supply chain pricing by major vendors Dell and HPE, who have committed to 30-day price locks amidst recent volatility, and tactical sales advice regarding quote expiration to manage project timelines and risk exposure.

For MSPs and IT leaders, these developments entail both opportunity and risk management considerations. M&A trends point to increased scrutiny and potential market concentration, emphasizing the need for transparency and due diligence in both dealmaking and vendor relationships. The recommended adoption of AI AUPs reflects heightened governance expectations, aiming to mitigate operational and reputational risks. Meanwhile, shifts in vendor pricing policies and resale practices invite closer review of contract terms to ensure financial stability and customer accountability.

What if my clients resist change?

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Halo PSA has launched a customizable artificial intelligence capability and announced a price reduction for its product, separating its approach from other PSA vendors. According to Amy Babinchak, Halo’s model allows users to build their own AI agents for a range of business processes, including quarterly reporting and project management, without charging additional fees. The company indicates that future price reductions may occur as user adoption milestones are met. This development is especially notable in an environment where other providers are raising prices while limiting flexibility.

Halo’s differentiation is further underscored by its openness and a lack of legacy constraints. James Kernan states that Halo is experiencing rapid market share growth, currently behind established players such as Kaseya and ConnectWise. The transcript notes customer concerns regarding restrictive contracts and limited support from these larger incumbents. In contrast, Halo’s policy of integrated AI features without additional fees, as well as its responsive approach to MSP feedback, positions it as a vendor that some perceive as more adaptable to industry needs.

Additional discussion addresses emerging risks related to MCP servers, which now facilitate the integration of client data across multiple platforms. Amy Babinchak raises liability concerns, noting that bringing client data into MSP-controlled systems may expand organizational exposure if security or compliance failures occur. The episode also reviews a backup vendor failure, in which an MSP was notified that Microsoft 365 backups were irretrievable due to a catastrophic vendor system failure. Both speakers underscore the severity of this scenario and recommend that MSPs seek written assurances from their backup vendors regarding data replication and recoverability practices.

For MSPs and IT service providers, these developments highlight several operational considerations. The integration of customizable AI tools and falling PSA pricing offer new opportunities, but also present due diligence and alignment challenges. Expanded MCP server capabilities and recent backup vendor failures illustrate the necessity of strict data governance, contractual clarity, and continuous risk assessment. Technology leaders are advised to verify vendor practices surrounding security, data ownership, and incident response to mitigate both business and client risk.

TITLE: How to Create People-Led Learning Culture?

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The episode’s primary focus centers on the introduction of China-based Alibaba's new artificial intelligence (AI) model, which is positioned to rival existing US-developed models. This development has triggered concerns within the US federal government regarding the potential superiority of these foreign AI models and resulting security and data governance risks. The discussion further noted that recent import bans in the US have included consumer and business products containing AI elements, such as robotic vacuum cleaners, reflecting heightened regulatory scrutiny and caution toward foreign AI integration in both enterprise and consumer environments.

Supporting details outlined that Chinese technology companies have released an increasing number of AI models, including both large-scale and smaller, task-specific models. According to the discussion, the trend toward “distilled” or smaller models, which are trained based on larger systems, introduces efficiency benefits but also creates concern about loss of fidelity or intelligence in iterative retraining. Reference was made to a lengthy public statement by Meta’s CEO on the risks and advantages of model distillation and to US regulatory actions responding to these broad technology shifts.

A key secondary topic was the launch of the Managed Intelligence Alliance (MIA), formed at ChannelCon 2026 to address AI standards, accreditation, and governance for MSPs. However, analysis pointed out that the Alliance’s executive leadership is comprised primarily of large aggregators and vendors, with a notable absence of direct representation from operational MSPs. The structure involves engagement with Texas A&M University for association-building, but concerns were raised regarding industry self-regulation, stakeholder representation, and the practical function of such alliances for the broader MSP segment.

TITLE: Probing Client AI Opportunities and Managing Leadership Meetings for MSPs
Question of the Week: What are some good pre-sales probing questions to get the conversation going with a prospect around AI opportunities?

AI: Chinese AI models, smaller/distilled models, and AI training
Meetings: How to run better weekly leadership meetings
ChannelCon: Managed Intelligence Alliance and MSP industry standards
Tales from the Field: The value of a small MSP business

The discussion concluded with practical implications for MSPs and IT service providers, emphasizing risk management, the importance of understanding both external technological developments and internal AI adoption, and the need for clear standards and governance amid evolving vendor and regulatory landscapes. The conversation highlighted the necessity for MSPs to critically assess tool adoption, process discipline in meetings, and asset valuation, while maintaining vigilance over the security, accountability, and ownership structures within emerging technology initiatives and industry alliances.

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Private equity (PE) acquisition trends in the Managed Service Provider (MSP) sector are targeting smaller firms at increasing rates, with offers now being extended to MSPs in the $1–3 million revenue range. PE activity, once limited to companies exceeding $5 million in annual revenue, is now resulting in more than half of current offers for these smaller businesses coming from large financial entities. This development creates both opportunities and risks for small and boutique MSPs, especially those with specialization or unique market positioning.

Market data and discussion on the podcast highlighted a “void” in the $3–5 million MSP segment, attributed to sustained PE buyouts and the slower organic growth required to fill this gap. Growth beyond the $2 million threshold remains a structural challenge for many MSPs, requiring investment in management layers and business process sophistication. PE acquirers are described as increasingly eager, but both success rates and culture-fit issues remain a concern, with statistics reportedly indicating that many PE integrations do not succeed in the long run. Diligent vetting of acquirers and focus on internal operational maturity were emphasized as risk mitigations.

Other topics examined included the implications of third-party cloud outages, such as the Microsoft incident of July 24, 2026, and their effects on MSP–client communication protocols. It was noted that responsibility for outages often lies outside the MSP’s control, making timely, empathetic, and proactive client communication essential. Additional segments addressed risks associated with misaligned business ethics—such as using misleading job advertising—and the operational significance of transparency and genuine client interaction. Opportunities for skill development were identified through emerging partner programs in AI, specifically pointing to free certification offerings from Google and Anthropic, with the observation that 65.7% of MSPs have no public-facing AI narrative.

For MSP leaders, these findings point to a need for robust organizational processes: strategic specialization, internal reinvestment, and strong core value alignment to withstand shifting acquisition patterns and integration risks. Vendor and platform accountability, particularly regarding service continuity, should remain central in client management practices. Skill development in AI and transparent business operations are positioned as differentiators in a market where rapid change and client trust are both key risk and opportunity factors.

About the SMB Community Podcast: Weekly business advice for small MSP owners from Amy Babinchak and James Kernan of the Small Biz Thoughts community — MSP sales, MSP pricing and agreements, hiring and leading an MSP team, MSP operations, selling your MSP, and AI for small MSPs. Produced by MSP Radio. More for MSP owners at smallbizthoughts.com.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.