Dive Brief:
- Private equity investments spurred an uptick in M&A in the managed services industry during the first three months of the year, according to research by Channel Dive sister company Omdia. Acquisitions increased 73% year over year globally to 64 deals in Q1 2026. In North America, where 37 were announced, volume increased 28%.
- The market for security services providers was particularly active, as buyers looked add to capabilities quickly rather than build them. Omdia identified 14 managed security services provider deals, seven of which were backed by private equity. Overall, outside investors had a role in 80% of transactions involving an MSP or MSSP, up from 68% in Q1 2025.
- The activity has been a net positive for the industry, according to Omdia Principal Analyst Jessica Davis. “It’s been a great help to MSPs who reached retirement age and were looking for an exit,” Davis said. “It’s also helped MSPs who needed more capital to grow. When you consolidate these businesses, you have the power of many operating together.”
Dive Insight:
As investors eye MSPs, the industry is evolving from reactive break-fix technical support to outcome-based modernization and AI deployment services. The shift is blurring the lines between managed services and systems integrators.
“MSPs are seeing services automated and commoditized,” Davis told Channel Dive. “Customers want to see some of the savings from AI efficiencies, so there’s pricing pressure on that part of the market.”
To maintain margins, MSPs are adding premium services, crossing over into the outcome-based project work that’s traditionally been the purview of global systems integrators. Meanwhile, GSIs are eyeing the recurring revenues generated by managed services contracts.
“Both have good reasons to go after the other piece of the pie,” Davis said. “MSPs are getting into projects and GSIs [are] moving into managed services.”
The strategy is one of several drivers fueling channel M&A consolidation as MSPs seek to add high-end consulting fees and value-added resale to their portfolios. Meanwhile, investors want in on the steady flow of recurring services revenue.
“ARR is what attracted private equity to the managed services space,” Davis said. “It’s nice because it’s so predictable.”
OpenAI secured a foothold in IT services via its investment in firm Thrive Holdings and its Thrive Capital VC offshoot, which is acquiring MSPs ripe for AI adoption. The arrangement gives the model builder access to seven MSPs acquired by Shield Technology Partners, an IT services platform that accounted for five MSP-focused deals tracked by Omdia in Q1.
In the managed infrastructure services market, 11:11 Systems was involved in two deals early this year that expanded its geographic reach in Australia and deepened its VMware services bench.
More recently, GSI giant Accenture orchestrated a concerted push into managed services with the June launch of a midmarket IT services business unit called Accenture Edge. The initiative consolidated talent from several of the company’s acquisitions.
Accenture CEO Julie Sweet outlined the company’s strategy during a June earnings call.
“We are expanding our total addressable market by going after a new exciting customer segment, the midmarket,” Sweet said. “We estimate that the midmarket, which we look at as companies with between $300 million and $3 billion of revenue, is a $240 billion addressable market for us, growing high single digit.”
A midmarket move fueled by several years of strategic M&A reflects the broader channel trend toward consolidation and diversification. It also reveals a significant shift in the composition of Accenture’s business.
“One of our GSI analysts looked at the Accenture financials and noted that Accenture had crossed over into being a pure-play MSP by Omdia’s definition,” Davis said. “Are we going to include Accenture in our list of MSPs? It’s now a discussion.”
