Selling a Cloud Services Business
Based on patterns from hundreds of real buyer-seller diligence calls we’ve supported on Rejigg, these are the cloud-services-specific topics that move price and terms when buyers dig into AWS and Azure margin drift, renewal behavior, SLAs, security hygiene, and delivery bandwidth. These are the cloud-services-specific topics that move price and terms when buyers dig into AWS and Azure margin drift, renewal behavior, SLAs, security hygiene, and delivery bandwidth.
What buyers ask and how to be ready
Each topic below comes from real buyer-seller conversations. Here's what they ask, what they're really evaluating, and how to prepare.
Financials
Where does gross margin actually come from: cloud spend control or labor?
Buyers are looking for margin they can count on, not margin that depends on one underpriced customer, a short-term staffing crunch, or a rebate that could change next quarter. They also want to see who eats the bill when usage spikes, egress shows up unexpectedly, or vendors raise prices. If you can’t tie margin back to each service motion, most buyers will either lower their offer or keep you stuck in diligence while they rebuild it themselves.
How to prepare
- Split revenue and gross margin by motion: managed services, projects, cloud pass-through, licensing resale
- Show cloud spend as a percent of managed revenue and how you catch budget drift and right-size
- List third-party tools with monthly cost and who pays: client direct, resale, or bundled
- Document how repricing works: cadence, customer communication, and churn after increases
Great Answer
We track margin by motion. Managed services is 68% of revenue at a 46% gross margin after tools and cloud costs, projects are 22% at 38%, and licensing and resale is 10% at 12%. Azure and AWS usage is billed as pass-through with a contracted markup, and we review budgets weekly so we catch drift before it turns into a surprise invoice.
Okay
We know which areas are profitable and can explain the main drivers, but our reporting does not consistently separate cloud pass-through, tools, and labor.
Gives Pause
We mostly watch blended gross margin. Cloud costs and tools are mixed in, and we deal with bill spikes when they happen.
How Rejigg helps: Rejigg’s secure data room and QuickBooks integration help you share motion-level financials and vendor costs cleanly, without spreadsheet churn. Learn more in the guide
Revenue Mix
What percentage of revenue is ‘managed’ versus ‘one-time’—and what does ‘managed’ include?
In cloud services, “recurring” only holds up when the boundary is clear and the managed fee does not quietly become unlimited engineering. Buyers are underwriting how predictable the month-to-month load is, what routinely turns into project work, and whether one heavy customer can consume the whole team. Clean packaging usually reduces the buyer’s urge to add price protection like holdbacks or earnouts.
How to prepare
- Define what the managed fee includes and what is out-of-scope
- Build a simple plan menu with common add-ons like security, disaster recovery testing, compliance support, and governance
- Show how you prevent overconsumption: limits, tiers, change control, and project triggers
- Map each motion to delivery: service desk, cloud engineering, security, and project delivery
Great Answer
Managed agreements are 72% of revenue and include monitoring, patching, backups, identity administration, and minor changes under a documented change-control process. Migrations, major identity work, and app refactors are separate statements of work, and we can show three recent examples where that split stayed clean through billing. Add-ons drive most expansion, especially security hardening and disaster recovery testing.
Okay
Most revenue is monthly, and we can describe what’s generally included, but we haven’t applied the same out-of-scope triggers consistently across accounts.
Gives Pause
It’s basically all recurring because we invoice monthly. When a client needs something big, we usually just handle it and figure it out later.
How Rejigg helps: Rejigg helps you present revenue by motion in a buyer-ready profile and share agreement examples through staged data room access. Learn more in the guide
Renewals
Show me your renewals: do customers quietly roll, or do they re-shop you?
Buyers care more about renewal behavior than what the contract template says. They are watching for common churn triggers in cloud services, like procurement stepping in, a new CIO, an acquisition, a security incident, or a cloud bill that makes the client question value. A seller with a renewal rhythm and relationships spread across the team usually reads as durable revenue.
How to prepare
- Build a renewal calendar with renewal month, notice terms, price steps, and relationship owner
- Summarize the last 24 months of renewals, reprices, wins, losses, and the real reasons
- Write your 90-day renewal playbook: reporting, security review, proposal, and escalation plan
- Flag accounts that rebid every year, and document how you retain them without founder rescue
Great Answer
We run renewals off a calendar and start 90 days out with a cost review and a security posture review, then we send a clear proposal. Over the last 24 months, we renewed 92% of managed revenue, and the losses were tied to acquisitions and one client building internal IT. Some mid-market clients do get quotes annually, and we can show we retained them without me stepping in.
Okay
We generally keep clients and can talk through recent renewals and losses, but we don’t run a formal renewal calendar or a consistent pre-renewal process.
Gives Pause
Renewals aren’t really a thing. Clients stay until they don’t, and we usually find out when they start pushing back on price.
How Rejigg helps: Rejigg lets you share renewal calendars and customer-level backup docs securely, and keeps renewal-risk Q&As in a single buyer message thread. Learn more in the guide
Security
Are you running a secure, auditable operation—or just a competent one?
Buyers are pricing the chance that they inherit breach risk, audit headaches, or insurance problems on day one. They do not expect a Fortune 500 program, but they do expect consistency across tenants: access control, restore testing, logging, and a real incident process. When security lives in one engineer’s head, buyers assume cleanup costs and increased churn risk.
How to prepare
- Document security ownership and baseline controls: access, MFA, logging, backups, and offboarding
- Summarize the last 24 months of incidents and what changed after each one
- Collect customer-facing artifacts: security questionnaires, audit outcomes, and restore test evidence
- Clarify what you contractually commit to during incidents versus best-effort support
Great Answer
We have a named security owner and a standard baseline across tenants for access control, MFA, and logging. Backups are tested on a set cadence, and we can show recent restore results. In the last 24 months, we had two meaningful incidents, both contained without customer loss, and we can walk through what we changed in controls and response after each.
Okay
We take security seriously and use solid tooling, but documentation and incident artifacts are spread across systems and need to be pulled together.
Gives Pause
We haven’t had any issues, and we trust our engineers. Security is mostly common sense, and customers don’t ask for much.
How Rejigg helps: Rejigg’s data room lets you share security policies and incident summaries with tight permissions after buyers sign NDAs digitally on-platform. Learn more in the guide
Access Risk
Who actually holds the keys: admin access, documentation, and tooling ownership?
In cloud services, ownership is literal. Buyers want to avoid inheriting tenants with global admin spread across personal accounts, unknown DNS registrar credentials, or backup access that only one person can find. Clean credential handling lowers outage risk and lowers key-person risk when someone leaves.
How to prepare
- Create a client-by-client ownership map: tenant admin, DNS registrar, backups, monitoring, and documentation
- Move credentials into a vault with audit logs and a real offboarding checklist
- Document how permissions are granted and reviewed, and what changes when staff leave
- List any owner-tied partner accounts, rebates, or tool logins that must transfer at close
Great Answer
For each top account, we can show tenant ownership, scoped admin roles, where credentials are stored, and how offboarding works. Credentials live in a vault with audited access, and we avoid shared long-lived admin accounts. We also maintain a current inventory of DNS, backup, monitoring, ticketing, and documentation systems with named owners.
Okay
Access is controlled for most clients, but a few legacy tenants and tool accounts still need cleanup and formal ownership documentation.
Gives Pause
Access is spread around. We can usually find what we need, and if someone leaves, we reset passwords.
How Rejigg helps: Rejigg lets you disclose access and control documentation in stages so buyers get confidence without receiving sensitive admin details too early. Learn more in the guide
Delivery Load
What’s your delivery load: are you selling work faster than you can staff it?
Buyers want to know whether profitability is coming from a team running hot, with a hiring bill hiding behind the numbers. In cloud services, backlogs can be real obligations, like migrations, security remediation, technical debt cleanup, and tool consolidation. They will look for proof that you can hit SLAs and deliver projects without burning out your engineers.
How to prepare
- List active projects with deadlines, staffing, and a simple capacity view by role
- Summarize onboarding effort by customer size and time to steady-state support
- Document subcontractor use: what they do, who manages them, and the replacement plan
- Track overload signals like after-hours volume and escalation frequency
Great Answer
We can share an active project list with staffing and expected delivery windows, plus capacity by role. A 50- to 200-seat customer usually reaches steady-state in 30 to 45 days, and we can show our last five onboarding timelines. We use subcontractors for overflow migrations under documented playbooks, and they stay under 10% of delivery hours.
Okay
We know what’s in flight and who is on it, but we don’t run a consistent capacity model beyond weekly coordination.
Gives Pause
We’re busy, but it’s fine. We push harder when projects spike and hire later if we need to.
How Rejigg helps: Rejigg keeps delivery-capacity diligence organized and lets you share project lists and staffing plans securely as buyers get serious. Learn more in the guide
Support & SLA
What does your support load look like—tickets, on-call, and SLA exposure?
Support data shows whether the business runs predictably or lives in constant escalation. Buyers look at ticket trends, how much after-hours work is normal, and whether escalations land on two senior people every week. They also look for SLA risk, since penalties and late-night firefighting tend to leak margin and drive engineer churn.
How to prepare
- Report ticket trends and after-hours percentage, broken out by customer tier
- Document your on-call and escalation model and how often senior engineers get pulled in
- Summarize SLA terms and any historical penalties or near-misses
- Show your standard tools and workflows that reduce variation across clients
Great Answer
We track ticket volume by customer tier, and after-hours stays under 6% of total tickets. Escalations to senior engineering are measured and have dropped since we standardized monitoring, patching, and alert tuning. A subset of accounts have SLAs. We have had no paid penalties in the last two years, and we can show incident timelines and root-cause follow-through.
Okay
We can explain support load and on-call clearly, but we don’t report it consistently in a way that ties back to staffing needs and margin by account.
Gives Pause
Support is great, and customers love us. We don’t really track tickets or after-hours, and SLAs haven’t been a problem.
How Rejigg helps: Rejigg’s deal workspace keeps support and SLA diligence questions, evidence, and follow-ups in one thread so buyers stop re-asking basics. Learn more in the guide
Team Risk
If I took your largest customer’s environment, could another engineer run it?
Buyers are checking how readable and transferable your environments are. They want to see current runbooks, consistent standards across tenants, and an escalation process that does not rely on weekly heroics from the senior architect. When continuity depends on one person, buyers often ask for longer transitions, retention bonuses, or money held back until they feel safe.
How to prepare
- Prepare 2 to 3 customer walkthroughs: architecture, tooling, runbooks, and recent changes
- Standardize naming and tagging, and document the remaining exceptions
- Map escalation ownership and build a cross-training plan for top accounts
- Create an org-by-function view: service desk, cloud engineering, security, delivery, and account management
Great Answer
Yes. For our top accounts, we have current runbooks, consistent naming and tagging, and a documented change process. New engineers shadow for two weeks, then can operate safely because tooling and standards are consistent across tenants. We can also point out the remaining legacy areas that are fragile today and the plan to codify or retire them.
Okay
Mostly, but a couple of large accounts still rely on one senior person for context, and we are mid-way through documentation and cross-training.
Gives Pause
Probably not. Our lead architect knows the big environments best, and we’d need them for anything serious.
How Rejigg helps: Rejigg helps you document the transition plan and coordinate buyer calls with the right engineers using built-in scheduling and video meetings. Learn more in the guide
Tool Stack
Do your tools and vendor relationships help you—or trap you?
Tools show up twice: in your expenses and in how consistently you deliver. Buyers want a standard stack, a clear view of how costs scale with seats and tenants, and an answer on whether discounts and partner benefits survive the ownership change. Tool sprawl usually means inconsistent delivery and surprise margin erosion once someone digs in.
How to prepare
- List core tools, what each does, and whether it’s standard or client-specific
- Map tool costs to pricing and clarify who pays: direct, resale, or bundled
- Document partner programs, rebates, and any owner-tied accounts or volume thresholds
- Write a consolidation plan and call out what should not change on day one
Great Answer
We run a standard stack for monitoring, ticketing, backup, and security, with documented exceptions driven by customer requirements. Tool costs are mapped to customer tiers and handled through renewal pricing updates. Partner relationships and discounts are business-owned and transferable, and we track the few volume thresholds that affect pricing.
Okay
We have a core stack, but there are several client-specific tools left over from older deals, and we have not fully measured the margin impact.
Gives Pause
We use whatever tools the client wants. We’ll decide what to keep after the sale, and vendor programs mostly run through me.
How Rejigg helps: Rejigg’s data room helps you share a clean tool and vendor inventory and partner documents only with vetted buyers under NDA. Learn more in the guide
Growth Motion
How does sales happen—referrals, QBRs (Quarterly Business Reviews), channel partners, or outbound?
Buyers want to know whether growth keeps working when the founder stops networking, and whether scoping is disciplined enough to protect margins. In cloud services, repeatable growth usually comes from a niche, a standard bundle, and a consistent path from migration work into managed services. A pipeline that lives in someone’s head can still be real, but buyers will discount it until they see a system.
How to prepare
- Break down leads by source and show a simple funnel from lead to scoped opportunity to close
- Document who scopes work and how you prevent scope creep before quoting
- Track project-to-managed conversion rate and the typical time to conversion
- Write down repeatable lanes with examples: vertical, problem, and bundle
Great Answer
Most new revenue comes from referrals and QBR-driven expansions in two niches, and we can show lead source data for the last 12 months. Our common path is a 6- to 10-week migration that converts to managed within 30 days about 65% of the time, usually with security and backup bundled. Scoping runs through a discovery checklist so we do not price identity cleanup like a simple mailbox move.
Okay
We grow through referrals and existing customers and can explain how it happens, but we don’t track conversion rates or use a documented discovery checklist.
Gives Pause
Sales is relationships. If the phone rings, we take it, and projects are priced based on experience.
How Rejigg helps: Rejigg connects you with pre-vetted buyers and keeps conversations and offers organized side-by-side, without a broker. Learn more in the guide
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Questions Cloud Services Owners Ask Us
What is a cloud services business typically worth?
A cloud services business is usually worth more when the managed revenue is clearly scoped, renewals are consistent, and support does not require constant senior-engineer heroics. Buyers will also pressure-test whether margin depends on fragile resale economics, rebates, or one oversized account. You can get a quick range with Rejigg’s free valuation calculator, then sanity-check it against managed mix, ticket load, and customer concentration.
How do buyers handle Microsoft CSP (Cloud Service Provider) and Microsoft 365 resale margin in valuation?
Buyers will usually count Microsoft CSP and Microsoft 365 resale margin as profit, but they will discount it if the economics look easy to lose after close. Expect questions about whether your margin comes from a consistent markup versus a rebate, and whether partner status or volume thresholds are required to keep it. They will also check if your labor margin in managed services holds up even if CSP margin compresses.
How do buyers think about AWS and Azure usage pass-through revenue?
Most buyers back out AWS and Azure usage pass-through when they value the business, since it can inflate revenue without adding much profit. They will ask who covers usage spikes, surprise egress, and premium support charges, and what your process is for alerts and right-sizing. If you mark up usage, buyers want to see it spelled out in customer agreements and applied consistently.
Do I need a broker to sell my cloud services company?
No. Brokers charge 5–10% of the sale price for work you can handle yourself with the right process and tooling. Rejigg gives you access to pre-vetted buyers, digital NDAs, a secure data room, and a dashboard to track conversations and compare offers side-by-side—and it’s free for sellers. Start with the preparation guide to tighten up your cloud financials and diligence story.
How long does it take to sell an IT cloud services firm?
Many cloud services deals take a few months from going live to a signed letter of intent, then another 1–3 months for diligence and closing. Timelines stretch when buyers have to rebuild margin by motion, chase missing agreements, or untangle tenant access and security ownership. Rejigg helps keep things moving by handling NDAs, document sharing, and buyer Q&As in one place through the data room.
What does a buyer expect in a cloud services data room?
Most buyers ask for financial statements, customer revenue by account, managed service agreements and statements of work, renewal schedules, tool and vendor invoices, and security artifacts like policies and incident summaries. They will also want evidence that “managed” scope is consistent and that tenant access is organized. Rejigg includes a built-in due diligence checklist and a secure data room so you control who sees what and when.
Can buyers use SBA loans to buy a cloud services or MSP-style business?
Sometimes. SBA lenders tend to like stable cash flow, so they get more cautious when revenue is mostly project-based or when contracts are short, informal, or easy to cancel. The borrower usually needs clean financials and a clear description of what the monthly fee includes so churn risk is easier to underwrite. Rejigg’s SBA loan calculator helps you model payments before negotiating terms.
What’s a normal owner transition period after selling a managed cloud services business?
A typical owner transition is 3–9 months, but it depends on how many client relationships, escalations, and partner contacts run through you personally. Buyers usually want support for client introductions, vendor and partner transfers, and a steady handoff of on-call and escalation paths. The cleanest transitions define your role by specific activities, like QBRs for top accounts and introductions to technical stakeholders. See transition planning guidance.
What is working capital in a cloud services deal, and why does it matter?
Working capital is the cash tied up in short-term items like unpaid customer invoices, vendor prepaids, and bills you owe. In cloud services, it matters because you might pay for tools, backup, and cloud services on one schedule while customers pay you on another. Buyers often set a “normal” working capital target so the business is not handed over cash-starved. Get ahead of this by tracking billing cycles and vendor payment terms.
Are earnouts common when selling a cloud services business?
Earnouts come up when a buyer is nervous about revenue sticking after the founder steps back, or when margins depend on repricing and operational cleanup. They usually tie extra payment to future revenue or profit, which can get messy in cloud services because one major incident, one platform change, or one large renewal can swing results. If you consider an earnout, get very specific about pricing control, tool changes, what counts as revenue, and how churn is measured. Use deal negotiation guidance to pressure-test terms.
How do non-competes work when selling an IT cloud services company?
Most buyers will ask for a non-compete so you do not immediately rebuild the same business next door, especially when value comes from relationships and reputation. The details vary, but buyers usually push for limits by geography, time period, and the services you cannot offer. In cloud services, watch for language that blocks you from adjacent work like consulting, vendor roles, or security advisory. Have your attorney review it and align it with your real plans after closing.
What customer contract issues slow down cloud services due diligence the most?
The slowdowns are usually missing signed agreements, vague “managed” scope, inconsistent renewal and notice terms, and customer-owned vendor accounts that nobody documented. Buyers also get stuck on liability language that does not match how you actually staff support, especially around security responsibilities and incident response. Rejigg’s staged data room access helps you share a standard contract set early, then disclose customer-specific exceptions after the buyer is vetted and under NDA.
How do buyers verify churn and retention for managed cloud services?
Most buyers verify retention by reviewing invoices by customer over 24–36 months and tying them to renewals, notice periods, and any down-sells. They will also ask about “quiet rebids,” where a customer shops you every year without calling it a bid. From real diligence calls we’ve supported, sellers who move fastest bring a renewal calendar, a short churn narrative with real reasons, and notes on who owns each relationship.
How should I present customer concentration in a cloud services sale?
Start with the revenue share for your top customers, then add the operational reality buyers worry about. In cloud services, one account can be a margin driver and a support sink at the same time, especially if it generates after-hours work or relies on one senior engineer. Share concentration alongside ticket volume, pricing notes, and any scope exceptions so the buyer understands the true risk, not just the percentage.
What taxes will I pay when selling a cloud services company?
Taxes depend on deal structure and what is being sold. Many sellers prefer a stock sale because it can be simpler and may reduce taxes, while many buyers prefer an asset sale because it can limit risk and increase tax deductions. In cloud services, buyers may also assign value to contracts or software, which can change the tax result. Talk to a tax advisor early, then bring allocation questions into negotiation once price and terms are real.
What’s the safest way to share sensitive cloud security details with buyers?
Share security details in stages. Early on, you can provide policy summaries, standard tooling, and a high-level incident history without exposing tenant-level admin specifics. After a buyer is vetted and has signed an NDA, you can share deeper artifacts like restore test evidence and completed security questionnaires. Rejigg supports this with buyer vetting, digital NDAs, and a secure data room with permissioning. See the due diligence checklist.
What are common deal structures for cloud services acquisitions (cash, seller financing, rollover)?
Many cloud services deals include cash at close plus seller financing, and sometimes equity rolled into the buyer’s company. The mix usually reflects renewal risk, support burden, and how dependent the business is on a few key people. If the buyer is using lender financing, expect tighter diligence and sometimes more pressure for seller financing. Rejigg’s deal tracking and offer comparison help you line up terms side-by-side so you can compare real economics, not just headline price. If you’re planning your process, start with finding the right buyers.
