Has M&A Activity for MSPs Picked Up in 2026?

https://www.theinformation.com/articles/iran-war-imperils-300-billion-gulf-ai-spending?utm_campaign=article_email&utm_content=article-16718&utm_medium=email&utm_source=sg The war: The USA has bombed three data centers owned by Amazon. This is the first time I've seen data centers be targets. It won't be the last.  The war: Middle eastern countries have promised $300 billion in AI infrastructure investment. Some in their countries and some in ours. That investment is in  jeopardy now as the bombs fall.   Memory Costs Squeeze Entry-Level Hardware as Suppliers Capture Margin Upstream   Apple’s $599 MacBook Neo Signals a Split Hardware Strategy, Not a Budget Play   Big announcement from Microsoft. A long rumored and asked for E7 plan. Finally, Microsoft announced the Microsoft 365 E7 Frontier Worker Suite, also available from May 1, priced at $99 per user per month. The bundle combines Microsoft 365 E5—long the company’s premium business productivity suite—with Microsoft 365 Copilot and Agent 365. It also includes the Microsoft Entra Suite and advanced Defender, Intune, and Purview security capabilities. It'll sell for $99 . The $99 price is below what customers would pay if they purchased these capabilities separately, according to Microsoft. The component pricing of the constituent parts—E5 at $60, Entra Suite at $12, Copilot at $30, and Agent 365 at $15—adds up to $117 per user.   https://www.linkedin.com/news/story/openai-hardware-chief-resigns-over-rushed-pentagon-pact-7064308/?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3Bx3AKUbDJSbm6nGyejyaodg%3D%3D     UPCOMING CHANNEL EVENTS:     Mastermind LIVE Event – San Diego March 26-27th https://portal.kernanconsulting.com/mastermind-event Exclusive Small Biz Thoughts Community Members Live Workshop: How AI Helps MSP Radio Production…and Where It Doesn’t Help.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

A significant risk area discussed is the challenge of “invisible work” in managed services due to increasing automation and the adoption of artificial intelligence (AI). Customers, according to participants, increasingly lack awareness of the work being performed on their behalf, which raises doubts about the value of services provided by MSPs. With prices for services escalating, clients are demanding higher-touch engagement and visibility into operations, creating a disconnect between automated backend activities and client expectations for tangible service. Supporting this, hosts cited the difficulties in proving the value of proactive prevention, such as security incidents that did not occur, and noted that with further automation, particularly through AI, this challenge will intensify. Customers may question why they continue to pay elevated fees if tasks can be completed by AI or low-cost competitors, amplifying price pressure and the potential for misaligned perceptions of value. Examples included references to the current technology stack, where some tools cost more to integrate and operate—particularly with new AI workloads—than previous turnkey supplier models, often with increased operational complexity and support risks. The episode addressed secondary risks stemming from overreliance on both small, unproven vendors and on large-scale automation. Hosts highlighted the volatility of new entrants in security and infrastructure, pointing out that many lack lifecycle support or robustness, making them unreliable partners for business-critical tasks. Recent events, such as the OpenAI boycott following its Department of Defense contract and operational disruptions at AI provider Claude, were used to illustrate instability among technology suppliers. The conversation also covered the risks of unchecked AI deployment, with examples from military and financial sectors where automation led to errors or was used to rationalize significant workforce reductions. The practical implications for MSPs and IT service providers center on maintaining transparency with clients, reassessing vendor risk (particularly with AI and new software providers), and calibrating expectations for automation. The hosts recommended reinforcing client communication regarding the nature and value of services, conducting due diligence on technology partners, and aligning automation strategies with operational risk management frameworks. Emphasis was placed on the need for ongoing human oversight, especially where automated decisions could lead to adverse outcomes, and on approaching AI adoption as a phase for careful experimentation rather than wholesale business transformation. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The most consequential development highlighted in the episode is Anthropic’s refusal to alter its AI contract terms for the US federal government, specifically regarding the prohibition of mass domestic surveillance and the deployment of autonomous lethal robots. Anthropic declined to allow the government unrestricted, legally permitted use of its software, resulting in the cancellation of a $200 million federal contract and the company’s designation as a supply chain threat. This sequence underscores ongoing concerns about ethical, operational, and governance risks associated with AI technologies deployed at scale by government agencies. Supporting details reveal that all other major AI providers servicing federal contracts—including OpenAI, Google, and xAI—agreed to the government’s revised terms, which permit any legal use without restriction. According to Amy Babinchak, Anthropic’s stance was based on reliability and readiness issues in its platform, specifically in domains of domestic surveillance and fully autonomous military systems, which remain controversial from both technical and moral standpoints. The government’s response, involving not only contract withdrawal but restrictions on federal contractor usage, demonstrates the gravity of compliance expectations and supply chain security considerations. The episode also addresses practical strategies for MSPs seeking to establish themselves as trusted local providers. James Kernan and Amy Babinchak emphasize consistent community engagement, including recurring events, charitable involvement, and practical low-cost networking tactics such as sponsoring social gatherings at local venues. The importance of consistent marketing, ongoing relationship-building with prospects and partners, and active participation in local business organizations are discussed. Additionally, operational news from the IT sector, such as the moderate decline in wage inflation since 2022 and the continued rise in IT spending, is briefly reviewed, as is product development by vendors like NinjaOne adding asset management capabilities. For MSPs, IT service providers, and technology decision-makers, the episode provides quantifiable insights concerning operational risk, vendor accountability, and compliance tradeoffs. AI adoption at enterprise or governmental levels requires rigorous evaluation of contractual terms, ethical boundaries, and supply chain impact. Local reputation-building demands sustained effort and investment, while operational trends such as wage stabilization and product enhancements reflect current market realities. Taken together, these developments point to the need for increased diligence in risk management, careful vendor selection, and ongoing community-facing operations to achieve sustainable business outcomes.   Topics / Events:   https://businessof.tech/2026/02/02/it-services-market-growth-to-1-09t-coincides-with-declining-wage-inflation/ North America IT Services Market is projected to grow significantly, rising from approximately $602.15 billion in 2025 to about $1.09 trillion by 2033, representing a compound annual growth rate of 7.72%. Global technology spending is on the rise,  marking a 7.8% increase as generative artificial intelligence drives the surge. Enterprises are focusing on AI talent, with job postings related to AI accounting for 20% of available tech roles Terms of Service – FEDERAL GOVT  AI   - https://podcasts.apple.com/us/podcast/the-pentagon-vs-anthropic-an-a-i-agent-slandered/id1528594034?i=1000750653008 https://businessof.tech/2026/02/10/ninjaone-adds-asset-management-zoom-launches-ai-workspace-tool-jumpcloud-opens-vc-arm/ Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The primary discussion in the episode centers on the increasing risk to data privacy posed by the adoption of artificial intelligence (AI) applications within SMB environments. Panelists highlighted the challenge of educating clients on how AI systems may access, process, and transmit sensitive information, sometimes integrating client data into broader training datasets owned by third parties. Specific emphasis was placed on the operational reality that data, once shared with AI models, may no longer be under the original owner’s control. This development directly affects both regulatory compliance and client trust, especially for service providers tasked with protecting client environments. Supporting details referenced both technical and procedural countermeasures available to MSPs. Tools such as browser-based security assessments (e.g., Atacama), network analysis at the firewall, and Microsoft 365’s built-in security features (Defender and Cloud App Security) were identified as practical resources for monitoring data flow and enforcing restrictions on AI integration. The approach recommended focuses on assessment-driven education—using tangible network data to demonstrate risks and capabilities, supporting MSPs in facilitating more accountable, informed decision-making among clients. Adjacent topics included a workforce transition in the MSP sector, driven by compliance and security requirements. The discussion referenced an industry demographic shift, with a substantive proportion of MSP owners above the age of 55, and many considering mergers or exits rather than evolving to meet new consulting, compliance, and productivity challenges introduced by AI. Additional coverage addressed the impact of AI and data center expansion on community resources (e.g., demands on electrical grids and water supply), as well as divergent organizational responses to emerging consumer technologies such as smart glasses.   Evolve or Exit -  Many MSP’s are facing this reality https://mspglobal.com/blog/exit-or-evolve-msp-reinvention-cycle/ Browser based security assessment tool http://www.atakama.com   States moving to require AI to pay for its own electricity. https://www.perplexity.ai/page/states-move-to-shield-ratepaye-0_4v24YTRWGbech52eWGZw   Airforce ban meta glasses while army adopts them.  https://www.perplexity.ai/page/air-force-bans-meta-ai-glasses-KTBzW6_tQom3lJ6XuWNcZg Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

This Week's Highlights:1. Elevating Your Business ConversationsEver feel anxious about those business-focused meetings with customers? You’re not alone! In this episode, Amy Babinchak and James Kernan share their personal experiences—like ice-breakers for introverts, why finding common ground matters, and how to move the business convo from awkward to actionable. Here’s Amy’s advice: listen actively, ask about their growth and goals, and let those insights lead you into productive IT conversations. You don’t need to come to the table with all the answers—just be ready to listen and respond.2. Why MSAs MatterAre Master Service Agreements (MSAs) critical? Our hosts agree: absolutely. James Kernan and Amy Babinchak lay out why every MSP should have a clear, enforceable contract with each customer (especially if you ever plan to sell your business). They cover how overcomplicated contracts can be a sales hurdle, the importance of keeping agreements simple, and protecting your liability in the age of fast-moving tech and shadow AI.3. Industry NewsWe touch on the recent Pax8 hack—what was exposed, why you should care, and how leaks can impact negotiations. Plus, a heads-up on the ongoing scarcity and price hikes for memory and storage thanks to AI's heavy demand. Don’t skimp when buying devices for clients! Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

In this episode, hosts James Kernan and Amy Babinchak dive into practical insights for MSPs and IT service providers, powered by Small Biz Thoughts.They kick things off by tackling the question of the week: What should you say in front of a crowd of 100 decision makers if you only have five minutes? James Kernan and Amy Babinchak share strategies for making a memorable impact and overcoming public speaking nerves—offering actionable tips and stories from their own experiences.The episode also covers important industry news, including Microsoft’s cancellation of standalone OneDrive and SharePoint licenses, Apple’s stronger-than-expected quarterly results and AI strategy, upcoming server end-of-life dates, and Tesla’s surprising shift away from building cars towards humanoid robots.Whether you’re looking for advice on public speaking or the latest tech developments, this episode delivers valuable takeaways for MSPs staying sharp in a rapidly evolving landscape. Links:  https://learn.microsoft.com/en-us/partner-center/announcements/2026-januaryhttps://businessof.tech/2026/01/30/record-iphone-sales-and-a-2-billion-ai-acquisition-signal-apples-long-term-control-strategy/https://www.cnbc.com/2026/01/28/tesla-ending-model-s-x-production.htmlhttps://www.canalys.com/insights/top-352-industry-events-msps-vars-channel-ecosystem-professionals     Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

In this episode of the SMB Community Podcast, hosted by James Kernan, guest Amy Slater from Innovative Events discusses her transition from the medical field to marketing and events. Amy shares insights on how her company helps MSPs with their marketing, including detailed strategies and processes. She emphasizes the importance of building a strong foundation in marketing and how her team ensures consistent engagement before, during, and after events. Moreover, Amy discusses her involvement with the Managed Service Providers Association of America (MSPAA) and the upcoming events she will participate in. Listeners can learn about her approach to personalized marketing and the valuable services her agency offers. https://innovevent.comAmy Slater: https://www.linkedin.com/in/amy-slater89/  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Overview: In this episode of the SMB Community Podcast, Amy interviews Steve Shattuck, VP of Global Partner Ecosystem and Business Development at GoTo. Steve shares his extensive background with AI from his tenure at Hewlett Packard Enterprise and discusses the transformative impact AI is having on the MSP industry. They delve into how AI can enhance rather than eliminate technician roles, the potential for AI to level the playing field between small and large MSPs, and the integration of AI in GoTo's product suite like LogMeIn Resolve. Key topics include automating mundane tasks, enhancing documentation processes, language translation in support, and the importance of developing a strategic AI approach for businesses. The episode concludes with Steve emphasizing the broader impact of breaking down communication barriers globally through AI. --- Chapter Markers: 00:00 Introduction to the SMB Community Podcast 00:30 Meet Steve Shattuck: AI Expert and Outdoor Enthusiast 04:49 AI's Impact on MSPs and Technicians 07:41 Leveraging AI for Enhanced MSP Services 24:16 AI and Language Translation in IT Support 28:27 Final Thoughts and Conclusion --- New Book Release: I'm proud to announce the release of my new book, The Anthology of Cybersecurity Experts! This collection brings together 15 of the nation's top minds in cybersecurity, sharing real-world solutions to combat today's most pressing threats. Whether you're an MSP, IT leader, or simply passionate about protecting your data, this book is packed with expert advice to help you stay secure and ahead of the curve. Available now on Amazon! https://a.co/d/f2NKASI --- Sponsor Memo: Since 2006, Kernan Consulting has been through over 30 transactions in mergers & acquisitions - and just this past year, we have been involved in six (6). If you are interested in either buying, selling, or valuation information, please reach out. There is alot of activity and you can be a part of it. For more information, reach out at kernanconsulting.com Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Overview: In this episode of the SMB Community Podcast, our host James Kernan welcomes Justin Maxwell of Big Life Financial to discuss crucial changes in the tax law surrounding R&D tax credits for tech companies. They delve into the history and importance of the R&D tax credits, misconceptions about qualification, and the significant financial benefits these credits can bring. Maxwell emphasizes the importance of having a cohesive team of financial advisors and offers a complimentary review for businesses to determine their eligibility. Don't miss this insightful conversation that could be a game-changer for your business's financial strategy. --- Chapter Markers: 00:00 Introduction and Welcome 00:50 Meet Justin Maxwell 04:44 The Importance of Financial Cohesion 07:22 Understanding R&D Tax Credits 12:38 Eligibility and Process for R&D Credits 23:49 Maximizing Your Tax Savings 25:59 Conclusion and Contact Information --- New Book Release: I'm proud to announce the release of my new book, The Anthology of Cybersecurity Experts! This collection brings together 15 of the nation's top minds in cybersecurity, sharing real-world solutions to combat today's most pressing threats. Whether you're an MSP, IT leader, or simply passionate about protecting your data, this book is packed with expert advice to help you stay secure and ahead of the curve. Available now on Amazon! https://a.co/d/f2NKASI --- Sponsor Memo: Since 2006, Kernan Consulting has been through over 30 transactions in mergers & acquisitions - and just this past year, we have been involved in six (6). If you are interested in either buying, selling, or valuation information, please reach out. There is alot of activity and you can be a part of it. For more information, reach out at kernanconsulting.com Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Overview: Exploring the Future of MSPs: AI, Cybersecurity, and Building Trust In this episode of the SMB Community Podcast, host James Kernan interviews Tim Thomson, founder of Cyber Trends, who shares insights on the future opportunities for Managed Service Providers (MSPs) in 2026. They discuss the role of AI and automation, the importance of cybersecurity and compliance, and strategies for proving value to clients. Tim explains his journey from founding his first MSP in 2002 to building a consulting firm that helps MSPs grow and scale. He emphasizes the need for MSPs to build personal brands and leverage partnerships to succeed in an evolving industry. The episode provides actionable advice for MSPs looking to capitalize on technology trends and improve their business outcomes. --- Chapter Markers: 00:00 Introduction to the SMB Community Podcast 00:26 Meet Tim: From MSP Founder to Consultant 02:07 Tim's Journey: Building and Scaling an MSP 04:29 Tim's Consulting Firm and Services 07:06 Opportunities for MSPs in 2026: AI and Automation 17:21 Cybersecurity and Compliance: A Growing Need 21:36 Proving Your Value: Building Trust and Personal Branding 30:01 Conclusion and Contact Information --- New Book Release: I'm proud to announce the release of my new book, The Anthology of Cybersecurity Experts! This collection brings together 15 of the nation's top minds in cybersecurity, sharing real-world solutions to combat today's most pressing threats. Whether you're an MSP, IT leader, or simply passionate about protecting your data, this book is packed with expert advice to help you stay secure and ahead of the curve. Available now on Amazon! https://a.co/d/f2NKASI --- Sponsor Memo: Since 2006, Kernan Consulting has been through over 30 transactions in mergers & acquisitions - and just this past year, we have been involved in six (6). If you are interested in either buying, selling, or valuation information, please reach out. There is alot of activity and you can be a part of it. For more information, reach out at kernanconsulting.com Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.