The Vertical Premium Is Real. The Proof Is Narrower Than the Pitch.

A healthcare MSP with HIPAA expertise and its BAA templates in order can charge 20 to 40 percent more than a generalist competitor. The range comes from M&A Signal’s 2026 MSP M&A report, updated this March, and the report is blunt about why: compliance complexity creates a client moat and pricing power, and acquirers pay for the expertise. The premium is real, it is priced, and most generalist MSPs walk past it at every renewal.

The pitch for verticalization makes three claims. Specialists charge more. Specialists keep clients longer. Specialists close faster. Go looking for the numbers behind all three, through the industry’s benchmark surveys, the professional-services research firms, and the analysts who price MSPs for a living, and the honest result is that the proof covers one claim. Pricing is measured. Retention has a single decent analog, from software. Speed has nothing. The case for each is below, sorted honestly, because a reader deserves to know which claims are measured and which are reasoned. Most content in this industry never makes the distinction.

Price is the proven part

Start with price. The 20 to 40 percent healthcare figure is the cleanest published number. CT Acquisitions, in its 2026 IT and managed services multiples report, comes at the same effect from the margin side: a vertical specialist can defend gross margin four to eight percentage points above a generalist of the same size, because clients pay for compliance-adjacent expertise. Take the conservative end and run the arithmetic on a $5 million book: four points of gross margin is $200,000 a year, collected every year, without signing a single new logo.

The backdrop makes the premium urgent rather than optional. Kaseya’s 2026 State of the MSP report, a survey of 1,061 providers fielded in November 2025, found the share of clients spending $25,000 or more a year fell from 75% to 41%. Generalist deal sizes are compressing. A premium you can defend is the counterweight.

Why regulated verticals pay it

Industry is the strongest force in IT budgets. Avasant’s Computer Economics benchmarks put IT spending in financial services between 4.4 and 11.4 percent of revenue across the middle half of firms, against 1.4 to 3.2 percent in discrete manufacturing, and state flatly that no factor matters more to IT spending as a share of revenue than industry sector, not company size, not geography. Their own illustration makes the sales case: a small bank can easily spend over 10 percent of revenue on IT, while a large construction firm would be unusual above 2. Celent’s banking research expected retail banks to reach $273 billion in IT spending in 2024, with growth driven by mandatory requirements. Mandatory is the operative word. Demand created by regulators arrives on deadlines, and dated demand is the easiest demand to sell into.

Healthcare shows the premium has a second engine, because it is not a big IT spender. Definitive Healthcare puts hospital IT expense around 2.3 percent of operating expense in 2024. What healthcare has is compliance exposure: HHS’s proposed overhaul of the HIPAA Security Rule, published in January 2025 and not yet final, carries an estimated $9 billion in first-year compliance costs across roughly 1.8 million regulated entities. Defense is the same story with dates attached. DoD’s CMMC rule prices a Level 2 certification assessment at about $101,752 for a small contractor, before any remediation, and the companion acquisition rule counts about 338,000 affected entities, over two-thirds of them small, with assessments phasing in from about 1,100 in year one to more than 18,000 by year three. Every one of those deadlines is a meeting a compliance-fluent MSP gets invited to and a generalist does not.

Insurance pushes from a third side, and the mechanism deserves precise wording: cyber insurance premiums are falling, down 3 percent in Q4 2025 for an eleventh consecutive quarterly decrease per Marsh, while underwriters keep tightening the security controls they require. The pressure on the buyer is the checklist, and the readiness gap is wide. In Coalition’s 2025 survey of a thousand small businesses, 74 percent allocate less than a tenth of their budget to cybersecurity, and 79 percent have been hit at least once in five years.

Then the strange part: almost nobody sells the fix as a product. In the same Kaseya 2026 survey, 71 percent of MSPs report year-over-year growth in cybersecurity revenue, the top category for expansion, yet only 8 percent name regulatory and compliance reporting among their top revenue sources. The demand is documented in federal rulemaking. The supply side has barely productized it.

Churn and speed run on logic

Churn first. No MSP benchmark measures retention for specialists against generalists, so the closest measured evidence comes from software. SaaS Capital’s retention benchmarks, drawn from more than 1,500 private B2B SaaS companies, found in both 2022 and 2023 that vertically focused products held a gross retention edge of about two points over horizontal ones, and no edge in net retention. Read it straight: in the nearest industry where anyone measured, vertical focus buys a modest retention advantage, in exactly the metric acquirers read as durability, and nothing more dramatic. For MSPs the mechanism has to carry the rest of the argument, and the mechanism is switching cost. A generalist running a standard tool stack can be swapped out in a quarter, because the replacement does the same things. Replacing a specialist who knows the client’s practice management system, the examiners’ habits, and the questions the cyber insurer will ask at renewal means re-teaching all of it to a stranger, and the client can price that cost before signing a termination letter.

Cycle time has no measurement anywhere, so reference density has to be argued from the referral evidence. Hinge Research Institute’s referral study with the Exit Planning Exchange, covering 262 professional-services participants, found visible expertise the largest single driver of referrals, accounting for 27.4 percent of the factors that produce them, and the absence of visible expertise the top referral killer, named by 45.5 percent. Referrers motivated by specialized expertise also simply referred more: 8.6 additional referrals against 5.3 for general reputation. That is professional services, not managed services, so carry it as an analog. The mechanism it supports is familiar to anyone who has sold into a vertical: office managers in medical practices talk to each other, law firm administrators sit in the same association meetings, and a specialist’s case study is a phone call the prospect can make rather than a PDF. Nobody has clocked the effect on cycle length, so sell it to yourself as logic, then test it against your own CRM dates.

The exit pays the premium again

The valuation case ran on this site in July under the title Vertical Specialization Is the Cheapest Multiple Expansion Available. The short version, updated against the source: M&A Signal puts the median MSP at 9.0x EBITDA for 2025, with the spread between top-quartile firms and the median widening from roughly 1.5 to 2 turns of EBITDA in 2022 and 2023 to 2.5 to 4 turns in 2024 and 2025. Its value-driver table credits vertical specialization in healthcare, legal, and finance with one to three additional turns. Other analysts size the same premium smaller; across sources the estimates run from under one turn to three. Read the disagreement honestly: the premium shows up in every source, and the measurement is soft. What the deal data agrees on is the shape: concentrated enough in the vertical to be credible, which CT Acquisitions pegs at roughly 40 to 60 percent of revenue, and diversified enough at the client level that no single logo can sink the thesis.

The operating premium and the exit premium compound. The 20 to 40 percent is collected monthly. The turns are collected once, on the whole EBITDA base the monthly premium helped build.

Run it as a revenue program

Pick the vertical the install base already picked. Sort revenue by client industry and the shortlist writes itself. The vertical where eight clients already sit comes with the references built in; the vertical that looks attractive in a market report comes with none.

Re-document before you re-sell. Most generalists already deliver half of a compliance stack and describe none of it in the vertical’s language. A BAA template, an examiner-ready evidence pack, a CMMC readiness checklist: the deliverables are documentation, and the premium starts at the next quote.

Reprice at renewal, not someday. A premium that never reaches a proposal is a blog post, not a strategy.

Build reference density on purpose. One association membership, one speaking slot, and one case study a quarter inside the vertical beat ten generic campaigns, because they reach buyers who already know your clients.

Instrument the claim. Track ARPU, win rate, and revenue share by vertical from the day the program starts. No benchmark in this industry measures the churn and speed claims, which means an operator who instruments them owns a number the market does not have.

The generalist across the street charges 20 to 40 percent less for similar work and calls it competitive. Specialization prices the expertise instead of the hours. That is the entire trick, and it is sitting inside most MSPs’ existing books, waiting to be named.