Planner Terminology
Understand the math before you manage the plan.
The Growth Planning Tool connects valuation, profitability, recurring revenue, client economics, and sales activity. This guide defines the terms the same way the planner uses them so the model is easier to interpret and easier to discuss with your leadership team.
Enterprise value and valuation
Enterprise Value (EV)
The modeled value of the operating business.
In the MSP Fuel planner, enterprise value is modeled from annual EBITDA and a valuation multiple. It is an estimate of business value, not a guaranteed transaction price.
Current Enterprise Value
The planner’s estimate of what the business is worth today.
The current value model uses the company’s annual EBITDA and the current valuation multiple generated or entered in the planner.
Target Enterprise Value
The business-value destination the owner is planning toward.
This is the Y in MSP Fuel’s X → Y by when planning language. The target lets the planner work backward into the EBITDA, revenue, recurring MRR, client, and sales requirements needed to support that value.
Enterprise Value Gap
The difference between modeled current value and target value.
The gap is not a recommendation to sell. It is a planning distance that can be translated into operating requirements.
EBITDA
The operating earnings measure used as the base for the valuation model.
The planner uses annual operating earnings as the quantity multiplied by the valuation multiple. In the current model, the profitability margin entered by the user is used to estimate annual EBITDA from annual revenue.
Valuation Multiple
The factor applied to EBITDA to estimate enterprise value.
The planner can model the multiple from EBITDA tiers and recurring-revenue mix or let the user enter a manual assumption. A multiple is a modeling assumption, not a promise about what a buyer will pay.
Revenue model
MRR · Managed Recurring Revenue
Monthly recurring managed-services revenue.
This is the core recurring managed-services revenue base used throughout the planner.
ORR · Other Recurring Revenue
Recurring revenue outside the core managed-services MRR bucket.
MSP Fuel generally uses ORR for other recurring revenue such as recurring product or license revenue that carries different economics from core managed services.
NRR · Nonrecurring Revenue
Nonrecurring service revenue, especially project labor.
In the planner, NRR on MRR is the project-labor revenue ratio expressed as a percentage of MRR.
Product on MRR
One-time product sales expressed as a percentage of MRR.
The ratio lets the model connect product-sales activity to the recurring managed-services base without treating product revenue as recurring revenue.
Total Recurring Revenue %
The share of modeled revenue that is recurring.
The current model treats MRR and ORR as recurring revenue and compares that recurring base with total modeled revenue.
Average New Client MRR
The average managed-services MRR expected from a newly won client.
This affects the number of new logos required to hit the MRR plan. Larger average new-client MRR means fewer new clients are required to produce the same amount of recurring growth.
Growth and operating assumptions
Net Profit Margin
The profitability rate used by the planner to estimate operating earnings.
The planner models how improving profitability can increase EBITDA and therefore enterprise value without requiring all of the value gap to be solved through new sales.
Annual Churn Rate
The percentage of recurring revenue expected to be lost over a year.
Churn increases the amount of new MRR required because some sales activity must first replace revenue that leaves.
Organic Growth Rate
Growth inside the existing recurring client base.
Organic growth reduces the portion of the target that must be produced through new-logo acquisition.
Close Rate
The percentage of qualified first appointments that ultimately become clients.
The planner uses close rate to work backward from the client requirement into the number of qualified appointments and leads required.
Not-a-Fit Rate
The portion of booked first appointments that are not qualified opportunities.
A high not-a-fit rate increases the number of appointments that must be booked to produce the required number of qualified sales opportunities.
No-Show Rate
The portion of booked appointments that are not attended.
No-shows create additional appointment demand because booked meetings do not all become attended sales conversations.
Sales Escalator
An assumption for increasing sales production over time.
The planner can model a sales plan that becomes more productive over the planning horizon rather than assuming the same monthly sales output forever.
Implementation Levers
Operating improvements modeled over time rather than instantly.
The planner can model changes in profit margin, NRR on MRR, product on MRR, and average new-client MRR. Implementation timing matters because an improvement that takes longer produces less benefit early in the plan.
A note about modeling versus valuation advice
The planner translates an enterprise-value goal into an operating plan. Use professional valuation advice for a transaction.
Actual enterprise value depends on many factors that are difficult to reduce to a single formula, including financial quality, recurring-revenue quality, customer concentration, leadership depth, growth, risk, market conditions, buyer strategy, and transaction structure.
Common planning questions
Connect the definitions back to the operating plan.
What is enterprise value in the MSP Fuel Growth Planning Tool?
Enterprise value is the planner’s modeled value of the operating business. The model connects annual EBITDA with a valuation multiple.
What is EBITDA in the planner?
EBITDA is the operating-earnings measure used as the base for the valuation model. The planner uses the profitability assumptions entered by the user to estimate the annual operating earnings required by the plan.
What do MRR, ORR, and NRR mean in the planner?
MRR is managed recurring revenue. ORR is other recurring revenue outside the core managed-services MRR bucket. NRR is nonrecurring revenue, with the planner using project-labor revenue as the primary NRR planning input.
Why do churn and close rate matter to an enterprise-value plan?
The enterprise-value target has to be translated into recurring-revenue growth. Churn changes how much new recurring revenue must be replaced, while close rate changes how many qualified sales opportunities are required to produce the needed new clients.