Microsoft's Copilot platform has recorded a 33% growth, growing its user base from 20 million to 30 million seats in a three-month period, according to reported company data. Increased adoption is attributed in part to Microsoft's strategy of bundling Copilot licenses with existing products. Copilot lacks custom code-generation features, instead focusing on business process optimization and employee productivity. Microsoft's switch from OpenAI to Anthropic as the underlying model for Copilot reflects a shift toward features that align more closely with user workflow support.

Supporting this development, comments noted that Fortune 500 and Fortune 1000 organizations are increasing their adoption of Copilot. Analysts highlighted Microsoft’s historical pattern of entering competitive spaces from a less dominant position and gradually increasing market presence. This strategy, combined with integration into widely used platforms, has contributed to the acceleration of Copilot’s uptake. The focus of the current Copilot version remains on facilitating business tasks rather than technical automation.

A secondary discussion covered marketing challenges for MSPs in a business environment shaped by the proliferation of AI tools. Peer group insights stressed that traditional digital marketing channels such as search and online advertisements are declining in effectiveness, with leaders instead reporting positive results from personalized outreach methods. Techniques identified as effective include public speaking at local business events, distributing real-time security and AI tips via email and video, and leveraging social media with authentic, direct content. Separately, a new CISA Insider Threat Guide was highlighted for its practical utility in offboarding, job change, and broader operational security processes.

For MSPs and IT service providers, the reported trends emphasize the need to adjust operational approaches in both services delivered and go-to-market strategies. The rapid expansion of Copilot signals increased customer expectations for workflow-integrated AI features and raises questions of vendor dependency and differentiation. At the same time, the diminishing value of broad digital marketing highlights the risks of relying on legacy lead-generation channels. Instead, practical field examples and security case studies suggest a shift toward higher accountability, lateral risk management, and more direct forms of engagement to mitigate threats and maintain competitiveness.

1. Show Rundown & Banter: What’s up? End of boating season and football season.
2. Question of the Week: AI killed marketing! What’s actually working now?
3. CISA Insider Threat Guide: How MSPs can help clients detect insider threats, manage employee offboarding, secure access, and build an ongoing insider threat program.
   https://www.cisa.gov/
4. Get Clients Ready for Copilot: Copilot adoption is growing. Discuss readiness reports, data governance, and security guidance before rollout.
5. AI Solves a Difficult Math Problem: OpenAI reportedly solved the Navier–Stokes problem using AI agents. Is this progress for mathematics, or could it weaken human scholarship?
6. Tales from the Field: The case of the underquoted bids — a security investigation reveals an employee leaking quotes to a competitor

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The episode centers on operational best practices and core risk factors for MSPs preparing to sell their businesses. The discussion highlights that a business must be able to function independently of its owner, with Amy emphasizing that the most important prerequisite for sale is organizational self-sufficiency. Buyers prioritize businesses that can maintain their operations, client relationships, and financial health following a change in ownership. The need for clean, auditable financials and contract organization is underscored as key requirements for reducing risk and promoting transaction confidence.

Further guidance is provided regarding exit strategy planning and business positioning. Owners are advised to clarify the desired type of exit—such as complete disengagement versus remaining in the business post-sale—and to consider factors such as buyer preference and legacy concerns. Both buyer and seller risk are increased by high client concentration, undefined leadership teams, and missing or ambiguous vendor commitments. Steady, incremental growth—rather than stagnation or decline—was cited as a marker of business stability and a factor that increases attractiveness to potential acquirers.

Adjacently, the conversation addresses developments relevant to technology and operational security. The discussion notes Microsoft’s release of updates to address over 400 vulnerabilities in Windows in a single month, which represents a four to ten times increase over the previous year’s counts for the same periods. The accelerating pace of vulnerability discovery and exploitation, driven in part by adversarial and defensive use of AI, is causing traditional patching regimens to become inadequate. Amy described this collapse of the patch window as a significant industry risk, with particular exposure in under-patched IoT and embedded systems.

MSPs and IT decision makers are advised to update succession and sale-readiness practices, stressing the importance of organizational hygiene, data transparency, and realistic self-assessment. The acceleration of security threats and increased complexity of vendor landscapes indicate that risk management processes must evolve rapidly. Owners should prioritize eliminating operational dependencies, ensuring rigorous contract and financial management, and modernizing their approach to security and resilience to preserve value—both for ongoing business health and as preparation for potential sale or transition.

What are the top 10 things I should do before I sell my business?

1. Question of the Week: Top 10 things to do before selling your MSP — prepare the business, finances, operations, team, customers, legal documents, and due diligence.
2. Facebook’s $17B Settlement: What does it mean for tech companies and accountability?
   https://www.azag.gov/press-release/attorney-general-mayes-announces-largest-big-tech-settlement-history
3. MSP Market & PSA Trends: Jay McBain’s latest market-share and growth trends.
4. Microsoft Patching: 400+ vulnerabilities fixed in August. What does this mean for MSPs and proving value?
   https://www.techrepublic.com/article/news-microsoft-august-2026-patch-tuesday/
5. Marketing for MSPs: What’s actually working for lead generation?
   https://www.connectwise.com/resources/msp-marketing-report
6. AI Agent Safety: Key safety rules for using AI agents and meeting assistants.
7. Tales from the Field: Why are you selling — burnout or retirement? Get your story straight.

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A primary development addressed is the increasing scrutiny and demands from cyber insurance providers on MSPs and their clients. Amy highlighted a case where an insurer canceled a client policy after the MSP could not produce comprehensive reports and logs verifying device management for all endpoints, including BYOD and personal devices. This incident underscores rising expectations from insurers for documented security controls covering all systems interacting with sensitive data, and the risk of coverage denial when undisclosed devices or unmanaged endpoints are discovered following a breach.

Supporting discussion featured the operational gaps many MSPs face, especially regarding the management of BYOD and personal devices. Amy and James both emphasized that insurance companies are increasingly insistent on verifiable evidence that data protection policies apply to every device with data access. Failure to comply with these mandates, or misrepresenting coverage in pre-insurance questionnaires, may not only result in claim denials but also expose the MSP to downstream liability and litigation risk. They also stressed the need for clear contractual exclusions and robust internal insurance for the MSP to mitigate risk transfer.

A secondary theme centered on the competitive pressure local and regional MSPs face from consolidation through roll-ups and the expansion of national firms. Both speakers identified differentiating on local presence and community engagement, such as sponsoring local events or supporting local causes, as key strategies for smaller providers. Additional discussion covered the new NSITSP accreditation and CE program, designed to establish a credentialing framework for MSPs, analogous to existing models in law and accounting. Amy suggested that the ability to market accredited status would address client needs for objective quality comparison between providers.

Takeaways for MSPs, IT service providers, and decision-makers include the importance of establishing precise, documented security controls aligned with insurance requirements, especially for unmanaged or BYOD endpoints. Clear, detailed contractual language is necessary to define service boundaries and liabilities. Maintaining up-to-date accreditations and engaging in ongoing staff education were discussed as foundational to both risk management and market differentiation. Finally, operational alignment with insurance, accreditation, and community expectations represents both a risk-reduction tool and a practical framework for navigating consolidation and regulatory scrutiny in the current environment.

How do I protect my MSP from roll-ups and national firms?

1. Question of the Week: How do I protect my MSP from competition from roll-ups and big national firms? Lean into being local, unique, and personal.
2. NSITSP CE Program: NSITSP launches CE-accredited programs, with Bigger Brains, IT Services University, and Karl Palachuk among the first providers. What does this mean for MSPs, and who is leading education in our industry?
   https://nsitsp.org/education/
3. Cyber Insurance Controls: Insurers are demanding more than security controls—they want a complete inventory of every device touching client data, including BYOD and contractor devices. What MSPs need to know.
   https://www.channelpronetwork.com/2026/08/26/cyber-insurance-device-requirements-what-msps-need-to-know/
4. Tales from the Field: The computer that turns itself off — a story from Nathan Fay.

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Halo PSA has launched a customizable artificial intelligence capability and announced a price reduction for its product, separating its approach from other PSA vendors. According to Amy Babinchak, Halo’s model allows users to build their own AI agents for a range of business processes, including quarterly reporting and project management, without charging additional fees. The company indicates that future price reductions may occur as user adoption milestones are met. This development is especially notable in an environment where other providers are raising prices while limiting flexibility.

Halo’s differentiation is further underscored by its openness and a lack of legacy constraints. James Kernan states that Halo is experiencing rapid market share growth, currently behind established players such as Kaseya and ConnectWise. The transcript notes customer concerns regarding restrictive contracts and limited support from these larger incumbents. In contrast, Halo’s policy of integrated AI features without additional fees, as well as its responsive approach to MSP feedback, positions it as a vendor that some perceive as more adaptable to industry needs.

Additional discussion addresses emerging risks related to MCP servers, which now facilitate the integration of client data across multiple platforms. Amy Babinchak raises liability concerns, noting that bringing client data into MSP-controlled systems may expand organizational exposure if security or compliance failures occur. The episode also reviews a backup vendor failure, in which an MSP was notified that Microsoft 365 backups were irretrievable due to a catastrophic vendor system failure. Both speakers underscore the severity of this scenario and recommend that MSPs seek written assurances from their backup vendors regarding data replication and recoverability practices.

For MSPs and IT service providers, these developments highlight several operational considerations. The integration of customizable AI tools and falling PSA pricing offer new opportunities, but also present due diligence and alignment challenges. Expanded MCP server capabilities and recent backup vendor failures illustrate the necessity of strict data governance, contractual clarity, and continuous risk assessment. Technology leaders are advised to verify vendor practices surrounding security, data ownership, and incident response to mitigate both business and client risk.

TITLE: How to Create People-Led Learning Culture?

1. MSP Question of the Week: Create a safe space, encourage questions, use group training, and teach without doing the work for people.
2. Halo introduces AI and lowers prices: Halo launches AI Studio for AI agents and plans to keep lowering prices. Could this spark an AI pricing war? https://www.crn.com/events/2026/halo-launches-ai-studio-mcp-push-to-help-msps-automate-service-delivery
3. MCP: Friend or Foe? MCP gives AI access to MSP systems, but creates new security, data, and liability concerns.
4. AI Shared Responsibility is now an MSP problem: MSPs need AI governance, approved tools, access controls, data policies, training, and incident reviews.https://petri.com/ai-shared-responsibility-is-now-an-msp-problem/
5. Tales from the Field: A backup failure raises a critical question: who is responsible when protected Microsoft 365 data cannot be recovered?https://www.reddit.com/r/msp/comments/1vm9dcs/heads_up_cove_backup_isnt_backed_up/

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The episode’s primary focus centers on the introduction of China-based Alibaba's new artificial intelligence (AI) model, which is positioned to rival existing US-developed models. This development has triggered concerns within the US federal government regarding the potential superiority of these foreign AI models and resulting security and data governance risks. The discussion further noted that recent import bans in the US have included consumer and business products containing AI elements, such as robotic vacuum cleaners, reflecting heightened regulatory scrutiny and caution toward foreign AI integration in both enterprise and consumer environments.

Supporting details outlined that Chinese technology companies have released an increasing number of AI models, including both large-scale and smaller, task-specific models. According to the discussion, the trend toward “distilled” or smaller models, which are trained based on larger systems, introduces efficiency benefits but also creates concern about loss of fidelity or intelligence in iterative retraining. Reference was made to a lengthy public statement by Meta’s CEO on the risks and advantages of model distillation and to US regulatory actions responding to these broad technology shifts.

A key secondary topic was the launch of the Managed Intelligence Alliance (MIA), formed at ChannelCon 2026 to address AI standards, accreditation, and governance for MSPs. However, analysis pointed out that the Alliance’s executive leadership is comprised primarily of large aggregators and vendors, with a notable absence of direct representation from operational MSPs. The structure involves engagement with Texas A&M University for association-building, but concerns were raised regarding industry self-regulation, stakeholder representation, and the practical function of such alliances for the broader MSP segment.

TITLE: Probing Client AI Opportunities and Managing Leadership Meetings for MSPs
Question of the Week: What are some good pre-sales probing questions to get the conversation going with a prospect around AI opportunities?

AI: Chinese AI models, smaller/distilled models, and AI training
Meetings: How to run better weekly leadership meetings
ChannelCon: Managed Intelligence Alliance and MSP industry standards
Tales from the Field: The value of a small MSP business

The discussion concluded with practical implications for MSPs and IT service providers, emphasizing risk management, the importance of understanding both external technological developments and internal AI adoption, and the need for clear standards and governance amid evolving vendor and regulatory landscapes. The conversation highlighted the necessity for MSPs to critically assess tool adoption, process discipline in meetings, and asset valuation, while maintaining vigilance over the security, accountability, and ownership structures within emerging technology initiatives and industry alliances.

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Private equity (PE) acquisition trends in the Managed Service Provider (MSP) sector are targeting smaller firms at increasing rates, with offers now being extended to MSPs in the $1–3 million revenue range. PE activity, once limited to companies exceeding $5 million in annual revenue, is now resulting in more than half of current offers for these smaller businesses coming from large financial entities. This development creates both opportunities and risks for small and boutique MSPs, especially those with specialization or unique market positioning.

Market data and discussion on the podcast highlighted a “void” in the $3–5 million MSP segment, attributed to sustained PE buyouts and the slower organic growth required to fill this gap. Growth beyond the $2 million threshold remains a structural challenge for many MSPs, requiring investment in management layers and business process sophistication. PE acquirers are described as increasingly eager, but both success rates and culture-fit issues remain a concern, with statistics reportedly indicating that many PE integrations do not succeed in the long run. Diligent vetting of acquirers and focus on internal operational maturity were emphasized as risk mitigations.

Other topics examined included the implications of third-party cloud outages, such as the Microsoft incident of July 24, 2026, and their effects on MSP–client communication protocols. It was noted that responsibility for outages often lies outside the MSP’s control, making timely, empathetic, and proactive client communication essential. Additional segments addressed risks associated with misaligned business ethics—such as using misleading job advertising—and the operational significance of transparency and genuine client interaction. Opportunities for skill development were identified through emerging partner programs in AI, specifically pointing to free certification offerings from Google and Anthropic, with the observation that 65.7% of MSPs have no public-facing AI narrative.

For MSP leaders, these findings point to a need for robust organizational processes: strategic specialization, internal reinvestment, and strong core value alignment to withstand shifting acquisition patterns and integration risks. Vendor and platform accountability, particularly regarding service continuity, should remain central in client management practices. Skill development in AI and transparent business operations are positioned as differentiators in a market where rapid change and client trust are both key risk and opportunity factors.

1. On July 24th Microsoft had an outage that covered a lot of North America for about 5 hours. https://www.instagram.com/p/DbKyeZVmauy/
2. What if you don’t want to sell your company? PE is snapping up the larger end of the MSP market. Is that an opportunity or a threat for smaller MSPs? https://ctacquisitions.com/guides/private-equity-msp-2026/
3. The MSP of the future. Amy has been writing for 3 years on this topic and now has a summary article. https://www.thirdtier.net/2026/07/23/the-msp-of-the-future-pulling-the-threads-together/

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A key focus of the episode is on practical approaches to conducting pre-sales assessments for prospective managed service clients, particularly those with existing MSP relationships and under 100 employees. Hosts discussed that frontline assessment methods often prioritize observational “walk-arounds” and targeted questioning rather than the deployment of specialized tools, except in cases where complexity or asset uncertainty warrants additional rigor. The conversation emphasized that visible signs of technological investment (or lack thereof) and management engagement provide valuable risk indicators to help MSPs assess prospect suitability and potential client alignment.

Supporting details included recommendations against using automated network scanning tools as a default during the sales process, especially for smaller prospects. Instead, initial technology and business process understanding should be driven by reviewing company websites, social media, and conducting direct observation and informal dialogue with staff. For more complex environments or where asset counts are ambiguous, tools such as Galactic Advisors, RapidFire Tools, or Lansweeper were suggested, but only after careful consideration of the actual information gap. MSPs were advised to leverage preexisting documentation and probe for differences with prior MSPs, focusing on gaps in service, dissatisfaction, or unaddressed needs.

Secondary topics included the necessity of formal Master Service Agreements (MSAs) and the operational risks of long-running unwritten arrangements. The hosts reported that customer pushback on contracts is rare; those unwilling to sign can be managed through premium pricing or operational discretion. The use of digital document management and auto-renew online agreements was cited as a means to streamline governance and ensure that contractual terms keep pace with operational changes. The conversation also addressed best practices for Quarterly or Technology Business Reviews (QBRs/TBRs)—advocating for business-oriented, forward-looking discussions rather than technical or ticket-driven reporting, and highlighting risk in overinvesting staff time in meeting preparation.

The episode concluded with a practical case study on recurring revenue management, highlighting a systematic approach to price increases after extended periods without adjustment. The case demonstrated that fears of customer attrition due to price adjustments are often overstated, particularly when supported by transparent communication and a graduated rollout to well-aligned clients. The discussion reiterated the importance for MSPs to maintain accountability, regularly review contractual agreements, manage operational costs, and structure client engagements to reduce risk exposure while improving alignment with organizational goals.

Title: How do you complete an assessment for a prospect?

1. Topics/Events
2. Question Of The Week: How do you complete an assessment for a prospect?
3. What to do if you don’t have agreements in place, but you’ve worked with recurring clients for years.
4. QBRs – what questions should you be asking during your regular QBRs with your clients
5. CMMC third-party audits are paused. The channel opportunity isn’t. ChannelE2E https://share.google/4vXDd5G3ysgflU6PU
6. STORY: Reviewing a MSP’s current agreements, James realized the MSP hadn’t had a price increase for over 5 years.

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