Key Takeaways
- GF Data Q1 2026: healthcare services averages 8.3x EBITDA; IT/MSP businesses with recurring revenue approach 8x; manufacturing averages 6.5x; specialty contracting averages 5.5–6.2x.
- The spread between top-quartile and bottom-quartile businesses in the same sector has widened to 2–3x turns — quality and process now matter more than sector selection alone.
- A well-run competitive process consistently delivers 1–2x above what a single-buyer negotiation achieves in the same sector.
Valuation multiples in the lower middle market ($2M–$15M EBITDA) are not uniform — they vary significantly by sector, growth profile, revenue quality, and deal structure. Understanding where your business falls in the range is the first step to a realistic exit strategy.
Here's what we're seeing in Q1 2026, drawn from active deal activity across our platform and buyer network. For a current cross-sector reference table that we update every quarter, see EBITDA Multiples by Industry (updated quarterly).
Current Multiple Ranges by Sector
| Sector | Base Range | Premium Range | Direction |
|---|---|---|---|
| Technology-Enabled Services | 7–9x | 10–13x | ↑ Expanding |
| Healthcare Services | 6–8x | 9–11x | → Stable |
| IT Managed Services / MSP | 6–8x | 9–12x | ↑ Expanding |
| Specialty Manufacturing | 5–7x | 7–9x | → Stable |
| Business Services | 5–7x | 7–9x | ↓ Compressing |
| Distribution / Logistics | 4–6x | 6–8x | ↓ Compressing |
| Specialty Contracting | 4–6x | 6–8x | → Stable |
| General Contracting | 3–5x | 5–7x | ↓ Compressing |
What's Driving the Divergence
Technology Premium Is Accelerating
Businesses with recurring software revenue, proprietary technology, or AI-assisted service delivery are commanding a meaningful premium over comparable human-capital-intensive businesses. A distribution company with a proprietary routing and inventory platform is valued differently than a traditional distributor — even at the same EBITDA level.
PE firms are specifically targeting "technology-enabled" add-ons for their platform companies. If your business has any tech component, make sure your CIM tells that story clearly.
Services Compression Is Real
General business services businesses with undifferentiated offerings and high labor dependency are seeing multiple compression. The culprits: labor cost inflation has reduced margins, making normalized EBITDA harder to defend; buyer competition for these assets has softened; and PE platforms have gotten more selective after overpaying for services roll-ups in 2021–2022.
The Quality Premium Matters More Than Ever
What Moves You Toward the Premium Range
- Recurring / contracted revenue — MRR, ARR, long-term contracts signal predictability
- Low customer concentration — No customer > 10–15% of revenue is ideal
- Management depth — A team that can run the business post-close
- Organic growth — 10%+ CAGR over three years signals market position
- Gross margin expansion — Improving margins suggest pricing power and operational leverage
- Clean data room — Organized, audit-ready financials reduce perceived risk
The Process Premium
Multiple ranges above represent what a well-run competitive process achieves. Single-buyer negotiations — where a founder accepts the first serious offer or deals with one strategic buyer — typically close at 1–2 turns below market. The process creates the tension that moves buyers toward the top of their range.
Bottom line: Sector matters, but quality and process matter more. A well-prepared business in a compressing sector, taken through a structured competitive process, will consistently outperform an average business in a hot sector sold quietly to a single buyer.
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