What Is Your Scale Business Worth? A 2026 Valuation Update on the Private Equity Invasion

New money is entering the industrial scale market, the platforms already in it are buying everything they can reach, and even seasoned private equity buyers can’t agree on what these companies are worth. For owners of scale service and distribution businesses, that uncertainty is very good news.

Even the Buyers Can’t Agree on What Your Scale Business Is Worth

Recently I spent an hour comparing notes with a partner at a prominent, industrial-focused private equity firm. He is seasoned, he is successful, and he is currently researching his firm’s first platform acquisition in the industrial scale and weighing sector — the kind of fragmented, service-heavy market that private equity loves to consolidate.

We compared notes on valuation. And here is what stopped me: his working assumption for what scale companies cost was nearly double what they are actually selling for.

Sit with that for a moment. A sophisticated buyer, preparing to deploy serious capital into this space, carried a price expectation almost twice the real clearing price. Part of his skepticism about the sector came from that very assumption — in his mind, these companies were expensive. In reality, they trade for far less than he believed.

If a seasoned private equity professional — and the new entrants writing checks alongside him — don’t have a fixed read on what scale companies are worth, that pricing uncertainty cuts in the seller’s favor. Buyers are anchoring their internal models high. They are competing for a scarce set of quality targets. And the owner who walks in knowing the real numbers holds the advantage.

This is a 2026 valuation update for owners of industrial-scale service and distribution businesses: what the private equity invasion actually means for the value of your company, and the factors that drive that value up or down.

Is Now a Good Time to Sell a Scale Business?

Yes — and the window is open wider than most owners realize.

Two forces are converging at once. New money is entering the sector: private equity firms that have never owned a scale company are building investment theses and hunting for a platform to anchor a roll-up. At the same time, the platforms that already exist are acquiring everything they can reach — and moving fast to do it.

National dealmaking forecasts back this up. Private-equity-led consolidation in recurring, technology-enabled service businesses is expected to remain strong through 2026, with sponsors focused on professionalizing and expanding the platforms they have already built. Scale service companies — with their recurring revenue from calibration, certification, repair, and preventive maintenance — fit that profile almost perfectly. They are exactly the kind of sticky, fragmented, aftermarket-rich business the smart money is chasing.

For a seller, the math is simple. More buyers, especially more motivated ones, create greater competitive tension. The same recurring service revenue and technician dependence that make your business demanding to run are precisely what make it valuable to an acquirer.

What Is My Scale Business Worth? The 2026 Valuation Update

Here is the number owners actually want. Based on the transactions we have worked on with our seller clients and our independent research, scale companies with EBITDA under $5 million are selling in the 6.5x to 9x EBITDA range. 

That is a strong number, and it sits at a premium to the broader industrial service middle market, which generally clears in the mid-single digits of EBITDA. The premium is not an accident. It is the recurring service and calibration revenue, the embedded technician relationships, and the sticky aftermarket that buyers are willing to pay up for. When a business produces predictable, contracted revenue year after year, acquirers underwrite it more like an annuity and less like a one-time equipment sale — and they price it accordingly.

Two further market realities push that range around, and both reward a prepared seller:

• Size is rewarded. Within the same sector, larger businesses command meaningfully higher multiples than smaller ones. The gap between a sub-$2 million and a $5 million EBITDA company can be several turns of EBITDA — which means disciplined growth in the year or two before a sale can pay for itself many times over at closing.
• Process is rewarded. Owners who run a competitive, advisor-led sale process consistently realize materially higher prices than owners who sell quietly to the first buyer who knocks on the door. The difference is routinely a double-digit percentage of the purchase price. Selling to the unsolicited caller is the single most expensive convenience an owner can buy.

The takeaway: the 6.5x to 9x band is real, but where you land inside it — and whether you push beyond it — is largely within your control.

What Factors Affect My Valuation?

Two scale companies with identical EBITDA can sell for very different prices. These are the factors that move the number, in roughly ascending order of importance:

• The scale of the operation — your overall revenue and earnings, and the size premium that comes with them.
• The number of technicians — your field-service capacity, and how much of it stays in place if the owner steps away. Scarce, retained technical talent is an asset; an owner-dependent service operation is a discount.
• The number of locations — your geographic footprint and the regional density a buyer can build on or plug into an existing platform.
• Profit margin — clean, healthy margins signal a well-run business and lower a buyer’s perceived risk.
• Service contracts and recurring revenue as a percentage of total revenue — and this is the big one. The higher and stickier your recurring base, the higher your multiple. No single factor does more to move valuation. If you want to raise the value of your business before a sale, this is where the leverage lives.

Who’s Buying — and Who’s the New Money?

The buyer pool is deepening quickly, which is the single best thing that can happen to a seller.

The clearest example is Michelli Weighing & Measurement, backed by private equity firm Summit Park. Since Summit Park’s investment, Michelli has been acquiring aggressively — buying Greenville Scale, Total Scale Service, Houston-based Industrial Scale & Measurement, and Florida Industrial Scale in just the opening months of 2026, building a service network that now spans roughly 50 service areas across 18 states.

Investcorp’s acquisition of Kanawha Scales & Systems, the Carlton platform, Cross Precision Measurement, and J.A. King round out a field of active, well-capitalized consolidators all competing for the same finite set of quality targets.

And now add the new entrant — the private equity firm I opened with, researching its first scale platform with capital ready to deploy. When a brand-new buyer steps into a market where the incumbents are already buying everything in sight, the owners of quality businesses are the ones who win.

What This Means for You

The most useful thing I took from that hour with the private equity partner was not a number. It was the confirmation that the buyers themselves are still working out what scale companies are worth — and that they are bracing to pay more than today’s sellers are receiving.

If you own a scale service or distribution business, you are sitting in a rare position: a deepening pool of motivated, well-funded buyers, a recurring-revenue model those buyers prize, and a market where the price expectations of the people writing the checks run ahead of where deals are actually clearing. The owners who capture that premium will be the ones who understand their real value — and run a real process — before a buyer ever calls.

We advised the seller of a scale business acquired into the Carlton platform, and we work with scale service and distribution owners across North America on valuation and exit strategy. If you are wondering what your business is worth in today’s market, that is a conversation worth having now, while the buyers are this hungry.

About Jackim Woods & Company

Jackim Woods & Company is a boutique mergers and acquisitions firm specializing in lower-middle-market transactions, with deep experience in the industrial scale and weighing sector. The firm provides valuation, exit planning, targeted buyer outreach, and hands-on advisory throughout the sale process.  For more information or a free consultation to explore your options, contact

Paul Fackler, Managing Director; pfackler@jackimwoods.com

OR

Rich Jackim, Managing Partner; rjackim@jackimwoods.com

How Jackim Woods & Co. Protects Your Confidentiality When You Sell Your Business

When you decide to sell your business, you face an immediate and uncomfortable paradox: to attract the right buyer and command a premium price, you must share sensitive information about your company — but doing so too early, or with the wrong people, can destabilize the very asset you’re trying to sell.

Employees may start updating their résumés. Key customers may test alternatives. Competitors may use the news to poach your best people or approach your top accounts. And a buyer who senses urgency or disruption will use it to negotiate a lower price.

Confidentiality isn’t an afterthought in a business sale. It’s a core value-protection strategy — and managing it requires both process discipline and legal sophistication.

At Jackim Woods, we bring both. I spent years as an M&A attorney at White & Case before founding this firm, so I understand confidentiality not just as a deal management practice but as a legal and contractual discipline. Here’s exactly how we protect you throughout the sale process.

Why Confidentiality is So Important

Before getting into our process, it helps to understand what’s actually at risk when confidential information gets out during the sale process.

Employees react fast.

A rumor that the business is for sale can trigger voluntary departures — particularly among your key managers, sales people, and technical specialists — before you have a retention plan or a transition story in place. Buyers pay close attention to team stability. One unexpected resignation during due diligence can reduce the value of your business or create deal conditions you didn’t anticipate.

Customers may hedge.

Relationship-driven businesses are especially exposed. If a major account hears that your company may be for sale that could delay a big order, a contract renewal, or simply ask questions you’re not yet in a position to answer. Any disruption to your revenue during a sale process is one of the fastest ways to lose negotiating leverage.

Competitors and suppliers will act on the information.

A competitor doesn’t need to know the buyer, the price, or the timeline to move against you. They only need to know you’re distracted. They may bring in up when meeting with your customers in an attempt to get a foot in the door.  Suppliers may tighten payment terms. Channel partners may revisit exclusivity arrangements. All of that creates noise in your financials and your story at exactly the wrong moment.

Buyers will discount the value of your business.

If any of the above occurs, a serious buyer will notice — and will use it. Lower purchase price, larger escrow holdbacks, more seller financing, stricter non-compete terms. Confidentiality failures have direct, quantifiable financial consequences.

How Jackim Woods Protects Your Confidentiality — Step by Step

Step 1: Anonymous Marketing with a Blind Teaser

We never identify your company during the initial phase of buyer outreach. Instead, we prepare a blind teaser — a one-page anonymous profile that describes the opportunity in terms of industry, geography, revenue range, EBITDA, business model, and key strengths — without revealing your company name, exact location, employee identities, or any detail that would allow a competitor or supplier to reverse-engineer your identity.

This gives us broad market exposure to identify the right buyers while keeping your identity fully protected until a buyer earns access through our screening process. A poorly constructed teaser can inadvertently identify a company through a combination of niche service descriptions, unusual geography, and recognizable customer patterns. We draft teasers carefully to prevent this.

Step 2: Buyer Screening and Financial Qualification

A confidentiality leak almost always traces back to the wrong party getting access too early. Before any identifying information is shared, we screen every prospective buyer for financial capability, strategic fit, acquisition intent, and deal timeline.

We build a targeted buyer universe of 150 to 200 potential acquirers using a structured framework based on Porter’s Five Forces — covering direct competitors, customers who might want to vertically integrate, suppliers who might want to move downstream, adjacent businesses, and financial buyers including private equity groups. From that universe, we identify the highest-probability acquirers before any contact is made.

Screened buyers register through us — not directly with you — which creates a documented, traceable record of who has received what information and when. This protects you legally if a breach of confidentiality issue arises later.

Step 3: A Professionally Drafted NDA — Before Anything Identifiable Is Shared

No buyer receives your company name, financial details, or any identifying information until they have signed a mutual non-disclosure agreement. Having drafted and negotiated hundreds of these agreements as an M&A attorney, I know where standard NDAs fall short.

A well-drafted NDA should do several things that generic templates often miss:

• Define confidential information broadly — financials, customer lists, employee information, pricing, and proprietary processes
• Restrict use of shared information to deal evaluation only
• Prohibit the buyer from contacting your employees, customers, suppliers, or landlord without your authorization
• Require return or destruction of materials if discussions end
• Bind the buyer’s advisors — lenders, accountants, attorneys — to the same obligations

An NDA is not a complete solution on its own. Enforcement is reactive — by the time you’re pursuing a legal remedy, the damage to your business relationships may already be done. That’s why we pair every NDA with the staged disclosure process described below.

Step 4: Staged Disclosure Tied to Buyer Seriousness

Information is released in layers as buyer credibility increases. This is the most reliable way to maintain confidentiality while still allowing a serious buyer to conduct a meaningful evaluation.

Our CIMs are deliberately more comprehensive than what most M&A advisors produce — typically 12 to 20 pages rather than a thin broker summary. This means serious buyers get the depth they need to move forward confidently, while casual or unqualified parties are screened out before reaching this stage.

Step 5: Controlled Due Diligence Through a Virtual Data Room

Due diligence is when the most sensitive information about your business is shared — and when confidentiality discipline matters most. We manage this through a structured virtual data room where we control who has access, which documents are available at each stage, and when access is granted or revoked.

This prevents the common problem of an overeager buyer or their advisor pulling documents that shouldn’t be released until later in the process — and ensures that if a deal falls apart, sensitive materials aren’t sitting unsecured in someone’s inbox.

Step 6: Planning Your Employee and Customer Communications

We help you think through the right timing and messaging for internal disclosures before you need to make them. In most transactions, broad employee notification happens after major deal terms are agreed upon — not at the start of the process. But planning that communication early prevents improvisation under pressure, which is where messaging mistakes happen.

We help you identify which employees are critical to notify early (and with what message), which key customers may need reassurance before closing, and how to frame the ownership transition in a way that preserves relationships and morale.

Common Confidentiality Mistakes to Avoid

Even sophisticated sellers can undermine their own confidentiality protections. The most common mistakes we see:

• Sharing financial details before screening a buyer. Sending tax returns or customer concentration reports to anyone who expresses interest — without verifying their identity, financial capacity, and intent — is the single most common source of leaks.
• Relying on the NDA alone. An NDA creates legal exposure for a buyer who misuses your information. It does not prevent them from misusing it in the first place. Process discipline is the real protection.
• Including too much identifying detail in the teaser. A teaser that mentions a rare niche service, a specific headcount, and a recognizable local customer base may effectively announce the sale without using your name.
• Telling employees too early and without a plan. Well-intentioned transparency before you have a transition message, a retention plan, and a closing timeline creates anxiety you can’t walk back.
• Not tracking data room access during due diligence. If you can’t document who saw what and when, you have no basis for a confidentiality claim if information is misused.

Frequently Asked Questions

Your EBITDA Is Strong. But Is Your Business Sellable?

Strong EBITDA is necessary but not sufficient to sell a business — buyers scrutinize the quality and durability of earnings, not just the headline number.

A company with $13M in revenue and $5M in EBITDA failed to sell after a year on the market because two structural risks — 45% revenue dependence on a single distribution channel and 16% revenue from one customer — triggered valuation disputes, and the deal fell apart during due diligence.

A concentrated revenue base, even at strong margins, creates deal risk that sophisticated buyers will find and price against. Businesses where any single customer accounts for 5% or more of revenue, where revenue flows through a single channel or relationship, or where recurring revenue is minimal , face a high likelihood of a buyer wanting to renegotiate the deal during due diligence. A professional market assessment — reviewing financials, revenue composition, customer concentration, and competitive positioning — is the critical first step before going to market, and is the most reliable way to avoid surprises that kill deals.

— Rich Jackim, Jackim Woods & Co.

Your EBITDA Is Strong. But Is Your Business Sellable?

Every business owner considering selling their business deserves a clear-eyed assessment of one foundational truth: EBITDA is a critical metric, but it does not tell the complete story. Owners who discover this after months of trying to sell their business — or after a deal fails during due diligence — will have wasted a lot of time and money.

The following is a situation we have seen multiple times in our practice. The details have been modified for confidentiality, but the dynamics are real—and offer important insights for any owner thinking about an exit.

A Business That Looked Great on Paper

Last year, we spoke with the owner of a business services company who had spent twenty years building his business. Now 65, he was ready to retire and sell the company. The financial profile was attractive: approximately $13 million in revenue with $5 million in EBITDA – strong margins that would get buyers’ attention.

Early in the process, the owner’s CPA reviewed the financials and told the owner the company was probably worth $25 million – exactly what the owner wanted to hear.  The CPA explained that the EBITDA was there, and in his experience, companies like this one sold for 5x EBITDA. The owner felt confident, so he hired an M&A advisor to sell the business.  After a year on the market, two buyers had withdrawn their offers during due diligence, and the business was still not sold.

Strong EBITDA opens doors. But what buyers find when they look inside determines whether a deal actually closes.

What the Financial Analysis Revealed

When buyers started their due diligence, they discovered the company’s revenue composition contained concentration risks that ultimately derailed the deal:

Revenue channel concentration: 45% of total revenue was generated through a single distribution channel, a key salesperson, who was the same age as the business owner. While that salesperson had performed reliably for years, the fact that the company depended on someone so close to retirement age was a structural dependency that concerned sophisticated buyers.

Customer concentration: 16% of revenue was attributable to one customer, a large manufacturer with multiple locations. This indicated a customer concentration issue that affected lending eligibility and the buyer’s financing options, which in turn affected the overall risk profile of the deal.

These were not deal killing factors individually. But collectively, they represented risks that sophisticated buyers identified in due diligence, and in one case, used to try to negotiate a huge valuation adjustment (50%) — or in the other case, as grounds to exit the process entirely.

When Market Conditions Validated a Buyer’s Analysis

What ultimately killed the deal was during due diligence, an external event occurred that demonstrated precisely why concentration risk demands early attention.

The company received formal notification that its largest customer — representing 16% of annual revenue — had been acquired by a direct competitor. As part of the acquirer’s vendor consolidation strategy, they provided notice that they would be scaling back their purchase orders over the next six months, with the goal of consolidating all purchase orders with the new parent company’s vendors.

The impact was immediate and material. Sixteen percent of the company’s revenue had just disappeared and could not easily be replaced. The seller’s valuation and negotiating position was now fundamentally changed by a single event outside of their control.  This is exactly what buyers feared, and it had come true.

The Strategic Lesson for Owners Selling Their Businesses

Advisors who do not earn success fees when a transaction closes have limited incentive to tell clients the hard honest truth about their client’s business. The result is that business owners often try to sell their business without a clear understanding of how buyers will evaluate their company — and without the opportunity to fix those risk factors before they become deal killers.

As the above example demonstrates, EBITDA matters a lot. But experienced buyers will also be looking at the quality and durability of those earnings:

• Does any single customer represent more than 5% of a company’s revenue?
• Is revenue dependent on a single channel, platform, or relationship that could be disrupted?
• Is revenue generated from one product or service, or diversified over a wide range of products and services?
• Is there industry concentration risk with services or products serving only one industry?
• How much of the revenue base is genuinely recurring, contracted, or relationship-protected versus transactional?
• How is the business positioned relative to industry transformation — as an adopter or as a laggard?
• How would EBITDA be affected if the single largest customer or channel relationship were impaired?

These are the questions that determine whether reported EBITDA represents durable, transferable earnings—or a business that will be systematically discounted during the diligence and negotiation process.

The Question Every Owner Should Ask Before Selling Your Business

It is not simply “What is my EBITDA?”

The more important question is: “Do my revenue and EBITDA accurately reflect the risk-adjusted financial performance of my business?”

That is precisely what a professional market assessment and business valuation is designed to answer. Not to produce an optimistic number, but to give you the honest, complete picture that enables you to maximize transaction value and approach the market from a position of knowledge rather than a host of assumptions.

Why a Free Market Assessment Increases Your Options when Selling Your Business

At Jackim Woods & Co., our complimentary market assessments are designed to give business owners the analytical foundation they need before making one of the most consequential financial decisions of their lives.

We review of your financials, revenue composition, customer and channel concentration, competitive positioning, and provide you with the realistic range of values a qualified buyer would assign to your business. It means identifying the factors that could affect a transaction — and giving you to option to address them before you go to market.

Business owners who understand their true market value make better decisions: about timing, about preparation, about which buyer profiles to target, and how to position the company’s story. They do not spend months pursuing a process that was unlikely to succeed. And they are not surprised by what buyers find.

If you are considering a sale — even if your timeline is one to three years out — an objective assessment of where your business stands today is the most valuable step you can take.

Please note:  Because of the time and effort that goes into to preparing a market assessment, free market assessments are only available for businesses generating at least $5 million in revenue or $1 million in EBITDA.

About Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to small and lower middle-market companies in a wide range of industries across the United States and Canada.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 120 successful transactions, ranging from one million to more than eighty million dollars in value.

If you own a business and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

America’s $5 Trillion Business Ownership Crisis

America is facing a business ownership crisis: 6 million small businesses will need new owners by 2035, and according to a McKinsey study titled The Great Ownership Transfer, 92% will simply close rather than sell.

The businesses most at risk have revenues between $1 million and $10 million — owner-operated firms spanning business services, regional manufacturing, and B2B specialties that are too small for institutional private equity and too complex for Main Street brokers. Together, they represent up to $5 trillion in enterprise value that will largely disappear unless buyers and sellers find each other in time. Rich Jackim predicted this wave in 2007 and co-founded the Exit Planning Institute to address it, training over 9,000 Certified Exit Planning Advisors — yet the majority of business owners still exit without a plan. For sellers, the window to transact at full value is narrowing every year; for buyers, the opportunity to acquire profitable, established businesses at reasonable prices has never been larger.

— Rich Jackim, Jackim Woods & Co.

McKinsey & Company just published a study that deserves attention from every business owner and serious business buyer in the country. The study, titled The Great Ownership Transfer, puts hard numbers to something I’ve been saying for nearly two decades: America is approaching a massive, largely unaddressed transition of business ownership — and most business owners aren’t ready for it.

The headline finding: 6 million small businesses will need new owners by 2035 as Baby Boomers retire. The sad news is that, according to McKinsey, 92% of these will not be sold and will simply shut their doors.  The good news is that this means at least 1 million are viable acquisition targets, representing up to $5 trillion in enterprise value.

I Saw This Coming in 2007

When I wrote the critically acclaimed book, The $10 Trillion Opportunity, this demographic wave was already clearly on the horizon. The math was never complicated: the largest generation of entrepreneurs in American history, the Baby Boomers, would eventually retire, and the buyer infrastructure to acquire these lower-middle-market businesses was not well developed.

That book led me to co-found the Exit Planning Institute, and to create the Certified Exit Planning Advisor (CEPA) designation — a program that has now trained more than 9,000 graduates and helped establish exit planning as a recognized professional discipline. Entire conferences, curricula, and consulting practices have been built around it.

And yet — despite all of that progress — the majority of business owners still exit without a plan in place. The McKinsey data makes that painfully clear: 92% of small business exits or sales today will end in closure. Not sale. Not succession. Closure. Let that sink in.

Profitable companies with real customers, trained employees, and decades of hard-earned reputation — simply shutting their doors because no qualified buyer stepped forward in time.

The Forgotten Core of the American Economy

The businesses most exposed to this risk share a common profile: revenues between $1 million and $10 million, spanning business service providers, regional manufacturers, and B2B specialists. These are owner-operated firms that have quietly powered local economies and supply chains for decades.

They’re too small to attract institutional private equity. Too complex for Main Street business brokers. And too often overlooked by the buyers who could give them a real future. It’s a structural gap hiding in plain sight — and it’s where the closure problem is most acute.

What This Means for Buyers & Sellers

Here’s the other side of the equation that doesn’t get discussed enough.

We talk with a lot of prospective buyers every day. And while well-run businesses with strong fundamentals cross our desk regularly, most buyers aren’t in the market for a good company. They’re searching for the right one — the one that checks all the boxes, including the right combination of timing, fundamentals, and transformative upside.

The challenge is that “right” means different things to different buyers. The right fit depends on the buyer’s background, industry experience, capital structure, growth thesis, and risk tolerance. That means if you are buyer, finding your right acquisition or isn’t a passive exercise. The same applies if you are a seller.  It requires extensive, targeted research and outreach — two things we do every day.

The Bottom Line

This is precisely the space that Jackim Woods & Co. was built to serve. Paul, Jim, and I have spent years developing the relationships, the methodology, and the market intelligence to move these businesses from owner-operated to professionally transitioned — without watching them quietly disappear.The Great Ownership Transfer is not a future event. It’s happening now. Every year that passes without a transaction plan is a year closer to a closure that didn’t have to happen.

If you’re a business owner thinking about your exit — whether in two years or ten — the time to start the conversation is now, before urgency forces your hand.

Contact us at Jackim Woods & Co. We’re happy to help you explore your options, help you develop a plan, and help you find the right buyer for your business. Reach us at jackimwoods.com or contact Rich directly to start the conversation.

2025 M&A Market Overview: What Business Buyers and Sellers Need to Know

The business brokerage landscape in 2025 tells a story of steady growth and selective optimism. After analyzing nearly 10,000 closed transactions representing nearly $8 billion in enterprise value, our research reveals a market that’s maturing with purpose—where buyers are more discerning, and sellers who prepare properly are being well rewarded.

A Market Finding Its Footing

This past year saw 9,586 transactions close, a modest but meaningful 0.4% increase from 2024. While that growth rate might seem incremental, it signals something important: stability, which is crucial amid market disruptions stemming from Trump’s tariffs and immigration enforcement policies, which have caused tremendous uncertainty across our economy.

Another important indicator is that the total enterprise value of $7.95 billion is up 3% year-over-year, demonstrating that deal sizes are expanding even as transaction volume holds relatively steady.

For sellers, the headline number is encouraging: the median sale price reached $350,000, a 2% increase that outpaced inflation in many sectors. More telling is that businesses are selling at an average of 94% of their asking price, suggesting that well-priced, well-prepared businesses marketed by professional business brokers are finding buyers willing to meet them close to their expectations.

The Valuation Story: Cash Flow Still Commands a Premium

Our research relies heavily on closed transaction data from the BizBuySell and our own internal database of closed transaction, which tends to focus on smaller, “main street” types of businesses, with revenues of less than $2 million.  For these small companies, valuation multiples reveal where buyer confidence truly lies.

The average cash flow multiple climbed to 2.61—a 1% increase that may seem small but represents real dollars when applied to six-figure earnings. With median cash flow of $158,950 (up 3%), sellers with strong, documented profitability are in the driver’s seat.

Revenue multiples also ticked up to 0.69, a 2% gain, while median revenue reached $703,000. This suggests buyers are willing to pay more for top-line growth, but the stronger appreciation in cash flow multiples confirms what savvy sellers already know: profit matters more than revenue when it comes to valuation.

Size Premium: It is important to note that larger companies sell for higher multiples of EBITDA and Revenue due to a size premium.  Buyers view larger companies as much less risky then smaller companies so if your business is generating more than $5M in revenue and more than $1M in EBITDA, you can expect your company to be valued at between 4x and 9x EBITDA, depending on the type of business you have and the industry you operate in.

Where the Action Is

Geography continues to play a decisive role in market velocity. Florida led all states in transaction demand, followed by California, Texas, Arizona, and New York.

These aren’t just population centers—they’re business hubs with favorable demographics and diverse economies that create both buyer pools and acquisition targets.

Sector Spotlight: The Reliable and the Rising

Service businesses dominated the closed deal landscape, claiming the top spot ahead of retail, restaurants, and manufacturing. The prevalence of service businesses reflects their scalability, lower capital requirements, and often more predictable cash flows—qualities that resonate in an environment where buyers are prioritizing stability.

But the real story lies in the rising business types that are capturing increasing buyer attention.

• Financial services
• Technology services
• Cafe and coffee retailers
• Beauty and personal care businesses

These sectors share common threads: recurring revenue potential, demographic tailwinds, and business models that have proven resilient through recent economic uncertainty.

What This Means for Sellers

If you’re considering an exit in the next 12 to 24 months, this data offers a roadmap. Buyers are active, valuations are holding, and well-run businesses in the right sectors are commanding strong multiples. The key is preparation: clean financials, documented cash flow, and a clear growth story will position you to capture that 94% (or better) of asking price.

The market rewards businesses that can demonstrate consistent performance, particularly in cash flow. With multiples trending upward, even incremental improvements in profitability can translate to meaningful differences in your final sale price.

What This Means for Buyers

For buyers, the landscape demands strategic discipline. With sale prices hovering near asking prices, there’s less room for bargain hunting, but opportunities exist for those who can move decisively on quality businesses. The rise in cash flow multiples means you’ll need to justify higher purchase prices with clear paths to growth or operational improvements.

The emerging sectors—financial services, technology, specialty retail like coffee shops, and beauty services—represent areas where market momentum may create additional upside beyond the acquisition.

Looking Ahead

The 2025 market isn’t about explosive growth or dramatic shifts. It’s about a maturing marketplace where quality businesses find quality buyers, where valuations reflect realistic expectations, and where the fundamentals—profitability, documentation, and preparation—determine outcomes.

At Jackim Woods & Co., we help clients navigate this landscape with clarity and purpose. Whether you’re building toward an exit or searching for the right acquisition, understanding these market realities is where successful transactions begin.

The data speaks. The question is: are you ready to act on it?

About the Author and Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to small and lower middle-market companies in a wide range of industries across the United States and Canada.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 120 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a business and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Jackim Woods & Co. Sells Chemical Maintenance, Inc. to Area Distributors

Champaign-based janitorial supplies distributor finds perfect buyer through strategic sale process

Deal Highlights

Jackim Woods & Co. is proud to announce the sale of Chemical Maintenance, Inc. (CMI), a leading janitorial supplies distributor in Champaign, Illinois, to Area Distributors of Quincy, Illinois. This strategic acquisition creates value for both companies while ensuring continuity for CMI’s employees and customers.

The CMI Success Story

CMI represents true entrepreneurial success. Betsy Parks started as a salesperson after college and worked her way up over 20 years to eventually buy the company from the founder’s family. Along with her husband Brad, she grew CMI into a thriving regional distributor, even acquiring a local competitor to strengthen their market position.

When the Parks family decided to retire and spend more time with family, they chose Jackim Woods & Co. to handle the sale.

A Competitive Sale Process

Our comprehensive marketing strategy reached buyers across the janitorial supplies industry, generating exceptional interest:

• 50+ qualified buyers signed NDAs and received detailed information
• Nearly a dozen formal offers demonstrated strong market demand
• Area Distributors emerged as the ideal strategic partner

Why This Deal Works

The acquisition creates compelling benefits for both companies:

For Area Distributors:

• Geographic expansion into an attractive adjacent new market
• Enhanced purchasing power through increased scale
• Access to CMI’s prestigious customers (universities, hospitals, hotels)
• Operational synergies with a well-run organization

For CMI:

• Continuity under experienced ownership
• Cultural alignment with similar values
• Foundation for continued growth

 “We are elated to connect with the Area Distributors group going forward. They will maintain our company culture for our customers, employees, and valued suppliers. We really have a lot of similarities, and it is important to me that the whole team will remain intact in Champaign.”– Betsy Parks, Former Owner, CMI

Industry Expertise Drives Results

This successful transaction highlights Jackim Woods & Co’s deep expertise in the janitorial supplies sector. Our understanding of industry dynamics, buyer networks, and deal structures helps clients achieve optimal outcomes.

The Jan/San sector continues to show resilience and consolidation opportunities as companies expand geographically and seek operational efficiencies through strategic partnerships.

About Jackim Woods & Co.

Jackim Woods & Co. is a specialized investment banking firm focused on middle-market transactions across distribution, manufacturing, and service sectors. We provide comprehensive M&A advisory services, helping business owners achieve their strategic and financial objectives.

Ready to explore your options? Contact Rich Jackim, Managing Partner, to learn more about our Jan/San sector expertise.

About the Author and Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in a wide range of industries, including the janitorial supply sector.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned janitorial supply companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a janitorial supply company and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

This article is also available on LinkedIn.

How to Value a Janitorial Supply Company in 2025

If you’re considering selling your janitorial supply business, determining its value is the first step. This guide will walk you through the key aspects of valuing a janitorial supply company in 2025, combining expert insights and current market trends to help you understand what your business is worth.

Why is Valuation Important?

Understanding the value of your janitorial supply business is essential for several reasons:

• The Janitorial Supply Sector is experiencing a rapid consolidation as large, national players and regional companies acquire smaller competitors to increase their geographic markets and overall market share. To understand more about this trend, read our article What’s Driving Acquisitions in the Jan-San Sector in 2025.
• Setting a realistic sale price: A proper valuation helps you set a realistic asking price, attracting serious buyers and avoiding wasted time. The number one reason companies don’t sell is that sellers have unrealistic expectations of value. So getting this right from the start is essential.
• Negotiating effectively: Knowing your company’s value empowers you to negotiate favorable terms.
• Making informed decisions: Valuation provides a clear picture of your company’s financial health and potential, guiding your decisions throughout the sale process.

Janitorial Supply Market Overview

The janitorial supply market forms an integral component of the broader facilities management sector, with a global market size valued at USD 31.15 Billion in 2023 and projected to reach USD 40.26 Billion by 2031, exhibiting a Compound Annual Growth Rate (CAGR) of 2.9% during the forecast period of 2024-2031.

In the United States specifically:

• The U.S. Facility Services market was sized at $267.8 billion in 2024 and is projected to grow steadily, reaching $370.7 billion by 2029.
• The U.S. Janitorial Services market alone had a size of $80.4 billion in 2024 and is forecast to increase to $92.3 billion by 2029.
• The Cleaning & Maintenance Supplies Distributors in the US generated approximately $9.9 billion in revenue in 2024, although this segment has experienced a decline at a CAGR of 2.4% over the past five years.
• The Janitorial Equipment Supply Wholesaling in the US reported revenue of $29.3 billion in 2024, with a modest growth of 0.5% CAGR over the previous five years.

Factors That Affect the Sale Price

The ultimate sale price of your janitorial supply company depends on a variety of factors:

• Financial Performance: Strong financial metrics including consistent revenue growth, healthy profit margins (EBITDA and net income), and stable cash flows significantly impact valuation.
• Customer Base: A diversified customer portfolio with low concentration reduces risk and increases value. High customer retention rates and long-term contracts indicate stability and predictable future revenue streams.
• Operational Efficiency: How efficiently your company manages its operations directly impacts profitability and attractiveness. Streamlined supply chain management, effective inventory control, and technology adoption for enhanced productivity all contribute to a higher valuation.
• Market Position and Competitive Landscape: Your company’s standing within the janitorial supply market, including market share, brand recognition, and geographical reach, influences its valuation.
• Management Team and Employee Stability: The experience, expertise, and stability of your management team are critical factors. Low employee turnover and a skilled workforce are positive indicators of a well-run business.
• Risk Profile: Overall risk factors associated with your business significantly impact valuation. These can include customer concentration, reliance on key personnel, financial instability, and potential regulatory challenges.
• Growth Potential: A business with clear growth potential, such as an expanding customer base or entry into emerging market segments, is more valuable.
• Product Mix and Specialization: Companies offering specialized or proprietary products often command higher valuations than those selling only commodity items.

Janitorial Supply Company Valuation Methods

Here are several methods you can use to determine the value of your janitorial supply company:

• Market Approach: This involves analyzing past market transactions of similar janitorial supply companies to establish a valuation basis. However, accessing transaction data for privately owned companies can be challenging.
• Cost-based Valuation: This approach calculates the cost of creating a similar company from the ground up, including tangible and intangible assets.
• Asset Approach: This method determines the net value of a business’s assets minus its liabilities. It’s crucial to use the market value of your equipment and inventory, and factor in goodwill or intangible value.
• EBITDA Multiples: This common approach applies an industry multiple to your company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Understanding EBITDA Multiples for Janitorial Supply Companies

EBITDA is a key metric for valuing janitorial supply companies. Here’s how to calculate it:

EBITDA = Net income + Interest + Taxes + Depreciation + Amortization

For privately owned janitorial supply companies, we often use Adjusted EBITDA:

Adjusted EBITDA = Net income + Interest + Taxes + Depreciation + Amortization + Owner Addbacks

Owner addbacks might include owner’s salary above market rate, personal expenses run through the business, one-time expenses, and other discretionary expenses that a new owner might not incur.

To determine your company’s value using EBITDA, you’ll calculate:

Your janitorial supply company’s value = Adjusted EBITDA × EBITDA Multiple

Current EBITDA Multiples for Janitorial Supply Companies in 2025

The valuation multiples for janitorial supply companies vary based on several factors, including company size, profitability, market position, and risk profile. Based on recent transactions and market data, here are the approximate EBITDA multiples:

EBITDA Multiples for Privately Owned Janitorial Supply Companies, Q1 2025

It is important to note that these multiples are current as of Q1 2025 and are subject to change based on market conditions.

Data from previous years indicated a mean EBITDA multiple of 8.3x and a median of 8.2x for M&A deals in the Janitorial Industry, while publicly-traded comps had higher mean and median multiples of 11.0x and 10.7x, respectively.

Revenue Multiples for Privately Owned Janitorial Supply Companies, Q1 2025

Data from previous years showed that the mean revenue multiple for Janitorial Industry M&A deals was 0.6x, with a median of 0.5x, while publicly-traded comps showed a mean of 1.4x and a median of 1.0x.

Other Factors Affecting the Value of a Janitorial Supply Company

Several other factors can influence the valuation of your janitorial supply company:

• Customer Type: Companies serving commercial, industrial, or healthcare sectors may be valued differently based on the stability and growth potential of these end markets.
• Recurring Revenue: Businesses with subscription-based models or long-term service contracts typically receive higher valuations due to predictable revenue streams.
• Technological Integration: Companies that have invested in e-commerce platforms, inventory management systems, or other technological solutions often command premium valuations.
• Brand Strength and Reputation: A strong brand with high recognition and positive reputation can significantly enhance company value.
• Geographical Footprint: Companies with a broader geographical presence may be more attractive to buyers looking to expand their market reach.
• Sustainable/Green Product Offerings: Companies focusing on environmentally friendly products may attract premium valuations due to growing market demand for sustainable solutions.

Trends in Janitorial Supply M&A in 2025

Several trends are shaping the M&A landscape for janitorial supply companies in 2025:

• Continued Consolidation: The industry is experiencing significant ongoing M&A activity, with private equity firms playing a prominent role. Companies like Imperial Dade (an Advent portfolio company) and BradyIFS + Envoy Solutions have been particularly active in acquisitions.
• Buy-and-Build Strategies: Private equity firms are implementing “buy-and-build” strategies, acquiring platform companies and then adding on smaller, synergistic businesses to build scale, expand geographic reach, and deepen service capabilities.
• Focus on Technology and E-commerce: Buyers are increasingly valuing companies with strong digital capabilities and efficient operational systems.
• Emphasis on Sustainable Solutions: Companies offering eco-friendly and sustainable cleaning products are attracting premium valuations due to growing market demand.
• Strategic Buyers Seeking Synergies: Larger existing companies are participating in M&A to achieve economies of scale, expand market presence, or gain access to new technologies and customer segments.

The Value of Expert Guidance

Selling a janitorial supply company is a time-intensive and complex undertaking. Engaging an M&A advisor with experience in the janitorial supply sector can significantly increase your chances of a successful sale at the best possible price. An M&A advisor with experience in the janitorial supply sector can:

• Help you accurately value your business
• Prepare necessary offering documents and financial models
• Market your company effectively to financial and strategic buyers
• Negotiate favorable terms
• Manage the due diligence process
• Ensure a smooth closing and transition

By understanding the key valuation methods, market trends, and preparation steps, you can confidently navigate the sale process and achieve the best possible outcome for your janitorial supply business.

About the Author and Jackim Woods & Co.

Rich Jackim is an investment banker, entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in a wide range of industries, including the janitorial supply sector.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned janitorial supply companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a janitorial supply company and are interested in exploring your options, I would welcome an opportunity to speak with you.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

This article is also available on LinkedIn.

How to Value Your Cybersecurity Business in 2025

Valuing Your Cybersecurity Business: A Comprehensive Guide for Owners

Read our previous article for information about mergers and acquisitions deals in the cybersecurity sector in 2024.

About the Author and Jackim Woods & Co.

Rich Jackim is an experienced investment banker, education industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned software, SaaS, tech-enabled, and cybersecurity companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a cybersecurity-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

Acquisitions in the Cybersecurity Sector in 2024

The following is a summary of mergers and acquisitions transactions in the cybersecurity sector in 2024.  We will update this post every two weeks as we work with more clients and learn of other deals in the sector.

The cybersecurity sector got off to a strong start in 2024, despite a drop in venture capital funding for companies in the sector in 2023.

As a result, valuations for small and medium-sized privately owned cybersecurity firms are close to their all-time highs and significantly higher than valuations for traditional businesses, including fast-growing SaaS businesses. The average small and medium-sized cyber security company is valued at 8x trailing twelve-month annual revenue.

For more information on how to value a small to medium size, privately owned cybersecurity firm, please read our article How to Value Your Cybersecurity Firm in 2025.

Who’s Driving M&A Activity in the Cybersecurity Sector

Based on the list below of mergers and acquisitions in the cybersecurity sector in 2024, the most active types of buyers are as follows:

● Cybersecurity Companies: The most active buyers are other cybersecurity companies seeking to expand their services, enhance technology, and increase market reach. There were at least 47 acquisitions by companies that are primarily focused on cybersecurity. Examples include Fortinet, CrowdStrike, CyberArk, Zscaler, Mimecast, and others.

● Private Equity Firms: These firms are making significant investments in the cybersecurity sector, often looking to build their portfolios and profit from the growing market. There were at least 11 acquisitions by private equity firms, including AE Industrial Partners, Leeds Equity Partners, Thoma Bravo, EQT, Haveli Investments, Permira, Accel-KKR, Clearlake/Francisco Partners, Hg, and others.

● Technology Companies: Many technology companies are acquiring cybersecurity firms to integrate security solutions into their existing products and services. There were at least 10 acquisitions or potential acquisitions by technology companies. Examples include Google, HPE, Cisco, OpenText, Akamai, Cloudflare, SonicWall, Visa, and Mastercard.

● Managed Services Providers: These firms are acquiring cybersecurity companies to enhance their security offerings and provide comprehensive solutions to their clients. There were at least 4 acquisitions by managed services providers, including Integrity360, Lumifi, N-able, and Magna5.

● Telecommunications Companies: These companies are expanding their services and capabilities by acquiring cybersecurity firms. There was at least 1 acquisition in this category, with TELUS acquiring Vumetric Cybersecurity.

● Other Companies: Companies across various industries, such as financial services and healthcare, are acquiring cybersecurity firms to integrate these services into their businesses. There were at least 7 acquisitions by companies in this category including Health Catalyst, Experian, PDI Technologies, Mitsui, Parsons, and Orange.

It’s worth noting that some companies might fit into multiple categories. For instance, some technology companies also offer managed services. Also, the exact number of transactions may vary depending on how the data is categorized.

This list is not exhaustive, as many smaller transactions are not publicly announced. The data only represents the deals that we learned about through our network or were directly involved in.

Acquisitions in the Cybersecurity Sector in 2024

Below is a summary of the mergers and acquisition transactions in the Cybersecurity Sector so far in 2024.  This is not an exhaustive list, as many smaller transactions are never announced.  This list only represents the deals we have learned about through our network or have been directly involved in.  I’ll do my best to update the list every two weeks.

Trends in Cybersercurity M&A

Based on the provided data, several trends are driving acquisitions in the cybersecurity sector. These trends can be summarized as follows:

● Expansion of Service Offerings and Capabilities: A primary driver is the desire of cybersecurity companies to expand their service portfolios and technological capabilities. Many cybersecurity firms are acquiring companies with specialized expertise or complementary technologies to offer more comprehensive security solutions. This is evidenced by the numerous acquisitions of companies that provide services like cloud security, AI-powered security, API security, and threat intelligence. For example, Fortinet acquired Perception Point to enhance its email security offerings, and CrowdStrike acquired Adaptive Shield to provide unified protection against identity-based attacks.

● Market Consolidation and Increased Market Reach: Mergers and acquisitions are also being used to achieve market consolidation and expand market presence. Established companies are acquiring smaller firms to increase their customer base, penetrate new markets, and consolidate their positions in the industry. This is seen in acquisitions such as Integrity360 acquiring Adsigo to expand its European presence, and Lumifi’s acquisitions to expand its healthcare cybersecurity services.

● Integration of Advanced Technologies: The need to integrate advanced technologies, such as AI, is another key trend. Several acquisitions involve companies specializing in AI-driven security solutions, such as Proofpoint acquiring Normalyze, a data security posture management (DSPM) leader, and Cisco acquiring Robust Intelligence for enhanced AI security capabilities. This reflects the growing importance of AI in combating increasingly sophisticated cyber threats.

● Private Equity Investment: Private equity firms are playing a significant role, actively acquiring cybersecurity companies to build their portfolios and capitalize on the growing cybersecurity market. These firms often invest in companies with strong growth potential and innovative technologies, aiming for profitable exits in the future. Examples include Thoma Bravo’s acquisition of Darktrace and EQT’s acquisition of Acronis.

● Demand for Managed Security Services: The rise in demand for managed security services is driving acquisitions in the sector. Many companies are seeking comprehensive security solutions without having to manage them internally. Managed services providers are acquiring cybersecurity firms to enhance their offerings and cater to this growing demand. For example, N-able acquired Adlumin to expand its managed security services.

● Integration of Security into Broader Tech Platforms: Technology companies are acquiring cybersecurity firms to integrate security solutions directly into their platforms and services. This is apparent in acquisitions such as HPE’s purchase of Juniper Networks to enhance networking and security and Akamai’s acquisition of Noname Security to improve API security. This trend shows a recognition that security is a critical component of all technology offerings.

● Cross-Industry Integration of Cybersecurity: Companies from various industries are integrating cybersecurity into their business. Firms across industries, such as financial services, healthcare, and others, are acquiring cybersecurity firms to enhance their businesses. This is seen in acquisitions such as Experian buying ClearSale and Health Catalyst acquiring Intraprise Health.

In summary, the cybersecurity sector’s acquisition trends are being propelled by the need for broader service offerings, market consolidation, the integration of advanced technologies like AI, the strategic investments of private equity firms, the need for managed security services, the integration of security into broader tech platforms, and the increased need for cybersecurity across all sectors. These trends highlight the dynamic nature of the cybersecurity industry and the increasing importance of cybersecurity in the modern business landscape

We will update this post every two weeks as we learn about other transactions and close more deals in the cybersecurity sector.

Read our previous article for information about How to Value Your Cybersecurity Firm in 2025.

About the Author and Jackim Woods & Co.

Rich Jackim is an education industry investment banker, education industry entrepreneur, and former mergers and acquisitions attorney.

For the last 25 years, Rich and his team have been providing boutique investment banking services to middle-market companies in a wide range of industries.

Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.

Jackim Woods & Co offers skilled mergers and acquisitions advisory services to software, SaaS, Edtech, and cybersecurity companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.

If you own a cybersecurity-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.

How to Value Your Private SaaS Business in 2025

In today’s dynamic software market, understanding the value of your SaaS business is crucial for making informed decisions about fundraising, M&A opportunities, or strategic planning. While public SaaS companies have transparent market valuations, private companies face unique challenges in determining their value. Here’s a comprehensive guide to help you determine what your SaaS business is worth in 2025.

Understanding SaaS Valuation Fundamentals

Unlike traditional businesses that use earnings or EBITDA-based multiples, SaaS companies are typically valued using a multiple of revenue. This approach is justified because of three unique characteristics of the SaaS business model:

1. High growth rates and the ability to scale rapidly through multi-tenant architecture
2. The disconnect between cash flow and P&L statements due to upfront annual payments and revenue recognition rules
3. Very high net operating margins that are often over 50%

Key Metrics That Drive Your Valuation

In addition to your Annual Recurring Revenue (ARR), there are three primary metrics that are important to determine the value of your SaaS company:  Annual Recurring Revenue, Net Revenue Retention, and Market Conditions.

1. Annual Recurring Revenue (ARR) Growth Rate

Your company’s ARR growth rate is the most significant factor affecting valuation. Current data shows that growth rates vary significantly by company size:

2. Net Revenue Retention (NRR)

NRR measures your ability to retain and increase revenue from existing customers. Strong retention rates indicate customer satisfaction and pricing power. Current market data shows typical NRR benchmarks by company revenue:

3. Market Conditions

Public market valuations serve as a good indicator for private company valuations. As of the June 2024, the median public SaaS company trades at 6.8x revenue, down significantly from 2021 peaks but stabilized in the 6-7x range.

Keep in mind that private SaaS companies sell roughly 4.1x revenue, a significant discount to their public counterparts. Based on the data and our market experience, but we are seeing private  SaaS companies selling at between 3x and 4.7x revenue, approximately a 40% discount to public companies.

Here are the key reasons for this valuation gap:

1. Liquidity Risk
– Public company shares can be bought and sold instantly on stock exchanges
– Private company shares are much harder to sell, often requiring lengthy deal processes

2. Information Quality and Access
– Public companies provide detailed quarterly financial reports, audited statements, and regular disclosures
– Private companies have limited transparency and less standardized reporting

3. Market Size & Scale
– Public companies are generally larger, with more established market positions
– Greater scale typically means more predictable revenue and lower operational risk

4. Professional Management
– Public companies typically have experienced management teams and established processes
– Private companies may be more dependent on founders or key individuals

Current Private SaaS Valuation Multiples

The actual multiple of revenue varies depending on the size of the business. The bigger the business, the higher the multiple.  This is called the “Size Premium”.  Based on current market data, here are the median valuation multiples for private SaaS companies by size in Q4 2024:

How to Calculate Your Company’s Value

Here’s how to estimate your company’s value:

1. Start with your current ARR
2. Calculate your trailing twelve-month growth rate
3. Measure your net revenue retention
4. Apply the appropriate multiple to your ARR based on your company’s size
5. Adjust the multiple based on company-specific factors.  For example, if your NRR is below industry averages, then lower the multiple. If your growth rate is higher than industry average, increase the multiple a bit.

For example, if your company has $5M in ARR, 35% growth rate, and 102% NRR, you would apply a 4.1x multiple, suggesting a valuation of approximately $20.5M.

This type of back of the envelope will give you a ballpark sense of what your business is worth.  However, if you need a more precise valuation, contact us to learn about our valuation services.

Market Context and Timing Considerations

Several market factors currently affect private SaaS valuations and will have an impact on valuations in 2025:

• The stock markets have reached all-time highs, but this is primarily driven by large tech companies and AI-related stocks
• Traditional B2B software valuations remain well below 2021 peaks.  This suggests that valuations for B2B SaaS companies may increase in 2025.
• IPO activity remains limited, creating a backlog of companies seeking exits, which suggests an increase in the number of companies looking to exit via a private sale rather than an IPO.
• There is a significant gap between seller value expectations and buyer valuations.  We expect this gap to lessen as buyers re-assess what it will take to get a deal done.
• Private companies are showing stronger growth compared to public counterparts, which will continue to attract both public strategic buyers and private equity groups.

Maximizing Your Company’s Value

If you are still a  year or two away from a liquidity event, there are several things you can work on to maximize the value of your SaaS business.  Our advise is to focus on:

1. Sustainable Growth

• Prioritize consistent, profitable growth over unsustainable rapid expansion
• Maintain clear paths to market leadership in your niche
• Document your growth strategy and market opportunity

2. Revenue Quality

• Improve net revenue retention through customer success initiatives
• Focus on annual contracts or subscriptions plans with some upfront payments
• Build predictable, recurring revenue streams

3. Operating Metrics

• Track and improve key SaaS metrics like CAC, LTV, and gross margins
• Maintain strong unit economics
• Demonstrate operational efficiency and scaling capabilities

Current Market Dynamics

The 2024 market presents unique considerations:

• Valuations have stabilized but remain well below recent peaks
• Investors are increasingly focused on profitability and efficient growth
• The bid-ask spread between buyers and sellers remains wide
• Market uncertainty continues to impact transaction volumes
• Smaller companies show resilience in growth rates compared to larger peers

Looking Ahead

As we wrap up 2024 and look forward to 2025, several factors could impact valuations:

• Interest rate changes. We expect interest rates to continue to drop slowly over the next 12 months.
• Macroeconomic conditions and their impact on tech spending.
• Disconnect between a seller’s value expectations and what buyers are willing to pay
• Evolution of AI’s impact on software valuations.

Understanding these valuation fundamentals will help you make informed decisions about your company’s future. While this framework provides a starting point, remember that company-specific factors, market conditions, and strategic value to potential acquirers can significantly impact your final valuation. To learn more about what your business may be worth, contact us for a free, no obligation consultation.

About the Author and Jackim Woods & Co

Rich Jackim is an attorney, investment banker, and entrepreneur. For the last 30 years, Rich and his team have been providing boutique investment banking services to small and middle-market companies in over 30 industries.

In addition to running a successful M&A advisory firm, Rich founded a successful training and certification company called the Exit Planning Institute, which he sold to a private family office in 2012.

Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses.  It became an Amazon best-seller in the business consulting category the year it was published.

If you own a SaaS business and are interested in exploring your options, I would welcome an opportunity to speak with you. There is no cost or obligation to you and all discussions are completely confidential.

Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.