LMM M&A Market Snapshot — May 21, 2026

Every week I track what buyers are paying in the lower middle market. Not the headline numbers from Axios or the PE wire. The real data from where deals are getting done.

Here's what stood out this week.

Healthcare SaaS Is the Hottest Vertical Right Now

Healthcare SaaS is commanding 9.0x EV/Revenue. That's the highest multiple of any vertical in Q1 2026. (Source: GF Data LMM Report Q1 2026; Bain Global Healthcare Private Equity Report 2026)

Thoma Bravo's $5.3B acquisition of ModMed set the benchmark for the sector. (Source: Thoma Bravo press release, 2024) But the PE interest isn't limited to large deals. EHR-integrated SaaS is a primary buy-and-build target for platforms running healthcare IT roll-ups at any deal size. Deep EHR integration creates switching costs that are close to permanent. Add regulatory complexity and you have a business that buyers believe will hold its customer base indefinitely.

If you have a SaaS product embedded in clinical workflows, you're sitting in one of the most desirable spots in the current market.

Behavioral Health Roll-Ups Are Accelerating

PE-backed MSOs are actively acquiring in behavioral health, dental, post-acute, and ambulatory surgery. Primary care multiples are compressing as that sector gets crowded. Specialty and behavioral health are holding up.

One thing I'm seeing consistently: Quality of Earnings reports are now standard even on $5M deals. Buyers need clean payer mix data, physician normalization, and no related-party issues before they'll move to LOI. If your financials have any of those complications, get them cleaned up before you start a process.

Specialty subsectors including orthopedics, cardiology, and GI are holding multiples better than primary care across the board.

The Recurring Revenue Premium Is Real

For professional services businesses outside healthcare, the biggest multiple driver right now is recurring versus project revenue mix.

Firms with 50% or more recurring revenue are trading at a meaningful premium. Sub-30% recurring revenue means a meaningful discount. It's not a new dynamic, but buyers are being more explicit about it in term sheets than they were two years ago.

The other thing buyers are scrutinizing is partner and founder retention. In service businesses, the exits that fall apart are usually the ones where the buyer realizes after close that the client relationships lived entirely with the seller. Buyers are building rollover equity and earnout structures specifically to solve for this.

If you're 18 to 24 months from an exit in professional services, the most valuable thing you can do right now is start transitioning client relationships to other members of your team. Document who owns what. Make yourself progressively less essential.

AI Integration Strengthens Your Multiple

Across verticals, buyers are paying more for AI-enhanced workflow tools. This is especially true in clinical healthcare: automated clinical documentation, AI-powered PRO measurement, EHR API integration. If your product has an AI layer in the workflow, it strengthens your multiple. If it doesn't, expect buyers to ask why not.

What This Means for Your Exit Timing

The lower middle market is the most active it's been in healthcare-adjacent verticals since 2021. If you're running a healthcare SaaS or a specialty professional services business and you've been thinking about timing, the current buyer appetite is real.

The worst thing you can do is wait until the window closes and try to time the tail end of a cycle. The best outcomes I've seen come from founders who start a process while the market is active. Not after.

I've handled 75+ transactions. The sellers who maximize their exit number are almost never the ones who waited for a perfect moment. They're the ones who started the process while buyers were hungry.

If you want to know where your business stands in the current market, book a free valuation call. I'll tell you what buyers in your vertical are paying right now, and what levers would move your number before you go to market.

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Frequently Asked Questions

What are healthcare SaaS M&A multiples in 2026? Healthcare SaaS is commanding approximately 9.0x EV/Revenue as of Q1–Q2 2026 — the highest of any lower middle market vertical. Deep EHR integration and regulatory switching costs are the primary drivers of that premium.

Are behavioral health businesses selling in 2026? Yes. PE-backed MSOs are actively acquiring behavioral health, dental, post-acute, and ambulatory surgery practices. Primary care is getting crowded and multiples are compressing there, but specialty and behavioral health are holding.

How does recurring revenue affect a professional services business valuation? Firms with 50%+ recurring revenue trade at a meaningful premium. Sub-30% recurring revenue draws a meaningful discount. Buyers are now more explicit about this split in term sheets than they were two years ago.

Does AI integration increase my business sale price? Yes — across verticals, buyers are paying more for AI-enhanced workflow tools. Clinical documentation automation, AI-powered PRO measurement, and EHR API integration all strengthen multiples. Businesses without an AI layer face more buyer scrutiny on roadmap.

When is the best time to sell a healthcare or professional services business? The LMM is the most active it's been in healthcare-adjacent verticals since 2021. The sellers who maximize their exit number are almost never the ones who waited. They're the ones who started while buyers were hungry.