LMM M&A Market Snapshot — May 28, 2026 — Nate Lind

Every week I track what buyers are paying in the lower middle market so founders have real data, not guesses, when they're thinking about an exit. Here is what the numbers say for the week of May 28, 2026.

Professional Services: The Lead Story This Week

The most interesting data point in the lower middle market right now is professional services. GF Data reports business services multiples hit 7.4x EBITDA in 2025, the highest level in their database history. That is not a typo. For a vertical that has historically been discounted for owner dependency and project-based revenue, this is a significant shift.

The driver is contract structure. Buyers are paying record prices for professional services firms with multi-year contracts, diversified customer bases, and a growing recurring revenue component. Services businesses with 30% or more of revenue from recurring software or SaaS elements are reaching 6x to 8x EBITDA versus 4x to 5x for pure project-based consulting firms. The buyer appetite in this vertical is increasing, not cooling. (Source: GF Data Q4 2025 M&A Report via ACG, February 2026; PraxisRock EBITDA Multiples by Industry; CT Acquisitions Consulting Valuation 2026)

Managed services, compliance firms, outsourced HR, accounting practices, and legal tech companies are seeing the strongest demand. The common thread: buyers can underwrite the revenue because it is contracted, predictable, and does not leave when the founder does.

If you run a professional services firm and you are thinking about a sale in the next two to three years, this data matters. The window where the market assigns this kind of premium to contractual revenue may not persist. GF Data's 7.4x figure is historic. Whether it holds through 2026 depends on interest rate movement, dry powder deployment pace, and how many quality assets come to market.

SaaS and Tech

Current multiple range: 3.1x to 5.5x EV/ARR (private LMM); top quartile at 8.1x or more ARR

Public SaaS medians fell to 3.4x EV/Revenue as of March 2026, down from 6x to 7x in mid-2025. The compression is AI-driven: buyers are discounting businesses where AI replication risk is real or perceived. Private LMM SaaS is stabilizing at 4.0x to 5.5x ARR for quality assets. What still commands top-quartile pricing: NRR above 110%, monthly churn below 2%, clean management transition story, and documented systems that survive ownership change. (Source: Aventis Advisors SaaS Valuation Multiples Report, April 2026; Synpact Consulting 409A Guide, May 2026)

Buyer appetite is cooling but not gone. The deals closing are with quality assets priced to the current market, not the 2021 market. If you are pricing your SaaS business based on multiples from two years ago, expect to sit.

eCommerce

Current multiple range: 3.43x SDE (BizBuySell median); 3.0x to 5.0x EBITDA for quality FBA/DTC assets

BizBuySell Q1 2026 data shows ecommerce holding at 3.43x SDE historically, but the trend is flat to down in 2026. Tariff uncertainty is the primary headwind. DTC and FBA margins are under pressure as supply chain costs remain elevated, and buyers are applying heavier diligence on inventory risk and cost of goods stability.

The deals closing at the upper end of the range share a profile: consistent 24-month revenue trend, 3PL fulfillment, customer diversification with no single channel above 40% of revenue, and a quality of earnings report on file. Businesses without those characteristics are facing heavier discount pressure or longer time on market. (Source: BizBuySell Insight Report Q1 2026; BizBuySell Valuation Benchmarks)

Digital Marketing and Agency

Current multiple range: 3x to 7x EBITDA (owner-operated 3x to 4x; $1.5M or more EBITDA 5x to 7x; $5M or more EBITDA 8x to 12x)

Retainer-based revenue is the single most powerful multiple driver in this vertical. Agencies with 80% or more retainer coverage command 5x to 7x versus 3x to 4.5x for project-heavy firms at the same revenue level. That gap is entirely buyer risk perception. Project revenue can walk. Retainer revenue stays on contract.

Owner dependency is the second major discount factor. If you are the primary relationship manager for your top clients, a buyer is underwriting whether those relationships survive a transition. Get account managers owning client delivery before you go to market. This is not cosmetic. It is the difference between a 3x and a 6x exit on the same revenue base.

Global M&A deal volume reached $1.25 trillion in Q1 2026, up 26% year over year. Marketing and advertising deal activity was up 13% in 2025 per multiple advisory firm reports. Buyers in this space are not waiting for perfect conditions. They are moving on businesses that have the right revenue profile. (Source: Axial Digital Marketing Agency Multiples; Breakwater M&A)

What the Market Is Telling Us This Week

LMM deal volume remains subdued: GF Data counted only 297 completed PE-sponsored transactions in 2025, a 23% decline from 2024 and 41% below the 2021 peak. But average multiples held steady at 7.2x EBITDA, meaning fewer deals are closing but quality assets are still commanding full prices. (Source: GF Data Q4 2025 via ACG, February 2026)
Dry powder pressure is real: US PE dry powder sits at approximately $880 billion (down from the $1.3 trillion peak in late 2024), and Axial tracked a record 12,856 deals coming to market in 2025, up 17% year over year. More sellers are testing the market than buyers are closing. The bid-ask spread is real. (Source: Outsearched LMM March 2026)
SBA lending contraction is squeezing smaller deals: SBA 7(a) originations through early FY2026 are down 18% year over year, directly impacting the sub-$5M deal market where SBA financing is the primary exit vehicle. Sellers in that range are facing a smaller buyer pool with less financing access. (Source: Outsearched LMM March 2026)

What This Means for Your Exit Timing

The professional services data this week tells a specific story: record multiples are available right now for founders with the right contract structure. GF Data's 7.4x figure is not a rumor. It is the median across a database of completed transactions. If your firm runs on multi-year contracts, has customer diversification, and is generating 30% or more recurring revenue, you are exactly what the market wants.

The macro picture is more complicated. Fewer deals are closing in total. SBA contraction is compressing the buyer pool at the sub-$5M level. The bid-ask spread is wide. But quality is still getting paid. The compression you see in the headlines is filtering out weak inventory. It is not compressing the top of each vertical's range.

For professional services founders specifically: this window is worth paying attention to. Record multiples in your sector. Increasing buyer appetite. And a market that rewards preparation over luck.

Book a free valuation call or review how the process works before you do.

Frequently Asked Questions

What are professional services firms selling for in 2026?

GF Data reports business services multiples reached 7.4x EBITDA in 2025, the highest level in their database history. Consulting and professional services firms with recurring or contractual revenue are trading at 4x to 7x EBITDA. Firms with 30% or more of revenue from recurring software or SaaS components are reaching 6x to 8x. Pure project-based firms settle at 4x to 5x. (Source: GF Data Q4 2025 M&A Report via ACG, February 2026; PraxisRock EBITDA Multiples by Industry)

What are overall LMM deal conditions like right now?

Fewer deals are closing but quality assets are still getting full prices. GF Data recorded 297 completed PE-sponsored transactions in 2025, down 23% from 2024. Average multiples held at 7.2x EBITDA across that pool. The market is selective, not broken. (Source: GF Data Q4 2025 via ACG, February 2026)

What should professional services founders do to maximize their exit multiple right now?

Three levers matter most: contract duration, customer diversification, and recurring revenue mix. If you have multi-year contracts with automatic renewal, 15 or more clients with no single client above 20% of revenue, and at least 30% recurring revenue, you are in the top quartile of buyer preference. Start there, build toward it 12 to 24 months before going to market.

How are SaaS companies valued in the current market?

Private LMM SaaS is stabilizing at 4.0x to 5.5x ARR for quality assets, with top-quartile businesses reaching 8.1x or more. Public SaaS medians fell to 3.4x EV/Revenue as of March 2026, down from 6x to 7x in mid-2025, driven by AI disruption concerns compressing private transaction multiples. (Source: Aventis Advisors SaaS Valuation Multiples Report, April 2026; Synpact Consulting 409A Guide, May 2026)

Is now a good time to sell a business?

The answer depends on your vertical and your preparation. Professional services multiples hit a record 7.4x EBITDA in 2025 according to GF Data. Quality assets in every vertical are still commanding full prices. What has changed is that SBA financing is down 18% year over year, which compresses the buyer pool at the sub-$5M level. If your business is above that threshold, well-prepared, and growing, the market is receptive. The risk of waiting is that you miss a window. Time is risk.