Where PE Sees Big Potential in Small Businesses

When private equity (PE) firms look for their next acquisition, they’re not just chasing size—they’re chasing scalability, profitability, and long-term potential. Marketing and tech-enabled businesses are checking all those boxes, which is why they’re often considered among the best small businesses for private equity.

Whether it’s a marketing agency with recurring retainer contracts or a SaaS-enabled service platform streamlining client operations, these businesses combine strong cash flow with growth-friendly models. At Merge, we’ve seen firsthand why these sectors consistently attract competitive offers from PE buyers.

1. Why Marketing and Tech-Enabled Businesses Stand Out

PE firms seek acquisitions that will deliver a strong return on investment. Marketing and tech-enabled companies offer:

  • Recurring revenue from retainers, subscriptions, or SaaS models.

  • Low capital expenditure requirements compared to manufacturing-heavy industries.

  • High scalability through process automation and technology adoption.

  • Diversified client bases that reduce concentration risk.

💡 The more predictable the revenue and the more scalable the model, the more appealing the business is to private equity buyers.

2. How They Fit the Private Equity Playbook

The best small businesses for private equity share characteristics that align perfectly with PE growth strategies:

  • Strong margins: Lean operations and high-value services create healthy EBITDA.

  • Upsell potential: Existing clients can be offered complementary products or services.

  • Fragmented markets: Opportunities for roll-up strategies and consolidation are abundant.

  • Tech leverage: Proprietary tools or platforms make operations efficient and scalable.

3. Key Attributes PE Firms Look For

If you’re running a marketing or tech-enabled business and want to attract PE interest, here’s what stands out during evaluations:

A. Predictable Revenue Streams

  • Retainer-based marketing contracts.

  • Subscription SaaS products.

  • Multi-year enterprise agreements.

B. Demonstrated Scalability

  • A service model that can grow without proportional headcount increases.

  • Cloud-based infrastructure and automation tools.

C. Low Customer Concentration

  • No single client representing more than 10–20% of revenue.

  • A mix of industries to reduce economic cycle risk.

D. Strong Management Team

  • Leadership that can operate independently from the founder.

  • Defined processes for sales, service delivery, and client retention.

4. Why These Sectors Appeal to PE Right Now

The current M&A landscape favors marketing and tech-enabled businesses because they offer:

  • Digital-first solutions: Meeting the demands of increasingly online consumers and businesses.

  • Global scalability: Tech platforms and digital services aren’t limited by geography.

  • Data-driven results: Measurable ROI attracts both clients and investors.

5. Examples of PE Success in These Niches

  • Digital Marketing Agency Roll-Ups: PE firms acquire multiple agencies to create a full-service powerhouse, leveraging cross-sell potential.

  • SaaS-Enabled Service Platforms: Combining proprietary software with a service offering creates defensible value and recurring revenue.

  • Specialized B2B Agencies: Niche agencies serving high-value industries (healthcare, finance, tech) command premium multiples.

6. Valuation Advantages

The best small businesses for private equity in marketing and tech often command higher multiples because:

  • Margins are typically 20%+ for established players.

  • Revenue predictability supports higher enterprise value.

  • Proprietary technology or IP adds intangible asset value.

7. PE Playbook for Growth Post-Acquisition

After acquiring marketing or tech-enabled businesses, PE firms often:

  • Expand geographically to reach new markets.

  • Add complementary services to increase client spend.

  • Invest in tech upgrades to improve delivery efficiency.

  • Pursue bolt-on acquisitions to consolidate market share.

8. Preparing Your Business for PE Attention

If you want to be on a PE firm’s shortlist, you should:

  • Document all recurring revenue agreements.

  • Build a strong middle-management team.

  • Standardize operations for scalability.

  • Strengthen client diversification.

The Merge Perspective

At Merge, we work with PE firms to identify the best small businesses for private equity investment. For marketing and tech-enabled companies, we:

  • Highlight recurring revenue models and scalability in CIMs.

  • Match businesses with PE buyers specializing in their sector.

  • Facilitate strategic conversations that lead to strong offers.

Final Thoughts

Marketing and tech-enabled businesses are firmly in the spotlight for private equity. Their scalability, predictable income, and market growth potential make them some of the best small businesses for private equity portfolios.

If you own a business in these sectors and are considering an exit—or if you’re a buyer targeting high-growth opportunities—connect with Merge to explore the right fit.