Which industries work for small business roll-ups?

What makes an industry good for a roll-up?

Screen the industry before you screen companies. A good roll-up industry passes most of these tests:

1. Fragmented. Many small, owner-run companies and no dominant player in your region.
2. Recurring or repeat revenue. Service contracts, maintenance plans, subscriptions or customers who return every year.
3. Licensing or skilled labor. These are barriers that keep new entrants out and make a larger company's recruiting and training worth more.
4. Retiring owners. In the IBBA Market Pulse for Q2 2026, retirement was the top reason owners sold: 45% of sellers under $500,000 and up to 72% in $1–2M deals.
5. Real benefits of scale. Shared dispatch, purchasing, marketing, finance or route density that lower cost or raise revenue when companies combine.
6. A documented valuation gap. Evidence that larger companies in the industry sell at higher multiples than small ones.
7. Low disruption risk. Demand that does not depend on one platform, one customer or one technology.

What do industry multiples tell you?

BizBuySell data from 2021 to Q1 2026 shows how Main Street buyers price different industries, in multiples of seller's discretionary earnings (SDE):

• Car washes: 4.99x
• Laundromats: 3.65x
• E-commerce: 3.43x
• HVAC: 2.79x
• Restaurants: 2.15x
• Hair salons: 2.04x
• All-sector average: 2.57x

A low entry multiple is not enough. Restaurants and salons are cheap, but cheap often reflects fragile earnings. Car washes already sell at nearly twice the all-sector average, which leaves less room between entry and exit. What matters is the spread between what you pay and what a larger company in the same industry is worth.

HVAC shows that spread clearly. Practitioner estimates put owner-run shops at 2.0–3.5x SDE and regional platforms with over $25M of revenue at 9–13x EBITDA. Few of the other industries on this list have a documented platform multiple in our sources.

Where is private equity already active?

• HVAC and home services. PKF O'Connor Davies tracked 25 HVAC deals in the first half of 2026; 14 were private equity add-ons and 3 were platforms. Carta finds add-ons roughly four times as common as platform deals in HVAC.
• Dental. About 130 private equity-backed dental support organizations as of June 2025, with 100+ transactions a year since 2021.
• Search fund targets. The 2026 Stanford study lists services, software and education as the top industries for search fund acquisitions.

A crowded industry cuts both ways. You will bid against well-funded add-on buyers, which pushes up prices. But those same buyers may later buy your platform, which gives you a credible exit.

Which industries usually don't work?

• Owner-as-product businesses. If customers buy the owner's personal skill or reputation, the earnings leave when the owner does.
• Thin-margin, high-failure categories. Restaurants trade at 2.15x SDE for a reason. Combining several does not make each one sturdier.
• Industries where the numbers barely carry debt. In data on leased laundromats, only a minority cleared 1.25x debt service coverage after paying a $60,000 owner salary.
• Single-platform businesses. E-commerce at 3.43x SDE can look cheap, but a change at one marketplace or ad platform can cut revenue for every company you own at once.

Worked example: screening three industries

Apply the seven tests above. This is a judgment exercise, not a ranking from data.

1. HVAC: passes all seven, including a documented valuation gap (2.0–3.5x SDE to 9–13x EBITDA). The catch is competition: 14 of 25 tracked deals in the first half of 2026 went to private equity add-on buyers. Good industry, crowded market.
2. Dental: passes most tests, with licensing and repeat patients. About 130 private equity-backed groups were already buying. Good industry, crowded and specialized.
3. Restaurants: fails recurring revenue, has weak barriers to entry, and has no documented platform premium in our sources. A low 2.15x entry multiple does not fix that.

The pattern to look for is HVAC's traits in an industry private equity has not yet crowded. Your best edge is often an industry you already know.

If you already own a business

Your own industry is usually the right place to start. You know how to judge a company, its staff and its customers. For SBA Business Expansion loans, lenders typically look for the same or a related industry. The question is whether your industry passes the tests above, not whether another one looks more exciting.

Where these numbers come from: BizBuySell SDE multiples via Beancount; HVAC practitioner estimates from Beancount; PKF O'Connor Davies; Carta; dental data from Focus Bankers; IBBA Market Pulse Q2 2026; Stanford 2026 Search Fund Study; laundromat coverage from BigIdeasDB.

Related questions

Is HVAC too crowded for an independent buyer?

Not necessarily, but you will compete with private equity add-on buyers on price. An independent buyer's opening is often smaller shops, specific trades or regions those buyers overlook. Underwrite each deal at your own platform's realistic multiple, not theirs.

Can professional services firms be rolled up?

Some can, where clients stay with the firm rather than one person and licensing transfers cleanly. Key-person risk is the main test. Retention agreements and rollover equity help keep the people who hold the relationships.

Do roll-ups work in e-commerce or software?

Software appears among the top search fund industries in the Stanford data, so single acquisitions are common. Rolling up many small e-commerce brands is riskier because they often share the same platform dependencies.

What comes next

If your industry is attractive to private equity, you face a choice: sell to a platform or become one. Read should you sell to a private equity platform or build your own?

Related articles

• What's the multiple difference between an add-on and a platform?
• Should you sell to a private equity platform or build your own?
• How do you run a roll-up as a small business owner?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.