If you’ve ever wondered whether your business is even “big enough” to catch a private equity firm’s attention, you’re not alone, it’s one of the most common questions we hear from owners exploring an exit.
TL;DR: Most private equity firms acquire companies with $2 million to $10 million in EBITDA, though the exact range depends on the fund’s size and strategy, and yes, smaller businesses can still attract interest.
What EBITDA Range Do Private Equity Firms Typically Look For?
Here’s the thing nobody tells you upfront: private equity isn’t one monolithic buyer type. It’s a spectrum. On the lower end, firms in the “lower middle market” will often consider platform companies starting around $2 million in EBITDA, with a sweet spot between $2 million and $8 million. Cross the $5 million mark and you open the door to a noticeably larger buyer pool (according to Turnstone Investment Banking’s breakdown of EBITDA thresholds, more buyers competing for your business tends to push valuations higher too). At the very top sits the upper middle market, generally $500 million to $1 billion in revenue, where firms compete hardest and pay the steepest multiples, according to Corporate Finance Institute’s overview of the upper middle market.
Does Revenue or EBITDA Matter More?
Honestly? EBITDA wins most of the time. Revenue tells a buyer how big you are; EBITDA tells them how profitable you are, and that’s what pays down the debt they’ll use to finance the deal. A firm might pass on a $20 million revenue company with thin margins in favor of a $10 million revenue company throwing off strong cash flow.
Is My Business Too Small for Private Equity?
Maybe not as small as you’d think. Search funds and independent sponsors regularly chase deals well under the $2 million EBITDA threshold, they just require more digging to find. That said, if you’re not quite there yet, it doesn’t mean you’re stuck. We’ve written before about whether a business can be too small for M&A advisory, and the short answer is almost never, the right advisor can still find you a path.
Why Does Company Size Matter So Much to Buyers?
Because size correlates with risk, sort of. Bigger companies usually have more diversified customers, deeper management benches, and cleaner books. That’s exactly what institutional buyers expect from founder-led companies during due diligence, and it’s a big reason why two businesses with identical revenue can land very different offers.
Private Equity vs. Strategic Buyers: Does Size Change the Comparison?
It does. Strategic buyers (competitors or industry players) sometimes pay up for smaller deals because of synergies, cost savings, market share, things private equity firms acquire for different reasons entirely. We break this down in more detail in Strategic Buyers vs. Financial Buyers: What Sellers Should Know, worth a read if you’re weighing your options. For a data-driven look at how these thresholds shift over time, PrivateEquityInfo’s research on acquisition criteria trends is a solid resource too.
Bottom Line
I’ve sat across the table from owners convinced their company was too small, too niche, too whatever, to interest a serious buyer. More often than not, they were wrong. The size private equity firms acquire varies more than people assume, and the number that matters most isn’t some magic threshold, it’s whether your financials tell a clear, credible story. That’s where preparation beats guessing every time.
If you’re trying to figure out where your business actually stands, or want an honest read on your options, work with an advisor who does this daily. Reach out to Surfside Capital Advisors and let’s talk through it, no pressure, just a real conversation about what’s possible.
