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TL;DR: Private-equity roll-ups create value two ways: 1) increasing EBITDA at each of the acquired companies; and, 2) moving the combined company into a higher valuation tier. The second method is essentially “free” and a lot less work than growing revenues.

While you are working 996 to grow your EBITDA from $2M to $4M to double your business, the PE guys are buying three or four companies of your size, at multiples of 3-4x each, then bolting them together and selling the bundle for 9x. Same revenues and same operating margins as you, but they get 5-6 more turns on the EBITDA multiple.

The principle is called multiples arbitrage and, before you get angry, know that you can play this game too. The strategic lesson here for founders is to go beyond asking yourself, “How do I grow EBITDA?” to asking a more nuanced, “What would cause the market to put my company in a different valuation bracket?”

What’s Going On

Most founders believe that if they grow EBITDA then the value of their company will rise proportionally. That’s true, but it’s not a straight-line proportion and it’s not a guarantee, either. Especially in the lower middle market, where the largest volume of M&A deals happen^[1], EBITDA multiples are not a fixed number per industry sector but rather a relative proxy for risk and buyer confidence.^[2]

Here’s the simple math for the scenario above: for every $1M of acquired EBITDA…

• At 4x multiple, it was purchased from you for $4 million
• At 9x multiple, it would be valued at about $9 million when the PE sells the roll-up
• Implied valuation uplift for that $1M of EBITDA: $5 million

You should be thinking of ways that you can capture some of this value-add for you and your company.

Examples

Guild Garage Group is a good lower-middle-market example. The company was created in 2024 as a roll-up of residential garage-door repair and replacement businesses. In less than two years, it completed 30 acquisitions and grew to more than $300 million in annual revenue and approximately $50 million in EBITDA. Guild’s individual acquisition prices were never disclosed, so we don’t know the exact arbitrage spread, but in March 2026 Reuters reported that Oak Hill Capital had agreed to acquire Guild for more than $800 million, which is a calculated valuation of at least 16x EBITDA.^[3] This is for garage doors.

By comparison, the well-known gaming brand Zynga also exited at 16x EBITDA.^[4]

Another example in the tech sector would be IT Managed Services (MSPs). Owner-operator MSPs under $5 million in EBITDA typically sell for 3.5x to 5x EBITDA, which is a modest reward for years of building the business. But once those same businesses get folded into a platform with $10 million-plus in recurring revenue and a real cybersecurity practice, buyers like Evergreen Services Group, New Charter Technologies and Dataprise are paying 10x to 13x EBITDA for the combined entity.^[5] That’s a similar 4x-to-9x spread as in the math above, now repeating itself across dozens of deals a year.

Multiples arbitrage is a structural feature of how buyers price larger scale, more predictable recurring revenue and the comfort of reduced risk relative to a single founder-run shop. If you’re sitting on a $2 million EBITDA business, the market is telling you, in writing, that it is worth more to combine you with three of your competitors.

What Founders Can Do

Bain defines a buy-and-build strategy as a platform company making at least four repeated add-on acquisitions.^[6] PitchBook reported that add-on acquisitions represented 75.9% of U.S. private-equity buyout activity by volume in the second quarter of 2025.^[7]

This is not a niche tactic; it has become one of the market’s dominant value-creation models. So you can play this game, too.

How? As in the garage doors example, if your startup operates regionally you can acquire several competitors and combine back-office operations and field services route density to boost margins (in sectors outside of tech, companies often use bank loans and SBA loans to finance acquisitions). If your startup competes within a larger supply-chain, you can look to the operators to your left and to your right and consider merging into a more vertically integrated player, which in turn becomes more attractive to potential acquirers. A little bit of focused thought will yield plenty of ideas for inorganic growth.

Just know that stapling a few companies together doesn’t guarantee higher multiples; it must be earned. PE buyers and strategic M&A buyers pay more only when scale creates genuine advantages: more stable recurring revenue, broader geographic coverage, efficient route density, purchasing leverage, cross-selling opportunities, stronger data, professional management, reduced customer concentration, et cetera.

Perhaps most importantly, scouting and negotiating your own tuck-in acquisitions has a way of forcing you out of daily operations to focus on larger goals. And that is a good thing, because M&A acquirers also pay more when the business does not depend on its founder and is capable of surviving an ownership transition.

The conclusion: stop treating your EBITDA valuation multiple as something the market has already assigned to your sector, and start treating it as something your company can deliberately engineer.

Sources

1. CapitalPad, “Lower Middle Market Private Equity Report”
2. Bain & Company, “Private Equity Buy-and-Build: How to Get It Right”
3. Reuters, “Oak Hill Capital to acquire Guild Garage Group in $800 million-plus deal, sources say”
4. Seeking Alpha, on the Take-Two/Zynga acquisition multiple
5. CT Acquisitions, “MSP M&A Multiples Report 2026”
6. Bain & Company, “Building a Stronger Buy-and-Build” (Global Private Equity Report 2024)
7. PitchBook, “Q2 2025 US PE Breakdown”

This is the second in a series of excerpts from my podcast interviews where I am asked about Communications Strategy.

Q: Mark, an article in the Harvard Business Review describes your work as “the most successful (strategy) in human history.” What is that all about?

A: That HBR article was about a grass-roots “protest movement” that we created. That particular communications strategy drove our client to become the #1 most-downloaded browser extension ever – we took them to 1+ Billion (that’s with a B) inside of 39 months, so we were actually growing faster than Facebook for a while. And we managed to do all of that without changing a single thing in the product itself – it was entirely smart storytelling and our culture-hacking communications strategy.

The product that we were asked to market was a browser extension that could hide certain page elements and customize the way your browser renders a web page by applying various filter lists to alter what data the browser fetches – among which was the data call to ad servers to fetch advertising content. So… it could block ads! But the way it was being positioned and marketing was a mouthful to explain and the benefits seemed relevant only to very technical users. The product, which is called Adblock Plus, had been in the market for 7 years already but downloads hadn’t really taken off.

When we took a look at the product it was clear to me that it had lots of potential. But creating mass-market consumer demand meant we would have to radically simplify the story and make it so compelling and urgent that people would want to share virally. Simplifying the message to “It blocks ads” was easy enough, but that message alone was insufficient to trigger viral sharing because people get really conflicted about blocking ads – a lot of people feel like they are cheating the system somehow. We had to make blocking ads a positive force for promoting better quality advertising. In fact, Adblock Plus was carefully designed to block only ads that grossly over-stepped reasonable guidelines.

To engage some viral sharing, we looked to cause marketing as a model and looked for ways to put more emotion into our communications strategy. We figured we could tap into consumers’ pent-up annoyance toward predatory advertising and re-direct that energy toward crowd-sourcing a definition of “acceptable” advertising. Our strategy was to position the Adblock Plus extension itself as much more than a blocking tool; we presented it as a way for an average person to stand up and protest for what is fair and right. I wrote out an actual Bill-of-Rights style manifesto that people could sign, declaring their demands for respectful and non-predatory ads, which gave consumers a way to take agency.

Then we took that manifesto to the extreme: I brought in some friends at EFF (Electronic Frontier Foundation) to help me write it and give me legal advice; I asked a friend who was like hire #9 at Reddit to help me populate r/adblock to get some viral conversations going; I talked to friends of mine who worked at advertising agencies to socialize what we were doing within the ad industry; I lobbied friends at Mozilla Foundation; I even found a contact at the FTC (Federal Trade Commission) to clear with them what we were doing and make sure they knew we were championing consumer rights. Essentially I rallied an entire community around the idea that we could work together to elevate the quality of advertising.

Now the product wasn’t just about blocking some ads on your computer anymore — it was about sending a clear message to the advertising industry where you draw the line! It was about releasing your pent-up annoyance in a positive way! To give you some idea, our best-performing hashtag was #BlockYou.

Best of all, the press loved all the fuss and gave us constant attention and coverage, which really amplified the movement. The result was that we hit a cultural nerve: we earned tens-of-thousands of press articles including mainstream press like TIME and Wall Street Journal; radio personality Howard Stern talked about us on his #1 broadcast; the TV comedy series South Park did an episode about it; Goldman Sachs invited me to speak on stage at their Internet Investor Conference; and more. The Adblock Plus product become a mainstream cultural reference point.

Even better, our world-wide consumer protest with 1+ Billion downloads in just months — plus all the press attention — put pressure on Facebook and Google and everyone else in the advertising ecosystem to clean up their act. Before our ad-blocker protests, consumers were helpless and resigned to getting ever-more aggressive pop-up ads and pop-under ads and auto-play ads and malvertising. Today, most of those intrusive ad techniques have actual industry-sanctioned bans.

We basically reformed an entire industry. In addition to the article that you mentioned in Harvard Business Review, they ended up writing a full Harvard Business School Case Study about my communications strategy, which is now being taught in several MBA programs. It was a mission-driven movement and definitely a highlight in our client work.

This is the first in a 4-part series of excerpts from my podcast with Marketer Interviews about Communications Strategy. In this excerpt I explain our groundbreaking “Culture Hacking” method, which is a powerful way for companies to cultivate viral influence, direct the narrative, and create consumer demand.

Q: Could you explain the genesis of your Culture Hacking strategy, and give an example?

A: The genesis of the strategy came about several years ago while working with an anti-virus (AV) security software company. We didn’t call it ‘culture hacking’ yet, but the effect became evident as you’ll see in this first example.

Our assignment for the AV company was to triple their installed customer base and get their brand ready for an IPO. If you know the AV sector, both then and now, it’s a commodity space where all the products have the same features and many vendors offer their products for $0 free. The sector is also well saturated, so winning market share usually means taking customers away from a competitor – which can be very ROI-challenging if you are offering a $0 free product.

But I kept thinking: if we could convince each of the current customers to convert just two of their friends, we could triple the installed customer base overnight and be done. So I thought, let’s unite the customer base around a common enemy – the hackers and ‘Bad Guys’ who were messing things up.

That’s where the Culture Hacking idea took root: we could tap into this pent-up anger about having to watch your back all the time from Bad Guys trying to steal your credit card number or hack your online accounts. We could re-direct that energy to get customers to evangelize AV software to two of their friends and triple our client’s installed base.

Now, moving from strategy to implementation, there was an opt-in feature in the product that let customers share data about what viruses and Trojans and other nasties their computer AV was blocking, and send that data up to a central server so that the security analysts could see global trends. It was basically crowd-sourcing security intel from millions of end-points, and it created a sense of community among those who participated.

So we coined this concept of “We protect Us” to enroll customers into seeing AV software as a greater good for society. It really resonated, because it kept reminding people that they have some agency in protecting “their” Internet. To give that phrase something tangible and sharable, we also printed up stickers of evil-looking ‘Bad Guys’ to hand out, and we gave people a rallying cry: “Let’s take back our Internet.” We even convinced the CEO to stage a peaceful protest march and sent video to the press.

The result was more like a cultural movement than a marketing campaign. It was fueled by real emotions, and because the marketing message was baked into the technology of the product itself, it was authentic and credible. Over the next several quarters stayed with this message and doubled-down on it with blog posts and press pitches and social media. Our Facebook followers shot past 1.5 million in just 10 months; website traffic and customer signups ramped up; press coverage skyrocketed 300%; and with all this new in-bound customer traction, product selling costs decreased significantly. The investment bankers were impressed and used the ‘We protect Us’ message as the theme for their IPO roadshow. It became a self-fulfilling cycle; a true culture hack.

That experience gave us a taste of how powerful our new ‘culture hacking’ strategy could be. In my next post I’ll share how we evolved and perfected the strategy.

How to Optimize Valuation by Finding Your Peak Synergy Window

TL;DR

Most founders think maximum valuation is achieved by scaling as much as possible and exiting as late as possible. In reality, the optimal exit can occur the moment a company finds itself to be disproportionately more valuable within an acquirer who is willing to pay strategic premiums. The key is identifying your ‘peak synergy window’—the stage when your startup innovation, coupled with an acquirer’s extra resources, creates exponential value for both (i.e. where 2 + 2 = 7).

Founders who understand this dynamic can achieve superior outcomes for themselves and their early investors by exiting sooner than conventional wisdom suggests. Performing a Valuation Engineering exercise can provide a roadmap to spot when and where peak synergy is likely to happen.

CONTRARIAN LOGIC

There is an ingrained belief in the startup ecosystem that the longer you hold out, the higher your valuation will be at exit. Grow revenues, scale the team, raise another round, and wait for when scale justifies a premium multiple on EBITDA. It’s a logical model, and in many cases it works. But it’s often the incorrect strategy for maximizing valuation and wealth for founders and early investors, because of the dilution and hold time.

Because in M&A scenarios, valuation is usually not a function of what you’re currently generating but rather it’s a function of what your business could become when combined with the resources of the right acquirer. Sometimes acquirers are buying an accretive revenue stream to add to their balance sheet, or an existing customer base to establish a beachhead in a new market. But more often they are buying acceleration: the ability to move quickly into a new market, or to close a technology or service gap in their offerings, or to neutralize a future competitive threat.

This is where the ‘peak synergy window’ comes into play. True strategic value emerges when a combined entity creates something that neither company could achieve independently. And in strategic acquisitions, buyers often pay significant premiums for companies that are still in their innovation and growth phases, even before revenues catch up.

THREE CASE EXAMPLES

Here are three real-world early exit examples to help illustrate:

1. One of the best-known ‘early’ acquisitions in technology history was Instagram’s exit to Facebook in 2012. At the time, Instagram had little more than a dozen employees and essentially no clear path to revenue. By traditional EBITDA-multiple metrics, Instagram would have been difficult to value using conventional frameworks, yet Facebook acquired it for $1 billion—a price that raised many eyebrows at the time.

In retrospect the logic was obvious: Instagram represented a mobile-native engagement platform at a time when Wall Street was questioning how Facebook—on the eve of their IPO—was going to transition from desktop. Instagram was a potentially strategic asset that could redefine how Facebook captured and monetized user attention on mobile, because Facebook already had a thriving advertising platform to plug it into. Within the Facebook ecosystem, Instagram could generate billions in revenue and become core to Facebook’s long-term growth. Facebook wasn’t buying what the Instagram business was at the time, it was buying what Instagram could become once integrated.

The peak synergy window for Instagram was actually defined by Facebook’s urgency, and it came years before they could have proven a revenue model on their own (if ever).

2. A more recent example is healthcare AI startup Cognita which was acquired barely a year after they started. The buyer was Radiology Partners, a heavily-capitalized sector leader backed by $ billions in investment, that also owns MosaicOS, which is the operating system that supports tens of millions of radiology exams. Cognita needed more data to improve its AI model as well as sales distribution, so rather than continuing to build independently, Cognita’s founder chose to sell at a stage when the company’s technology could be immediately amplified by an acquirer with an industry-dominant OS (i.e. data) and sold via an established distribution into healthcare systems.

As a standalone Cognita had significant potential, but its growth would have been constrained by the time and capital required to purchase data and penetrate complex healthcare markets. Inside a larger platform, however, those constraints disappeared. The acquirer gained a differentiated AI capability, while Cognita gained instant access to data and infrastructure that would have taken years to build.

For Radiology Partners, it was an acceleration play into AI, for which they were willing to pay a strategic premium.

3. A similar pattern plays out quite often in the cybersecurity sector, where the major incumbents are under constant pressure to expand capabilities ahead of emerging threats. The 2024 acquisition of PingSafe by SentinelOne (NYSE: S) in a deal that reportedly exceeded $100 Million is a good example. PingSafe was only two years old at the time and seed-funded with just $3.3 Million. To underscore the significance of this ‘early’ exit timing, the founders were not yet diluted from multiple funding rounds and didn’t need a unicorn valuation to realize meaningful founder liquidity.

Their peak synergy moment happened early because SentinelOne was motivated to move quickly rather than wait for the cloud security market to consolidate or for PingSafe to scale bigger on their own. PingSafe had developed a precursor to Cloud-Native Application Protection Platform (CNAPP), which represented a new era of cloud security for large enterprises. Sentinel spelled out their acquisition rationale in their press release that announced the deal: “The acquisition of PingSafe is a transformative move that will enable SentinelOne to grow the value and security it offers to customers. When integrated into the Singularity™ Platform, PingSafe’s differentiated capabilities will give SentinelOne a leading cloud security solution.” (emphasis added)

In other words, 2 + 2 = 7.

For PingSafe, the acquisition provided immediate access to enterprise customers and a global go-to-market engine that would have been difficult to replicate independently. As with other early acquisitions, the timing was all about capturing the moment when the combined entities could create the greatest possible advantage.

In reality, waiting too long to exit can sometimes erode valuation. As markets mature, competitors catch up, capabilities become commoditized, and acquirers lose urgency. The window where your company represents a unique and highly leverageable asset can open and close quickly.

HOW CAN YOU DETERMINE YOUR PEAK SYNERGY WINDOW?

Founders should be asking when their company’s strategic value to a specific set of acquirers could reach its peak. Answering that question requires stepping outside your own operational view of your business and adopting the perspective of potential buyers. What capabilities do they lack? What markets are they trying to enter? Where are they under pressure from encroaching competitors, from Wall Street demands, or from broader industry shifts?

And most importantly, how does your company change the acquiring company’s trajectory if they were to buy you today instead of a year from now?

Performing a Valuation Engineering exercise can yield exactly these answers and provide a roadmap to spot when and where peak synergy is likely to happen. Valuation engineering is the process of deliberately shaping your company’s positioning, capabilities, and exit timing to maximize strategic value in the eyes of potential acquirers. It is not about inflating metrics or making boastful marketing claims. Rather, it is about understanding where your company sits within a broader ecosystem and exactly how you can create outsized value when combined with the right partner.

In practice, when we lead a Valuation Engineering process we apply our Valuation Levers Audit to help founders surface the hidden valuation nuggets within their company, and also a due diligence stress test to spot areas where valuation can be eroded. Then we bring in our network of M&A brokers who provide marketplace context by explaining current deals and the buyer rationale for each, and who help us short-list specific buyers for whom your company could be a force multiplier. Finally, we deliver a prescriptive roadmap that provides a purposeful growth strategy to evolve your company toward a strategic exit

There is no such thing as selling ‘too early’ if it leads to the highest-value outcome. Founders should consider undertaking a Valuation Engineering exercise sooner rather than later to determine whether their highest-value outcome is closer than they think.

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