By Dave Halvorson, M&A Advisor | April 2025
Navigating Economic Uncertainty: A Guide for Technology Services Business Owners
As a lower middle market (LMM) business owner in technology services, you’re facing a challenging landscape. Interest rates remain elevated, global trade tariffs are shifting, and generative AI is transforming companies’ operations. Yet, these dynamics create unique opportunities for technology services firms to outperform the broader market.
Why Technology Services Remain a Top Performer
1. Strong Demand for AI and Digital Infrastructure
The surge in generative AI adoption fuels demand for data centers, cybersecurity, and cloud solutions. Industry analysts project 15–20% annual growth rates for these segments through 2030. As a result, technology services companies consistently achieve higher EBITDA multiples—recent data shows that for private companies with revenues under $100m, the median tech sector multiples are 8- 16x, far above traditional industries.
2. Recurring Revenue Drives Premium Valuations
Buyers, especially private equity (PE) firms, prioritize businesses with recurring revenue models such as SaaS and managed IT services. These models provide predictable cash flow and resilience, making your company more attractive in a volatile environment.
3. Insulation from Tariff Risks
Unlike manufacturing or consumer goods, technology services—particularly software and cloud-based solutions—face minimal exposure to import tariffs. This protection helps preserve margins and supports premium valuations.
The Value of an M&A Advisor in Today’s Market
In a complex and fast-moving market, partnering with an experienced M&A advisor is more valuable than ever. Here’s how an advisor can help you maximize your company’s value:
- Accurate Valuation: Advisors expertly normalize your financials, including add-backs for owner compensation and non-recurring expenses, ensuring your EBITDA reflects your business’s true earning potential.
- Access to Qualified Buyers: With over $1.1 trillion in PE dry powder targeting tech services, advisors leverage deep networks to connect you with the right strategic and financial buyers.
- Optimized Deal Structures: Advisors negotiate hybrid capital deals and earn-outs, balancing risk and upside in a high-interest rate environment.
- Faster, More Successful Exits: Only 18% of businesses sell within six months without expert guidance. M&A advisors can reduce time-to-close by up to 50% while driving higher valuations.
Action Steps for Technology Services Owners and CEO’s
- Prepare Your Financials: Document all add-backs and one-time costs to highlight your true EBITDA.
- Emphasize AI Capabilities: To align with buyer demand, focus on cybersecurity, edge computing, or industry-specific SaaS offerings.
- Engage an Advisor Early: Early engagement increases your chances of a successful, lucrative exit.
Conclusion
Despite economic headwinds, technology services companies in the LMM space are set to outperform. By leveraging M&A expertise and positioning your business as an AI-driven leader, you can unlock premium valuations and capitalize on the current wave of consolidation. Now is the time to act and secure your company’s future in this dynamic market.
Sources: The Complete Guide to Selling a Business; McKinsey M&A Annual Report 2025.