Rethinking Value - What Small Deals Reveal About Private Equity’s Next Move
- Bob Dunn
- Jul 8, 2025
- 3 min read
Audience: Private equity leaders, fund managers, M&A advisors, and performance-focused investors.
Overview: Sub-$10M deals are surfacing powerful signals about where private equity is heading. Based on GF Data’s latest findings, this article explores how capital strategy, leadership continuity, and deal structure in the smallest transactions is reshaping how value gets created and realized.
In a deal environment that has remained cautious and uneven, the smallest transactions in the market have begun to punch above their weight. For much of 2024, transactions valued under $10 million showed unexpected pricing power, better debt coverage, and more favorable structures – especially as add-on investments.
These aren’t one-off anomalies – they’re part of a growing body of signals that tell us where middle-market private equity is heading – and where leadership and operational focus must follow.
At GF Data, we formally tracked transactions between $1 million and $10 million for the first time in 2024. These deals sit below our traditional $10M–$500M core range, but have increasingly become a key segment in private equity strategy.
The findings from our first year of analysis were clear - in a constrained market, buyers prioritized deals they could complete with existing credit lines. Add-ons in the sub–$10M range became particularly attractive due to their capital efficiency and execution speed.
Through Q3 2024, add-ons made up 75% of all deals in the $1M–$10M range - compared to just 54% across all transactions tracked by GF Data.
Add-ons in this tier not only cleared faster – but also commanded higher average valuations than comparable platform deals.
That’s a notable inversion of traditional pricing logic - and a signal that liquidity, not size, was driving value.
Another key signal – capital structure. Add-ons in this range averaged 5.7x EBITDA with significantly higher levels of senior debt (nearly 67%) and relatively minimal equity contribution (under 20%).
Platform deals, by contrast, demanded far more equity to get done – 61% of the purchase price on average. Rollover equity also emerged as a key value driver – deals with rollover posted average purchase price multiples nearly two turns higher than those without.
So what do these small-deal patterns really show us?
First, they underscore how capital availability and deal optionality now shape pricing more than size or sector.
Second, they reveal where seller trust and operator alignment matter most. Add-ons rely on leadership continuity, cultural fit, and scale-ready operations - factors that don’t appear in the multiple, but shape it all the same.
These trends reflect a broader truth in the context of the organizational performance insights we analyze at PL3 – data doesn’t close the performance gap - leadership action does.
As small deals become more central to private equity strategy, surfacing the signals that shape value -– from leadership alignment to operational readiness – isn’t just helpful – it is essential.
Interestingly, the shift back toward platform investing in late 2024 and early 2025 doesn’t negate these signals. If anything, it reinforces them.
As platform deals come back into focus, firms are navigating more complex financing, longer diligence and closing timelines, and higher stakes around integration and performance.
The performance insights that surfaced in last year’s small deals - around debt efficiency, equity trust, and leadership continuity - are now more relevant across every deal tier.
Sometimes, the smallest deals tell the biggest stories - we’d be wise to listen.
Reference Articles
Bob Dunn is Managing Director of GF Data, an ACG company - the leading source of private deal valuations in the middle market. He brings extensive experience across corporate finance, private equity, and hedge funds, with former leadership roles at With Intelligence and Dow Jones & Co.
