Why the Roll-Up Model Is Breaking — and What Comes Next
New research is confirming what many of us have already sensed: the traditional roll-up and private equity model is cracking under pressure. What was once a seemingly foolproof playbook — buy small at 6–8x EBITDA, bundle, scale quickly, and flip at 14–18x — is now struggling to deliver on its promises.
The core issue? The math just doesn’t work anymore.
Multiples have compressed. Exit opportunities are drying up. And the whole thesis — that bigger equals better — is being tested in public markets, where investors are demanding discipline, not just size. The “buy low, roll up, exit high” strategy is running into a wall.
Public strategics no longer want to acquire platforms because it dilutes their own multiples. PE sponsors are stuck, unable to sell without taking a loss — a scenario LPs won’t tolerate. And public markets? They’re actively discounting roll-up platforms, prioritizing free cash flow and organic margin expansion over the hype of M&A-driven growth.
So the roll-up machines are shifting gears. The very platforms that once lived on deal volume are now being forced to grow organically. Some are turning to stock buybacks instead of new acquisitions. Others are slowing down completely — not because the targets are gone, but because the upside is.
This is the consequence of short time horizons. Most PE funds are built to sell in about five years. When that timer runs out, firms are forced to exit — even if market conditions aren’t right or the business isn’t ready. That kind of pressure leads to rushed sales, suboptimal buyers, and ultimately, businesses getting passed from one fund to the next, with little stability in between.
At Legacy, we’re taking a different approach.
We’re not trying to out-arbitrage the market or rush to an exit. We’re building small, regional portfolios of essential service businesses with long-term, local backing — especially from debt holders who value fixed returns over flashy exits. That gives us time, flexibility, and the ability to grow the right way — with durability, not debt.
Here’s what’s happening in the real world:
Real-World Examples: The Roll-Up Squeeze
Limbach ($LMB) – Commercial HVAC
Down to 12x EBITDA (from 15x), despite strong performance. Even debt-free, M&A-based growth isn’t being rewarded.Comfort Systems ($FIX) – HVAC/Electrical
$900M+ EBITDA, $500M cash on hand, but still trading at 12–13x — down from 17–18x.Builders FirstSource ($BLDR) – Building Products
$2.2B EBITDA, trading around 9x. M&A has paused. Buybacks now seen as a better use of capital.APi Group ($APG) – Life Safety
Trading at 12–13x despite continued acquisitions. Valuation is flat — upside capped.Mister Car Wash ($MCW) – Consumer Roll-Up
Around 10x EBITDA. They’ve moved on from roll-ups to greenfield expansion for more control.Vail Resorts ($MTN) – Ski Roll-Up
$875M EBITDA, trading at ~10x. No scale premium, despite brand strength.BrightView ($BV) – Landscaping
Trading at 7.5x EBITDA with leverage. Public markets aren’t buying the roll-up narrative.DentalCorp ($DNTL) – Dental Roll-Up
From mid-teens to ~8.5x EBITDA. Acquisitions haven’t driven valuation gains.ABM Industries ($ABM) – Janitorial & Facilities
Once highly acquisitive, now trading at 9–10x EBITDA. Focus is on margins and clean operations.Rollins Inc. ($ROL) – Pest Control
Still at 20x+, but the pace of M&A is slowing. Market isn’t rewarding inorganic growth the same way.Waste Connections ($WCN) – Waste Services
Trading at ~15x, down from 18x. Shifted from deals to pricing and internal leverage.US Physical Therapy ($USPH) – Healthcare Services
At ~11–12x EBITDA. Flat organic growth and higher integration costs dragged valuation.
The message is clear: the market is rewarding substance over story.
In this environment, local scale and operational excellence matter more than financial engineering. Time-tested businesses run by people who know the market — not spreadsheets — are becoming more valuable.
And that’s exactly the kind of business we’re focused on building.
