The U.S. Private Equity Middle Market

Private equity (PE) as an investment class has outperformed virtually all other investment categories over the last 20+ years. U.S. companies now raise nearly four times as much capital each year in the private markets versus public offerings.

• PE groups bring repeatable playbooks and operational teams to strengthen and professionalize management teams, improve financial controls, and bring M&A execution skills to achieve product and geographic expansion through buy-and-build strategies and consolidation.
• Within the PE capitalization sector, the middle market segment presents a compelling investment opportunity. Returns across all vintages in the middle market for the last ~20 years have had the highest median IRRs, lowest downside risk, and the best asymmetric upside performance compared to small cap and large cap
• The opportunity set is large and diversified as the U.S. middle market is the backbone of the U.S. economy. Deal flow accounts for 68% of all U.S. private equity by value, but only 39% of all capital raised. Lower entry multiples reflect less competition, more imperfect deal information, and lower correlation to public markets