This week’s digest explores reasons private equity firms prefer to invest in lower middle-market companies, why middle-market firms expand via add-on acquisitions, and the private equity industry’s current dilemma. As usual, click on the headlines for the full stories.
Private Equity Firms Focusing on the Lower Middle-Market
“One of the more common ones is the belief that professional buyers only focus on very large deals. Since most deals that get any press coverage are larger, the thinking is that most buyers primarily focus on those size deals.
[T]he reality is professional buyers actually focus on much smaller deals for a variety of reasons. Simply put, it is far less risky to make a series of smaller acquisitions than it is to ‘swing for the fences,’ to use a baseball analogy, and miss.
The proof of this can be seen in data released recently by Pitchbook in their 3rd Quarter Deal Terms and Multiples Survey.”
Add-On Investments – How Middle-Market Firms Expand
Carl Doerksen examines a recently announced deal to share insight into how buyers operate, what they are looking for, and the wide variety of companies they invest in.
Dry Powder – Use It or Lose It!
“The private equity industry is currently facing a problem: too much committed capital and not enough companies to invest in.
But, as with most components of our economy, one industry’s challenges create opportunities for others. So this is really good news if you are the owner of a middle-market company.”
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