A recent article from Middle Market Growth discusses the increasing trend of private equity firms shifting their focus towards smaller deals and fundraising in the middle market. As larger deals become more competitive and expensive, firms are seeking opportunities in the middle market, which offers attractive valuations and growth potential. This shift has led to increased fundraising for middle-market-focused funds, as investors recognize the potential for higher returns and lower risk compared to larger deals.
Middle-market companies are often overlooked by larger private equity firms, creating a less competitive environment and more attractive investment opportunities. These companies typically have strong growth potential and can benefit from the operational expertise and capital provided by private equity firms. Additionally, middle-market companies are more likely to be founder-owned or family-owned businesses, which can provide a smoother transaction process and better alignment of interests.
Despite some recent successes, fundraising was down significantly year-over-year. “2023 was the most challenging year for private equity in the last decade because of high interest rates, slow exits, limited M&A and limited liquidity and challenging economic conditions,” Alter Domus’ Regional Executive North America, Jessica Mead said.
LPs want to see a proven track record and have deeper access to qualitative portfolio analysis.”
Jessica Mead
Read the full story here.
