Middle Market Private Equity Surges in this Challenging Market…

Marc Patterson
2 min readJun 21

Opportunities are Still Plentiful

Even in this market, investors continue to like the opportunities presented by middle-market buyout Private Equity. While overall funding to large private equity buyout shops has dropped considerably, the opposite is taking place in the middle market.

As reported in the attached PitchBook article, in Q1 of 2023, middle-market buyout private equity funds attracted almost 90% of funding in the buyout space. That is double that number from the previous year. That is an astounding statistic!

From the article: “There might be some interest in the middle market today because people feel that this is an easier place to find mispriced assets,” said John Haggerty, director of private-market investments at Meketa Investment Group.

‘Mis-priced’ May not be the Correct Word

Smaller middle-market companies often come with lower valuation multiples and often require less debt. That is a great recipe in the current environment of higher inflation and interest rates.

As mentioned above, much of the market considers these assets ‘mis-priced.’ I would call that a misnomer. The assets are more than likely priced correctly. However, unlike much of the larger buyout market, these companies are less mature, and need a lot more work.

Put the Work in and the Rewards are Large

They often require a lot of financial, tech, and operational work put into them in order to scale. However, once that work is done, the financial rewards to the Private Equity Sponsor and their LPs can be significant.


© Copyright June 2023. Marc Patterson. All Rights Reserved.

Marc Patterson

Managing Director at E78 Partners — Driving value creation for Private Equity, Venture Capital, and Growth-stage companies. Email: mpatterson@E78Partners.com..

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