Insights & Info

Insights > Why Private Equity Fundraising is Focused on Middle-Market Businesses

Why Private Equity Fundraising is Focused on Middle-Market Businesses

By Generational Equity

Focus Business

“The middle market… provides one of the best ecosystems for private equity investors to create returns” Mike Fairmouth

Private equity firms in the U.S. are sitting on more dry powder than ever before, and middle-market businesses will be among the biggest beneficiaries. That is the evaluation of the specialists at PitchBook, a trusted resource for many VC, PE and M&A firms. In their 2017 PE & VC Fundraising Report, the middle-market stands out as the area with the most opportunity for private equity investors:

“Though megafunds have dominated the fundraising scene in terms of dollars raised, middle-market firms account for a larger portion of final closes this year.”

That’s putting it mildly. The middle-market continues to dominate a period of record-breaking fundraising for private equity firms. PE firms are raising more capital currently than at any point post-recession, and remain on pace for a 24 percent increase in value compared to 2016. Mid-sized companies represent a strong part of that activity (nearly 50 percent of total deals), and that trend is set to continue for the considerable future.

Of course, megafunds will be more commonplace in the headlines, like this year’s record-breaking $24.7 billion invested in the Apollo Investment Fund IX. But, the real stories lie beneath the surface, where movement in the lower and core-middle-market sectors will drive private equity fundraising for the next five to seven years.

Here are some other key findings from PitchBook’s report and a survey compiled by Probitas Partners:

  • 81 percent of survey respondents said their deals focused on making operational improvements, while 73 percent focused on buy-and-build strategies.
  • Interest in specialty funds focused on a sole industry grew from 37 percent of investors last year to 51 percent this year.
  • The strongest interest in PE funds was in the healthcare and technology industries, but in general all major sectors were attracting interest.
  • The average time to close funds (13 months) is the lowest figure since 2006, meaning these funds are enjoying more investor interest than ever before.
  • 350,000 companies worldwide have an annual revenue between $5 million and $100 million, compared to just 25,000 with annual revenue between $100 million and $500 million.

Why Middle-Market Business Owners Should Be Excited

If you own a mid-sized business and have ever wondered “How much is my company worth?” the current state of private equity in the U.S. and beyond could have enhanced its valuation in the eyes of the right buyer.

Whether it’s acquiring a company to enter a new industry, or using a business to enhance another already in their portfolio, the lower middle-market is going to be attracting significant attention from buyers. The only question is, will you be at the heart of this, or will you miss the boat?

Competition in the lower middle-market is intensifying compared to the prior year, and with more dry powder laying around than ever before, there is massive opportunity to exit your business for the optimal value. But the longer you wait, the more companies will be vying for attention. Guidance from a professional M&A advisory firm like Generational Equity will help you take advantage of these opportunities and ensure you’re not left thinking what might have been.

As we’ve noted numerous times before, timing is everything in mergers and acquisitions. The best time to sell a company is when your company is growing and buyers are active. Right now, PE firms can’t find enough well-run companies to invest in! So, if you are thinking it’s time for a new chapter in your professional story, the next year or two could be the ideal time to exit for the highest possible return.

Start your next chapter by attending one of our M&A executive conferences. These are completely complimentary, and held across North America, they will give you a valuable insight into the process of exiting your business at the optimal time for the optimal value. You will understand what private equity firms are looking to invest in with their surplus dry powder, and how to grow your business to stand out to buyers.

Contact our team at Generational Equity today at 972-232-1121 to find our next conference near you, or arrange a meeting with our experienced professionals.

Make an informed decision

The best decisions in life are informed decisions. We release educational business insights like this every week. Subscribe to make sure you don’t miss the latest news, views and analysis.


Success, you have been added to our list.

I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Terry D. Wickman, President, Keytroller
Generational Equity’s assistance was invaluable in compiling and marketing our business.
Bil MacLeslie, CEO, ipHouse
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.
Jay Dinnison, Owner of Sharpe Mixers
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.
Jay Dinnison, Owner of Sharpe Mixers
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.
Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.
Robert Evans, President and CEO of Mealtracker Dietary Software
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.
Andy Graham, Vice President, Modern Heating & Plumbing
The professionals at Generational Equity then helped develop a roadmap for enhancing the value of the firm and an evaluation report. This was completed by June 14, 2021. We then developed the Confidential Information Memorandum and put Taylor Studios, Inc. on the market by July.
Generational Equity’s professional staff helped me every step of the way. Their network and professionals are the only reason I sold my company this quickly. For me this is a once in a lifetime sale and I was unfamiliar with the process. I was able to lean on them with questions and concerns.
Betty L. Brennan, President, Taylor Studios
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.
Bryan D. Horn, Owner, Over Under Clothing
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).
Bil MacLeslie, CEO, ipHouse
I decided to attend the conference and hopefully receive some guidance on how to structure an exit plan of my business. Upon arriving at the conference, I was so impressed with the presentation given by Generational Equity that I set a future appointment that week to discuss the possibility of selling my business with their Senior Managing Director David Robinson.
JoAnn Ellis, Owner of Fondren 5 Star Kennels
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.
Larry Moore, Owner, A Company Portable Restrooms
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!
Eric Erlandson, Owner, Action Fastenings, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.
Pete L.
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.
Ralph Noblin, President of Noblin & Associates
We had the pleasure of working with Mr. Ahmad Behjati Managing Director, M&A, for Generational Equity during our acquisition of Papa's Dodge in late 2021. Generational Equity and Mr. Behjati represented and marketed Papa’s Dodge. As our primary contact, Mr. Behjati was professional in every facet of this acquisition process, conveying valuable advice most times and assisting us in every step of the process.
Rick Greene of Dobbs Equity Partners LLC
We were represented by Michael Goss with Generational. The due diligence was grueling and exhausting, but Michael propped us up and kept us motivated throughout the process. Debi and I continued to ask each other how we could possibly make it through this process without the assistance of Michael. Michael's professionalism and knowledge is absolutely amazing, and we are so blessed to have had him by our side as we made our future dreams come true.
Bob and Debi Lee, Owners of BL Technology, Inc and BL Tl Services, LLC
The most important contribution I think Ahmad made was with his personality and work ethic. He is sincere, efficient, and very hard working. He was available to me at all times, whether it was for specific detail of the negotiation or just to talk through the bigger picture. He listened, advised, and recommended, but never forced his idea or opinions. In the time we worked together, he became a valued colleague and also a friend.
Salvo Stoch, Founder and CEO of Sleeping Partners
Through the sale process, Generational brought in several interested buyers and we closed in about 6 months. I am so glad I accepted that invitation to the conference and could not be happier with the whole process. The team at Generational coupled with their knowledge and guidance was so valuable that in the end, I know I could never have done this on my own!
JoAnn Ellis, Owner of Fondren 5 Star Kennels
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.
Terry D. Wickman, President, Keytroller
We thank you Eric and Generational Equity making our dream come true.
Larry Moore, Owner, A Company Portable Restrooms
Thanks to you, the entire GE team and especially Michael Goss for driving a great valuation, coaching me and driving the process across the finish line. Please let me know if there is anything I can do to support GE going forward. P.S. Given my experience with GE I felt comfortable enough to sign up with Generation Wealth Advisors!
Tom Currier, Former President & CEO, Rackmount Solutions
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.
Bil MacLeslie, CEO, ipHouse
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.
Robert Evans, President and CEO of Mealtracker Dietary Software
After attending a conference with GE, I decided that the value they bring would be worth the expense and as soon as I started working with them, I realized that was the right decision. When we started to get LOIs, Fred Zweifel took the lead on the communication and supported negotiations throughout the process, which got tricky as we moved forward. I learned that it can be common for companies to make a great offer then work to erode that price with their discoveries, but Fred and the GE team kept that from happening.
Caroline Connelly, CEO, OptoTest
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.
Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
I wanted to take this opportunity to thank you for all that you have done for us. Not only did you take care of all the aspects of the sale but took extra care to make sure we knew what it looked like every step of the way. I will definitely recommend your company to anyone that is in a position to or looking to exit their business.
Shane and Johanna Kline, Owners of Vision Upfitters