February 20, 2018
The middle-market model has fallen victim to its own success in some ways over the last few years. As investing in small, growing companies has proven lucrative, more and more players have entered the fray. These days, mid-market private equity firms face competition from bulge bracket PE firms heading downstream, large corporations looking to accelerate growth, fundless sponsors doing one-off deals and family wealth offices bypassing PE firms to invest directly. Fundraising has been robust, which means there’s a lot of money chasing the best deals. That, in turn, has driven up prices. To prevail, many PE firms are re-calibrating their approaches, often by lowering expectations for returns, lengthening hold times and accelerating the closing process.