2012 Set for Another Strong Year of Middle-Market PE Investment

Those reading are likely the least that need to be told this, but the middle market is truly the heart of private equity investment here in the United States.
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April 15, 2012 - PRLog -- While this is not a shocker, I figure it might be helpful to actually put some numbers and data behind this statement in an effort to illustrate just how much PE firms have invested in the space. Everybody has their personal definition of the middle market. So, in an effort to keep it broad and relevant across the industry, we decided to break it into three distinct segments, which together span companies valued from $25 million to $1 billion. These segments are the lower middle market ($25M to $100M), core middle market ($100M to $500M) and upper middle market ($500M to $1B).

These three areas of the middle market have seen a combined $2.1 trillion of total capital investment and deals involving an aggregate 12,500 U.S. companies since 2000. This accounts for about two-thirds of all private equity activity over this 12-year span. In terms of deal flow, the lower middle market is king, having seen over 6,000 deals since 2000, but in terms of capital investment, it is the core middle market that is most popular, having attracted $1.15 trillion worth of deals during the last 12 years. The interesting thing is that, while these numbers are huge, when broken down into yearly portions, they only come out to be roughly 1,000 deals and $175 billion of investment per year—totals that have been surpassed during both of the last two years and, considering the $425 billion of PE dry powder and the positive buzz the space is generating among investors, should again be surpassed this year. Look for more details on PE investment in the middle market in an upcoming report by PitchBook.

Adley Bowden
Director of Research, PitchBook Data

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