Lower Middle Market Madness
Welcome to this month’s edition of The Lower Middle Market. Hopefully March Madness hasn’t completed derailed your Thursday like it has mine. Here’s what we have for you in this quick update:
Smaller LMM funds lead the way in private equity returns
Home health care’s sluggish 2023
It may be a good time to go bargain hunting for slow growing VC backed companies
Let’s get into it!
What’s Hot
Private Equity Interest in Semiconductors - Chip production is essentially a duopoly controlled by TSMC and Samsung. These firms enjoy a significant technological and knowledge advantage that would require upwards of trillions of dollars to compete against. However, private equity is seeing opportunities within the wider semiconductor supply chain. Link
Riches in Niches - According to this article in Institutional Investor, the best performing private equity funds in 2023 shared these two attributes: 1) The funds contained under $350 million in assets 2) The funds focused on investing in esoteric industries or businesses Link
Infrastructure Management Services - Fueled by federal funding, infrastructure management services in industries like water and electricity and underground infrastructure are starting to see projects and deal volume pick up
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What’s Not
Home-based Healthcare Deals - Home Health Care M&A was sluggish in 2023 and was characterized by PE firm’s reluctance to engage in the market. This article discloses why home-based care is in a interesting position when it comes to deal making for 2024. Link
VC-backed Startups - With many slow growing startups winding down and failing to secure additional funding, there seems to be a real value opportunity to acquire these companies that have no other option. Link
VC-backed M&A - Meanwhile, VC-backed M&A is at an all time low. Link
Fundraising
3 Boomerang Capital Closes Flagship Private Equity $375 Million Fund Link
Encore Consumer Capital Closes $258 Million Fund to Target Consumer Products Companies Link
CORE Industrial Partners Announces Closing of Two New Funds Totaling $887 Million Link
Keystone Capital Announces 3rd LMM Focused Fund Link
Ocean Avenue Capital Partners Raises $600 Million Fund V to Focus on LMM Special Situations Link
Gauge Capital Raises $1.4 Billion 4th Fund Link Link
Other stuff
See what NFL legend Steve Young is up to post playing career Link
Caymus Equity Partners hopes to replicate its commercial HVAC, electrical and plumbing growth strategy in environmental services Link
Cross-border M&A looks ready for takeoff in 2024 Link
Uptick in lower-mid-market borrowers struggling to meet covenants Link
Use of equity rollovers continues to rise amid market uncertainty Link
Thanks for reading and have a great end to the week!