By: Michael White
As a business owner chances are that you have received numerous emails or calls from private equity investors wanting to talk about your business. It is also likely that some of your friends or colleagues may be involved in a transaction with a private equity investor right now. Valuations across healthcare, and almost all subsectors within, are near all-time highs as investors continue to look for quality assets with strong tailwinds and potential for growth. This increase in valuation has been driven by several factors, but one of the most important is the increase in the number of private equity investors in the lower middle market.
We, at Founders Advisors, define the lower middle market as being between $10 and $250 million dollars in total enterprise value. Over the last several years the private equity sector has experienced significant growth both in total number or firms and the number or firms investing in the lower middle market. There are over 1,500 private equity firms focused on the lower middle market across industries today. The increased interest in this size cohort has proven to be beneficial to founders and owners of lower middle market companies with valuations now at, or near, all-time highs across sectors.
Many private equity firms that were previously focused on investing in larger companies have moved down in size focus in the hopes of finding fewer financial firms competing for deals. Additionally, there is a larger universe of assets to invest in. As private equity investors continue to focus on the lower middle market, it becomes increasingly important for business owners to understand how private equity works along with the advantages and disadvantages of partnering with private equity. The Founders Advisors team is well versed in helping owners understand the qualities private equity investors are looking for in a business and how your business is valued by investors.
If you have questions about the value of your business in a potential sale or recapitalization transaction, please reach out to any member of our team. We would be happy to have a conversation with you about potentially maximizing that value, whether for today or for the future.