2015 Annual US Middle Market Report

RECORD Y E AR F OR U.S . MIDDL E M ARKE T E X I T S , F UNDR AISING BO T H UP L E AGUE TABL E S

Fundraising time to close down to 13.3 monthsPAGE 15»

MIDDLEMARKETREPORT

2015 ANNUAL

U.S.

S P O N S O R E D B Y

Capital invested tops $385B in 2014, past 2007 recordPAGE 6»

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CONTENTSIntroduction

Middle Market Overview

Deals by Region

Deals by Industry

Middle Market Breakdown

Exit Activity

Fundraising Activity

League Tables

Methodology

4

5-6

7

8

9-10

11-12

13-14

15

16

CREDITS & CONTACT

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Content, Design, Editing & Data

ALEX LYKKEN Editor

ALLEN WAGNER Contributing Editor

ANDY WHITE Lead Data Analyst

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COPYRIGHT © 2015 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.

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$50 million to $2 billion. Our products and services support the acquisition, recapitalization and growth investment efforts of private equity firms focused on middle market companies. Our reputation is built on key relationships and effective communication. We build relationships by concentrating on the needs of our clients and delivering outstanding services.

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3 PITCHBOOK 2015 ANNUAL U.S .

PE MIDDLE MARKET REPORT

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IntroductionBy several measures, 2014 was a record year for private equity (PE) investors in the U.S. middle

market. More capital was invested last year ($385.1 billion) than any other year on record, and the 1,748 deals recorded weren’t far off the all-time high of 1,816 made at the height of the buyout boom in 2007. Fundraising and exit totals, which we’ll detail later, were also at record highs. To call 2014 an “active” year is an understatement.

Given the fundamentals in the market, it’s easy to understand the totals. Low interest rates helped make cheap credit widely available to investors, and lenders entered the market in a big way. The dry powder held by PE firms made them motivated and active buyers, and the high multiples in the market coaxed some wouldn’t-be sellers into the arena. Underlying everything was a widely held expectation of economic growth, particularly in the middle market. While valuations are high, many investors are justifying them and using larger debt components in their capital structures to offset them.

As for exits, 2014 was a record year. $95.7 billion worth of investments were offloaded through 780 liquidity events, both all-times highs. Of that capital

exited total, the $50.4 billion sold through strategic acquisitions and $18.6 billion exited through IPOs were both new highs for their exit routes, and the $26.7 billion exited via secondary buyouts came close to matching the 2007 record of $27.1 billion.

The seller’s market of 2014 helped grease the fundraising wheel to the tune of $135.5 billion raised through 165 PE funds. The capital raised total is a new post-crisis high and a 17% increase over

2013, while the 165 funds that closed in 2014 was in line with the 168 that closed in 2013. By both fund count and value, most of the fundraising boom was tied to LP interest in the upper middle market; $91.7 billion was committed to funds in the $1 billion to $5 billion size bucket, the most ever, while the $24.1 billion committed to the $500

million to $1 billion range in 2014 represented a post-crisis high. With those figures, we’ll likely see sustained PE activity in the middle market for the next few years.

We hope the data and commentary in this report prove helpful and informative in your decision-making process in the coming quarters. If you have any questions, comments or suggestions, please reach out to [email protected].

Last year was a record year for PE investors

in the U.S. middle market, whether you look at dealmaking, exits or fundraising.

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Middle Market Overview

If 2014 is any measure, PE firms, lenders and LPs have all

firmly entrenched themselves in the middle market. As mentioned, the $385.1 billion invested last year is a new record, eclipsing the $361.6 billion invested in 2007 at the height of the buyout boom. 2014’s totals were front-loaded in the first two quarters; the $106.8 billion and $97.4 billion, respectively, invested in 1Q and 2Q were two of the highest quarterly tallies on record. The graph above shows a downward slope in QoQ deal flow, though it’s important to note that each of the last four quarters were strong by post-crisis standards. The $106.8 billion invested in 1Q, while just short of the 4Q 2012 outlier ($108.5 billion), was more than any quarterly total during the buyout frenzy of 2005-2008.

Looking at middle-market

MIDDLE MARKET DEAL FLOW BY QUARTER

Source: PitchBook

MIDDLE MARKET DEAL FLOW BY YEAR

Source: PitchBook

$6

0

$5

8

$5

5

$8

9

$6

4

$6

2

$6

7

$75

$73

$6

9

$74

$10

9

$71

$6

1

$8

5

$8

6

$10

7

$9

7

$9

6

$8

5

232 241

254

397

291336

310

336

326

358

355

535

318

272

430

406

517

447

407377

0

100

200

300

400

500

600

$0

$20

$40

$60

$80

$100

$120

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2010 2011 2012 2013 2014

Capital Invested ($B) # of Deals Closed

$18

9

$271

$3

62

$17

4

$9

0

$26

1

$26

8

$3

25

$3

03

$3

85

1,163

1,464

1,816

1,200

660

1,125

1,273

1,5751,426

1,748

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


The $385.1 billion invested in the middle market last year is a new record, eclipsing the $361.6 billion invested in 2007.



®

MIDDLE MARKET MEDIAN DEBT %

MIDDLE MARKET MEDIAN EBITDA MULTIPLES

Source: PitchBook

Source: PitchBook

segments, deal flow in the lower middle market ($25m-$100m) is down by both count and value. LMM activity typically softens during good times, relative to core middle market (CMM) and upper middle market (UMM) activity, but in 2014 it’s share of overall activity dipped to 32%, the lowest

The middle market was responsible for 78% of overall PE activity in the United States last year.

percentage we’ve recorded. Seeing increased attention is the CMM ($100m-$500m), which accounted for 54% of total deal flow, up from 49% in 2013 and 43% in 2012.

Historically, the U.S. middle market is responsible for about two-thirds of overall PE activity by count. Last year it was home to 78% of overall PE activity, well above the norm. It’s doubtful that percentage will stay that high over the long

63% 64% 63%

60%

49%

57%

53%

57%

65% 65%

40%

45%

50%

55%

60%

65%

70%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

term, given the dearth of activity at the highest end of the market. Valuations, of course, particularly in the stock market, have been blamed for that exodus, but it’s hard to avoid noticing that multiples are just as high in the middle market. The median valuation-to-EBITDA multiple was 9.3x in

2014, down from 10.5x in 2013 but high nonetheless. Bolstering both medians are big debt components, a median of 6.0x in 2014 and 6.8x in 2013. Many of the professionals we’ve talked to expect middle-market multiples to remain frothy in the near term. Yes, valuations are up, but so is optimism.

5.2

x

5.7

x

5.4

x

5.2

x

2.7

x 4.7

x

4.3

x

4.4

x 6.8

x

6.0

x

3.1x 3.3

x

3.2

x

3.5

x

2.9

x

3.6

x

3.9

x

3.3

x

3.7

x

3.3

x

8.3x9.0x

8.6x 8.7x

5.6x

8.2x 8.2x7.7x

10.5x

9.3x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Debt/EBITDA Equity/EBITDA Valuation/EBITDA



®

Deals by Region

MIDDLE MARKET DEALS (#) BY REGION

Source: PitchBook

Source: PitchBook

A rising middle-market tide lifted all regional boats in 2014.

By count, every U.S. region matched or blew past their 2013 totals. The Mountain region saw the biggest YoY gain at 31%, up from 127 deals in 2013 to 166 last year. The South was home to 382 deals in 2014, a 21% boost over the prior year, while the West Coast recorded an 11% gain over 2013 levels, with 348 deals versus 314.

Interestingly, only two regions posted gains in total capital invested – the Midwest, which was up 68% over 2013 with $18.7 billion, and the Southeast, which more than doubled its 2013 output. In fact, the difference of $22.9 billion between the region’s 2013 and 2014 levels accounted for about 28% of the country’s total increase in capital invested.

The map represents what percentage of total middle-market deal flow each region comprised in 2014, from least (dark blue) to most (dark red). For specific percentages see the “Middle Market Deals (#) by Region” graph below.

LEGEND

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%West Coast

Southeast

South

Great Lakes

New England

Mountain

Midwest

Mid-Atlantic



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Deals by Industry

MIDDLE MARKET DEAL FLOW ($) BY INDUSTRY

MIDDLE MARKET DEAL FLOW (#) BY INDUSTRY

The 864 deals made in the B2B sector in 2014 represented the second highest total on record and a 22% rise over 2013.

Source: PitchBook

Source: PitchBook

The B2B sector is somewhat synonymous with the U.S.

middle market. The industry accounted for 41% of overall PE activity in 2014, up from 38% the prior year and 34% in 2010. Investors have shifted their attention to B2B, which is performing well since the crisis. The 864 deals made in 2014, the second highest total on record, represented a 22% rise over 2013’s 709 deals. Revenues are up and optimism is high, and given that the industry’s fundamentals haven’t changed, we expect to see continued B2B strength in 2015.

The healthcare industry also saw more action. 258 deals were made in the space last year, a nominal increase over 2013 (247) but 34% more than what we saw in 2010, when the Affordable Care Act was passed. Middle-market activity hasn’t waned in the last three years, and in fact could keep climbing given PE’s interest in consumer-driven healthcare service providers like urgent care centers and pain management clinics.

The IT industry, due in large part to the software sub-sector, notched a new record for deal flow in 2014. The 272 transactions made last year just beat out 2013’s record of 268, which just beat out 2012’s 267, now the third-highest total. More important than the nominal records are the technology trends PE firms are chasing. New software solutions are infiltrating every niche of the economy and helping change business processes throughout the middle market.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%B2B

B2C

Energy

FinancialServices

Healthcare

IT

Materials &Resources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%B2B

B2C

Energy

FinancialServices

Healthcare

IT

Materials &Resources



®

Middle Market Breakdown% OF MIDDLE MARKET DEALS (#) BY SEGMENT

% OF MIDDLE MARKET INVESTMENT ($) BY SEGMENT

Source: PitchBook

Source: PitchBook

Buttressed by one of the best first quarters on record, the

core middle market continued its expansion within the overall U.S. middle market in 2014, as it grew its share of deal count from 48.5% in 2013 to 53.9% in 2014, its largest percentage on record. Activity early in the year set the stage for a banner year in the CMM, as PE firms completed 280 deals worth upwards of $56 billion in the CMM during 1Q 2014. Capital invested in the CMM also increased as a percentage of overall middle market activity from 47.6% in 2013 to 50.2% last year, largely due to a big jump from $144.4 billion to $193.3 billion.

Dealmaking in the CMM not only continues to grow within the overall middle market, but is also now responsible for nearly 42% of all private equity deal activity in the United States, after comprising just 20.5% in 2009. Much of this is likely due to the availability of cheap debt to fuel investment in companies of this size, as well as overall market conditions valuing companies more highly than at the depths of the financial crisis in 2009, when the lower middle market comprised more than 50% of activity (now it only makes up 32%) and the CMM accounted for 34.2% of all middle market deals.

Meanwhile, the UMM saw growth in capital invested and, despite its share of middle market deal count in the U.S. falling from 15.4% in 2013 to 14.1% in 2014, registered a small bump in deals.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

LMM CMM UMM

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

LMM CMM UMM

The CMM not only continues to grow within the middle market, it now represents nearly 42% of all PE deal activity in the U.S.



®

Company Name

2014 Deal Month

Size ($M) Industry

Deal Type

PayLink Payment Plans

July $83 Financial Services

Buyout/LBO

Sport Chalet Aug. $70 B2C Add-on

Three Eagles Communications

Oct. $66.5 B2C Add-on

The Cypress Insurance Group

July $63 Financial Services

Buyout/LBO

MPI Products Aug. $62.5 B2B SBO

Company Name

2014 Deal Month

Size ($M) Industry Deal Type

Cole-Parmer Instrument

Aug. $480 Healthcare Carveout

Northwest Hardwoods

July $465 Materials & Resources

SBO

Tensar July $400 B2B SBO

Pike Electric Dec. $383 Energy P2P

Home Partners of America

Nov. $375 B2CBuyout/LBO

Company Name

2014 Deal Month

Size ($M) Industry Deal Type

Ipreo Aug. $975 B2B SBO

National Veterinary Associates

Aug. $920 Healthcare SBO

Healogics July $910 Healthcare SBO

TGI Friday's July $900 B2CCorporate Divestiture

Toms Shoes Nov. $625 B2C Buyout/LBO

UPPER MIDDLE MARKE T SELEC T DEAL S

CORE MIDDLE MARKE T SELEC T DEAL S

LOWER MIDDLE MARKE T SELEC T DEAL S

UMM DEAL FLOW

CMM DEAL FLOW

LMM DEAL FLOW

Source: PitchBook

Source: PitchBook

Source: PitchBook Source: PitchBook

Source: PitchBook

Source: PitchBook

$14

$24

$3

9

$5

4

$3

9

$20

$3

7

$3

8

$4

2

$3

7

$4

8

$4

1

17

33

61

98

65

29

60 6456

57

7366

0

20

40

60

80

100

120

$0

$10

$20

$30

$40

$50

$60

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2012 2013 2014


$4

7

$3

5

$28

$4

7

$26

$3

6

$4

0

$4

3

$5

6

$5

4

$4

2

$4

0

138146

145

251

139

151

201203

280246

203213

0

50

100

150

200

250

300

$0

$10

$20

$30

$40

$50

$60

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2012 2013 2014


$13

$11

$7

$7

$6

$5

$8

$6

$9

$7

$6

$4

171 179

149

186

11493

169

139

181

145131

98

0

25

50

75

100

125

150

175

200

$0

$2

$4

$6

$8

$10

$12

$14

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2012 2013 2014




®

Exit ActivityMIDDLE MARKET EXITS BY QUARTER

Source: PitchBook

U.S.-based middle market exit activity continued

its solid run in 2014, as PE firms sold 780 middle market companies totaling $96 billion. Both figures are new records and represent 17.3% and 39.1% increases, respectively, over 2013 totals. Combined with the fourth quarter of 2013, which recorded 214 exits and $24 billion in capital exited, the last five quarters saw just under 1,000 U.S. middle market companies totaling $120 billion on the sell-side. It was that good of a year for middle market exits.

All three exit ramps saw increases in use over 2013 totals, with more than 500 corporate acquisitions, nearly 70 IPOs and close to 200 secondary buyouts of U.S.-based PE-backed middle market companies in 2014.

Source: PitchBook

MIDDLE MARKET EXITS BY YEAR

$9

.3

$15

.9

$16

.0

$23

.7

$8

.3

$19

.0

$21.8

$20

.2

$14

.0

$17

.7

$17

.7

$3

1.9

$12

.1

$15

.9

$16

.6

$24

.0

$23

.2

$24

.5

$24

.3

$23

.7

107 113 112

184

95

147159

175 178 182

159

237

125

160 166

214

180 187

210 203

0

50

100

150

200

250

$0

$5

$10

$15

$20

$25

$30

$35


2010 2011 2012 2013 2014

Capital Exited ($B) # of Exits

$6

0

$6

0

$73

$3

5

$21

$6

5

$6

9

$8

1

$6

9

$9

6

468 495

570

367

216

518

577

755

665

780

0

100

200

300

400

500

600

700

800

900

$0

$20

$40

$60

$80

$100

$120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Capital Exited ($B) # of Exits

The 780 middle market exits totaling $96 billion in 2014 represented new records for both exit count and capital exited.



®

MIDDLE MARKET EXITS (#) BY TYPE

MIDDLE MARKET EXITS (#) BY SIZE

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Corporate Acquisition IPO Secondary Buyout

Source: PitchBook

Source: PitchBook

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$25M-$100M $100M-$500M $500M-$1B

Exit activity, particularly to cash-laden corporate acquirers, hasn’t been dampened by increasing valuations.

Strong public markets drove much of the increase in IPOs, as well as exit valuation increases across all three options. PE-backed middle market companies that went public raised close to $19 billion in 2014, while corporate acquirers dished out $50.4 billion for middle market companies last year.

These increases, many in the core and upper middle markets have pushed the share of exits in the lower middle market to below 20% for the first time and the share of exits in the UMM to more than 20% for the first time. CMM exits comprised 57.8% of all exits in 2014, which is up from 52.6%. But, as noted before, exit activity, particularly to cash-rich corporate acquirers, hasn’t been dampened by increasing valuations. It will be interesting to see whether 2015 will continue to be a brisk year for exits in the U.S. middle market.

The B2B sector—which experienced a bit of a resurgence on the deal side—had more companies head for the exit in 2014 than ever before, as well. Reflecting the growing backlog in the company inventory and strength in the sector, 269 B2B companies were sold last year, greater than the 197 that were sold in 2013 and 246 in 2012. Most other sectors experienced increases in exit count, except energy, where PE firms may have decided to hold onto their investments until oil prices bounce back from their near-six-year low.



®

Fundraising Activity

Source: PitchBook

Source: PitchBook

U.S. middle market private equity fundraising activity

slowed down in the second half of 2014 to finish the year a tad behind 2013’s fundraising pace, as 165 funds totaling $136 billion closed last year. While middle market PE firms weren’t able to match the number of funds closed in 2013 last year, they more than surpassed the prior year’s $116 billion in capital raised, largely due to an uptick in the number of funds closed in the $1 billion to $5 billion range, from 33 in 2013 to 46 in 2014. The 46 funds in that bucket are the most since 51 were closed in the buyout bonanza of 2007.

This increase pushed the average middle market buyout fund size from $697 million in 2013 to $797 million last year, which saw the largest average buyout fund size since 2009.

MIDDLE MARKET FUNDRAISING BY QUARTER

MIDDLE MARKET FUNDRAISING BY YEAR

$17

$18

$17

$15

$3

4

$3

0

$23

$19

$3

2

$3

4

$23

$20

$26

$3

8

$26

$27

$4

1

$3

8

$26

$3

1

3128

19

27

37 35

27

3941

3430

35

42 42

40

4448

43

35

39

0

10

20

30

40

50

60

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45


2010 2011 2012 2013 2014

Capital Raised ($B) # of Funds Closed

$9

2

$12

6

$14

7

$14

0

$8

4

$6

7

$10

6

$11

0

$11

6

$13

6

147

180

222197

109

105

138 140

168 165

0

50

100

150

200

250

$0

$20

$40

$60

$80

$100

$120

$140

$160

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Capital Raised ($B) # of Funds Closed

With 165 funds and $136 billion in capital last year, middle market PE firms closed slightly fewer funds but for more capital than in 2013.



®

MIDDLE MARKET FUNDS (#) BY FUND SIZE

MIDDLE MARKET BUYOUT FUNDS AVERAGE TIME TO CLOSE (IN MONTHS)

But PE firms (and their limited partners) have largely shied away from mega-funds in recent years; and despite the increase in larger middle market funds, fundraising has mostly remained in the lower-to-core middle markets. For example, 32% of middle market funds closed in the $100 million to $250 million range, a size bucket that hasn’t varied beyond 27% at the low end (in 2010) and 37% at the high end (in 2009). Similarly, funds in the $500 million to $1 billion size bucket comprised 22% of U.S. middle market vehicles in 2014, which is on the high end of a decade-long range of 17%-24%.

0%

10%

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30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$100M-$250M $250M-$500M $500M-$1B $1B-$5BSource: PitchBook

Source: PitchBook

0

5

10

15

20

25

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Over the last few years, there has been a decline in the average time to close a middle market buyout fund.

What has been a clear trend over the last few years is the slow decline in the average time to close a middle market buyout fund. With dealmaking conditions much improved over the financial crisis, public markets reaching new heights, and exit options abounding for private equity firms, LP confidence in private equity is at a post-crisis high.

Given these market conditions, middle market buyout shops are closing their vehicles in roughly 13.3 months, down from 15.3 months in 2013 and a decade-high of

20.6 months in 2011. With the fundraising cycle now nearing just one year, and dealmaking and exit activity continuing

at a brisk pace, it wouldn’t be surprising to continue to see strong middle market fundraising in 2015.



®

2H 2014 Middle Market League TablesMOST ACTIVE INVESTORS MOST ACTIVE LAW FIRMS

MOST ACTIVE ADVISORS

Source: PitchBook

Source: PitchBook

Source: PitchBook

ABRY Partners 27

Audax Group 23

The Riverside Company 18

GTCR Golder Rauner 16

Kohlberg Kravis Roberts 14

The Carlyle Group 14

Hellman & Friedman 12

Summit Partners 12

The Blackstone Group 12

Vista Equity Partners 11

KRG Capital Partners 10

CI Capital Partners 9

Warburg Pincus 9

H.I.G. Capital 8

PNC Mezzanine Capital 8

The CapStreet Group 8

The Edgewater Funds 8

Triangle Capital Corporation 8

Firm Deals

Kirkland & Ellis 79

Jones Day 39

DLA Piper 34

Paul Hastings 31

Paul Weiss Rifkind Wharton & Garrison 23

Ropes & Gray 20

Weil Gotshal & Manges 20

Latham & Watkins 19

Honigman Miller Schwartz and Cohn 14

Dechert 14

Goodwin Procter 14

Shearman & Sterling 12

Greenberg Traurig 11

O’Melveny & Myers 11

Morgan, Lewis & Bockius 9

Willkie Farr & Gallagher 9

Skadden, Arps, Slate, Meagher & Flom 7

Vinson & Elkins 7

Choate Hall & Stewart 7

BakerHostetler 7

Proskauer 6

Simpson Thacher & Bartlett 6

Winston & Strawn 6

Perkins Coie 6

K&L Gates 6

Dorsey & Whitney 6

McDermott Will & Emery 5

Davis Polk & Wardwell 5

Fredrikson & Byron 5

Sidley Austin 5

Bass Berry & Sims 5

Katten Muchin Rosenman 5

Akerman 5

Stroock & Stroock & Lavan 5

Harris Williams & Co. 22

Houlihan Lokey 19

William Blair & Company 17

Piper Jaffray 13

KPMG 12

Lincoln International 12

Jefferies Group 11

Deloitte & Touche 9

Jones Day 8

Morgan Stanley 8

Raymond James & Associates 8

Robert W. Baird 8

Credit Suisse 7

Evercore Partners 7

Goldman Sachs 7

Generational Equity 6

Duff & Phelps 6

Moelis & Company 6

Firm Deals

Firm Deals



®

MethodologyMIDDLE MARKET DEFINITION

For this report, the middle market (MM) is defined as U.S.-based companies acquired through buyout transactions between $25 million and $1 billion. Note that minority deals are not included. The middle market is further broken down into the lower middle market (LMM; $25 million to $100 million), the core middle market (CMM; $100 million to $500 million) and the upper middle market (UMM; $500 million to $1 billion). This report covers only U.S.-based middle-market companies that have received some type of private equity investment.

TOTAL CAPITAL INVESTED Total amount of equity and debt used in the private equity investment

Ex. $10 million of equity and $20 million of debt = $30 million of total capital investment

PitchBook’s total capital invested figures include deal amounts that were not collected by PitchBook but have been estimated using a multi-dimensional estimation matrix, which takes into account year of investment, deal type, platform v. add-on, industry and sector. Some data sets will include these extrapolated numbers while others will be compiled using only data collected directly by PitchBook; this explains any potential discrepancies that may be noticed.

FUNDRAISINGPitchBook defines middle-market funds as PE investment vehicles with between $100 million and $5 billion in capital commitments. The report only includes private equity funds that have held their final close. Funds-of-funds and LP secondary funds are not included.

EXITSThe report includes both full and partial exits of middle-market companies via corporate acquisition, secondary private equity buyout and initial public offering (IPO). PitchBook has utilized its multi-dimensional substitution and estimation matrix to estimate transaction sizes where the deal amount is unknown.

LEAGUE TABLESAll League Tables are compiled using deal counts for middle-market transactions. For example, the Most Active Advisors League Table shows the number of U.S.-based middle-market deals that a firm advised on during the second half of 2014. Deals on which a firm advised multiple parties will only be counted once for that firm.



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2015 Annual US Middle Market Report

Economy & Finance

Transcript of 2015 Annual US Middle Market Report