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Micro Private Equity: Generating Returns in an Expensive and Overcrowded PE Market

  • Writer: PrimeAlpha Thought Leadership
    PrimeAlpha Thought Leadership
  • Oct 15, 2018
  • 2 min read

Updated: Mar 17

Micro Private Equity: Generating Returns in an Expensive and Overcrowded PE Market

Private equity investors are navigating a landscape marked by intense competition and escalating costs, with firms holding a record $1.1 trillion in dry powder. In response, attention is turning towards the lower middle-market, previously overlooked but now seen as a potential source of strong returns. However, high competition has driven purchase multiples to historic highs across all market tiers, prompting larger investors to venture downstream in search of viable opportunities.


Bain & Company's research highlights the growing importance of exit multiples in determining private equity success, challenging the traditional emphasis on operational improvements. This shift poses a dilemma for investors facing inflated valuations and prolonged capital lock-up periods.


Amidst these challenges, Micro Private Equity emerges as a compelling alternative, leveraging stable entry multiples and diverse acquisition targets to target robust internal rates of return (IRRs).


Access the full report to gain insights into how investors are navigating the evolving landscape of private equity, exploring opportunities in overlooked segments like the lower middle-market and leveraging micro investments to boost returns and diversification.



If you do not have a work email address, please email us at info@primealpha.com and we can email you the report directly.



Table of Contents

  • Introduction to Micro Private Equity

  • Imbalance in Private Equity: Causes and Effect

  • Record Multiples, Even in the Middle and Lower Middle Market

  • PE Returns Driven by Exit Multiples, Operational Execution Negligible

  • Where can Investors go?

  • The Micro Private Equity Opportunity

  • Barriers to Entry: Insulating the Micro Private Equity Market from Bulge Bracket

  • Complementary to Existing Private Equity Allocations

  • Investing Directly versus Funds

  • How to Invest and Who are the Players?




Thanks to our Contributor

Osceola Capital Management Logo

Osceola Capital Management offers access to the Micro Private Equity segment of the economy with proven results. The firm’s investment team possesses deep operational experience having founded, run and sold successful businesses.

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