Middle-market buyouts are wooing patient investors who are wanting to add value through operational improvements rather than financial engineering and debt, according to Josh Peel, Credit Suisse’s vice-president alternative investments. Lower EBITDA purchase multiples of middle-market businesses – one to two times lower than the mega buyout end – meant there was significant upside for the old-fashioned private equity disciplines of strategic business reviews and implementation of real process changes, managing director of Credit Suisse’s private equity group, David Russell, said.
The mid-market buyout sector is already gaining popularity, despite the long J-curve where investment is generally in the first five years with returns occurring in years four to 11, Peel said.
