Deal flow for sub-USD1 billion private equity (PE) funds accelerated at the start of 2018 and set an all-time record for any first quarter, according to data analysed by top 100 US law firm Akerman.
Despite this year’s decrease experienced by the rest of middle market funds, data found in the second quarterly Akerman PErspectives Report indicates activity surrounding sub-USD1 billion funds continued to show positive divergence from peers of larger size and scope.
Compared to 2017, exit value and volume for these sub-USD1 billion buyout vehicles for the first quarter of 2018 also were up and stable, in contrast to bigger funds. Based on Akerman’s analysis, these metrics indicate sub-USD1 billion funds were relatively more active in deploying capital during the first quarter of 2018 than their larger, more established counterparts, while maintaining relatively favourable exit metrics.
“Sub-USD1 billion PE funds are poised for another strong year, thereby increasing their lure as compelling investment vehicles among the range of popular alternative asset classes,” says Carl Roston (pictured), co-chair of Akerman’s Corporate Practice Group. “Similar to larger funds, these players operate with increasing sophistication, effectively pursuing nice strategies that have delivered attractive returns through nimble, creative deal structures. In such a competitive market environment, these funds require effective deal advisors able to act as deft risk managers that can execute upon often accelerated transactions, foster collaboration with management teams and drive efficiencies.”
“Our report shows available data for 2018 indicate deal flow for US PE funds in the sub-USD1 billion range has so far equaled to a third of all middle market transactions,” says Jonathan Awner, co-chair of Akerman’s Corporate Practice Group. “With increasing volatility rippling through the markets this year, this data point alone shows the resilience and overall attractiveness of this fund range, a market segment which Akerman lawyers have long served and understand. At a time of shifting market priorities, we continue to remain focused on this end of the market and help our clients meet their objectives through prudent yet effective dealmaking.”