Middle Market Private Equity | AEA Investors (2022)

A 50+ year legacy of relationship building, partnership and value creation makes AEA MMPE the preferred strategic partner

MMPE Team

MMPE Portfolio

Investment Criteria

Middle Market Private Equity | AEA Investors (1)

Enterprise Value:

$400mm – $3bn+

Middle Market Private Equity | AEA Investors (2)

EBITDA:

$25mm – $250mm

Middle Market Private Equity | AEA Investors (3)

EQUITY INVESTMENT Size:

$250mm+

Middle Market Private Equity | AEA Investors (4)

Sectors

Industrials, Consumer, Services

Middle Market Private Equity | AEA Investors (5)

Location

North America / Europe

Middle Market Private Equity | AEA Investors (6)

We Provide the Resources, Capital and Know-How Needed to Accelerate the Growth of Middle Market Companies

With over $12 billion of capital under management, the AEA MMPE team is committed to working in concert with our portfolio companies to help execute the strategy that is right for their business

(Video) Finding Value in Lower Middle Market Private Equity

Key Highlights:

01

Extensive history of partnering to achieve growth and operational improvements

50+ Years

Of investing in the middle market across many economic cycles

02

Highly cohesive and experienced team of sector-focused investment professionals

17 Years

Average tenure at AEA of our MMPE investment partners

With Whom We Want to Partner

We invest in a shared vision — our job is to help you achieve it

We look for companies with the framework, talent and ambition to transform good businesses into leading companies. Across all industries, MMPE generally invests in opportunities with the following characteristics which enable them to outperform:

Significant runway for growth, organically and through acquisition

Differentiated business model with clear value proposition

(Video) Mid-Market Private Equity Investing - David, Pine Island Private Equity & Goldman Private Investing

Proven capability in industrial, consumer and services sectors

Talented management team with the ability to lead and willingness to grow beyond home region

How We Work

Our long history of working with management to invest behind growth and operational change positions AEA MMPE as the partner of choice for leading middle market companies ready for their next phase of success

01

Industry Focus

Proactive, specialist approach with continuous evaluation of sector trends to identify attractive deal opportunities and develop a differentiated strategy for value creation

02

Expansive Network

Extensive global network of industry veterans, experienced Operating Partners, executive talent and third-party resources that help drive sustainable, long-term growth across our portfolio companies

03

Global Resources

With six offices across three continents, we have professionals on the ground that live, speak and operate on a local level regardless of the geography

04

Tenured Team

Team of tenured professionals who bring significant knowledge and expertise to the full cycle of AEA MMPE’s investment process

Middle Market Private Equity | AEA Investors (7)

Case Studies

1-800 Contacts, Inc.

Disruptive Technology Innovation

Read More about 1-800 Contacts, Inc.

Dematic

Technology-Forward Global Leaders in Automation

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Read More about Dematic

Burt's Bees, Inc.

True to Nature

Read More about Burt's Bees, Inc.

View All Case Studies

Hear It First Hand

“Given my long history in building products, I knew there was a tremendous opportunity in 2008 to build a unique, best in class roofing platform by focusing on culture, the employee experience and superior customer service,” said SRS’ Chairman Ron Ross. “I chose AEA to be my partner based on their industry experience and prior successes in building businesses, as well as their shared vision for what SRS could become. Ultimately, we were successful in identifying the initial platform investment in Florida and then accelerating the growth via acquisitions and greenfields. AEA was a truly value-added partner using their strategic and capital resources to support our growth and really helped us achieve SRS’ mission to be the premier roofing distributor.”

Ron Ross

Chairman of the Board, SRS Distribution Inc.

“The team at AEA have been terrific business partners and friends for nearly twenty years. They have provided significant support to help us achieve our growth potential by encouraging us to be more aggressive in our organic growth opportunities, providing capital for acquisitions and helping us expand our business by developing strategies to enter new product lines, end markets and geographies. I value our relationship and am pleased to support AEA over many years.”

Ken Kranzberg

Chairman Emeritus, TricorBraun Holdings, Inc.

“AEA has supported and encouraged investing for future growth, from key talent additions and expansion of R&D resources to strategic add-on M&A. This support has helped us drive new product introductions and expansion into adjacent technologies. AEA has been a genuine partner helping us build a best in class industrial technology company positioned for long term success.”

David Nislick

Chief Executive Officer, Excelitas Technologies

“AEA spent nearly a decade learning about our business and leveraging their knowledge of packaging to be a value-added partner for us. Working together, we took ProMach to a new level by expanding into new end market such as pharmaceuticals, leveraging their global capabilities to help us acquire new platforms in Europe and Asia, and implementing the ProMach Business System to take better advantage of our economies of scale. The investments they helped us make in our organization have enabled us to continue our robust growth trajectory even after their exit.”

Mark Anderson

Chief Executive Officer, Pro Mach Group, Inc.

“AEA was the ideal partner to support us in transforming Evoqua into the best-in-class leader that it is today. AEA’s experience in ownership transitions and sensitivity to the needs of all stakeholders helped ensure a successful outcome for Siemens as well as Evoqua’s management and employees. Under AEA’s ownership, Evoqua benefited from the extensive resources and unique global network of AEA, which enhanced our ability to successfully pursue numerous organic, inorganic, and operational excellence opportunities.”

Ron Keating

Chief Executive Officer, Evoqua

(Video) Advice For Middle-Market Recruiting - Private Equity Panel, Goldman, Ares, Blackstone, Shore & Huron

“I have had the pleasure of being an investor with AEA for nearly 20 years and in that time have served on multiple portfolio company boards. AEA’s sector focus and global capabilities truly helped transform Dematic. They recognized from the outset the tremendous growth potential from warehouse automation driven by e-commerce. They capitalized on Dematic’s position as the global leader to further its differentiation by significantly increasing R&D investment, especially in software, as well as building out low-cost country engineering and manufacturing centers of excellence to enhance the customer value proposition. Dematic was truly a different, and more valuable, company at exit.”

Rick Wagner

Former Chairman of Dematic, Former Chairman and CEO of General Motors

“The team at AEA were phenomenal partners who saw the potential and vision in At Home when very few others did. They supported the significant transformation of the core business they had bought and helped us find the talent and resources to be able to turn the business into one of the leading specialty retailers in the country. I especially appreciated their focus on long term value which allowed us to make the investments we needed to be successful long after their exit.”

Lee Bird

Chief Executive Officer, At Home

Burt’s Bees success story had many authors, first among those was AEA,” reflected John Replogle, CEO of Burt’s Bees. “Together we built a tremendous business by taking smart risks, leaning into principles and pioneering new ways of operating. For me, the partnership with and unyielding support from the AEA team emboldened me to push a visionary strategy. They brought operating expertise, financial counsel and talent to the table to help us build a brand and business of unique value.

John Replogle

Chief Executive Officer, Burt's Bees, Inc.

“I appreciated the tremendous partnership we had with our AEA team. They worked with us to dramatically upgrade the talent on our team, expand our presence in the industry and supported several key acquisitions, always with a maintained focus on building the long-term value proposition of the company. They are smart, savvy investors and partners who engage where they can add value without adding complexity and overhead.”

John Graham

Chief Executive Officer, 1-800 Contacts, Inc.

“I met AEA in 2016 when I was looking for a new partner to continue the disruption of the cooking industry and building of Traeger as a lifestyle platform overall. We valued AEA’s passion for our product and community, and their unique experience in brand building and thoughtful approach to channel strategy. Our partnership has extended across their organization and network to include operators with specific expertise in retail distribution, talent acquisition, supply chain, and finance. This support has been a helpful enabler of growth for us both organically and with accretive acquisitions in new accessory categories. It has been an absolute pleasure working with a team that really understands and embraces our mission. Their credibility and integrity is unmatched and I’m thankful to call AEA not only trusted advisors but also great friends.”

Jeremy Andrus

Chief Executive Officer, Traeger Pellet Grills Holdings, LLC

Continue Learning About AEA Middle Market Private Equity

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AEA MMPE Portfolio

Each business and story is unique, but every investment looks like an ‘AEA’ deal

explore The AEA MMPE Portfolio

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AEA MMPE Team

Collaborative, one-firm mentality. No names on the door

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AEA MMPE News

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FAQs

What is middle market private equity? ›

Middle market private equity refers to the sector of private equity businesses that invest in companies worth between $50 million and $500 million. Companies in this range tend to be well-established, without the risks of investing in a small startup.

Why private equity is going big on the middle market? ›

One reason is that it is usually more fragmented, offering opportunities to grow organically and through acquisitions. Middle market firms also are nimbler and better positioned than their larger peers to pivot quickly, leverage innovation and take advantage of opportunities to grow and capture market share.

How big is a middle market PE fund? ›

So, our definition will be: Middle Market Private Equity Definition: Middle market private equity firms typically acquire companies for purchase prices between $50 and $500 million and use leverage in deals but tend to focus more on growth and operational improvements.

What percentage of portfolio should be in private equity? ›

Abstract. Private equity provides diversification benefits in portfolios with at least 60 percent equity. Illiquidity, risk, and inefficient markets cause some investors to consider private equity unsuitable for their portfolios.

How many middle market PE firms are there in the US? ›

There are around 200,000 companies in the middle market — more than a quarter of which are PE-owned — that provide more than 30 million American jobs.

What is considered middle market? ›

Understanding Middle-Market Firms

Typically, in the U.S., companies with annual revenues above $100 million and below $3 billion are regarded as middle-market firms. Defined by the number of employees, the companies with more than 100 and less than 2,000 employees can usually be considered to be middle-market firms.

What is considered upper middle market private equity? ›

What is the Upper Middle Market? The upper middle market is a market consisting of firms that earn revenues between $500 million to $1 billion.

How many lower middle market private equity firms are there? ›

Lower Middle Market Private Equity: The Investment Sweet Spot. The lower middle market is quickly gaining popularity among private equity firms. These are companies with annual revenues averaging between $5 million and $100 million. According to Forbes, there are approximately 350,000 such businesses nationwide.

Why is there a lower middle market? ›

The lower middle market allows investors of all stripes to purchase assets with relatively low debt (and, therefore, risk) compared to much larger companies. Additionally, the COVID-19 pandemic impact cannot be ignored when selling your business.

How many employees do middle market companies have? ›

We employ two categories for the mid-market. The Lower Mid-Market are companies with 100 to 500 employees. The Upper Mid-Market are companies with 500 to 2,500 employees.

What is middle market enterprise value? ›

How is the Middle Market Defined and What are its Unique Challenges? The “Middle Market” includes businesses that are valued between $10 million and $1 billion, comprising approximately 200,000 companies in the U.S. and accounting for around one-third of total private sector gross domestic product (GDP).

What is considered middle market Ebitda? ›

EBITDA=$5,000,000 to $10,000,000

By definition, this level of EBITDA could be truly deemed “the middle market.” Most would consider anything below the $10M EBITDA size range as “lower” middle-market.

How much do you need to invest in private equity? ›

The minimum investment in private equity funds is relatively high—typically $25 million, although some are as low as $250,000. Investors should plan to hold their private equity investment for at least 10 years.

Should you invest in private equity? ›

If you have significant available capital, access to potential deals, knowledge of the due diligence necessary for effective private equity investing, and a willingness to take some risks, private equity investing could be a perfect addition to your portfolio.

How much should I allocate to venture capital? ›

Data that was collected from thousands of active angel investors the common consensus is that venture investing should be in a range of 12-18% of your overall investment portfolio depending on your personal risk – profile.

Why is it difficult to find a potential buyer for the participation the PE owns? ›

Why is it difficult to find a potential buyer for the participation the PE owns? wrong: The buyer may not be intereseted in the financing of the company. wrong: The price is defined by the market and a seller could buy the shares forspeculative purposes.

Why is private equity so popular? ›

One reason many investors find private equity so alluring: It gives them the chance to invest in the kinds of companies that have been slowly disappearing from the public market—small-cap stocks with large-cap potential.

How do private equity firms make money? ›

Private equity firms buy companies and overhaul them to earn a profit when the business is sold again. Capital for the acquisitions comes from outside investors in the private equity funds the firms establish and manage, usually supplemented by debt.

How many middle market PE firms are there? ›

Smaller companies looking for growth capital and/or shareholder liquidity are likely seeking the attention of the best lower middle market private equity (PE) firms. There are more than 350,000 middle market companies in the U.S. alone.

What are middle market clients? ›

Investopedia considers middle market firms to be those with sizable annual revenues, ranging from $50 million to $1 billion, which straddle the market between smaller companies and billion-dollar giants.

What is the difference between mid-market and enterprise? ›

Small and medium-sized enterprises (SME), also known as midsize enterprises (MSE), are commonly referred to as mid-market. They are companies that are beyond the small and medium businesses (SMB) phase but are not large enough to be called a large enterprise (LE) and make it into Fortune 500 or Forbes 2000.

How do you evaluate a private equity firm? ›

The three measures of private equity performance you need to know are internal rate of return (IRR), multiple of invested capital (MOIC), and public market equivalent (PME). It's important to learn and use all three metrics in tandem because they account for the others' blind spots.

What is fund size in private equity? ›

The total amount of capital committed by the investors of a venture capital fund. © 2022 Institutional Limited Partner Association. All rights reserved.

What is mid-market M&A? ›

A middle market investment bank is an investment institution that takes on assignments exclusively for mid-market mergers and acquisitions (M&A) transactions. Typically, the services provided by these investment banks (also known as i-banks) will be restricted to sell-side, buy-side and financing engagements.

How large is the lower middle market? ›

Lower middle market refers to the lower end of the economy's middle market segment, which is measured in terms of the firms' annual revenue. Firms that are grouped under the lower middle market category realize an annual revenue that ranges from $5 million to $50 million.

How many lower middle market companies are there? ›

Currently there are about 350,000 companies in this segment, compared to 25,000 companies with revenues between $100 million and $500 million (the middle market) and only a few thousand companies with revenues above $500 million (the upper middle market), according to Forbes.

How many companies are in the lower middle market? ›

With an estimated 350,000 lower middle market companies in the US according to Forbes, it's a larger pool of target companies than in other segments of the market.

What is above middle market? ›

Lower-middle market is usually around $5 million to $50 million in revenue, while middle market is $50 million to $500 million in revenue, and upper-middle market is $500 million to $1 billion in revenue. Types of businesses.

What are middle market investment banks? ›

Middle market investment banks are financial institutions or intermediaries that deal mostly with mid-market firms, specifically for raising debt or equity capital, as well as mergers and acquisitions.

What is lower middle market business? ›

What is Lower Middle Market? Lower Middle Market Companies are generally owner-operated businesses with revenue of between $5 million and $50 million. These companies are in diverse industries and are generally profitable. These companies often provide a niche or targeted offering/product to their end customers.

What is mid market employee size? ›

Also known as “mid-market”. SME's are defined as having between 101-500 employees and between $10 million and $1 billion in annual revenue.

How many middle market companies are in the US? ›

In the United States, there are roughly 350,000 middle-market or mid-market companies, producing an estimated 33% of the nation's GDP.

What size is a mid size company? ›

The attribute used most often is number of employees; small businesses are usually defined as organizations with fewer than 100 employees; midsize enterprises are those organizations with 100 to 999 employees.

Is 5x revenue good valuation? ›

What the chart says is this: The 5x base value assumes the company has a stable history of performance and has no significant blemishes. A stable financial performance is the most basic component, the foundation of a valuation.

How many times EBITDA is a business worth? ›

Generally, the multiple used is about four to six times EBITDA. However, prospective buyers and investors will push for a lower valuation — for instance, by using an average of the company's EBITDA over the past few years as a base number.

What is a good EBITDA multiples for valuation? ›

The EV/EBITDA Multiple

The enterprise-value-to-EBITDA ratio is calculated by dividing EV by EBITDA or earnings before interest, taxes, depreciation, and amortization. Typically, EV/EBITDA values below 10 are seen as healthy.

Can small investors invest in private equity? ›

Private equity involves investing in businesses or funds not listed on public stock exchanges. Private equity investments offer high returns, but are illiquid and have high minimums. Traditional private equity is only open to the wealthy, but newer forms are available to smaller investors.

How much do private equity investors make? ›

In 2022, the average annual compensation for a Private Equity Associate with less than three years of experience was roughly $99,000. 1 The nationwide average salary range was $54,000 to $180,000.

Can anyone be a private equity investor? ›

A private equity fund is typically open only to accredited investors and qualified clients. Accredited investors and qualified clients include institutional investors, such as insurance companies, university endowments and pension funds, and high income and net worth individuals.

What percentage of private equity investments fail? ›

Looking at bottom-quartile funds, he found that 75 percent had failure rates of 35 percent or higher. The average is around 27 percent for buyout firms.

Is private equity High risk? ›

Overall, the risk profile of private equity investment is higher than that of other asset classes, but the returns have the potential to be notably higher. For investors with the funds and the risk tolerance, private equity can be a lucrative investment for a portion of a portfolio.

What is a good return in private equity? ›

Depending on the fund size and investment strategy, a private equity firm may seek to exit its investments in 3-5 years in order to generate a multiple on invested capital of 2.0-4.0x and an internal rate of return (IRR) of around 20-30%.

How much of portfolio is angel investing? ›

Half of angels commit no more than 15% of the net worth to seed and startup ventures. A typical angel portfolio is made up of ten or more such investments of a minimum of $25,000 per investment and reserve at least 50% for future rounds of investments in the same companies.

What investors look for before investing? ›

What Investors Look For
  • The Right Fit.
  • Location, Industry, and Stage of Development.
  • Market Size.
  • More Than a Good Idea.
  • A Competitive Edge.
  • Social Proof.
  • Traction.
  • Credibility is All.

How much return does a VC expect? ›

They expect a return of between 25% and 35% per year over the lifetime of the investment. Because these investments represent such a tiny part of the institutional investors' portfolios, venture capitalists have a lot of latitude.

What is considered upper middle market private equity? ›

What is the Upper Middle Market? The upper middle market is a market consisting of firms that earn revenues between $500 million to $1 billion.

What is the difference between mid-market and enterprise? ›

Small and medium-sized enterprises (SME), also known as midsize enterprises (MSE), are commonly referred to as mid-market. They are companies that are beyond the small and medium businesses (SMB) phase but are not large enough to be called a large enterprise (LE) and make it into Fortune 500 or Forbes 2000.

What is a lower middle market private equity firm? ›

The lower middle market is quickly gaining popularity among private equity firms. These are companies with annual revenues averaging between $5 million and $100 million. According to Forbes, there are approximately 350,000 such businesses nationwide.

What is above middle market? ›

Lower-middle market is usually around $5 million to $50 million in revenue, while middle market is $50 million to $500 million in revenue, and upper-middle market is $500 million to $1 billion in revenue. Types of businesses.

How many middle market PE firms are there? ›

Smaller companies looking for growth capital and/or shareholder liquidity are likely seeking the attention of the best lower middle market private equity (PE) firms. There are more than 350,000 middle market companies in the U.S. alone.

How do you evaluate a private equity firm? ›

The three measures of private equity performance you need to know are internal rate of return (IRR), multiple of invested capital (MOIC), and public market equivalent (PME). It's important to learn and use all three metrics in tandem because they account for the others' blind spots.

How big is the lower middle market? ›

Firms that are grouped under the lower middle market category realize an annual revenue that ranges from $5 million to $50 million. Lower middle market companies are usually ranked just above small and medium enterprises (SMEs), which report revenues lower than $5 million.

Is mid-market the same as SMB? ›

SMB: Small and Medium-Sized Businesses. SMBs are defined as having less than 100 employees and between $5-$10 million in annual revenue. SME: Small and Medium-Sized Enterprises. Also known as “mid-market”.

How many employees does a mid size company have? ›

The attribute used most often is number of employees; small businesses are usually defined as organizations with fewer than 100 employees; midsize enterprises are those organizations with 100 to 999 employees.

How do you determine if a company is small medium or large? ›

In small and medium-sized enterprises (SMEs) employ fewer than 250 people. SMEs are further subdivided into micro enterprises (fewer than 10 employees), small enterprises (10 to 49 employees), medium-sized enterprises (50 to 249 employees). Large enterprises employ 250 or more people.

What happens when private equity buys your company? ›

When a private-equity firm (PE) acquires a company, they work together with management to significantly increase EBITDA during its investment horizon. A good portfolio company can typically increase its EBITDA both organically and by acquisitions.

Why is private equity so popular? ›

One reason many investors find private equity so alluring: It gives them the chance to invest in the kinds of companies that have been slowly disappearing from the public market—small-cap stocks with large-cap potential.

How many lower middle market companies are there? ›

Currently there are about 350,000 companies in this segment, compared to 25,000 companies with revenues between $100 million and $500 million (the middle market) and only a few thousand companies with revenues above $500 million (the upper middle market), according to Forbes.

What are examples of middle market companies? ›

Mid-Market 1000 Preview
2018 RankingBusiness NamePrimary Industry
1Great Lakes Cheese, Inc.Dairy Products
2Steelcase Inc.Office Furniture and Fixtures
3Continental Resources IncOil & Energy
4Payless HoldingsRetail
64 more rows

What are middle market clients? ›

Investopedia considers middle market firms to be those with sizable annual revenues, ranging from $50 million to $1 billion, which straddle the market between smaller companies and billion-dollar giants.

What is mid-market M&A? ›

A middle market investment bank is an investment institution that takes on assignments exclusively for mid-market mergers and acquisitions (M&A) transactions. Typically, the services provided by these investment banks (also known as i-banks) will be restricted to sell-side, buy-side and financing engagements.

Videos

1. Which Private Equity Firm Should You Work For?
(Peak Frameworks)
2. Paths to Private Equity: Middle Market Banking to Harvard Business School and Megafund (Full Video)
(OfficeHours)
3. Five Ways Private Equity Firms Win Deals in a Crowded Mid Market
(Navatar Group)
4. FUNDamentals: A Mid-Market Guide to the Fund Formation Process
(Holland & Hart LLP)
5. What Do Private Equity Firms Look For In Portfolio Companies?
(MCM Capital)
6. What REALLY is Private Equity? What do Private Equity Firms ACTUALLY do?
(365 Careers)

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