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In the middle market, take-privates are a rare choice

While middle-market investors aren't known for prolific take-private activity, the percentages are surprisingly low. For the past two years, middle-market take-privates have accounted for less than 2% of all middle-market activity, according to PitchBook's 

3Q 2019 US PE Middle Market Report

Dating back to 2014, middle-market buyouts have been responsible for roughly 2% to 3% of all middle-market activity. Further back, though, take-privates used to be more prominent in terms of deal sourcing. In 2007, for example, at the height of the buyout boom, they accounted for 7% of all middle-market deals. The timeframe from 2006 to 2011 was consistently in the 5% to 7% window.

These aren't huge percentages, but the sudden change in prominence and the consistency of the smaller percentages going back to 2014 suggest that middle-market investors aren't looking at public companies as much as they used to. The middle market as a whole saw almost $450 billion worth of activity last year. In 2011, when take-privates accounted for almost 7% of all middle-market buyouts, combined deal value across the entire middle market had eclipsed $200 billion for the first time.

One possible explanation for today's lower ratio: the middle market is much bigger—with new investors targeting more and more niches—and the public markets have become a relative afterthought to today's investors, especially the newcomers.


This column originally appeared in The Lead Left.

Featured image via Gang Zhou/iStock/Getty Images Plus