If you are in the process of seeking out a private equity investment, you will quickly discover that there are many types and categories of private equity. One of the most well known is middle-market or mid-market private equity.
In this article, we will discuss exactly what mid-market private equity is, its qualities, and when it might be advisable for a business to seek this type of investment.
What is mid-market private equity?
Private equity is an investment offered by private individuals and organizations in exchange for an equity stake in the company they are investing in. The term “mid-market” refers to the middle range of the market as it pertains to a company’s size. It excludes the early or start-up stage of the market as well as the large billion-dollar deals.
What defines mid-market private equity investment?
Mid-market private equity investments are generally defined by the following characteristics:
- Revenue – These businesses usually involve businesses that have annual revenue in the range of $5 to $100 million.
- Deal Value – Mid-market private equity deals are usually in a value range between $10 million and $300 million (sometimes larger).
It is important to note that these values are not universally agreed upon and may differ amongst investors and analysts.
Why do companies seek out mid-market private equity investments?
There are a number of reasons why firms may seek this type of investment, including:
- Funding a strategy for a merger and acquisition.
- Succession planning and ensuring the company can grow and thrive under new management.
- Company growth or expansion into a new market.
When is a private equity investment the right choice?
Private equity investment can be an excellent way for businesses to get the funding they need, but finding the right investment partner is critical.
Before getting into a deal, it is important to be clear about the following:
- How much ownership of your business you are willing to give up.
- How much you expect your business to grow.
- What your potential investor’s plans are for getting out of the investment.
- The investor’s ability to provide follow-on funding.
- Knowledge and expertise that the investor can provide.
- Whether the investor can connect you with others who can join your board or provide other expertise.
- Whether the investor’s values align with your own.
Finding the right partner for your mid-market business is crucial in positioning your company for growth.
How CBGF can help
CBGF is a private equity firm that works with mid-market Canadian businesses as a minority investor to help them grow and achieve their goals. If you are an ambitious entrepreneur looking for funding and are considering a mid-market private equity investment, we want to hear from you. Contact us today to learn more and to see if we might be the right partner for you.