October 2017

Investing in the Lower Mid-Market is Like Boiling the Ocean

Private Equity International

In an article assessing the notion that the best managers in the lower mid-market are producing the best returns private equity can offer, global head of private investment research at Cambridge Associates, Andrea Auerbach, explains that the widest dispersion exists in the lower mid-market, which is where return-seekers should be looking as long as they have the resources and access to find the right managers.

She asks, “do investors have sufficient resources to monitor their exposures and to constantly boil that ocean to find the opportunity?” explaining that monitoring a broad and deep portfolio of mid-market managers can be overwhelming. Other notable quotes include:

• “Investors who make commitments to emerging managers in this tier have a ringside seat on where that manager is growing and evolving to.”
• “An LP can start with a great lower mid-market manager who grows its team, expands its skillset and gradually grows toward a different market tier successfully, and that investor gets to benefit from all of that as well. There are a lot of advantages to spending time evaluating opportunities in this tier.”

Read the full article here.