Private equity firms are sitting on near record cash piles and are actively seeking to put their capital to work in a very competitive deal environment. With intense competition in the middle market, Private equity firms are trickiing down to the lower middle market to find M&A opportunities.
Other private equity firms are teaming up with operating partners in an attempt to win over targets in certain sectors. For example, Huron Capital has formed a new platform to seek M&A in the HVAC sector through the investment of Pueblo Mechanical & Controls Inc. The private equity firm has partnered with Dan Bueschel to look for additional acquisitions in the space. Detroit-based Huron targets companies with up to $200 million in revenue using a buy-and-build investment model dubbed the ExecFactor.
The private equity fundraising climate is very robust and that is expected to significantly contribute to mid-market dealmaking activity. Brynwood Partners has closed its eighth fund with $649 million in capital. The fund VII is the largest raised in the firm’s 34-year history, according to Brynwood CEO Hendrik Hartong III.
New York-based Sentinel Capital Partners also raised a new fund valued at $2.15 billion in capital. Concurrent with the closing of Fund VI, the firm has also raised $460 million in capital for its inaugural Sentinel Junior Capital I L.P. fund. The firm will deploy the same investment strategy it has used with previous funds, partnering with management teams to acquire businesses with up to $65 million in Ebitda across the aerospace and defense, business services, consumer, distribution, food and restaurants, healthcare and industrial sectors.