There are more Private Equity Groups (PEGs) active in the market today than in past years. Depending on how you define and count these investors, there are now over 3,500 active professional participants of this type in the US. These groups primarily invest in the private middle market. Most Private Equity Groups have preferences for investments in specific industries. This is their first screen to determine if they have any interest. The target industries for the more active PEGs are well known within the merger and acquisition community. Part of the service provided by top middle- market acquisition advisors is effective management support of their investments.
Private Equity Groups rarely want to invest in businesses that are losing money. They are not turnaround specialists. However, if you had a strong financial performance before a crisis and have found a cash flow break-even footing, they may talk to you. A formalized plan will be a big help in facilitating useful discussions. If you speak to someone in this funding group that does not have a good match for your needs, they still may be able to refer you to someone with the required investment profile. These investment groups are sophisticated business buyers with billions of dollars. But they have a big problem—they have far more capital than workable deals.
They cannot find enough companies that fit their acquisition criteria to effectively deploy all of their available capital in good times… let alone in a down economy. The private investment groups’ problems are greatly increased in times of economic distress when few companies are developing any notable measure of financial performance.