Will Middle-Market Private Equity Activity Continue to Decline?
PitchBook’s latest report reveals a continuing slowdown in private equity (“PE”) activity among the country’s middle market. According to the 2Q 2016 U.S. PE Middle Market Report, the total deal value of private equity middle-market investments during the first half of 2016 ($180 billion) dropped 8.5 percent, compared to the second half of 2015. Compared to the same period last year, the total volume declined 14 percent. Overall middle-market private equity activity, however, is declining at a slower rate than the broader private equity marketplace.
The report also highlighted the lower middle market’s significant activity decline in second quarter 2016. Despite a big increase (228 deals closed) in first quarter 2016, U.S. private equity lower-middle-market deal flow almost dropped by half (124 deals closed) during the second quarter. Meanwhile, the core and upper-middle-markets performed stronger than anticipated in second quarter 2016.