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Lower Middle Market Weekly Outlook

As you begin planning for 2015, Devin Mathews of ParkerGale thinks it is important for you to remember two things: the industry is hyper-competitive and sellers are getting smarter. These trends — both of which have been developing for a long time — are soon to create an “apocalypse” environment for non-adaptive PE firms.

One strategy to ensure your survival of this apocalypse is to specialize in a given sector or industry. Recent research from Cambridge Associates found, “Sector-focused funds have returned an aggregate 2.2x multiple on invested capital and a 23.2 percent gross internal rate of return between 2001 and 2010… That compares to the 1.9x multiple and 17.5 percent gross IRR returned by generalist funds during that time period.” For other strategies, stay tuned for Axial BD Week, starting December 1st when we’ll discuss the 5 core pillars of business development.

In other news, you should sell your business to an MBA and Paul Taubman has hired Don Cornwell to PJT Partners.

Transactions:

Events:

  • Thursday: Americans to eat their weight in turkey

Opinions:

This week in history…Matsushita buys MCA for $6.5 billion (1990).

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