With its mix of family-led firms, hidden champions and mighty SMEs, the European middle market — firms with roughly €15-€150m in EBITDA — is the continent’s top segment for buyout activity.

But competition is fierce, and not every fund that takes on this segment will come out a winner.

The difference between the annual net returns of first- and third-quartile funds in this space in Western Europe is more than 15 percentage points, according to private equity data provider Cobalt. It’s one reason we at Moonfare take our commitment to only offering top-tier funds to our clients very seriously.

To learn more about the European middle market as a territory for buyout funds, please download our latest specialist article. It takes a macro and firm-level view of the category and offers some analysis of the early impact from Covid-19.

Key takeaways:

• There is a deep supply of attractive acquisition targets for buyout firms in the European middle market — but competition among funds has become increasingly fierce, driving up EBITDA multiples paid for targets.
• Covid-19 began to soften transaction volumes and multiples across the European middle market in the first half of 2020. Now more than ever funds that can differentiate themselves stand to get better prices in acquisitions and thus superior returns.
• Proprietary sourcing channels and a deep bench of talent to implement a fund’s value creation playbook are critical ways for funds in the middle market to differentiate themselves.

Interested in opportunities to invest in European middle market buyouts funds? please contact our team or complete your profile on Moonfare.com.

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