Benchmark International

According to leading alternative assets industry data and intelligence provider Prequin, ‘dry powder’, typically defined as capital that has been committed to investment organisations which generally has to be invested within 7 years, has now reached record levels and is estimated to be just over $1 trillion.

So what does this mean for middle-market business owners? Well, with such significant levels of capital to be invested in such a short timeframe the pressure to spend is at an all time high. Target investment trends have also shown a strong bias towards a middle-market preference, due to the perceived risk and difficulties associated with completing larger transactions.

Middle-market transactions are considered a ‘safer bet’ and, with the pressure being placed on private equity firms to invest, business owners in this category looking to exit are likely to benefit through increased competition surrounding deals and, as a result, increasing multiples and values.

Benchmark International has taken an active role at a number of private equity events over the past few years, including sponsoring and attending some of the highest profile events, and the increasing appetite for middle-market opportunities is obvious.

At the recent UK Mid-Market private equity conference organised by RealDeals, a key topic of discussion was the pressure that firms are under to invest capital raised and the level of competition they face from trade buyers.

For business owners looking to sell, this pressure on private equity firms to complete transactions is a desirable factor and a high level of competition surrounding those deals is anticipated.

2013 was a great year in M&A as confidence returned in a big way, bolstered by strong buyer appetite and readily available finance.  The continued combination of these elements is sure to see 2014 to eclipse one of the most buoyant years in recent history for M&A activity.