‘Same as it Ever Was’: The Enduring Case for Small-Market Private Equity

By Matt Petronzio January 1, 2020
Twin Bridge Capital Partners Download PDF

Twin Bridge Capital Partners is a Chicago-based private equity firm with deep experience investing in the North American small and lower middle-market buyout industries. We are an active and accomplished buyout fund and equity co-investor and have deployed more than $1.9 billion since our founding. Matt Petronzio, Partner, has extensive experience in the middle market buyout industry, with particular emphasis on the small market buyout space. He shares responsibility for all aspects of the Firm’s investment, portfolio management and fundraising activities. Mr Petronzio serves on the Twin Bridge Investment Committee.

Same As It Ever Was…

In an increasingly complex investment world, the North American small-market buy-out market is really the same as it has always been, or the ‘same as it ever was’ in the immortal words of the Talking Heads’ David Byrne. In fact, historical industry returns illustrate that the SMB market has been a segment of private equity that offers outsized returns due to its simple, yet enduring characteristics, which have been fundamental to private equity since its earliest days. The potential benefits of investing in SMBs are clear, and institutional investors continue to seek meaningful allocations to this part of the market.

At its essence, investing in SMBs typically offers a refreshingly simple value proposition for institutional investors, namely its ability to offer the following:

  • A sizeable target market with extensive investment opportunities;
  • Prolific opportunities for partnership with high quality teams;
  • Abundant opportunities for creating fundamental financial improvement; and
  • Attractive exit avenues to financial and strategic buyers eager to acquire larger, more profitable, and better-run organisations.

It sounds like ‘mom and apple pie’ for private equity investors, right? Not so fast.

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