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A deep and still largely untapped investment universe
This deep and underexploited market stands in striking contrast to listed markets, which are dominated by a handful of giants. The mid-market, the true backbone of the American economy, shaped the history of private equity 35 to 40 years ago. It is here, within this segment of mid-sized companies, that transformation levers are at their most powerful. While the American economy has doubled over the past 30 years (compared with growth of only 50% in Europe), this economic momentum has relied on the depth of the American entrepreneurial fabric: mid-sized companies have contributed extensively to this trajectory. Not on the technology giants of the Magnificent Seven, but on the real economy, which represents between one-third and one-half of U.S. GDP. Accounting for 92% of the country’s companies, this segment has historically delivered growth 50% higher than that of large-cap companies.
The American mid-market comprises nearly 200,000 companies, more than 90% of which remain owned by their founders or families, without any private equity shareholder. 99% of them are not listed, making it an investment field reserved for private markets. Acquisition multiples are more attractive (between 5x and 10x EBITDA, compared with 7x to 12x for large cap), and leverage is more controlled, with ratios of 2x to 3x EBITDA, compared with 5x to 6x for larger-scale transactions. Above all, value creation is more direct: transforming a company with 500 to 700 employees remains far more accessible than steering an already highly structured group. Finally, exit options are more diversified (industrial sale, acquisition by a larger fund or, more rarely, an initial public offering — in 1% to 5% of cases —), a major advantage in a context where distributions have slowed.
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Enhanced resilience in the face of global transformations
In an environment marked by geopolitical tensions, the normalization of valuations, and the emergence of artificial intelligence, simplistic readings of the economic cycle are no longer sufficient. The key issue now lies in the starting point of the investment. Funds currently being raised, freed from the legacy of portfolios built between 2019 and 2021 (a period of elevated valuations and exceptional financing conditions), are deploying capital with an updated view: financing costs, greater selectivity, sector transformations, and the impact of technological disruption. In private equity, these initial parameters condition a major share of performance. Committing today to funds in the deployment phase means entering a cycle that has already been reset, on healthier foundations.
The sector positioning of the mid-market reinforces this dynamic. Primarily exposed to healthcare, business services, and industrial services, this segment is less directly vulnerable to rapid disruptions, particularly in certain areas of software. Combined with historically superior growth, 50% above that of large cap, this orientation acts as a shield in an uncertain macroeconomic environment.
Conclusion – Returning to fundamentals
The American mid-market, the backbone of the real economy and the historical breeding ground of private equity, today embodies a strategic opportunity: realistic valuations, powerful transformation levers, and enhanced resilience in the face of macroeconomic uncertainty. With attractive multiples, historically superior growth, and diversified exit options, this underexploited segment in French wealth portfolios enables investors to access compelling return potential within an economic cycle that has finally rebalanced.
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FAQ – American mid-market and private equity
What is the American mid-market in private equity?
The American mid-market refers to the segment of mid-sized companies, which account for 92% of businesses in the country and between one-third and one-half of U.S. GDP. Nearly 200,000 companies make up this universe, more than 90% of which remain owned by their founders or families, without any private equity shareholder.
Why are acquisition multiples more attractive in the mid-market?
Acquisition multiples in the mid-market range between 5x and 10x EBITDA, compared with 7x to 12x for large cap. Leverage is also more controlled, with ratios of 2x to 3x EBITDA, compared with 5x to 6x for larger-scale transactions.
Which sectors are most represented in the American mid-market?
The American mid-market is primarily exposed to healthcare, business services, and industrial services. This sector positioning makes it less directly vulnerable to rapid disruptions, particularly in certain areas of software.
What are the exit options for a mid-market investment?
Exit options are more diversified than in the large-cap segment: industrial sale, acquisition by a larger fund, or, more rarely, an initial public offering (1% to 5% of cases). This diversification represents a major advantage in a context where distributions have slowed.
Why is this an opportune time to invest in the American mid-market?
Funds currently being raised are free from the legacy of portfolios built between 2019 and 2021 (a period of elevated valuations and exceptional financing conditions). They are deploying capital on reset foundations: normalized financing costs, greater selectivity, and consideration of sector transformations.
