LOWER MIDDLE MARKET

Westward focuses on companies with $15 to $200 million in revenue, and $3 to $12 million of EBITDA. We believe that the attractive growth potential in the smaller middle-market makes it well worth the extra effort required to identify and partner with these smaller businesses, and enables us to add more value to the relationship.

 

CHALLENGE:  LIMITED PRIVATE EQUITY BUYERS

 

  • Traditional private equity firms typically target larger companies, which has severely limited the total amount of liquidity available to sellers in this market.

  • These traditional funds are often required to deploy a minimum of $10 million in equity per deal, which excludes most smaller middle-market transactions.

  • Westward was specifically created to address the needs of the smaller middle-market.

OPPORTUNITY:  LARGE NUMBER OF AVAILABLE INVESTMENTS

  • Transactions less than $100 million represent approximately 75% of all M&A deals completed.

  • As the North American population ages and more baby boomers retire, many middle-market companies will be for sale as owners manage estate and generational transfer issues.

CHALLENGE:  HIGH BARRIERS TO ENTRY

  • Lower middle-market transactions are frequently based on developing personal relationships.

  • Geographic proximity to transactions drives deal-flow.

  • Westward has an established network in its target geography, which acts as a significant barrier to many new entrants.

 

OPPORTUNITY:  UPSIDE POTENTIAL

  • Lower middle-market companies typically have higher growth potential and more room for operational improvements.

  • The investment performance in this sector has historically exceeded all other major asset classes, including middle and large market private equity investments, the S&P 500, venture capital, and hedge funds.

1. S&P Global Markets Intelligence – Announced US M&A Transaction – 2016 Summary.

2. Cambridge Associates “Buyout and Growth Equity Index and Selected Benchmark Statistics” December 31, 2016.

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