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- $350B Middle Market Ascends | PE Volume Down, Value Up | The 10–15% AI Power Spike
$350B Middle Market Ascends | PE Volume Down, Value Up | The 10–15% AI Power Spike
Private equity is entering a new phase of higher-quality deals, longer holds, and rising AI-driven energy demand. Liquidity is tightening, but conviction is growing.
Good morning, ! This week we're covering private equity's AI-driven energy transition bets in Europe, the changing sector focus for US private credit lending, the new normal of extended PE holding periods, and the growing risk profile from the SEC's whistleblower program.
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DATA DIVE
Middle Market, Major Engine
The middle market isn’t just back — it’s structurally ascended.
Since the 2009 trough, U.S. middle-market deal value has grown nearly 5x, reaching over $350B in 2024, according to Pitchbook. What once functioned as a niche, founder-driven pocket of PE has become the dominant bandwidth for private capital deployment.
The growth isn’t just in volume. It’s in quality. A swelling number of companies have crossed the $3–5M EBITDA threshold — the inflection point where underwriting becomes repeatable, governance improves, and cash flow visibility sharpens. For sponsors, these businesses hit the “Goldilocks zone”: not institutional enough to be crowded, but mature enough to back confidently.
Crucially, the segment has shown resilience through cycles. Even downturns in 2020 and 2023 didn’t break trend — they recalibrated it. Hodrick–Prescott filtering reveals a clear structural trajectory, and cyclicality now serves more as a timing tool than a threat.
Why it matters:
The middle market is no longer a tactical bet — it’s a strategic allocation. Investors who can operate in fragmented, under-institutionalized ecosystems with sector depth and diligence edge are harvesting alpha in a space that still misprices operational quality.
TREND OF THE WEEK
Europe’s Energy Rush: Now With AI Power-Ups
Private equity’s energy fixation in Europe just hit a new voltage. With €39B deployed across 245 deals YTD, deal value is up—but deal count is heading south. Blame AI. Specifically, the data center boom is driving up electricity demand, which now accounts for a projected 10–15% spike in usage over the next decade. Add rate cuts from the ECB and BOE, and you’ve got GPs eyeing grid upgrades and renewable infra like it’s 2010.
Foreign capital is surging too, already topping €33.9B—on track for a record. Meanwhile, players like Apollo and KKR are writing checks in the billions for nuclear, biofuels, and even offshore wind giants like Hornsea 3.
In short: The shift from volume to value is real, and Europe’s energy transition just became private equity’s favorite new asset class. (More)
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LIQUIDITY CORNER
The Era of Long Holds Is Getting Longer
The hold period clock keeps ticking—and not just because GPs love their portfolio companies.
According to Pitchbook, the share of buyout-backed companies held 7+ years rose to 13.7% in 2025, nearly matching its 2015 high of 15.1%, and reversing the trend seen through 2017–2022. Meanwhile, the 5–7 year cohort has swelled to 16.0%, up from just 11.0% in 2015, and continuing a steady climb post-2020.
In total, nearly 30% of portfolio companies are now held beyond five years, the highest share in over a decade.
Why it matters: As exit markets remain sluggish, PE firms are opting to extend hold periods—via continuation funds, NAV loans, or just strategic patience. This dynamic limits distributions, stretches fund timelines, and forces LPs to adjust to a slower liquidity cycle.
It’s a clear sign: in today’s environment, liquidity is earned, not scheduled. (More)
DEAL OF THE WEEK
The CPG Blockbuster Scale Play
Kimberly-Clark’s proposed $48.7 billion acquisition of Kenvue was the M&A headline this week, initially shocking the market with a valuation of 14.3x LTM EBITDA.
For PE veterans, however, the eye-popping premium is quickly rationalized by the aggressive synergy target. KMB is betting on a massive $2.1 billion in run-rate savings—primarily from supply chain efficiencies—which drops the effective acquisition multiple to a far more attractive 8.8x adjusted EBITDA. This reliance on deep operational cost-takeout underscores the imperative for CPG giants to achieve scale through consolidation, a move that will require flawless integration to avoid future activist scrutiny. (More)
PRESENTED BY GAIN PRO
Who are the biggest private equity investors in the US? See the top 250 shaping the market.
Discover the most influential private equity investors in the United States, ranked by the total enterprise value of their US portfolio companies.
In this report, you’ll find in-depth insights into investment trends, sector shifts, and regional dynamics that define US private equity today. Highlights include:
Where the most active investors rank — with Blackstone, KKR & Apollo leading at $446bn combined
Which sectors dominate — with TMT well ahead, followed by Services and Science & Health
How concentrated the market is — the top 25 firms manage nearly half of total US 250 EV
How US investment is shifting across regions
A differentiated view of market power, scale, and deal momentum
Whether you’re benchmarking peers, exploring potential partners, or tracking the most active players, this report is your essential guide to US private equity today.
Download the full US 250 report and uncover the trends shaping tomorrow’s dealmaking.
PRIVATE CREDIT
Lenders Hit Reset on 2025
US private credit lenders are quietly rewriting their playbook for 2025. The data shows a shift toward diversified deployment, with most sectors posting higher interest than last year. Business Services remains the undisputed anchor at 93%, a sign that lenders still favor outsourced, cash-flow-rich platforms when the macro feels shaky. But the real story is the pullback: Software & Technology drops to 76% and Health Care falls to 71%, evidence of valuation fatigue, regulatory overhangs, and a collective timeout after years of aggressive underwriting. Meanwhile, Manufacturing, Financial Services, and Transportation & Logistics notch meaningful gains as lenders look for defensible fundamentals and clear ROI in a high-rate world. Call it a portfolio rebalance—not a retreat. (More)
MICROSURVEY
As part of our weekly microsurvey section, we would like to understand the intricacies and drivers of private credit in today's private markets
What’s driving interest in private credit right now? |
MACROVIEW
The Fed Whisperer’s Playbook
History doesn’t repeat, but it does echo the sound of the Fed fumbling with interest rates. For 50 years, the U.S. economy has followed a tired-but-true formula: Jobs soften → Fed panics → Markets rejoice. We’re seeing déjà vu in 2025, with unemployment inching up and rate cuts looming. But here’s the kicker: by the time headlines scream "recession," the smart money is already reallocating. Investors obsess over labor stats, but capital cost is the real villain in industrial slowdowns. Meanwhile, housing—every central banker’s favorite feedback loop—is already itching to rally at the first sign of liquidity. The takeaway? Monetary policy doesn’t just influence markets—it pre-programs them. So don’t wait for the unemployment peak to start buying; the Fed's pivot is your starting gun. (More)
COMPLIANCE CORNER
Whistleblowers Are Now the SEC’s Sharpest Tool
The SEC Whistleblower Program has quietly become one of the most powerful forces in financial enforcement—and private equity is increasingly in its line of sight. Built under Dodd–Frank, the program offers whistleblowers 10%–30% of monetary sanctions tied to original, high-quality tips. The numbers speak loudly: more than $6 billion in sanctions have been linked to whistleblower-driven cases.
For PE firms, the risk calculus has changed. The SEC’s intensified focus on fee and expense allocation, valuation, MNPI controls, side letters, and portfolio company governance means the first warning sign often comes from an employee inbox, not an exam notice. With strong confidentiality and anti-retaliation protections, insiders now have every incentive to escalate concerns externally.
The takeaway: whistleblower rules don’t weaken compliance—they supercharge it. Effective internal reporting channels, real training, clean documentation, and a credible compliance function are now essential risk buffers. In a world where one credible tip can trigger eight-figure consequences, operational resilience begins long before the SEC calls. (More)
THIS WEEK IN HISTORY
The Deregulation That Redefined Dealmaking
Twenty-six years ago, on November 12, 1999, Washington rewired the financial system with the partial repeal of Glass–Steagall. The Gramm–Leach–Bliley Act didn’t just blur the lines between commercial banking, investment banking, and insurance—it effectively invited them to live under one roof. The result: the rise of diversified financial holding companies capable of lending, underwriting, trading, advising, and managing assets at unprecedented scale.
The market impact was immediate. Capital formation expanded, M&A accelerated, and securitization markets deepened. For private equity, it was a turning point: stronger leveraged finance desks, broader syndication capacity, and the balance-sheet firepower to support ever-larger buyouts.
Its legacy, of course, is complicated. The repeal didn’t cause the 2008 crisis, but it did amplify its fallout by enabling a handful of institutions to become systemically enormous. The real drivers—non-bank lending, lax underwriting, and hyperactive securitization—were already in motion.
Still, November 12, 1999 remains a milestone. It built today’s integrated capital markets while offering a permanent reminder that scale creates efficiency—and systemic risk. (More)
TWEET OF THE WEEK
"Do not be embarrassed by your failures, learn from them and start again."
Richard Branson