Amid heightened geopolitical tensions, volatile public markets, and a cloudy economic outlook, middle market private equity sponsors are positioning themselves to weather market turbulence and take advantage of market dislocations.

After a record-breaking 2021 for private markets and a volatile and uncertain 2022, private equity sponsors are retrenching in an environment of higher rates and persistently elevated inflation. For skilled private equity managers, risks and opportunities can often be two sides of the same coin. While managers are cognizant of the gathering headwinds, private equity’s long-term horizon combined with active management can enable managers to successfully navigate volatile conditions.

To better understand how middle market private equity sponsors are preparing for what is expected to be a challenging 2023, Apogem Capital LLC (“Apogem”) partnered with Coalition Greenwich to conduct over 100 in-depth interviews with senior investment decision-makers at US middle market private equity sponsors.

Our findings indicate that private equity sponsors are keenly monitoring new sources of risk that are presenting themselves in this evolving investment landscape, and some are well positioned to benefit, seeing these risks as unique investment opportunities in the middle market.

In this report, we analyze these and other key research findings in detail, and identify five strategies middle market private equity sponsors are implementing to optimize investment and business performancein a volatile environment.

Five Strategies to Navigate a Volatile Market Environment

  1. Build diversified portfolios emphasizing recession-resilient sectors
  2. Focus on creating value through operational improvements
  3. Lean into Environmental, Social, and Governance (ESG) and Diversity and Inclusion (D&I) initiatives
  4. Capitalize on fundraising by larger private equity sponsors for attractive exit opportunities
  5. Cultivate relationships with reliable partners

By subscribing you are consenting to receive personalized online advertisements from New York Life Investments.