The middle market offers superior prospects for differentiated, value-added investing. These opportunities differ from those in the venture or mega-fund/bulge bracket private equity arena and play directly into Gryphon’s strengths of industry focus and operational efficiencies.
Companies Ripe for Value Creation.
Optimizing the operations of a multi-national corporation is a complex, often costly exercise. And, in the end, the changes do not always drive profitability. Within the middle market, the environment is different. Smart investment teams like Gryphon can have a direct, immediate impact on the companies in which they invest. We work with management teams to explore and pursue value-added strategies that will deliver both short and long-term returns. The insights we deliver and work with our portfolio-companies’ management teams to implement can have a direct impact every facet of the business, from manufacturing to marketing, from sales to finance to HR. Together, we’ve implemented market expansion and rebranding programs, we’ve revamped sales processes and product pricing. The strategies we propose and help our companies pursue position them for added growth and increased profitability.
Where Inefficiencies Exist,
The middle market includes more than 81,000 businesses posting annual revenues of $25 to $250 million. That is a sizable market and high growth area of the U.S. economy. Historically, however, companies in the middle market sector have attracted only 25% of private equity investments. That means 75% of private equity funds are chasing either start-ups with unproven technology, teams and revenue models, or mega-enterprises with capital-intensive operations. For low-end middle market investors like Gryphon, the environment could not be more ideal: Fewer firms and more companies add up to more reasonable valuations and opportunities for real returns.