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Evolution of Emerging Managers

RCP’s Research Finds Emerging Managers Remain Focused on Small Companies but Raising Larger Funds to Support Increase in Market Multiples and Slightly Larger Teams

RCP Advisors (“RCP”) is proud to share its latest research presentation: Evolution of the Private Equity Emerging Manager. Leveraging more than a decade of Middle Market Private Equity investment data, RCP is able to provide insights regarding the progression of Emerging Managers’ (defined as Funds I or II) fund sizes, underlying portfolio company sizes, purchase price multiples, and firm team sizes.

Highlights include:

  • Fund sizes increasing by ~25%, or $50M, in recent years
  • Entry EBITDA purchase price multiples increasing by ~1.5 turns, or 22%, over the same timeframe
  • On an aggregate basis, portfolio company EBITDAs remain relatively steady, increasing only 5%
  • Larger fund sizes support slightly larger deal teams

While some Emerging Managers may simply take advantage of market trends that support larger first- and second-time fund sizes, our analysis suggests that Emerging Managers as a whole are staying true to the small companies but utilize increased capital to prevail in investment processes and, to a lesser extent, support slightly larger teams. 

For additional details, as well as conclusions and key takeaways from our research, please download the report below.

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