It is the end of an era and the beginning of a new. When evaluating performance within private equity, roughly two-thirds of the total return for buyout deals that were entered in 2010 or later and exited in 2021 or before can be attributed to market multiple expansion and leverage. Today, with higher financing costs, falling multiples, and a tighter exit environment, fundamental value creation through revenue growth and margin expansion are taking center stage for GPs. We encourage investors to go where fundamental value creation has been the largest driver of returns, the U.S. middle market.

The U.S. middle market, composed of 200,000 companies with annual revenue between $10 million and $1 billion, has served as a driving force of the domestic economy for decades, representing one-third of private sector GDP and employing 48 million Americans. The middle market has thrived in the post-pandemic era with 83 percent of middle market firms reporting positive year-over-year rev