Good morning, ! It's Wednesday, and we're diving into the long term trend of the private equity middle-market. Europe is facing an exit slowdown, banks are chasing the $1T Private Credit boom, and buyouts are still cheaper than stocks.

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DATA DIVE

Special Report: Middle Market PE: Recalibrated, Not Retreating

After peaking at $518B in 2021, US middle-market PE cooled—but definitely didn’t collapse. Deal value hit $359B in 2024, up from $320B in 2023, marking a 30.7% drop from the peak but a clear sign of stabilization. The Hodrick-Prescott filter shows the trendline holding steady—this is recalibration, not retreat.

Valuations followed suit: EV/EBITDA multiples slid from 14.4x in 2021 to 11.6x in 2023, before ticking up to 13.0x in 2024. With interest rates elevated and bid-ask spreads still sticky, the market is shifting from outbidding to disciplined underwriting.

Carveouts are rising, sponsor-to-sponsor deals are back, and resilient sectors like healthcare and tech remain active. IPOs may be quiet, but exits still work. The music’s slower—but it’s still playing (Read Or Listen To Full Report)

TREND OF THE WEEK

Multiple Choice: Why Are Buyouts Still Cheaper?

The EV/EBITDA multiple gap between public markets and private equity buyouts is now the widest in 15 years—13.1x for public equities vs. 11.9x for PE. Blame it on liquidity premiums, tech optimism, or PE discipline in a high-rate world. Whatever the reason, this pricing divergence is one part opportunity, one part warning shot. Public valuations keep stretching as investors chase growth and liquidity. Meanwhile, PE buyers—dealing with debt costs and exit uncertainty—are sticking to script. The result? A public exuberance vs. private pragmatism narrative. And for the first time in a while, private equity might look like the sober side of the trade. (More)

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LIQUIDITY CORNER

Flush With Cash, Starved for Exits

Europe-focused PE is sitting on record-level fundraising—$187B in 2024, to be exact—but can’t find the exits. Despite inflows, liquidity remains elusive as exits hit a 5-year low, dragging down distributions and recycling. M&A activity is present but sluggish, with buyers holding back and auctions drawing fewer bids. Thirty-one mega-funds raised $1B+ each, but most GPs are in a holding pattern, waiting for the IPO window to reopen or M&A markets to regain momentum. The mismatch between seller expectations and buyer appetite continues to stall deals, forcing many managers to hold assets longer than expected. In this game of musical chairs, there’s a seat for everyone—but no one's getting up.  (More)

DEAL OF THE WEEK

Silver Lake Bags Altera as Intel Reboots Its Core

In a $4.46 billion play, Silver Lake is acquiring a 51% stake in Intel’s programmable chip unit, Altera, marking the first major move under new CEO Lip-Bu Tan’s turnaround mandate. The deal values Altera at $8.75 billion, a sharp markdown from the $16.7 billion Intel paid in 2015, but it gives the chipmaker a much-needed capital injection to fund its foundry ambitions—and maybe even catch Nvidia.

The divestiture fits Intel’s broader strategy to shed non-core assets and tighten its focus on CPUs and AI infrastructure. With Altera posting a $615 million operating loss on just 3% of Intel’s total revenue, the exit underscores how past integration bets fell flat, while AMD’s Xilinx surged ahead.

Silver Lake now gets control of a still-strategic silicon player across telecom, defense, and data centers, right as programmable logic chips ride a new wave of AI demand. Expect more Intel carveouts to follow, Mobileye may be next.

Bottom line: Intel cuts its losses. Silver Lake buys the dip (More).

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PRIVATE CREDIT

Private Credit, Private Choices: How Banks Are Chasing the $1 Trillion Boom

Everyone wants a slice of private credit, but banks are finding there’s no one-size-fits-all strategy.

From Citi’s Apollo alliance to JPMorgan’s hybrid model and Goldman’s in-house fortress, Wall Street’s heavyweights are carving out distinct paths to compete with direct lenders and appease PE sponsors. Citi’s model? Originate but don’t fund. JPMorgan? Put skin in the game with $50B on the table. Goldman? Centralize and cross-sell.

Across the Atlantic, Barclays and Lazard are going “asset-light,” sourcing deals while leaning on partners like AGL and Arini to raise capital. SMBC, meanwhile, stands out with a deeper JV alongside Park Square, offering co-origination and co-management—rare in Europe’s fragmented scene.

But here’s the fine print: bureaucracy and speed don't mix. Asset managers caution that bank-led JVs often bog down in red tape. In this market, nimble wins, and balance sheet strategy may matter less than clarity, alignment, and speed of execution.

Bottom line: Private credit is here to stay. But for banks, the how may prove more important than the how much. (More)

MICROSURVEY

We’d love to hear your thoughts on the soft landing narrative the FED is trying to push through. Share your expectations for how these changes might shape the U.S. economy in the coming months.

MACROVIEW

Tariffs and Inflation: The Squeeze on Consumer Wallets

Higher inflation is back on the menu — and this time, your washing machine is leading the charge. Blanket China tariffs are poised to lift consumer prices by ~1.5%, with household appliances spiking 12% and other goods like phones and luggage nearing 8%. This isn't just an import cost story; it's a squeeze on real disposable income, which is set to shrink even before the full effect of tariffs hits. Add rising interest rates and softening labor markets, and you're looking at a textbook case of consumer demand erosion. One silver lining? Services may benefit as buyers dodge pricy goods — a classic substitution play.

THIS WEEK IN HISTORY

Marshall Plan, Meet M&A Strategy

On 16 April 1948, 18 war-ravaged European nations came together under a singular premise: cooperate or crumble. The result? The Organisation for European Economic Co-operation (OEEC)—an unprecedented alliance born from the $13B Marshall Plan, arguably the most effective turnaround deal in modern economic history. The OEEC not only brokered resource allocation and trade liberalization, but became the blueprint for the OECD and—arguably—the EU. This was PE-style coordination before private equity had its first LP. Also: the Americans didn't even take a board seat. Instead, they outsourced capitalism via subsidies, loans, and strategic commodities. The OEEC's story is a reminder that economic recovery isn't about control, it’s about collaboration.

INTERESTING ARTICLES

What is China’s state backed funds stance on U.S. investments?

How is the Southeast Asia PE market reacting to global uncertainty?

Yale reacting to federal funding challenge with PE portfolio massive sale, more to come?

TWEET OF THE WEEK

"The golden rule for every businessman is this: put yourself in your customer's place."

Orison Swett Marden