For roughly a decade before the pandemic, middle market private equity operated against a generally favorable backdrop. Debt was inexpensive and readily available, valuations generally rose over a five-year holding period, and exit markets were dependably open. These conditions rewarded investing discipline but also forgave missteps – a private equity fund manager (“sponsor”) who bought a good business at a reasonable price could deliver an acceptable return with little more than a ‘buy and hold’ strategy. We believe that backdrop has changed. Macroeconomic growth has slowed and volatility has risen across consumer demand, input costs, labor markets, and trade policy, compressing the margin for error. READ MORE