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 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

Credits & Contact

PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Market Development & Analysis

Content
DYL AN COX Analyst

CONTENTS
NIZAR TARH U NI Senior Analyst
BRYAN HANSON Data Analyst
J ENNIFER SAM Senior Graphic Designer

Contact PitchBook
pitchbook.com
Introduction 4
RESE ARCH
Note from ACG 5 reports@pitchbook.com

Overview 6-7 EDITORIAL

editorial@pitchbook.com

Lower Middle Market 8 SALES

sales@pitchbook.com
Core Middle Market 9
ACG Global
Upper Middle Market 10 GARY L ABR ANCHE President & CEO
KRISTIN GOMEZ Vice President,
Q&A: Madison Capital Funding 12 Communications & Marketing
DEBOR AH COHEN Editor-in-Chief

Company Inventory 13
COPYRIGHT 2016 by PitchBook Data,
Inc. All rights reserved. No part of this
Exits 14 publication may be reproduced in any
form or by any meansgraphic, electronic,
or mechanical, including photocopying,
Fundraising 15 recording, taping, and information storage
and retrieval systemswithout the express
written permission of PitchBook Data, Inc.
League Tables 16 Contents are based on information from
sources believed to be reliable, but accuracy
and completeness cannot be guaranteed.
Methodology 17 Nothing herein should be construed as any
past, current or future recommendation to
buy or sell any security or an offer to sell, or
a solicitation of an offer to buy any security.
This material does not purport to contain
all of the information that a prospective
investor may wish to consider and is not to
be relied upon as such or used in substitution
for the exercise of independent judgment.

Cover photo credit: Thomas Moskal

3
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

PREPARING TO
WEATHER A YOUR JOURNEY
TO STRONGER
STORM RETURNS
STARTS HERE
Introduction

Three-quarters of the way through the year, middle-market private equity

continues its slump. Though still relatively strong on a historical basis, both the The PitchBook Platform
number of transactions and the total value of those deals are tracking behind last for private equity
year. Further, middle-market deal value has lagged significantly more than in the
wider PE landscape, which has been supported by increased activity above the Strengthen your LP
$10 billion price range. Exits have also diminished this year, and PEGs are still warm relationships
to the idea of buying companies from one another due in part to the cooling of the
IPO markets. Build a better portfolio

As middle-market company inventory continues to rise, EBITDA multiples have Exit efficiently and
also grown, making it harder than ever to find attractive investment opportunities. successfully
Extra scrutiny continues to be necessary when sourcing deals and performing due
diligence, as portfolio companies must be prepared for a potentially volatile future. Elevate your firm
We hope this report is useful in your middle-market practice. As always, feel free to
with award-winning
send any questions or comments to reports@pitchbook.com. technology

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4
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

NEW PRESIDENT, CONGRESS

BRINGS INCREASED FOCUS ON
MIDDLE-MARKET PE
by Gary LaBranche & Amber Landis

For the past five years ACG has worked to bring the Voice of the Middle Market to Washington, DC, and opened a Washington, DC
office last year to strengthen that message. With the advent of a new president and a new Congress, the work ahead promises to be
more challenging than ever.

Over the next two years, stronger enforcement actions and stepped-up examinations of PE firms can be expected from the
industrys chief regulator, the Securities and Exchange Commission (SEC). Since 2012, advisers of private funds with $150 million or
more in assets under management have to register with the Securities and Exchange Commission and comply with the reporting
and compliance standards of the Dodd Frank Act. While aimed at the largest firms, the Acts one-size-fits-all requirements have hit
small and midsize advisers hard, requiring significant time and expense to comply with often duplicitous and burdensome reporting
that have no tangible benefit to investors or the public.

This why ACG has been working proactively with regulators and legislators about ways to improve the most ambiguous regulation.
ACG helped to shepherd a bipartisan bill through Congress that would modernize the 75-year old reporting requirements that most
burden middle-market PE firms. The bill, the Investment Advisers Modernization Act (H.R. 5424), is sponsored by Reps. Robert Hurt,
R-Va.; Juan Vargas, D-Calif.; Steve Stivers, R-Ohio; Bill Foster, D-Ill., Randy Hultgren, R-Ill.; and Krysten Sinema, D-Arizona. The bill
modifies requirements of the Investment Advisers Act of 1940 to reflect the PE investor model, while also maintaining SEC oversight
and investor protections.

ACG joined several other organizations supporting H.R. 5424, and in mid-May, ACG Private Equity Regulatory Task Force (PERT)
member Joshua Cherry-Seto, CFO of Blue Wolf Capital, testified before the House Financial Services Subcommittee on Capital
Markets and Government Sponsored Enterprises in support of the bill. On September 9, H.R. 5424 was passed with a vote of 261 to
145, with 35 Democrats voting in favor of the bill.

While this progress is important, the Senate has yet to pick up the bill and the Obama Administration is on record with a threat to
veto anything that amends the Dodd-Frank Actdespite the unintended consequences for private capital providers and the small
and midsize companies they invest in.

ACG will continue to be proactive about the need for meaningful regulatory reform with the new Administration and Congress.
But many observers predict that the industry should brace for expanded media scrutiny as well as enhanced examination and
enforcement. This provides a unique opportunity for the industry to step up and aggressively promote its role as a net-jobs creator,
builder of businesses and contributor to economic growth. As revealed in collaborative research from ACG and PitchBook, found at
GrowthEconomy.org, middle-market PE grows more jobs and company revenue when compared to all other companies in the US
economy between 1998 and 2015. That is a track record of accomplishment that can withstand the brightest scrutiny.

GARY L ABR ANCHE , FASAE , CAE AM B E R L AN DIS

President & CEO Vice President of Public Policy
ACG Global ACG Global

5
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

THE BUYOUT CYCLE

CONTINUES TO SLOW
Overview

Middle-market PE activity in Behind last years pace

the US continued to slow in the US PE middle-market activity
third quarter, following a similar trend
as the wider PE marketplace. $265 Deal Value ($B) # of Deals Closed
billion in deal value closed across 2,106
1,330 transactions through the first
three quarters, representing a 9.7%
1,825
year-over-year (YoY) decrease in
1,461
enterprise value (EV) and 16.0% fall 1,330
in the number of deals completed. 1,265 1,272
The drop-off in 2016 has been more
pronounced in the middle market due
to the lack of big-name transactions
and deals with EVs of greater than
$10 billion that have been increasingly
responsible for deal value figures

$396

$265
$310

$304

$428
$236

$269
$278

$352

$194

$92

above the upper middle market

(UMM). Median deal size in the middle
market through 3Q came in at $128.6 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
million, down from $133 million last Source: PitchBook
year and $150 million in 2014. Smaller *As of 9/30/2016

US PE middle-market activity

Deal Value ($B) # of Deals Closed

573 561
540
Source: PitchBook 508 492 495

412
398
351 356 307
328
241 292
$107

$112

$108
$109

$102

$101

$104
$46
$52
$53
$85
$63
$66
$64
$75
$68
$67
$69

$71
$61
$83
$89

$99

$94

$99

$91

$70

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2010 2011 2012 2013 2014 2015 2016

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

deal sizes can be partially attributed to
the prevalence of add-on transactions,
which now make up 64% of all US
buyout transactions (including those
transactions above the UMM). We
also saw more niche, specialist funds
raising capital last year, and as those
firms start to put that capital to work,
they are increasingly finding value in
the lower middle market (LMM). The
lofty EBITDA multiples and heightened
competition for companies in the UMM
range and beyond has forced many
investors to seek value elsewhere. 544
deals with an EV between $25 million
and $100 million have been completed
thus far in 2016, totaling $28 billion
in aggregate value. This represents a
6.9% YoY decrease in the number of
transactions, but a simultaneous 17.2%
pop in the value of those deals across
the same period.
There is a popular belief that deal
flow slows in a presidential election
year, as investors wait to see if there
will be any political changes affecting
the economy. However, our dataset
shows this not to be the case. Middle-
market PE deal flow tends to follow
the broader economic trends of
the time, not any sort of political
speculation. In 2008, deal flow fell as typically in play for months at a time,
the financial crisis was still unfolding. so we think the base-case scenario
In 2012, middle-market activity grew managers use to model out potential
as it had for the previous two years deal outcomes will likely have already
as part of the post-crisis recovery. incorporated a shift in the government
This year is poised to see a drop in landscape. At the very least, we think
activity, though mostly due to market managers have incorporated a slower-
fundamentals that were in play long growth future into the frameworks
before the political environment they use to evaluate targets. Thus,
became as uncertain as it may appear we dont expect deal flow trends to
today. In addition, PE transactions are change dramatically through year-end.
Median US PE middle-market transaction size ($M)
$160
$133.0
$140
$120
$128.6
$100
$80
Source: PitchBook
*As of 9/30/2016
$60
$40
$20
$0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

In 3Q, each segment saw a decrease in the number of Deal value lags after last quarter
deals completed US PE MM deals ($B) by segment
US PE MM deals (#) by segment

700 $120
$25M-$100M $100M-$500M $500M-$1B
$25M-$100M $100M-$500M $500M-$1B
600 $100

500
$80

400
$60
300
$40
200

100 $20

0 $0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q

2013 2014 2015 2016 2013 2014 2015 2016

Source: PitchBook Source: PitchBook

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

POISED FOR GROWTH

Lower-middle-market activity

US PE LMM deal flow

Deal Value ($B) # of Deals Closed After a very strong 1Q,

252
218
both deal value and
212 192
190 170 182 volume in the LMM
149 170
have returned to the
117
historical mean.
$10

$10

$15
$9
$7
$8
$8
$6
$9
$6

$7
$7
$6
$8
$9
$7
$7

$7
$6
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012 2013 2014 2015 2016
Source: PitchBook. Transactions sized between $25 million and
$100 million comprise the lower middle market.
US PE LMM deal flow

Deal Value ($B) # of Deals Closed

783
692 723
Deal value is on pace 631

to exceed each of the 501

544

last few years.

$32

$38

$38

$18

$23

$27

$34

$29

$30

$30

$28
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
US PE LMM deals (#) by sector in 2016* Source: PitchBook
*As of 9/30/2016

3% B2B
11%
B2C
B2B and B2C still
10% 39% Energy
make up the majority
3% Financial Services
of LMM activity.
7%
Healthcare

IT
27%
Materials & Resources
Source: PitchBook
*As of 9/30/2016

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

GRADUAL DOWNTURN
Core-middle-market activity

US PE CMM deal flow

Deal Value ($B)

# of Deals Closed 292
257
275
263
CMM activity slows
229 after a very steady
195
184
175
132 first half of the year.
138
$44
$34
$27
$49
$24
$35
$40
$51
$56
$51
$46
$56
$57
$36
$41
$37
$45
$46
$30
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012 2013 2014 2015 2016
Source: PitchBook. Transactions sized between $100 million and
$500 million comprise the core middle market.
US PE CMM deal flow

Deal Value ($B) 1,077

# of Deals Closed
The CMM is tracking Source: PitchBook 807
well behind the 672
*As of 9/30/2016

previous two years 564 583

493
in terms of value and
deal count.

$121
$209

$171
$100

$136

$154

$150
$141

$167

$107

$45

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

US PE CMM deals (#) by sector in 2016*

B2B
7.7%
B2C The healthcare
29.9%
18.2%
Energy sector makes up a
Financial Services significant portion of
7.7%
Healthcare CMM activity.
11.7% 24.7% IT

Source: PitchBook
*As of 9/30/2016

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

A SHARP DECLINE
Upper-middle-market activity
US PE UMM deal flow
Quality targets
Deal Value ($B) # of Deals Closed are hard to come
100
106 by. After strong 2Q,
UMM activity falls
69
68 69 well below last years
61
numbers.
58
46 49
24
$13
$24
$36
$49
$39
$21
$34
$32
$46
$40
$55
$47
$29
$57
$51
$57
$31
$51
$34
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2012 2013 2014 2015 2016
Source: PitchBook. Transactions sized between $500 million
and $1 billion comprise the upper middle market.
US PE UMM deal flow

Deal Value ($B)

# of Deals Closed 306
UMM activity is still Source: PitchBook

strong on a historical *As of 9/30/2016

235
basis, pacing well 207 202
158
above the majority of
years since the crisis.
79
$194

$116
$122

$126

$188
$113

$106
$105

$147

$50

$30

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

US PE UMM deals (#) by sector in 2016*

B2B
While overall the UMM is
18% sluggish, IT shows resilience,
30% B2C
Energy making up 30% of deals
Financial Services through 3Q.
18%
Healthcare
19% IT
4% 11%
Materials & Resources
Source: PitchBook
*As of 9/30/2016

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 ITS YOUR DEAL.

R E G I S T R A T I O N O P E N S I N N O V E M B E R .

W W W . I N T E R G R O W T H . O R G

2016 Association for Corporate Growth. All Rights Reserved.


HUGH WADE
Chief Executive Officer
Madison Capital
Hugh_Wade@mcfllc.com
Mr. Wade co-founded Madison Capital and
has served on its Investment Committee
since inception. He has held a variety of
leadership positions at Madison Capital,
including Chief Administrative Officer and
Chief Credit Officer. He also managed
the middle-market Financial Sponsor
Group for Banc of America Securities
LLC. Mr. Wade is a graduate of Marquette
University and received his MBA from the
University of Notre Dame.
CHRISTOPHER TAYLOR
Managing Director,
Head of Relationship Management
Madison Capital
Christopher_Taylor@mcfllc.com
Mr. Taylor is a member of the Investment
Committee and is responsible for Madison
Capitals entire origination team, including
general industries/services, healthcare
and insurance/financial services. Since
joining Madison Capital in 2005, Mr. Taylor
held various underwriting positions before
transitioning to relationship management.
Mr. Taylor earned a B.S. in Accountancy
from the University of Illinois at Urbana-
Champaign.
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
I N PA R T N E R S H I P W I T H S P O N S O R E D BY
What changes have you noticed in the How much would a rate hike affect
middle-market lending environment middle-market lenders?
lately? How does Madison Capital
Pricing has been fairly consistent as of
remain competitive in such an
late and we dont see that changing
environment?
much in the next year. An incremental
To the extent that it is possible, we rate increase wont change the
look to limit our exposure to cyclicality structure of loans, as lenders should
with the types of clients we work with. have already built a rate increase into
With regards to more recession-prone their current structures. That being
borrowers, we look for defensible said, we could see the LIBOR floor
management structure and truly increase somewhat in 2017 to offset
unique market position. In certain the rise in interest rates, but it will be
instances, Madison Capital will not very gradual and incremental.
be as aggressive as the rest of the
market due to the permanent nature
of our capital. Since we dont have to What types of things should investors
raise new capital and are focused on be especially cognizant of in the next
a longer investment horizon, there is few quarters?
no need to follow the market in such
Its important to understand where
aggressive lending environments.
lenders are getting their capital and
Lately, we have been able to find very
how those structures are funded. If
lucrative deals in the software and
we enter a lending malaise, source
technology industry. These sectors
of funding will be paramount in
have tended to yield higher-quality
determining which lenders can survive.
deals, better structures, and more
When writing five to seven-year illiquid
favorable terms.
contracts, you must be well-funded
and especially focused on the long
term. Looking forward, we also expect
What are sponsors concerned about
nontraditional sponsors to become
from a deal perspective? How do you
more prevalent in the coming years,
overcome these concerns?
a trend that will affect lenders and
First and foremost, sponsors are borrowers alike.
concerned about the high price tags
they are having to pay for companies
these days. They realize that valuations
are higher than usual, which has led to
a heightened focus on loan structure
in 2016. Sponsors want their lending
sources to be as stable as possible
as we expect more choppiness in
the next few years. We are able to
meet investor needs by providing
senior, senior stretch, unitranche,
and mezzanine packages across the
entirety of a company hold period.
12
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

SHIFTING YOUNGER
US PE middle-market company inventory

Inventory is increasingly concentrated in relatively younger companies

US PE middle-market company inventory by count and year

6,000
Source: PitchBook
5,570
*As of 9/30/2016 5,417
5,000 5,156
4,680 4,900
4,402
Year of
4,163
4,000 3,887 Investment
3,701
3,259 2011-2016*
3,000
2,697
2006-2010
2,241
2,000 1,929
2000-2005

1,000 Pre-2000

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

US PE MM median hold period (years) by exit type

7.5
Source: PitchBook

6.5
*As of 9/30/2016
6.4 Corporate and SBO
5.6 exits have taken
5.5 longer to develop in
5.5
5.1
4.5 4.7 2016. The cold IPO
4.2 market is forcing
3.5
managers to look
2.5 elsewhere.
IPO Corporate SBO
1.5

0.5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*

13
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

EXITS STAY OFF PACE

US PE-backed middle-market exits

PE-backed exits in the middle US PE-backed middle-market exits

market totaled just under $51.5
billion across 593 sales in the first three Exit Value ($B) # of Exits
quarters of the year, representing 33% 1,016
and 20% YoY decreases, respectively. Source: PitchBook
*As of 9/30/2016
The most interesting trend in the exit 862
market is the pace at which PE firms are
selling to each other. 52% of PE-backed
exits were secondary buyouts in 3Q, 593 628 593
while 44% were corporate acquisitions
470
and 4% came via IPO. We saw more
secondary buyouts than corporate
acquisitions in both 2Q and 3Q of this
year, the first time weve seen two
consecutive quarters experience this

$116

$107
trend since at least 2005.

$51
$70

$86

$43

$26

$74

$77

$87

$76
Partially driven by the continued
weakness we see in the IPO markets, 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
sponsors appear to be warming up to
the idea of selling to another financial
buyer. In an industry where a group of SBOs make up the majority of MM exits for last two quarters
managers is always in need of liquidity US PE-backed MM exits (#) by type
for LPs, moving forward down the
1,200
SBO route today has its benefits.
Additionally, another PE group with Corporate Acquision IPO Secondary Buyout
an operational specialty may be the 1,000
only potential buyer who can pencil
out a deal at the heightened EBITDA
800
multiples weve seen persist.

As SBOs become a larger portion of

600
the market, some LPs may be exposed
to each side of the deal, costing
them unnecessary transaction fees 400
as they effectively sell businesses to
themselves. If portfolio companies 200
really are ending up in the hands of a
more knowledgeable and effective
operator, however, the transaction fees 0
should be outweighed by the bottom- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Source: PitchBook
line improvements further down the *As of 9/30/2016
road.

14
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

FUNDRAISING
Even with all of the news
US PE middle-market fundraising by year around megafunds and LPs
recent consolidation in the number
Capital Raised ($B) # of Funds Closed of managers they choose to work
with, there is still plenty of appetite
for exposure to the US middle market.
169 176 175 Through 3Q 2016, $80 billion has been
closed across 121 vehicles, on pace for a
9% decrease in capital committed, but
119 121 the exact same number of funds as last
yearoverall fairly strong figures.
94 On a quarterly basis, however, the
value of LP contributions to the US
middle market has decreased each of
the last three quarters, signaling some
trepidation in the market. Further, the
$120

$122

$116

$112

$133

$118
$77

$52

$85

$90

$80
average time to close for a middle-
market PE fund through 3Q 2016 was
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 17.7 weeks, up from 13.7 in 2015. It has
Source: PitchBook taken managers a full month longer,
*As of 9/30/2016 on average, to close a fund this year.
PEGs are still able to close, but timelines
are being dragged out as LPs become
US PE MM fund count by size more aggressive in the negotiation
100% of fee discounts and co-investment
opportunities. In addition, average
90%
middle-market fund size came in at
80% $667 million through 3Q 2016, down
70% from $726 million just two years ago.

60% We believe the elevated multiples

50% weve seen in the CMM and UMM are
causing managers to move down the
40%
EV spectrum. Therefore, we think the
30% decline in median fund size can be
20% attributed in part to the aforementioned
shift in sourcing strategies. Industry
10%
giants outside of the middle market
0% continue to raise outsized pools of
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* capital, while traditional middle-
$100M-$250M $250M-$500M $500M-$1B $1B-$5B market players are finding value
Source: PitchBook
through smaller, specialized vehicles.
*As of 9/30/2016 Subsequently, UMM-focused funds
targeting between $1 billion and $5
billion have made up just 17% of final
closes and 52% of capital raised thus far
in 2016, both well below the historical
norm.

15
P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

MM LEAGUE TABLES
3Q 2016

Most active investors by deal count Most active lenders by deal count Most active law firms by deal count

ABRY Partners 12 Antares Capital 25 Kirkland & Ellis 49

HarbourVest Partners 12 Twin Brook Capital Partners 11 Latham & Watkins 21

Audax Group 11 BMO Harris Bank 7 Goodwin Procter 16

Apax Partners 7 Golub Capital 7 Jones Day 16

Huron Capital Partners 7 Wells Fargo 7 DLA Piper 13

Kohlberg Kravis Roberts 7 MidCap Financial 6 Morgan, Lewis & Bockius 11

CIP Capital 6 Fifth Third Bank 5 Ropes & Gray 11

Genstar Capital 6 Madison Capital Funding 5 Sidley Austin 10

New Mountain Capital 6 NXT Capital 5 Paul Hastings 9

Stone Point Capital 6 PrivateBancorp 4 Paul, Weiss, Rifkind, Wharton

9
& Garrison
Source: PitchBook
TA Associates Management 6
Debevoise & Plimpton 8
Warburg Pincus 6 Most active advisors by deal count
Andrews Kurth 7
AEA Investors 5 Houlihan Lokey 16
Weil, Gotshal & Manges 7
Apollo Global Management 5 Duff & Phelps 11
Bass, Berry & Sims 6
Five Points Capital 5 Raymond James Financial 11
Dechert 6
Golden Gate Capital 5 William Blair & Company 11 Honigman Miller Schwartz
6
and Cohn
Great Point Partners 5 Robert W. Baird & Co. 10
Skadden, Arps, Slate,
6
GTCR 5 Lincoln International 8 Meagher & Flom

Willkie Farr & Gallagher 6

H.I.G. Capital 5 The Goldman Sachs Group 7
Cooley 5
Harvest Partners 5 Evercore Group 6
Locke Lord 5
Hellman & Friedman 5 Harris Williams & Co. 6
McDermott Will & Emery 5
Marlin Equity Partners 5 Moelis & Company 6
Winston & Strawn 5
Providence Equity Partners 5 Barclays 5
Alston & Bird 4
Quad-C Management 5 Cascadia Capital 5
Cleary Gottlieb Steen &
Piper Jaffray 5 4
Tecum Capital Management 5 Hamilton

The Jordan Company 5 KPMG 4 Gibson, Dunn & Crutcher 4

The Riverside Company 5 Petsky Prunier 4 McGuireWoods 4

Vista Equity Partners 5 PricewaterhouseCoopers 4 Shearman & Sterling 4

Source: PitchBook RBC Capital Markets 4 Vinson & Elkins 4

Source: PitchBook
RBS Hoare Govett 4

Source: PitchBook

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T
 I N PA R T N E R S H I P W I T H S P O N S O R E D BY

METHODOLOGY
MIDDLE MARKET DEFINITION
For this report, the middle market (MM) is defined as US-based companies acquired through buyout
transactions between $25 million and $1 billion. Note that minority deals are not included. The middle
market is further broken down into the lower middle market (LMM; $25 million to $100 million), the core
middle market (CMM; $100 million to $500 million) and the upper middle market (UMM; $500 million to
$1 billion). This report covers only US-based middle-market companies that have received some type of
private equity investment.

TOTAL CAPITAL INVESTED/DEAL VALUE

Total amount of equity and debt used in the private equity investment

Ex. $10 million of equity and $20 million of debt = $30 million of total capital investment

PitchBooks total capital invested figures include deal amounts that were not collected by PitchBook
but have been estimated using a multidimensional estimation matrix, which takes into account year
of investment, deal type, platform v. add-on, industry and sector. Some datasets will include these
extrapolated numbers while others will be compiled using only data collected directly by PitchBook; this
explains any potential discrepancies that may be noticed.

FUNDRAISING
PitchBook defines middle-market funds as PE investment vehicles with between $100 million and $5
billion in capital commitments. The report only includes private equity funds that have held their final close.
Funds-of-funds and LP secondary funds are not included.

EXITS
The report includes both full and partial exits of middle-market companies via corporate acquisition,
secondary private equity buyout and initial public offering (IPO). PitchBook has utilized its multi-
dimensional substitution and estimation matrix to estimate transaction sizes where the deal amount is
unknown. For the MM company inventory, we included companies that are expected to exit between $25
million and $1 billion.

LEAGUE TABLES
All league tables are compiled using deal counts for middle-market leveraged buyouts. For example, the
Most Active Advisors league table shows the number of US-based middle-market deals that a firm advised
on during the third quarter of 2016. Deals on which a firm advised multiple parties will only be counted
once for that firm.

Madison Capital, founded in 2001, and headquartered in Chicago, Illinois, is a

premier finance company focused exclusively on the corporate financing needs
of middle market private equity firms. Madison Capital has closed transactions
with over 255 different private equity firms and provides enterprise-value
leveraged financing for leveraged buyouts, management buyouts, add-on acquisitions and recapitalizations. Madison Capital
Funding LLC is a subsidiary of New York Life Insurance Company. Additional information may be found at: www.mcfllc.com

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P I TC H B O O K 3Q 201 6 U S P E M I D D L E M A R K E T R E P O R T