The U.S. lower middle market remains one of the most fragmented areas of private equity. Omnigence Asset Management’s latest paper examines how more than 200,000 U.S. businesses with revenues between $10 million and $150 million continue to operate outside traditional institutional capital markets.
Despite the size of the opportunity set, the majority of private equity dry powder remains concentrated in larger funds pursuing larger transactions. According to the paper, less than 19% of PE dry powder is allocated to funds under $1 billion.
The report outlines why the lower middle market remains structurally fragmented, including smaller deal sizes, operational complexity, proprietary sourcing, and the prevalence of founder-led businesses that have not previously accessed institutional capital.
The paper also explores how valuation differences between lower middle market and large-cap private equity transactions may influence investment strategies and operational value creation approaches.