Private Equity Strategy
Targeting middle market companies with strong management teams, recurring revenue, and growth potential, focusing on sub-sectors experiencing strong secular growth trends.
The Middle Market Private Equity Opportunity
Massive Addressable Market
The U.S. middle market comprises over 200,000 companies with revenues between $10 million and $1 billion, representing an enormous opportunity for strategic investment. Our focus targets the lower and core middle market segments—approximately 140,000 companies with revenues between $10 million and $250 million—where competition is lower and value creation potential is highest.
This represents 70% of the total addressable market, providing substantial deal flow and opportunities for disciplined investors who understand the unique dynamics of middle market businesses.
Strategic Investment Focus
42 Private Equity targets U.S.-based companies with post-formation EBITDA between $10 million and $50 million across business services, industrials, and financial services sectors. We prioritize companies experiencing secular growth trends exceeding 10% annually and those holding leading positions within their respective sub-sectors.
Our thematic approach centers on digital and physical infrastructure companies with mission-critical, sticky products or services that generate long-term recurring or contracted revenue streams.
Total addressable market in the United States with revenue between $10M–$1B
Lower and core middle market companies representing 70% of the market opportunity
Minimum secular growth trends in target sub-sectors for investment consideration
Maximum investment per opportunity for control or minority positions
42 Asset Management's Differentiated Private Equity Approach
What sets 42 Asset Management apart in the competitive private equity landscape is our unique integration with the broader reinsurance asset management platform. Unlike traditional private equity firms operating in isolation, we deliver a comprehensive solution that aligns perfectly with insurance capital requirements while creating exceptional value for portfolio companies.
Insurance-Optimized Capital Structures
We design debt capital structures specifically suited for insurance balance sheets, creating alignment between portfolio companies and our reinsurance clients. This unique capability allows us to access lower-cost capital while delivering attractive risk-adjusted returns to insurance partners.
First Institutional Capital Provider
We specialize in providing initial institutional capital to founder-led and family-owned businesses, offering sophisticated expertise without the bureaucracy of larger sponsors. Our flexible approach supports both control and minority positions, with strong preference for club investments alongside family offices or strategic partners.
Integrated Platform Advantage
Portfolio companies benefit from our comprehensive asset management platform, including access to our private credit and asset-based finance businesses. This creates organic origination opportunities and allows us to provide holistic financial solutions as companies grow and evolve.
Investment Criteria and Company Characteristics
Target Profile
- $5M to $50M capital per investment
- PF EBITDA: $10M to $50M
- Revenue: $10M to $250M
- Control or minority positions
- Club-friendly structures
Company Attributes
- Leading market positions
- 10%+ organic growth rates
- Strong management teams
- Mission-critical offerings
- Recurring revenue models
Sector Focus
- Business services
- Industrial companies
- Financial services
- Digital infrastructure
- Physical infrastructure
Partnership Philosophy: We actively partner with management teams to optimize operations, accelerate growth trajectories, and ultimately enhance valuations. Our collaborative approach combines institutional discipline with entrepreneurial flexibility, creating sustainable value for all stakeholders.
Why Middle Market Growth Equity With 42 Asset Management
The convergence of substantial market opportunity, reduced competition in the lower-to-core middle market, and our differentiated insurance-integrated platform creates a compelling value proposition. Our ability to structure investments that serve both operating company growth objectives and insurance portfolio requirements represents a genuine competitive advantage.
By combining deep industry expertise, flexible capital solutions, and strategic platform resources, 42 Private Equity delivers superior risk-adjusted returns while supporting the long-term success of exceptional middle market companies. Our approach transforms traditional private equity limitations into distinctive strengths, creating alignment across all stakeholders in the investment ecosystem.