Private Equity Strategy
Valley Forge Private Equity (“VFPE”) invests in U.S. Lower Middle Market buyout funds (<$500M fund size) across multiple industries as well as selectively co-invests directly into portfolio companies alongside trusted fund managers. This hybrid structure ultimately targets portfolio companies generating $10-$100M of revenue and $5-$30M of EBITDA.
Why Private Equity?
- Performance – Long-term Private Equity returns have outperformed the public markets
- Diversification to Public Markets – Private Equity valuations are dictated far more by company level factors than broader market sentiment
- Access to Deep Opportunity Set – 4,400 public U.S. companies versus 325,000 private U.S. companies have historically created opportunities to take advantage of an inefficient market
- Dedicated Sponsors – Fund managers with deep experience take a hands-on approach to adding value
Why Lower Middle Market?
- Opportunities – Larger pool of prospects with smaller companies having limited alternatives for capital
- Control – Majority ownership enables experienced sponsors to direct strategy
- Efficiencies – Opportunity for operational upgrades to industry standards, seeking to create synergy and value
- Lower Purchase Prices – Lower purchase prices caused by greater supply can lead to better returns
Why Hybrid Fund Structure?
- Access – Access to otherwise inaccessible fund managers by exceeding typical investment minimums
- Due Diligence – Active monitoring and support of fund managers’ strategy and portfolio acquisitions
- Fee Efficiency – Co-investing presents the opportunity to create a fee efficient investment vehicle
- Diversification – Diversification by sponsor, industry, and geography through a single fund commitment
- Develop long-term, high-quality, multi-level relationships with the Valley Forge network of value-oriented Private Equity fund managers, while avoiding early-stage venture/start-up risk
- High conviction portfolio with two to four primary commitments per fund vintage historically
- Generate attractive co-investment opportunities though VFPE’s “Value-Add” relationships with fund managers