Every quarter private equity data provider Pitchbook releases their accounting of the different market segments. Here’s a review of what they found for private equity’s (PE) middle market.

Executive Summary

In Q1 2024, US PE middle-market dealmaking showed a slight improvement over Q1 2023, following a peak of activity in Q4 2023. The increase in deal multiples in Q1 2024 indicated a stabilization of the market, supported by lower borrowing costs and higher public market valuations. The report suggests that while there is an increase in activity, the market has not yet fully recovered, as evidenced by constrained buy-side activities due to a lack of sellers.

Deal Activity

Middle-market deal activity remained stable in Q1 2024, continuing the trend from Q4 2023. While the overall deal value was ahead of Q1 2023, it was still below the highs of 2021. PE firms are focusing on bringing their most attractive assets to the market, which has resulted in a narrowed scope of deal flow. This selective approach is crucial for maintaining higher valuations and successful deal completions.


Deal multiples for middle-market PE deals rebounded in Q1 2024. The median EV/revenue multiple rose to 2.2x from 2.0x in Q4 2023, and the median EV/EBITDA multiple increased to 12.7x from 11.0x. This recovery in valuations is attributed to lower borrowing costs and strong public market performance, which have provided a more favorable environment for PE transactions.

Exit Activity

Exit activity in the middle market showed signs of recovery, with a notable increase in take-private transactions. In Q1 2024, 15 take-private deals were announced or completed, up from 8 in the previous quarter. This trend is driven by the attractive valuations of small-cap public companies and reduced market volatility. The report highlights that many companies that went public during the 2020-2021 surge are now reverting to private ownership due to adjusted valuations.

Fundraising and Performance

Fundraising in the middle market remains strong, with PE firms continuing to attract significant capital. However, the report notes that the overall returns for private equity in 2023 were lower than the historical average, reflecting the broader market conditions. The concentration of returns in a few large-cap stocks underscores the need for a broader market recovery to enhance PE performance.

Lending and Debt Markets

The report discusses the impact of the lending environment on PE activity. The average debt/value ratio for new jumbo loans backing leveraged buyouts (LBOs) decreased significantly, favoring middle-market deals due to their smaller deal values and access to private credit. The syndicated loan market saw increased activity, providing much-needed relief to PE borrowers through lower borrowing costs and more competitive lending conditions.

Sector Focus

The report includes a spotlight on the fintech sector, noting increased interest from PE firms in middle-market fintech companies. This trend reflects the growing importance of technology and innovation in driving value in the middle market.


Overall, Pitchbook’s Q1 2024 US PE Middle Market Report provides a cautiously optimistic outlook for the middle-market PE space. While challenges remain, such as constrained deal flow and the need for broader market recovery, the report highlights positive signs in deal multiples, fundraising, and lending conditions. The continued focus on high-quality assets and strategic sectors like fintech suggests that PE firms are well-positioned to navigate the current market environment and capitalize on emerging opportunities.


In the fast-paced world of startups and venture capital, early stage valuations often serve as a tantalizing yet sometimes deceptive beacon. While they provide a snapshot of a startup’s perceived value, these valuations are rife with assumptions, inflated expectations, and strategic maneuvering that can sometimes mislead founders, investors, and the market. Sometimes when put to the test by public scrutiny, early stage valuations can prove to have been way too low!

The Allure of Big Numbers

Early stage valuations can sometimes be eye-catching. A headline boasting a multi-million dollar valuation for a fledgling startup can generate significant buzz, attracting media attention, potential employees, and further investment. However, these figures can be misleading. They often reflect the potential of an idea rather than the actual performance or tangible assets of the company. Valuations at this stage are heavily influenced by market sentiment, the charisma of the founders, and the competitive landscape of venture capital rather than solid financial metrics.

Some might point to the following graphic as case in point. The following view, from private equity data provider Pitchbook, shows the median pre-seed valuation. Amazingly, median pre-seed valuations hit nearly $1 million in the first quarter of 2024, above its previous all-time high. Compared to prior years, some might simply say “wow”.

The Role of Venture Capitalists

Venture capitalists (VCs) play a critical role in setting early stage valuations. Their goal is to invest in high-growth potential startups with the hope of reaping substantial returns. However, VCs also have an interest in securing significant equity for the lowest possible investment. This dynamic can lead to inflated valuations, especially when multiple investors compete to fund the next potential unicorn. The resulting valuations can be more reflective of investor enthusiasm than the startup’s intrinsic worth. Or, does it really?

The Risk of Overvaluation

An inflated early stage valuation can create several risks. For founders, it sets a high bar for future performance. Subsequent funding rounds will require the company to demonstrate significant growth and justify even higher valuations. Failing to meet these expectations can lead to down rounds, where the company raises funds at a lower valuation than before, which can be demoralizing for the team and damaging to the startup’s reputation.

For employees, stock options and equity grants can become less attractive if future rounds devalue the company’s stock. This can affect morale and retention, especially if the initial valuation was perceived as a promise of future wealth.

The Illusion of Market Validation

Given this background, could some be right that early stage valuations are just an illusion of market value? Well, maybe, but maybe not. A high valuation might suggest that a startup has a viable product-market fit and a strong business model, but this is not always the case. Many startups receive high valuations based on potential market size and the promise of future success, rather than current revenue or profitability. This can lead to a false sense of security, where founders and investors believe the company is on a solid path to success, only to face harsh realities as the market evolves.

The Importance of Due Diligence

For investors, due diligence is crucial in navigating the deceptive nature of early stage valuations. Beyond the headline figures, investors need to scrutinize the startup’s business model, market potential, team capabilities, and financial health. This involves asking tough questions and seeking transparency about the assumptions driving the valuation.

Founders, on the other hand, should be cautious about chasing the highest possible valuation. It’s important to balance the need for funding with realistic expectations and sustainable growth strategies. Overvaluing a company in the early stages can lead to long-term challenges that outweigh the short-term benefits of a large funding round.


Early stage valuations are a double-edged sword. While they can propel a startup into the limelight and attract much-needed capital, they can also be deceptively optimistic and create unrealistic expectations. Both founders and investors must approach these valuations with a critical eye, focusing on long-term viability rather than short-term hype. By doing so, they can build more resilient companies that are better equipped to navigate the unpredictable journey from startup to success.


The Most Actives in the First Quarter

Every quarter, private equity data provider Pitchbook releases what they call their “Global League Tables.” The report is essentially an accounting of the top investment firms through the reported quarter. Which companies show up on top for the first quarter of 2024? Here’s a look.

The Most Active in the U.S.

The first look is the most active in the U.S. Before looking, can you guess which firms show up on top? Interesting, the top five includes (number of deals in parentheses) Ares (27), the Blackstone Group (23), Shore Capital Partners (22), Leonard Green & Partners (18), and Trivest Partners (16).

Rounding out the top ten are GTCR (15), New Mountain Finance (15), Altas Partners (14), Audax Private Equity (14), and KKR Credit (14).

Surprisingly, some of the usual big players were absent from the top ten in the first quarter of 2024, including Bain Capital (12), Harvest Partners (10), the Carlyle Group (10), Apollo Capital Management (9), and the Goldman Sachs Group (8).

The Most Active in Europe

Shifting attention to Europe, the following table has that view. Can you guess which firms show up on top without looking?

By far the number one investment firm in Europe in the first quarter of 2024 was Bpifrance (36). Second place Ardian was far behind with “just” 22 deals. Rounding out the top five were EQT (18), Hg (16), Mubadala Investment Company (16), Silver Lake (16), and Sjatte AP-fonden (16).

The remaining members of the top 10 include BNP Paribas Developpement (15), Berkshire Partners (15), and TA Associates Management (15).

The Most Active Globally

Given the picture pained by the U.S. and Europe, you can likely guess which firms show up on the global most active list. As shown in the following table, on top of the list is Ares (38), followed by Bpifrance (36), KKR Credit (30), the Blackstone Group (29), EQT (27).

The sixth through tenth places were occupied by Mubadala Investment Company (25), Silver Lake (25), TA Associates Management (25), Ardian (24), and Bain Capital (24).

Most Active by Exits

Our last view is the top investment firms ranked by the most exits. As with the other views, can you guess the top five without looking? Here’s the view.

The most active globally in the first quarter was KKR Credit, with 6 exits. The other members of the top five included the Pioneer Fund (5), Ares (4), BNP Paribas Developpement (4), and Bain Capital (4).

Other top exiting firms included (all with 3 exits) Ardian, Bpifrance, Cerberus Capital Management, HarbourVest Partners, Hg, OKX Ventures, and the Goldman Sachs Group.

Summing Up

Overall, although the economy is slowing, investors continue to be active in the private equity and venture capital world.


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