The lower middle market in the United States has long been a fertile hunting ground for private equity investing. AlphaWeek’s Greg Winterton spoke to David Fershteyn, CEO at Atlanta, GA-based Altera Private, to learn more about his firm and its activities in the space.
GW: David, tell us what it is about the lower middle market that Altera finds particularly appealing.
DF: Like most professional investors, we are hyper focused on generating attractive risk-adjusted returns for our limited partners – the question is how do we achieve this? Our journey to focusing solely on the lower middle market started with us deciding what “game” we wanted to play, and then making sure our game had an increased probability of investment success. The most important factor for us in this decision was trying to identify where there is market inefficiency and why. The number of publicly traded companies has declined to ~4,0001, while assets held by public equity funds have steadily increased. Billions of dollars chasing a shrinking, limited universe of opportunities (where there is much more transparency and analyst coverage) didn’t seem like the best chance of generating alpha for our investors…
1 McKinsey & Company, Reports of Corporates’ Demise Have Been Greatly Exaggerated, October 2021.
Disclosure: This information does not constitute investment advice or suggest an offer to sell, or the solicitation of an offer to buy, any securities or other financial products. All information is provided as of the date referenced and has not been updated since that date for any information contained in it that may have changed, including any beliefs and/or opinions.