Forget Those Big Deals (and Headlines): Private Equity Firms Are Shopping the Middle Market

March 5 - Knowledge@Wharton - Big buyout firms like the Blackstone Group and Kohlberg Kravis Roberts do headline-grabbing transactions and collect eye-popping paychecks. But when the economy slows down and lenders turn wary, those mega-deals are the first to dry up.

Meanwhile, the modest middle market -- typically deals in the $500 million to $1 billion range -- keeps plugging along, according to investors who gathered at the 2008 Wharton Private Equity Conference. These transactions may not get talked up on CNBC's "Squawk Box"or written about in Barron's, but they also don't depend on the availability of cheap credit and the lending appetite of big banks like Citigroup and Bank of America. In fact, the middle-market specialists who spoke on a panel titled, "Middle Market: Calmer Waters or Sea of Competition?" argued that they are, to some extent, insulated from the current credit crisis and other economic ups and downs. Read More.