Growth in fundraising and transaction volume: 2011 to 2023
![Column chart depicting fundraising and transaction volume for large-cap and mid-market private equity sponsors. The chart highlights that fundraising far outpaces transaction volume among large-cap sponsors. Within middle market PE deals, fundraising is much more closely aligned with transaction volume, leading to more attractive valuations within the middle market.](https://fsinvestments.com/wp-content/uploads/2024/08/COTW_2024-08-02_blog-730px.jpg?w=1170)
Source: Pitchbook, FS Investments, as of December 31, 2023.
- Private equity fundraising has seen enormous growth in recent years, driven by its historical outperformance versus public equities along with growing retail interest. Private equity assets under management grew 172% for the six-year period ended December 2023 while dry powder—capital that has been raised but not yet deployed—grew 59%.1
- Much of the fundraising has centered on large- and mega-cap PE sponsors. Yet the tremendous growth also has posed a unique problem for them: the capital raise has massively outpaced transaction volume.
- From 2011 to 2023, the growth in large cap fundraising outpaced actual transaction volume by more than 580%.2 Meanwhile, fundraising among middle market PE sponsors has been much more closely aligned with their target opportunity set.
- Significantly more money chasing large- and mega-cap deals has led to notably higher multiples (17.3x) there than in the mid-market space (14.4x).2
- Large- and mega-cap PE sponsors garner most of the headlines and continue to lead fundraising efforts in 2024. Yet the U.S. middle market presents a deeper opportunity set comprised of more than 200,000 businesses and may offer a more attractive long-term growth opportunity than that of its large cap peers.