We are Lower Mid‑Market Investors

Positioned in the Heart of Opportunity

Penguin Capital is focused exclusively on the Lower-Mid Market (LMM), a thriving segment filled with untapped opportunities and growth potential. The LMM holds a vast number of companies, typically representing over 90% of mid-market entities across North America and Western Europe, with a combined revenue of $10 trillion and employment of nearly 50 million people in the U.S. alone.

Why the Lower Mid-Market?

01 — Abundant Opportunities and High Growth Potential

Many LMM companies are “hidden champions” that fly under the radar due to their smaller size and less-sophisticated infrastructure. These businesses often experience succession challenges or lack the resources for advanced financing, which makes them ideal for private equity partnerships. Under PE ownership, these companies typically go through substantial transformations, benefitting from fresh capital, hands-on expertise, and an agile approach to scaling operations.

02 — Favorable Entry Multiples and Compelling Valuations

Valuation spreads in the Lower Mid-Market (LMM) remain compelling, significantly lower than those seen in large-cap buyouts. Over the past 15 years, these spreads have widened from 3–4 times EBITDA to 7–8 times today, driven by a substantial capital overhang in the large-cap space and a persistent supply-demand imbalance in the LMM, creating cost-effective entry points for strategic investments. This pricing gap allows for significant upside through value-creation strategies like digitalization, supply chain optimization, or operational improvements, without relying heavily on financial leverage.

03 — Proven Resilience and Value Creation Potential

The LMM has demonstrated resilience during economic downturns. For instance, during the 2008 Global Financial Crisis and the COVID-19 pandemic, mid-market companies continued to grow and adapt, contributing millions of new jobs even as larger businesses downsized.

04 — Fragmented Markets and Expansion Opportunities

Due to fragmented industries and market structures, there is ample room for inorganic growth through M&A, roll-ups, and other consolidative strategies. This fragmentation enables private equity to build platforms within niche sectors, creating strong portfolio companies that become leaders in their fields.

05 — Sector and Geographic Diversification

Penguin Capital leverages its vast network to invest across a diverse range of sectors and geographies within North America and Europe, enhancing risk mitigation and unlocking growth potential. Employing a proprietary multi-factor model grounded in modern portfolio theory, we construct balanced and diversified portfolios designed to deliver robust returns and resilience, regardless of regional or sector-specific economic shifts.

06 — Building Value with Lower Complexity and Higher Impact

In contrast to large buyouts, where straightforward value levers have often been maximized, the LMM presents a range of “low-hanging fruits” that can significantly boost company value with manageable complexity. Whether it’s driving digital transformations, streamlining operations, or expanding customer bases, the LMM is uniquely positioned for high-impact interventions that don’t require excessive financial engineering.