Apogem Capital Announces New Research Outlining Five Strategies for Sponsors in the Middle MarketPrivate Equity Space
Research Uncovers Trends, Insights and Strategies for Private Equity Sponsors and Investors Navigatingthe Middle Markets in 2023
NEW YORK – February 23, 2023 – Apogem Capital, in partnership with Coalition Greenwich, today
released a new research report analyzing how middle market private equity sponsors are navigating anenvironment characterized by volatile public markets, geopolitical uncertainty, and persistently highinflation. The report titled, “Exploring the New Paradigm Shift: Middle Market Private Equity Research,”features trends and insights from more than 100 interviews with managing directors and partners at
middle market private equity sponsors in the US.
“Private equity sponsors continue to monitor new and emerging risks in an ever-evolving investment
landscape,” said Louise Smith, Managing Director, Private Equity at Apogem Capital. “While investors
are assessing the impacts of heightened inflation, accelerating interest rates and market turbulence,
middle market GPs may be well-positioned to navigate this environment – using these risks as uniqueinvestment opportunities in the middle market.”
The research revealed sponsors in the middle market could benefit from less competition for assets andmore consistent opportunities for attractive exits relative to larger peers and sponsors operating inother segments of the market. Overall, participants articulated five strategies they are adopting tomaximize the advantages in the middle market to negotiate challenging market conditions.
Key strategic takeaways from the research data include:•Build diversified portfolios emphasizing recession-resilient sectors: More than 80 percent of
middle market private equity sponsors have started to focus their investments on recession
resilient sectors but defined the segments presenting the most attractive opportunities
differently. This divergence illustrates the value of portfolio diversification to potentially lower
overall risk and enhance risk-adjusted portfolio returns.

•Focus on creating value through operational improvements: According to the research, morethan 70 percent of study participants indicated that current market and economic conditions
have prompted them to focus on operational improvements at portfolio companies as a primarymeans of creating value. This may allow companies to weather economic headwinds and growtheir way out of potential valuation compression that could accompany an economic downturn.

•Lean into Environmental, Social and Governance (ESG) and Diversity and Inclusion (D&I)
initiatives: 90 percent of middle market private equity respondents indicated that limited
partners (LPs) are driving interest in ESG investing. PE sponsors have taken action to respond to
this interest, with the share of respondents indicating that they have a formal process toevaluate ESG-related risks and opportunities increasing by nearly 50 percent since the 2021
report.

•Capitalize on fundraising by larger private equity sponsors for attractive exit opportunities:
When discussing fundraising challenges, many managers cited larger private equity managers
coming to the market sooner with bigger funds. While this has made fundraising more difficult

for middle market managers, it also suggests a large pool of private equity dry powder up
market that may be motivated to continue to transact, potentially acquiring the portfolio
companies of middle market funds, even in the event of a downturn.
•Cultivate relationships with reliable partners: Middle market private equity sponsors are
shoring up ties with their most loyal and consistent partners to ensure continued access tocapital throughout any extended market disruptions. Private equity sponsors are asking capitalproviders for partnership, flexibility, and speed – attributes that can make or break transactions
in a volatile environment.

“The investing and macroeconomic environment continues to evolve. For some investors, this is theirfirst experience investing or managing a company through a rising rate and potentially recessionary
environment, outside of the COVID-related downturn in 2020,” said David Fann, Senior Managing
Director and Vice Chairman at Apogem Capital. “While middle market sponsors are preparing for achallenging period ahead, we believe cycle-tested managers with unique value-add should be wellpositioned to navigate a complex environment, and potentially produce attractive results. Private
markets are nearly impossible to time - we believe that staying disciplined with consistent capital
deployment across a diversified portfolio has generally performed best over the long term.”
To read more about the survey results, download the complete research report here.
Methodology
In the third quarter of 2022, Coalition Greenwich, in partnership with Apogem, interviewed 102
managing directors and partners at middle market private equity sponsors in the United States. These
in-depth phone conversations centered on market conditions in 2022, as well as investment trends, exit
strategies, funding sources, and emerging challenges and opportunities.
About Apogem Capital
Apogem Capital was formed in April 2022 through the combination of PA Capital, Madison Capital
Funding and GoldPoint Partners to create a singular and unified, world class private markets’ investment
firm. With approximately $39 billion in assets under management as of September 30, 2022, we believe
Apogem has the deep relationships, data, and history in the middle market to deliver innovative
solutions to both clients and sponsors. Apogem Capital offers investors access to the middle market’s
growth engine through investments in leading private companies and funds. The Firm manages a
streamlined suite of capital solutions, including direct lending, junior debt, primary fund investments,
secondary investments, equity co-investments, GP stakes, and private real assets. Apogem Capital is awholly owned subsidiary of New York Life Insurance Company (“NYLIC”), through New York Life
Investment Management Holdings, LLC (“NYLIM”).
Media Contacts
Allison Scott
New York Life Insurance Company
Awscott@newyorklife.com
Matthew Panichas
Sloane & Company
Matthew.panichas@sloanepr.com