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American Capital Forms Lower Middle-Market Group

May 19, 2014, 07:24 AM

American Capital, Ltd. announced the formation of the Lower Middle Market Buyout group, led by Sean Eagle, Eugene Krichevsky, David Steinglass and Justin DuFour, who have more than a decade of experience working together at American Capital and more than 50 years of collective experience managing and investing in lower middle market buyouts. The Lower Middle Market group has an initial staff of ten investment professionals and is located in the company's Bethesda, MD office.

On May 6, 2014, American Capital announced the launch of American Capital Equity III, LP ("ACE III"), a new $1.1 billion private equity fund being managed by the Lower Middle Market Buyout group. Upon closing, ACE III will purchase seven middle market companies from American Capital, with an option to purchase the equity interest of one of the companies at a future date. The current American Capital Investment teams responsible for these companies will work together with the Lower Middle Market group to manage these investments.

The Lower Middle Market group will also manage $445 million of committed capital, which will be used to pursue control equity investments in lower middle-market companies primarily in the business and technology services, healthcare products and services and industrial growth end markets, with EBITDA of $5 to $25 million. 

The Lower Middle Market Buyout group will operate within American Capital's asset management affiliate, American Capital Asset Management LLC, which is dedicated to creating, capitalizing and managing alternative investment funds across asset classes, including private equity, private finance, real estate and energy and infrastructure.

"We are delighted to have Sean, Eugene, David, Justin and their entire team continue to devote their attention to lower middle market buyouts and deploy and manage our new ACE III fund," said Malon Wilkus, American Capital Chairman and Chief Executive Officer. "They have broad industry experience, complementary skill sets and an excellent track record investing in lower middle market buyouts through several economic and credit cycles while at American Capital.  The Lower Middle Market Buyout group complements our larger investment platform where we target middle and upper middle market buyout opportunities up to $750 million in size, as well as energy, infrastructure and special situations investment strategies."

"We are excited by the opportunity to manage ACE III and deploy its $445 million of committed capital in lower middle market buyouts of companies with EBITDA of $5 to $25 million," said Sean Eagle, Managing Director, Lower Middle Market Buyouts.

"We believe our collective experience investing in lower middle market companies, coupled with American Capital's infrastructure and significant market coverage, differentiates us in this segment of the market and positions us well to deliver attractive returns for our investors," said Eugene Krichevsky, Managing Director, Lower Middle Market Buyouts.

The Lower Middle Market Buyout group is seeking companies that have proven management teams, defensible market positions, stable recurring revenue streams and high cash flow conversion.  Key highlights of the targeted industries include increased outsourcing, favorable demographic trends and recession resistance, and overall market growth potential.

American Capital, Ltd. is a publicly traded private equity firm and global asset manager. 

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