Buyout groups targeting more small businesses

Weekly Corporate Growth Report, Jun 16, 1997

There is intense competition these days to invest in large companies and the cost of these deals just keep on rising. Investors say that is why a growing number of buyout groups are turning to smaller deals, some priced at half the multiples of the bigger deals.

A new investment arm of Swander Pace & Co., a San Francisco consumer products consulting firm, is currently raising $75 million to invest in consumer-products companies with annual sales of $5 million to $75 million. According to Kopin Tan, editor of the New York journal Buyouts, of the 44 buyout funds launched in 1996, 43% of them were aimed at small companies. In 1994, before the buyout industries latest binge began, 39% of 41 funds formed that year focused on smaller deals.

(Source: Wall Street Journal)