Private equity firm size classes: from Emerging Manager to Mega

Ask three people in private equity what a "mid-market firm" is and you may get three answers. Some mean the size of the companies a firm buys. Others mean the size of the firm itself, measured by the money it manages. To make firms easy to compare and filter, AcquityData classifies every private equity firm into one of five size classes, based on a single measure: assets under management, or AUM.

What AUM means

AUM, short for assets under management, is the total value of the investments a firm manages for its investors. For a private equity firm it usually includes the capital its funds have invested and the capital investors have committed but the firm has not yet invested. Firms define and report AUM in slightly different ways, which is one reason to treat any size figure as an estimate.

The five size classes

AcquityData uses the following classes. They are based strictly on a firm's reported AUM, in US dollars:

When a firm reports its AUM in another currency, such as euros or pounds, the amount is converted to US dollars first, and the class is chosen from the converted figure.

How a firm is placed in a class

A firm is given a class only when a reliable AUM figure can be found. The figure may come from the firm's own website or press releases, from regulatory filings, or from annual reports. Where several figures exist, the most recent reliable one is used.

A firm's size is not estimated from the number of deals it has done or from how large it seems. If a firm does not state its AUM, it has no class. The size of a single fund is also not the same as AUM. A firm might raise a $400 million fund while managing several times that across all its funds, so fund size alone is not used.

How many firms sit in each class

Counts are for private equity firms shown on AcquityData today, and update as firm profiles are completed.

Most private equity firms are smaller than the best-known names. The firms that dominate headlines, with tens of billions under management, make up a small share of the industry by number, even though they manage a large share of the money.

Why size matters

A firm's size shapes how it invests:

• Deal size. Larger firms need larger investments to make a difference to a big fund, so they tend to look at bigger companies. Smaller firms are more comfortable with smaller ones.
• Competition. Firms of similar size often compete for the same deals.
• Likely partners and buyers. If you are selling a business, firms of the right size are more likely to be interested. If you are researching an investor, its size tells you what kind of deals to expect.
• Resources. Larger firms usually have bigger teams and wider geographic reach.

What the classes do not tell you

Size is a useful filter, not a full description. A few cautions:

• The class says nothing about quality or performance.
• Some firms invest well below or above what their size would suggest.
• AUM changes over time, so a firm can move between classes.
• Industry terms such as "lower middle market" often describe the size of the companies being bought, not the size of the firm. AcquityData's classes describe the firm.

Where AcquityData fits

Each PE firm profile shows its size class where one is available, and the firm search lets you filter by size, along with sector, location and investment criteria. See the Help Center guide Searching PE firms for the steps.