Why Do Smaller Buyouts Outperform Large Caps? Operations.

Dedicated operating partners are scarce in the small- to mid-market. But counterintuitively, these firms’ operational successes have led them to outperform large buyouts.

Small- and mid-market buyout firms with dedicated operational teams are rare. Yet, counterintuitively, those same firms’ funds tend to outperform their larger peers despite their lack of resources.

According to Fabien Chen, head of benchmarks at Preqin, smaller buyout funds in the US have outperformed their large-cap peers by a good margin in recent years.