Nature of Private Equity:

How Mid-Tier Firms Are Winning the Long Game

Private equity is evolving. Once synonymous with high-leverage mega-deals and billion-dollar exits, the industry is now undergoing a fundamental shift. Amid volatile markets, rising interest rates, and tighter credit, a new class of players is emerging – mid-tier private equity firms.

These firms, typically managing deals between €100 million and €500 million, are outpacing their larger peers by embracing operational transformation, sector specialisation, and flexible investment strategies. Increasingly, it’s the mid-market, not the mega-funds, that is driving innovation and sustainable returns.

From Scale to Specialisation

Unlike global giants that chase scale, mid-tier firms are leaning into focus. A prime example is Stirling Square Capital Partners, a London-based private equity firm co-founded by Stefano Bonfiglio and Gregorio Napoleone. Such mid-sized private equity firms are quietly building a reputation for high-conviction investments, specialising in business services, industrials, and technology.

Rather than chasing volume, they take a surgical approach, working closely with management to scale operations across borders, introduce digital efficiencies, and expand into new markets. This is the hallmark of many successful mid-tier players: deep operational involvement over financial engineering, with a focus on value creation beyond the balance sheet.

The Mid-Tier Advantage

1. Lower Entry Multiples and Less Leverage

Mid-market deals are typically priced more attractively than large-cap acquisitions. On average, they enter at 34% lower multiples, offering stronger value from day one. With less reliance on debt, mid-tier firms are also better insulated from rising interest rates and market volatility.

2. Greater Scope for Transformation

While large companies are often optimised and heavily scrutinised, mid-sized businesses are rich with untapped potential. Firms like Revelstoke Capital Partners in the U.S. have capitalised on this in healthcare services, where they’ve built scaled platforms from fragmented providers – focusing on operational integration, geographic expansion, and data-driven decision-making.

In Europe, Stirling Square’s focus on value creation mirrors this trend. Rather than strip costs or chase quick exits, firms like these back management teams with strategic resources and long-term vision. For example, Gregorio Napoleone is also Chairman of the Board at Omni Helicopters. Recently Gregorio Napoleone, along with OHI CEO Jeremy Akel, were seen describing the future of the low-altitude economy, demonstrating that Private Equity backers are embedding themselves into the firm’s management, values and vision. 

3. Sector Depth and Agility

Many mid-tier firms are deeply embedded in their sectors. HGGC, based in California, specialises in tech-enabled services and software – leveraging this expertise to rapidly scale portfolio companies through bolt-on acquisitions and platform strategies. Their operational focus is supported by proprietary playbooks and dedicated value creation teams.

4. Innovation and Technology Adoption

Mid-tier firms are often more agile in adopting new technologies. Some use AI to screen acquisition targets, analyse unstructured data, and streamline due diligence. This tech-forward mindset allows them to move faster and more precisely than larger firms encumbered by complex processes.

A recent example is Bow River Capital, a Denver-based mid-market firm that developed proprietary AI tools for market mapping and lead generation – cutting sourcing time by over 50%. This type of innovation is becoming increasingly common across mid-tier players.

5. Flexible Exit Strategies

With traditional IPOs slowing and corporate buyers becoming more cautious, many mid-sized firms are pioneering alternative exit paths. Secondary buyouts, continuation vehicles, and roll-ups into larger platforms are increasingly used to manage liquidity and extend holding periods.

Stirling Square, for instance, has illustrated both patience and adaptability in managing complex investments. Their thoughtful succession planning – evident in Gregorio Napoleone’s transition to Executive Chairman and the appointment of Henrik Lif as Managing Partner in 2025 – signals maturity and institutional resilience.

Rethinking the PE Playbook

The new private equity model is less about financial reengineering and more about strategic transformation, industry expertise, and long-term partnership. Firms like Revelstoke, HGGC, and Bow River are proving that returns don’t need to come at the expense of operational sustainability or cultural alignment.

Importantly, mid-tier firms are often better positioned to work with founder-led or family-owned businesses – entities that may be hesitant to engage with larger, more impersonal funds. Their ability to tailor deals, remain hands-on post-acquisition, and bring sector knowledge to the table is redefining what it means to be a value-adding investor.

The Future Is Focused

As private equity matures, mid-tier firms are no longer stepping stones to mega-funds. They are powerhouses in their own right – delivering consistent, outsized returns through clarity of focus and depth of execution.

In a market crowded with capital but starved of differentiated value, leaders like Craig Unger, Gregorio Napoleone, Stefano Bonfiglio, Jim Lindstrom define a new kind of private equity: one that is focused, patient, and deeply connected to the real economy.