The Middle-Market Manager Who Reached $70 Billion Without Chasing Mega-Deals

Private equity has evolved toward larger transactions over three decades. Fund sizes have grown from hundreds of millions to tens of billions. Deal values have increased proportionally. The industry celebrates $10 billion buyouts and fund closings above $20 billion.

Sami Mnaymneh took a different path. Rather than competing for mega-deals, he built HIG Capital exclusively around middle-market opportunities with enterprise values between $50 million and $500 million. The strategy has produced a $70 billion platform operating 19 offices worldwide.

Mnaymneh serves as founder, executive chairman and CEO of the firm he launched with Tony Tamer in 1993. HIG Capital employs over 1,000 people and has invested in more than 400 companies. The firm’s current portfolio exceeds 100 businesses with combined revenues above $53 billion.

Understanding how middle-market focus enabled building a platform of this scale offers insights into alternative paths for industry growth.

Market Dynamics

Middle-market private equity operates under different dynamics than large-cap transactions. Mega-deals attract numerous bidders, driving up valuations and compressing returns. Sophisticated sellers hire major investment banks to run competitive auctions. Information asymmetries favor sellers.

Middle-market transactions present different characteristics. Many deals involve family-owned businesses, corporate divestitures or management buyouts rather than auction processes. Fewer qualified buyers compete for individual transactions. Relationships and reputation matter more than in large-cap deals.

These dynamics create opportunities for managers building credibility and capabilities in the middle market. Less competition potentially allows better entry valuations. Operational value creation matters more than in auctions where highest bidder typically wins.

However, middle-market investing also presents challenges. Smaller deals require similar effort to large transactions but deploy less capital per deal. Firms must complete more transactions to deploy equivalent assets. This creates operational complexity and resource demands.

Additionally, middle-market companies typically need more operational support than large corporations. Creating value requires hands-on involvement rather than financial engineering alone. This demands different capabilities than purely financial buyers possess.

Capability Requirements

Mnaymneh recognized early that middle-market success required building specific capabilities. Before founding HIG Capital, he built strong educational foundations, graduating first in his class at Columbia University with a B.A. summa cum laude, then earning both a J.D. from Harvard Law School and an M.B.A. from Harvard Business School with honors.

This dual training provided tools for both understanding business operations and structuring complex transactions. Following roles at Morgan Stanley and as a managing director at The Blackstone Group, Mnaymneh understood what successful private equity operations required.

HIG Capital’s hiring strategy reflected middle-market requirements. Rather than recruiting exclusively from investment banks, the firm sought professionals with operating backgrounds. Many came from consulting firms or previous operational roles, bringing expertise in business operations alongside financial analysis.

The firm now employs over 500 investment professionals with diverse backgrounds. This depth allows working directly with portfolio companies on operational improvements rather than relying solely on financial engineering for returns.

Building sector expertise across healthcare, technology, business services, consumer products and other industries required focused investment. Middle-market companies need specialized knowledge, not generalist perspectives. Developing deep industry understanding took years of focused transactions and capability building.

Platform Development

HIG Capital began as a single leveraged buyout fund. Early success validated the middle-market thesis and enabled raising subsequent, larger funds. As assets under management grew, the firm expanded beyond traditional buyouts.

The platform now encompasses seven distinct strategies: private equity, growth equity, direct lending, real estate, infrastructure, special situations debt and growth-stage healthcare. Each addresses different middle-market opportunities while maintaining focus on companies others might overlook.

This multi-strategy approach creates several advantages. Different strategies generate returns at different times, smoothing distributions to limited partners. The firm can provide various capital forms to companies at different development stages. Multiple strategies diversify firm revenues and reduce dependence on any single market segment.

WhiteHorse, the direct lending arm, exemplifies successful expansion. The platform launched to provide middle-market companies with flexible debt capital as banks retreated from lending following the 2008 financial crisis.

WhiteHorse has invested approximately $18 billion in 285 companies since inception. The platform closed its fourth fund at $5.9 billion in August 2025, demonstrating substantial institutional demand for middle-market lending strategies.

Fund IV targets senior secured loans to both sponsor-backed and non-sponsor borrowers with EBITDA between $30 million and $100 million. The lending platform competes with banks, business development companies and other direct lenders while leveraging relationships developed through HIG Capital’s broader platform.

Scaling Challenges

Growing from startup to $70 billion platform presented numerous scaling challenges. Deploying increasing amounts of capital requires completing more transactions or moving up-market to larger deals. HIG Capital chose the former, maintaining middle-market focus while increasing transaction velocity.

This approach demands building sourcing capabilities. The firm developed relationships with business owners, corporate development teams, investment bankers and other deal sources. These networks provide consistent flow of middle-market opportunities.

However, evaluating more deals creates resource demands. Investment teams must review hundreds of opportunities to identify attractive transactions. Due diligence on middle-market companies often proves more complex than on larger, more established businesses. This requires substantial professional resources.

Mnaymneh addressed this through centralized decision-making. He maintains personal approval authority over all capital commitments despite the firm’s scale. This ensures consistency in investment criteria while also creating potential bottlenecks as transaction volumes increase.

Geographic expansion also presented challenges. HIG Capital built offices across North America, Europe, Latin America, the Middle East and Asia. Each required building local teams, developing deal flow and establishing operational capabilities.

Recent transactions demonstrate global reach. Investments in 2025 included companies across Finland, Spain, Germany, France and Italy spanning diverse sectors. This geographic diversification provides access to middle-market opportunities worldwide.

Competitive Positioning

HIG Capital competes primarily against other middle-market focused firms rather than mega-funds. This competitive set includes firms like Gryphon Investors, Court Square Capital, KKR’s middle-market team and numerous others targeting similar-sized companies.

Differentiation comes through operational capabilities, sector expertise, speed of execution and relationship building. Middle-market business owners often value partnership quality beyond pure price. Firms demonstrating value creation capabilities may win transactions even without highest bids.

The multi-strategy platform also creates competitive advantages. Providing various capital forms increases relevance to both portfolio companies and sellers. This flexibility allows pursuing opportunities competitors focusing solely on buyouts might miss.

However, competition has intensified as more capital targets middle-market opportunities. Purchase price multiples in middle-market transactions have risen alongside large-cap deals. This compression in entry valuations makes operational value creation increasingly important for generating returns.

Performance Metrics

Private equity firms rarely disclose detailed performance data. However, certain indicators suggest HIG Capital has delivered competitive returns. The firm successfully raised successively larger funds over three decades, indicating limited partners remained satisfied with results.

The ability to attract $5.9 billion for a single lending fund demonstrates institutional confidence. Pension funds, endowments, insurance companies and sovereign wealth funds conduct extensive due diligence before committing capital. Large allocations reflect conviction in both strategy and execution.

Current portfolio scale also indicates sustained success. Managing over 100 active investments with combined revenues exceeding $53 billion requires consistent deal flow and effective portfolio management.

The firm must generate sufficient exits to return capital to limited partners while maintaining steady deployment rates. Extended holding periods in recent years due to constrained exit markets have tested this balance across the industry.

Industry Trends

Several trends affect middle-market private equity currently. First, competition has intensified as more capital targets this segment. The number of firms focusing on middle-market deals has grown substantially since HIG Capital launched in 1993.

Second, purchase price multiples have risen. Middle-market companies now trade at valuations approaching large-cap transactions in many sectors. This compression reduces the valuation arbitrage that historically advantaged middle-market investing.

Third, exit markets face headwinds. Elevated interest rates have slowed strategic acquisition activity and IPO markets. Many firms hold portfolio companies longer than historical averages, tying up capital and delaying distributions.

Fourth, operational value creation has become more important. With financial engineering contributing less to returns, driving business improvements matters more. This potentially advantages firms like HIG Capital that emphasized operations from inception.

Fifth, technology disruption affects middle-market companies across sectors. Portfolio companies need support navigating digital transformation, automation and other technological changes. Firms providing relevant expertise create more value than purely financial buyers.

Organizational Evolution

After 32 years, questions about leadership succession naturally arise. Mnaymneh and Tamer remain actively involved in day-to-day operations. The firm has developed deep management ranks, but eventual transition remains unaddressed publicly.

Succession planning presents particular challenges for private equity firms. Founders often establish distinctive investment approaches and organizational cultures. Maintaining these through leadership changes requires careful planning.

Some firms struggle when founders depart. Others manage smooth transitions by developing internal leaders and maintaining institutional capabilities. How HIG Capital navigates this transition will affect the firm’s trajectory.

The firm’s scale also creates organizational challenges. Maintaining culture and capabilities while operating 19 offices requires systematic approaches. As organizations grow, preserving what made them successful initially becomes more difficult.

Strategic Alternatives

Looking forward, HIG Capital faces strategic choices about continued growth. The firm could maintain current scale, focusing on optimizing existing capabilities and resources. This would emphasize performance over growth.

Alternatively, the firm could continue expanding assets under management, raising larger funds and potentially moving up-market to somewhat larger transactions. This would generate more management fee revenue but require deploying increasing capital amounts.

A third option involves expanding into additional strategies beyond the current seven. However, each new strategy requires building capabilities and may dilute focus on existing strengths.

The multi-strategy platform provides flexibility regardless of strategic direction. Different approaches to growth can occur across strategies rather than firm-wide. Some strategies might expand while others maintain current scale.

Market Environment

Current market conditions present challenges and opportunities for middle-market managers. Elevated interest rates increase borrowing costs, affecting both acquisition financing and portfolio company operations. Exit markets have slowed as strategic buyers and public markets show restraint.

However, the middle market may prove somewhat more resilient than large-cap transactions. Smaller companies have limited access to public capital markets regardless of broader conditions, creating consistent demand for private capital.

Additionally, operational value creation matters more in environments where financial engineering contributes less to returns. Firms like HIG Capital with demonstrated operational capabilities may perform better than purely financial buyers.

Direct lending has proven particularly attractive in high-rate environments. Senior secured floating rate loans offer compelling returns while providing downside protection. Strong lending performance can offset challenges in equity strategies during difficult periods.

The Path Forward

As HIG Capital approaches its 35th anniversary, the middle-market focus that defined the firm’s founding remains central to its identity. The decision to build exclusively in this segment rather than chasing mega-deals has produced a substantial platform.

Whether this focus continues delivering competitive returns depends on execution, market conditions and eventually leadership transition. The capabilities built over three decades provide foundation for continued success if preserved and enhanced.

For now, the strategy Mnaymneh established in 1993 — building scale through focused middle-market investing rather than pursuing mega-deals — continues guiding one of private equity’s most active platforms. The approach offers an alternative path for industry participants considering strategic positioning.