Stone-Goff Partners, a middle-market private equity investor, has closed its largest buyout vehicle to date—and its first funded by institutional investors.
While PE fundraising has been in a dry spell, buyout funds focused on the middle market are gaining more traction among LPs than their larger counterparts.
The New York-based firm on Thursday wrapped up the buyout vehicle, its fourth, on $175 million.
Stone-Goff Partners IV, which has secured commitments from insurance companies, funds-of-funds, wealth advisors and family offices, marks the first time Stone-Goff has raised institutional money, according to Hannah Stone Craven, a managing partner and co-founder at the firm.
Family office investors have backed its two most recent funds, which each raised roughly $80 million, Craven said.
Middle-market buyout funds—vehicles with between $100 million and $5 billion—were able to bring in more money than their larger peers during Q1, PitchBook data shows.
These funds amassed $49.9 billion total, or about 88% of the total US capital raised for buyout strategies, according to PitchBook’s Q1 2023 US PE Middle Market Report. In 2022, middle-market funds represented only 45.4%.
Stone-Goff Partners IV will target founder-owned companies in the business services sector, ideally generating $3 million to $12 million in EBITDA. The firm intends to make eight to nine platform acquisitions out of the new fund, then expand those companies both organically and through add-ons.
The founder-focused investor was able to attract institutional capital partly because it has an established track record, making 18 platform acquisitions and completing 10 exits over the last 12 years, Craven said.
About 25% of the fund has been deployed. That includes the investment this year in FS Vector, a consulting firm serving clients in financial services. In August, Stone-Goff acquired JSI, a specialty consulting firm in the telecom industry.
Featured image by Hoowy/Shutterstock
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