Liz Campbell, CIO of Portfolio Advisors on Middle Market Success
- Editor
- Mar 9
- 2 min read
In Brief:
In the S&P Global podcast "Private Markets 360," Liz Campbell, CIO of Portfolio Advisors, shares insights on middle market investment strategies. Having overseen $2.5 billion in annual commitments, Campbell emphasizes how middle market investments offer more value creation opportunities than large-cap alternatives.
Big Picture Drivers:
Middle Market Focus: Companies with transaction values under $1 billion offer better supply-demand dynamics and more value creation opportunities.
Fundraising Discipline: The best managers maintain size discipline rather than growing funds beyond their strategic sweet spot.
Real Estate Evolution: The asset class has diversified beyond office and multifamily into niche sectors like cold storage and data centers.
Secondary Markets: Secondary transaction volume in both real estate and credit is poised for significant growth after recent valuation resets.
Key Topics Covered:
Investment Strategy: Portfolio Advisors specializes in middle market private equity, credit, and real estate.
Credit Secondaries: Market has grown from under $1 billion to approximately $30 billion in annual transaction volume.
Manager Selection: Team cohesion, track record relevance, and value creation approach are paramount in due diligence.
Market Outlook: Despite some headwinds, underlying portfolio company growth remains relatively strong.
Key Insights:
Value Creation: Middle market investments succeed through fundamental improvements rather than financial engineering.
Exit Options: Smaller companies have more diverse exit opportunities, reducing reliance on uncertain public markets.
Valuation Reset: Real estate valuations appear to be bottoming out, creating attractive buying opportunities.
Portfolio Management: Secondaries are increasingly used as proactive portfolio management tools rather than just in response to market volatility.
By The Numbers:
200,000+: Number of middle market companies in the US alone, creating a vast opportunity set.
$650 million: Amount committed to underrepresented minority and women-owned managers over the past decade.
2-3%: Annual turnover rate in private equity secondary markets, compared to historically 1% in real estate.
Memorable Quotes:
"We really have a preference for when equity value is driven by underlying growth, fundamental company improvements as opposed to financial engineering." - Liz Campbell
"Everybody's saying that DPI is the new IRR." - Liz Campbell
The Wrap:
As we move through 2025, Campbell expects a "period of reorientation" with strong secondary market volume and continued growth in private credit as banks retrench. While concerns exist around tariffs and leverage sustainability, middle market firms that drove true operational improvements rather than relying on cheap debt are well-positioned to navigate the current environment.
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