Investment Strategy: Small Cap Buyout

The Paul Capital Fund of Funds small cap buyout investment strategy focuses on investments in a select group of small cap buyout funds in North America. Small cap buyout funds, as the term is used by Paul Capital, are being raised by managers who are focused on buying companies with enterprise values of $300 million or less. Small companies that grow internally, that grow through transforming acquisitions, or that grow through restructuring create a sustainable increase in enterprise value and are not dependent on high levels of leverage to drive returns.

Paul Capital utilizes select criteria, a rigorous process based on our significant experience in the fund of funds business, and a long history of buyout relationships to select the best performing managers. The process starts with a large universe of buyout relationships and ends with a highly focused but appropriately diversified small cap buyout portfolio. The portfolio is complemented by co-investments and by investments in target funds obtained through the secondary market.

Small Cap Buyout Strategies


The Paul Capital Fund of Funds Team divides small cap buyout funds into six different investment strategies, based on the belief that small private equity firms do not have a sustainable competitive advantage as generalist – they need to focus and excel in a particular area. Our targeted funds focus their investments in companies that grow by:

  • Strong internal revenue growth – growth buyout funds and industry specific funds
  • Expense savings and synergy driven earnings growth – deep value funds and distressed funds
  • Balanced amounts of revenue growth and expense savings – regional funds and platform/micro-cap acquisition funds

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