The intersection of small business and private equity presents unique opportunities, according to Levi Pettit, a CFA® charterholder and current MBA candidate at Pepperdine Graziadio Business School. Drawing from his experience as an Investment Associate at a single-family office, where he managed private equity and venture capital portfolios, Pettit sees particular value in the Lower-Middle Market Private Equity (LMMPE) sector.
“LMMPE is generally defined as companies generating revenues between $1 – $40 million. This encompasses 99.9% of businesses in the USA,” explains Pettit, who developed his analytical foundation as an Enterprise Risk Management Analyst before becoming a Credit Analyst at Veritex Bank. The former University of Texas at Dallas golf team captain, who graduated Magna Cum Laude with degrees in Finance and Economics, points to structural advantages that make this market segment particularly attractive.
Pettit, a two-time Cleveland/Srixon Academic All-America Scholar, notes that larger funds face operational constraints that create opportunities for LMMPE firms. These bigger funds find it “more efficient and cost-effective at making 10-20 large acquisitions per fund,” leaving a vast landscape of smaller opportunities unexplored.
The emerging technological transformation adds another layer of opportunity, according to Pettit. “Small businesses and public sector entities are not naïve. They know they will have to incorporate artificial intelligence into the infrastructure of their business to survive and grow over the next decade,” he observes.
However, drawing from his background in risk management and investment evaluation, Pettit maintains a balanced perspective. While noting that “LMMPE has historically generated significant returns and is poised to continue to do so,” he emphasizes that “investors should be mindful of liquidity risks generally associated with private equity investments.” His insights suggest that success in LMMPE requires both strategic vision and careful risk assessment.