Key Takeaways
- • James Duffy, investment director at Alvia Asset Partners, says more than half of Australia's mid-market businesses nearing an exit have no succession plan, which he presents as an overlooked opportunity for advisers.
- • The Australian Business Growth Fund estimates about 164,000 Australian businesses have revenue between $2m and $100m, and MYOB's Business Monitor finds only a quarter of owners have exit succession plans in place.
- • Duffy says the lower mid-market faces far less private equity competition: for every $1 of PE dry powder targeting the lower mid-market, there is five times that for the mid-market and nearly 12 times for large-cap.
- • Alvia Asset reports many portfolio companies paying dividend yields above 10 per cent, and Duffy notes manager selection dispersion of 14 per cent in private equity versus 3 per cent in listed markets.
- • Duffy says these opportunities typically suit HNW investors and family offices, and that investors must be able to withstand illiquidity for at least 10 years.
Summary
Advisers seeking private equity exposure may find untapped potential in low to mid-market businesses that are nearing an exit and need a transition plan, according to a Money Management article drawing on remarks made at the recent Australian Wealth Management Summit. James Duffy, investment director at Alvia Asset Partners, said more than half of Australia's mid-market businesses nearing an exit have no succession plan. The Australian Business Growth Fund puts the number of Australian businesses with revenue between $2m and $100m at about 164,000, and MYOB's bi-annual Business Monitor found only a quarter of owners have succession plans in place. Duffy argued that figure is especially low given that selling a business can form part of a retirement plan.
Alvia Asset frames the strategy as helping a sound business survive the transition from one owner to the next rather than buying and rapidly growing it, likening the approach to a relay race rather than a sprint. The firm also argues the lower mid-market faces less competition for private equity capital. Duffy said that for every $1 of PE dry powder targeting the lower mid-market there is five times that for the mid-market and nearly 12 times that for large-cap, adding that less competition supports more sensible entry pricing and that many owners will prioritise a partner who preserves their legacy over a particular price.
The Australian Investment Council (AIC) reported Australian PE-backed deals totalled $13.6 billion across 147 transactions in 2025, below the peak reached three years earlier, and a five-year net internal rate of return of 19.5 per cent, outperforming global PE peers. Alvia Asset says many of its portfolio companies pay dividend yields above 10 per cent and treats high yield, alongside growth, as an important criterion. The firm recommends advisers apply standard diligence on earnings, defensibility and structure. Duffy noted manager selection dispersion is wider in private equity, with an average gap of 14 per cent compared with 3 per cent in listed markets, underscoring the importance of choosing the right manager.
Duffy cautioned that the approach requires a level of involvement that may not suit every investor, saying the opportunities typically suit HNW investors and family offices given minimum investment sizes and the sophistication required. Liquidity is a central consideration: capital can be tied up for extended periods, and Duffy said such investments suit those who can withstand not having the capital for at least 10 years. According to the AIC, around one-third of 2025 PE deals involved technology. Alvia Asset's portfolio includes Altimate Foods, Pure Environmental and Envoi Specialist Pathologists, reflecting its criteria applied across several industries.
Alvia Asset frames the strategy as helping a sound business survive the transition from one owner to the next rather than buying and rapidly growing it, likening the approach to a relay race rather than a sprint. The firm also argues the lower mid-market faces less competition for private equity capital. Duffy said that for every $1 of PE dry powder targeting the lower mid-market there is five times that for the mid-market and nearly 12 times that for large-cap, adding that less competition supports more sensible entry pricing and that many owners will prioritise a partner who preserves their legacy over a particular price.
The Australian Investment Council (AIC) reported Australian PE-backed deals totalled $13.6 billion across 147 transactions in 2025, below the peak reached three years earlier, and a five-year net internal rate of return of 19.5 per cent, outperforming global PE peers. Alvia Asset says many of its portfolio companies pay dividend yields above 10 per cent and treats high yield, alongside growth, as an important criterion. The firm recommends advisers apply standard diligence on earnings, defensibility and structure. Duffy noted manager selection dispersion is wider in private equity, with an average gap of 14 per cent compared with 3 per cent in listed markets, underscoring the importance of choosing the right manager.
Duffy cautioned that the approach requires a level of involvement that may not suit every investor, saying the opportunities typically suit HNW investors and family offices given minimum investment sizes and the sophistication required. Liquidity is a central consideration: capital can be tied up for extended periods, and Duffy said such investments suit those who can withstand not having the capital for at least 10 years. According to the AIC, around one-third of 2025 PE deals involved technology. Alvia Asset's portfolio includes Altimate Foods, Pure Environmental and Envoi Specialist Pathologists, reflecting its criteria applied across several industries.
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