eQ has been investing successfully in the Northern European lower middle market for more than 25 years. Our investment team consists of 10 professionals whose combined investment experience exceeds 150 years, making us one of the largest and most experienced private equity fund investment teams in the Nordics. Our network of fund managers is exceptionally extensive and comprises hundreds of managers.

We believe that the lower middle market offers attractive return potential across various economic cycles. Entry valuations for portfolio companies are typically lower than for larger companies, averaging 7-9x EBITDA. Leverage levels are moderate, averaging 2.5-3.5x EBITDA, and exits are almost always executed as cash transactions to strategic buyers or larger private equity funds. We invest in private equity funds that are typically smaller than EUR 500 million in size. These target funds generally make majority investments in profitable growth companies with revenues ranging from EUR 20 million to EUR 100 million.

The Northern European manager universe is highly fragmented, with more than 400 managers meeting institutional-quality standards. Each year, we meet and assess over 100 fund managers and make only 5-8 fund commitments, resulting in a very low “hit rate”. Return dispersion between managers is significant, and the best managers frequently and consistently outperform the broader market.

Building a successful lower middle market portfolio requires deep market knowledge and a highly proactive approach. The best managers rarely market themselves and, in some cases, access needs to be built over several years. One of eQ's key strengths is our broad and long-standing investor base. During our long operating history, we have built a broad client base that includes foundations and non-profit organisations, family offices and investment companies, universities, and pension investors. Our products are only marketed to professional investors.

Our manager selection process, or due diligence, focuses on three key pillars: team, strategy, and track record.  A typical investment process takes between three and four months and includes several manager meetings and calls, data crunching and analysis, reference calls and a thorough decision-making process.

Our manager selection reflects our current market outlook. We favour specialized manager teams with a clear competitive advantage within their respective market segments and a demonstrated ability to create value across different market environments.

We have built a diversified portfolio by combining value-oriented and growth-oriented managers, focused sector-specialists and sector generalists, as well as established teams and emerging managers with strong future potential. We also strive to maintain geographical balance across our three investment regions: the Nordics, the United Kingdom, and the DACH/Benelux region.

Access to many funds and investment opportunities has been made possible through the manager relationships eQ has built over many years. Several recently raised funds have been heavily oversubscribed, but eQ's position as a long-term and trusted investor has enabled us to secure allocations.