Why Emerging Managers matter: Access Capital Partners’ conviction built over three decades in European small cap buy-outs

Introduction

Emerging managers are one of the most compelling ways to access the small cap buy-out segment where pricing discipline, alignment of interest and operational value creation matter greatly to produce outperformance.

At Access Capital Partners, our conviction in emerging managers has been shaped by nearly three decades of investing in European small cap buy-outs. Over that period, we have seen that some of the most attractive opportunities do not come from scale, but from focus: focused teams, focused portfolios and focused ownership.

In that context, emerging managers are often the part of the market where incentives are strongest and execution is sharpest.


A practical definition of emerging managers

The term emerging manager is sometimes used too broadly, often reaching out as far as third generation funds.

At Access Capital Partners, we define emerging managers as talented teams with outstanding investment or entrepreneurial history raising their first institutional small cap buy-out fund, centred around accompanying European SMEs through their growth and value-creation journey.

The market is both deep and highly dynamic, with more than 60 new teams emerging each year, a trend that continues to gain momentum in an environment where operational value creation and disciplined underwriting are increasingly critical to generating strong returns. Within that universe, three broad profiles tend to stand out.

The first is the below-the-radar manager, often operating through deal-by-deal structures, and now transitioning to a more institutional format. The second is the spin-off, where experienced professionals leave an established platform or financial institution to build an independent franchise. The third is the newly formed team, where seasoned investors and often entrepreneurs come together around a clear sector angle, sourcing advantage or investment discipline.


Emerging managers at the core of small cap buy-outs

At Access Capital Partners, this is where our conviction is strongest: investing in European small cap buy-outs alongside rigorously selected managers.

The small cap buy-out market remains the most attractive and resilient segment of private equity, underpinned by strong structural advantages. Its appeal is further enhanced by the outperformance potential of first-time funds, providing another compelling layer of opportunity.

Access Capital Partners benefits from 28 years of track record in small cap buy-outs, making us a recognised leader in this segment, able to identify top emerging managers long before they appear in mainstream fundraising. The investment team meets 800+ GPs per year and selects managers with a differentiated angle, operating in the sub €100m EV segment, where local information asymmetry and sourcing depth allow skilled teams to acquire high quality companies at exceptionally attractive entry prices.

This small cap environment also lends itself naturally to buy and build strategies, driving rapid and meaningful value creation.

“For us, emerging managers are not a style shift from mainstream small cap buyouts, they are often where the small cap market is most entrepreneurial, most aligned and most capable of generating differentiated returns.”

Agnès Nahum & Philippe Poggioli, Managing Partners at Access Capital Partners

The performance case: why emerging managers can outperform

The case for emerging managers is sometimes framed as an argument about outperforming established firms. We believe the most compelling perspective is structural. Emerging managers are attractive because the conditions around their early stage often produce better alignment of interest and the highest degree of motivation.

Not all emerging managers succeed in raising a debut fund. In fact, the majority fails to do so. Those who do succeed are usually battle hardened by tough fundraising and have made short term sacrifices to maximize long term gains. Access Capital Partners itself will only invest in a small proportion of its emerging manger deal flow, making each individual fund commitment a high conviction / rigorous due diligence exercise.

First generation funds outperforming later generations
Median TVPI by fund generation


Source: Preqin, vintages 2015-2022, sample of 308 funds

In our experience, four drivers are particularly important.


1.A fully dedicated team

Emerging managers are typically focused on a single strategy and a smaller number of investments. It means senior professionals are not diluted across multiple products, legacy portfolios or internal committees with competing priorities. Time is spent on sourcing, underwriting, portfolio monitoring and value creation, not on managing organisational complexity.


2. Stronger alignment through meaningful GP commitment

Alignment is not a slogan in first-time or early-generation funds, it is part of the economic reality. These teams are building reputation, track record and future fundraising capability. GP commitment is often meaningful in relative terms, and the reputational stakes are high. That can translate into disciplined investment selection and a higher degree of hands-on management than may established GPs.


3. Differentiated sourcing and sector depth

The best emerging managers are rarely generalists by default. Many originate from a sector, operating network or sourcing niche where they can access proprietary or lightly intermediated opportunities.

At Access Capital Partners, the emerging managers we select are able to secure off market, locally sourced transactions at <8x EBITDA, thanks to deep regional networks and limited process deals.

In the small cap segment, that differentiation is critical. Competitive tension can be lower, but only for managers who genuinely know where to look.


4. Concentrated portfolios with higher conviction

Portfolio concentration increases responsibility, but it also sharpens selectivity. That concentration can accelerate capital deployment and bring forward value crystallisation.

Access Capital Partners favours funds with 4 to 6 investments, and 2 to 3 deals already visible in the pipeline at entry. We commit only when we have clear visibility on the first assets, underwriting early deals with credible pathways to >3x returns, rather than committing blind.

In emerging managers portfolios, the first exit alone can materially underpin the economics of the fund within two to three years.

While our conviction lies in concentrated portfolio with high potential for star assets, diversification remains a key pillar of our strategy, achieved through our fund of fund approach.


Why emerging managers are particularly well suited to a fund of funds model

A fund of funds approach is particularly relevant in emerging managers because the opportunity set is broad, but dispersion can be high.

Access is not simply seeking exposure to a category, we are underwriting manager selection as a source of alpha.

Increased dispersion of first-time funds compared to older generations


Source: Preqin, vintages 2015-2022, sample of 308 funds

Finding the next stars requires structured selectivity

Successful emerging manager selection is a repeatable discipline.

With €1.5 billion deployed across 50 small cap buy-out emerging manager funds, Access Capital Partners has generated a 3.0x average gross cost multiple across more than 250 exits. That experience helps us identify which teams have the ingredients to become enduring franchises: investable pipeline at entry, differentiated sourcing, coherent ownership model and readiness to institutionalise.

Emerging managers are therefore not only an access opportunity, they are a selection challenge. The value lies in recognising quality before it becomes consensus.


Cornerstone LPs can improve institutional readiness

Our average LP stake of 42% in emerging managers funds consistently makes us the largest LP and gives us the ability to act as a genuine cornerstone investor.

This significant investor position can support fund structuring, governance, reporting and operational readiness from the outset.

Access Capital Partners consistently negotiates enhanced terms, strong alignment and robust governance, materially improving fund economics and encouraging outperformance, while maintaining a strict discipline around fund size.

For early-generation teams, institutionalisation is part of the investment case, not an administrative afterthought.


Diversification is a structural advantage

A fund of funds approach mitigates individual manager dispersion.

Investing in 10 to 15 funds across geographies and vintage years creates diversification at several levels: by fund, by company, by sector and by market timing.

This is particularly valuable in concentrated underlying funds, where manager quality is high, but outcomes can be more dispersed.

At Access Capital Partners, emerging managers have represented a consistent 25% of allocations in our flagship funds. That reflects conviction, but also portfolio construction logic. We now also invest out of a dedicated emerging managers fund that will commit to circa 15 first institutional funds.


ESG can be a structural advantage when embedded early

Institutional investors increasingly expect ESG to be built in from the onset. For earlygeneration managers, this creates both a challenge and an opportunity. The challenge is obvious: teams are small, resources are finite and reporting requirements are rising. The opportunity is equally clear: with no legacy infrastructure to unwind, managers can build a framework that is proportionate, decision-useful and linked to value creation.

This is particularly important in small cap buy-outs, where governance, human capital, supply-chain resilience, energy efficiency and compliance processes often have direct operational impact. The best emerging managers embed ESG into diligence, ownership planning and board-level follow-up.

Access Capital Partners does not only set expectations, we help shape workable practices by supporting managers to focus on material issues and implement credible processes and reporting.


Conclusion

Emerging managers represent a compelling opportunity because they are often closer to the fundamental drivers of superior performance: alignment, focus, sourcing, pricing discipline and active ownership.

In European small cap buy-outs, those qualities are especially relevant. This is a segment where differentiated sourcing matters, where portfolio concentration can be an advantage and where institutional quality can be fostered by a strong cornerstone LP.

At Access Capital Partners, our conviction comes from experience: when emerging managers are selected with rigour and backed with the right governance framework, they can offer not only attractive returns, but access to the next generation of enduring private equity franchises.

In that sense, emerging managers are a lens through which to identify where entrepreneurial energy and investor alignment are most powerfully combined.