Australia’s retirement wave is creating a quiet private equity boom

Most private equity capital in Australia chases the same deals. The large end of the market is crowded with global institutional players, valuation multiples are stretched, and the margin for error is thin. But one firm is looking in a different direction entirely.

Fortitude Investment Partners targets established businesses with enterprise values below $200 million, a segment of the market that is, by its own account, largely overlooked by institutional capital. The results so far suggest the thesis is working. The firm’s portfolio delivered 17% earnings growth in 2025.

The opportunity, according to Fortitude partner and co-founder Nick Miller, is structural. And it is not going away any time soon.

A retirement wave with nowhere to go

The backdrop to Fortitude‘s strategy is demographic. A generation of business founders is approaching retirement age, and many are not simply looking to sell to the highest bidder. They want succession partners who understand what they have built and can help take it further.

This so-called silver tsunami is generating a steady pipeline of quality businesses coming to market, often outside the formal auction processes that dominate large-cap deal-making. For private capital firms willing to engage directly and patiently, it creates a meaningfully different dynamic.
That dynamic is particularly visible in one corner of the economy.

Industrial distribution: dull by design

Industrial distribution businesses are not the kind of companies that attract much attention. They supply cleaning products to hospitals, equipment to food production lines, and materials to facilities management operators. They do not make headlines. But that is precisely what makes them interesting to Fortitude. According to Miller:

“These businesses combine defensible markets, deep and contractual customer relationships and scalable adjacencies, representing attractive opportunities for private equity.”

The contractual nature of those customer relationships matters. When a hospital or an aged care facility relies on a supplier for mission-critical inputs, switching costs are high and relationships tend to be sticky. That predictability of revenue is what underpins the investment case.

Fortitude’s recent acquisition of Richard Jay, an Australian cleaning supplies distributor and commercial laundry services business, is the clearest expression of this approach. The business serves hospitals, aged care providers, hospitality groups, government facilities including prisons and education, food and beverage operators and accommodation providers.

“This is exactly the kind of stable, mission critical business services platform we like, one that offers strong customer outcomes with clear levers to grow,” Miller adds.

Where the competition is not

The other pillar of Fortitude’s argument is about supply and demand. There are approximately 60,000 businesses in Australia that fall within the small cap category. The amount of institutional capital targeting that universe is, relative to its size, remarkably small.

“There is a supply-demand imbalance in this segment,” Miller explains, “there is relatively little institutional competition for these opportunities, with the vast majority of private equity capital targeting much larger businesses.”

The practical effect of that imbalance is twofold. Entry valuations are more reasonable, and deal-making tends to be more collaborative. Founders are not running processes designed to extract the last dollar. They are choosing partners, which gives disciplined buyers genuine advantages.

The maths of growing smaller

The investment case for small cap private equity is also partly arithmetic. Smaller businesses start from a lower base, which makes proportional earnings growth more achievable. And because the levers for improvement tend to be operational rather than financial, the returns do not depend on leverage or multiple expansion alone.

Miller adds, “In simple terms, it is often easier to 3x a business’s earnings from $5-10 million to $15-30 million than it is to grow a business from $20-30 million to $60-90 million.”

That scalability also shapes the exit. As a business professionalises and grows, it transitions from the small cap segment into the mid-market, which opens up a broader pool of potential buyers: larger private equity firms, listed strategics, and corporate acquirers looking for quality platforms to consolidate.

The operational levers are the other part of the story. Many founder-led businesses have reached a natural ceiling. Processes are manual, management layers are thin, and technology has not kept pace. Bringing in professional management and better systems can unlock meaningful margin improvement without needing to fundamentally change what the business does.

Accessing the space

For private wealth advisers, this part of the market has historically been difficult to access. Deal sizes are smaller, structures are less standardised, and the sourcing requires genuine on-the-ground relationships rather than participation in broadly marketed processes.

The Fortitude Small Cap PE Fund, launched in 2025, is designed to provide structured access to this segment for the private wealth sector. The fund targets deal flows across healthcare, technology and digitalisation, energy transition, and food and beverage, with a focus on the same operational improvement thesis that underpins the Richard Jay acquisition.

It offers quarterly applications and redemptions after a two-year establishment period, a liquidity profile that suits most private wealth portfolios while preserving the time horizon needed to execute operationally focused strategies.

As the retirement wave among Australian founders continues to build, the supply of quality businesses seeking succession partners is unlikely to slow. For advisers looking beyond the large end of town, the lower mid-market may be worth a closer look.