When it comes to the middle market, Marlin Equity Partners appears to be moving up in a big way with a $1.6 billion target for its latest buyout fund, Marlin Equity IV LP. If successful, the Hermosa Beach, Calif., private equity firm founded by deal maker David McGovern will nearly triple its current $1 billion in funds under management and move up a notch or two in the world of medium-sized shops.

Overall, the vast majority of limited partners say they expect to maintain or increase their allocations to private equity in 2013, according to a new survey from Preqin. The exact number is 76%. However, expectations appear less sanguine than a year ago.

Private equity execs have grown more positive about deals and the credit markets, according to a survey.

LPs appears to be warming to private equity, in particular mid-market buyouts, distressed equity and venture capital. At least they were prior to the August financial shock. Almost two-thirds of LPs said they committed new money to the PE asset class in the first half of the year, a pace that is ahead of the [...]

It’s been a few days since the Quebec City conference ended and I’ve learned that a survey found attendees are more positive about increased deal flow in fourth quarter, while a sale to a strategic is now the preferred exit route.

More than one-fifth, or 22%, of those attending the conference expect to see a 50% surge in M&A during fourth quarter compared to the same time period in 2009, according to Thomson Reuters. Nearly half, or 47%, think M&A will increase by 10% in the fourth quarter. Another 24% expect deal flow to remain flat in fourth quarter. Amazingly, 2% of attendees think deal flow will jump by 100%, while 5% believe deal flow will drop in fourth quarter.

A working paper from Prof. Jarrod Harford and Prof. Adam Kolasinski of the Foster School of Business finds some really interesting things. Portfolio company sales actually create wealth.

In fact, when sponsors sell their companies to a public strategic buyer, the strategic’s stock price jumps and their long term stock price is “indistinguishable” from other acquirers’s. And what about all those special dividends that PE firms supposedly take? The paper finds that portfolio companies with public debt rarely issue special dividends. And those that do occur rarely forecast future distress. Strategic sales are the most common exit, 36%, for a portfolio company, almost a third of the companies are sold to a financial buyer, 10% go IPO and 14% ended up in financial distress (I still haven’t figured out where the rest ended up).

See working paper here.