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Why we choose the European lower mid-market

We invest through specialised European buyout funds in the lower mid-market: established, profitable companies typically with €1 to €8 million in EBITDA a year.

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What a Clusterfund invests in

You invest in one ClusterfundA fund of funds. You invest alongside other investors in one Clusterfund, which spreads across around 10 specialised buyout funds and so across more than 100 companies.. This way you invest in more than 100 profitable companies, spread across around 10 specialised European lower mid-market buyout funds.

Illustrative. Numbers and regions are examples.

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Why spread across multiple funds

Historically, private equity has returned more than the stock market. But a single fund can disappoint. Spreading across several funds makes the difference.

Return

Around 9 percentage points a year above the stock market

Historical net return per year, Europe7

Risk

Chance of a loss: from almost 1 in 4 to less than 1 in 100

Historical simulation. That is why a Clusterfund spreads across around 10 funds8

The difference between lower mid-market and larger buyout funds

Fewer buyers, a lower price and less debt. That helps explain why lower mid-market buyout funds have historically returned more.

  1. 1

    Less competition

    Of every €100 that funds in Europe raise to buy companies5

  2. 2

    Lower price

    Purchase price as a multiple of annual operating profit (EBITDA)3

  3. 3

    Less debt

    Debt at purchase as a multiple of annual operating profit (EBITDA)6

  4. 4

    Higher return

    Historical return per year, after fees (median)4

Market data for European buyout funds.

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How value is created in a lower mid-market company

The funds we select earn their returns mainly by making companies better, not by borrowing more.

ProfessionalisationFor example, hiring a finance director and running the business on monthly figures.
AcquisitionsFor example, combining regional installation contractors into a single national player.
DigitalisationFor example, processing orders automatically and digitising planning.
Limited debtFor example, funding growth from the company's own profits rather than with additional loans.
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From more than 300 funds to around 10

A strong track record alone is not enough. We also look at the team, the managers' own investment in their fund and how the return was achieved.

Our selection criteria

A selection from more than 50 criteria.

Past results

  • Demonstrably achieved by this team
  • Source of returns: profit growth, debt or a higher sale price
  • Repeatability

Team and alignment of interests

  • Team stability and succession
  • Managers' own investment in the fund
  • Reference calls

Strategy and value creation

  • Purchase prices and debt levels
  • Improvements within the companies themselves
  • Growth through acquisitions (buy-and-buildGrowing by acquiring smaller companies in the same industry and combining them into one stronger group.)
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Tax-efficient through a Dutch entity

  1. In the ClusterfundThe Clusterfund is a Dutch cooperative (coöperatie). It aims to invest only in funds to which the Dutch participation exemption applies. In principle, it then pays no corporate income tax on the proceeds from those funds.
  2. Through a Dutch companyIf you invest through a Dutch entity that pays corporate income tax, such as a BV, NV or cooperative, your interest in the Clusterfund in principle also falls under the participation exemption.

The companies themselves still pay tax on their profits. Private individuals and foreign companies are taxed differently. Not tax advice.2

Read the explanation
Hypothetical worked example, not a forecast: €1m over 20 years at a 15% net return
With the participation exemption €16.4mWithout the participation exemption €10.4m
Year 0Year 10Year 20 36%less
Assumptions behind the example
Hypothetical example, not a forecast. It does not show how a Clusterfund develops: a Clusterfund runs for around 12 years and distributes its proceeds. Assumptions: investment of €1m, 20 years, a 15% net return a year, proceeds reinvested at the same return. Without the participation exemption, corporate income tax is due on the gain (25.8%, the rate above €200,000). With a single investment in a fund, the return then falls from 15.0% to 12.4% a year: €10.4m after 20 years instead of €16.4m. With a lower return, the difference is smaller. What this means for you depends on your structure. Not tax advice.2

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After your request, we will contact you personally. You can read how we handle your data in our privacy statement.

Thank you

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Would you like to discuss the brochure? Book a half-hour introductory call.

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Investing involves risk. You may lose some or all of your investment. Private equity is illiquid.

  1. The target net return (net IRR and net multiple) is an objective of Two Rivers Capital, not a forecast or a guarantee. Past performance is no guarantee of future results. The actual return depends on the underlying funds and companies and may be lower or negative. The net multiple is total distributions divided by total contributions, after all costs.
  2. Not tax advice. A Two Rivers Clusterfund is a cooperative (coöperatie) and aims to invest only in funds to which the participation exemption applies. In principle, the Clusterfund then owes no corporate income tax on the proceeds from those funds. If you invest through a Dutch entity that pays corporate income tax, such as a BV, NV or cooperative, your interest in the Clusterfund in principle falls under the participation exemption, regardless of its size. If you invest privately or through a foreign company, different tax treatment applies. For foreign funds, whether the participation exemption applies is assessed case by case. The manager may deviate from the policy of investing only in such funds. Have your situation reviewed by your own tax adviser.
  3. Purchase price as a multiple of EBITDA. Lower mid-market: companies with €1 to €8 million EBITDA, around 5.0 to 7.5x. Large companies: €100 to €250 million EBITDA, around 11.0 to 16.0x. Sources: Oaklins (January 2022), FS Investments, Pitchbook, Preqin, Bain & Company. Indicative: the actual price differs by company, sector and timing.
  4. Median net IRR of European buyout funds, vintages up to and including 2016: funds up to €250 million 20.0% (245 funds), funds of €5 billion or more 13.1% (64 funds). Source: Preqin, September 2026. After fees of the underlying fund, before fees of Two Rivers. Past performance is no guarantee of future results.
  5. Share of the total size of European buyout funds, vintages 2015 to 2026 (Preqin, September 2026). Lower mid-market: micro and small-cap buyout. For comparison: companies with fewer than 250 employees generate 51% of value added in the EU (Eurostat, 2023).
  6. Median net debt as a multiple of EBITDA at purchase, Europe: enterprise value up to €200 million 2.8x, €500 million or more 6.2x (Qualitas Insight, European transactions).
  7. Net return per year of European buyout funds (Cambridge Associates European Buy-out Index, around 1,700 funds) compared with the MSCI Europe using the same timing of contributions and distributions (PME), over 5, 10 and 20 years, in euros. Source: Bain & Company, Global Private Equity Report 2025 (data up to and including the third quarter of 2024). Before fees of Two Rivers. Past performance is no guarantee of future results.
  8. Chance that a portfolio returns less than was paid in (TVPI below 1.0x). Historical simulation based on 3,077 funds from 1991 to 2005, equally weighted (Cambridge Associates). Before fees of Two Rivers. Past performance is no guarantee of future results.
  9. Through MaasInvest and Schouten Investments.
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