• Bank of America spinout expects to finish Fund IV deployment in 2026
• Focuses on investments in business services, healthcare, industrials
• Recent exits, like Matterhorn Express Pipeline, are from Funds II and III

Many private equity firms slowed down as 2Q25 was blighted by tariff-driven volatility, contributing to 14% quarter-on-quarter declines in sponsor-led buyout and exit volumes.

At Ridgemont Equity Partners, however, it was largely business as usual. The first half of 2025 ended the way it had started – with a deal. In June, the Charlotte-based sponsor announced an investment in digital engineering services business Unosquare. This followed a commitment to IT services company Strata Information Group in January.

Both transactions illustrate Ridgemont’s preference for asset-light services and distribution businesses, for which it sees no shortage of supply even in a slower overall market. “In the US, there’s just tremendous opportunity for mid-market assets generally,” Jack Purcell, a managing partner at the firm, told Mergermarket.

Ridgemont is currently deploying its fourth fund, which closed in October 2022 at the hard cap of USD 2.35bn. A first investment came five months before that with the acquisition of a majority stake in Crete Mechanical Systems, a heating, ventilation, and air conditioning (HVAC) business, which has since been renamed Crete United. The fund is expected to be fully deployed in 2026.

“Right now, we’re on pace with our four-year deployment plan,” said Purcell. “Vintage year diversification matters a lot.”

Bank of America roots 

Ridgemont, which has around USD 8bn in assets-under-management, is celebrating its 15th anniversary as a fully-fledged, independent GP. However, the firm originated another 17 years before that as the in-house private equity arm of Bank of America (BofA) – known first as Banc of America Capital Investors and subsequently as BAML Capital Partners.

The spinout came in 2010, in the slipstream of the global financial crisis, when many financial institutions were forced to curb their balance sheet exposure to alternative assets under the Volcker Rule. The new name was inspired by the nearby Blue Ridge Mountains.

The first two funds closed in 2012 and 2015 with corpus of USD 735m and USD 995m, respectively. They were followed in 2018 by the USD 1.65bn Ridgemont Equity Partners III. The LP base has become increasingly diversified with each vintage, underpinned by a healthy re-up rate.

“We retained over 110% of our net dollars from existing LPs in our most recently announced fundraise in 2022 and we continue to deepen relationships with new LPs,” said Purcell.

Formal ties to BofA have long since ended, but Ridgemont chose to remain headquartered in Charlotte. Indeed, this location is regarded as a competitive advantage. Many investee companies are based in non-tier one cities, and Purcell believes being from Charlotte, versus New York or Chicago, means Ridgemont can be more relatable than some of its mid-market competitors.

“That cultural nuance, while very subtle, is just extremely important in the way we run our business, and approach partnerships with prospective management teams or selling shareholders,” he said.

The firm relies heavily on a partnership-driven approach, where rapport and understanding with company founders and management teams are essential. Ridgemont is the first institutional capital provider in around two-thirds of its deals. Typically, the sponsor buys a controlling stake of 60%-70% in the target business, with sellers rolling over a significant minority interest.

“Our transactions look and feel a lot like bespoke recaps rather than buying 100% of a business from another sponsor,” said Purcell. Deal announcements often refer to investments as recapitalizations.

This approach means transactions are often years in the making. Ridgemont’s most recent fully deployed vehicle – Fund III – made 20 platform investments overall. On average, the firm spent three years engaging with target companies before agreeing terms.

A proactive deal sourcing engine is key to identifying opportunities well ahead of time. These tend to come from investment banks, as well as a broader network of contacts that includes regional banks, accounting firms, and estate-planning lawyers.

Ridgemont was notably an early adopter of a dedicated in-house business development operation, which was introduced in 2002 under BofA.

“We had a partner-led business development effort, which back then was a little bit of a novelty,” said Purcell. “The cumulative effect of that investment over 23 years allows us to see well over a thousand opportunities annually from a disparate group of deal referral sources.”

Appetite for services

Of those opportunities, Ridgemont ends up investing in three to five, which the firm sees as indicative of a disciplined approach to selection and diligence. It targets companies with USD 15m to USD 50m in EBITDA, primarily focusing on business services, healthcare, and industrials.

In the current environment, healthcare services is considered particularly attractive, with Purcell pointing to recent successes backing companies “that are helping to bend the cost curve and deliver high-quality patient outcomes.”

Examples include a 2021 investment in Agape, which has become the largest hospice provider in the Southeastern US. Looking ahead, Ridgemont has a robust pipeline of post-acute services businesses.

In industrial services, meanwhile, exposure to US infrastructure upgrades is a prominent theme. Investments have addressed needs such as electrical grid monetization, municipal water systems, and infrastructure for data centers. Notably, Fund IV backed National Power, a provider of power system services for hospitals, schools, data centers, and telecom infrastructure, in 2023.

“We don’t invest in capital-intensive assets, but we own service companies supporting those ecosystems,” explained Purcell.

When it comes to building value, while add-on acquisitions might be part of the plan – Agape, for example, bought a regionally diversified portfolio from Crossroads Hospice & Palliative last year – the focus is largely on organic growth. Purcell estimates that some private equity investors rely on M&A for 80% of their value creation. At Ridgemont, it’s about one third.

There are three main operational levers: professionalization, diversification and commercial excellence. The first two involve strengthening management teams, implementing enterprise resource planning (ERP) systems, upgrading data analytics for better decision-making, expanding geographic exposure, adding vendors and customers, and reducing reliance on key individuals.

Commercial excellence is the most significant contributor to value creation and multiple expansion, according to Purcell. Initiatives range from enhancing pricing strategies to expanding sales teams.

Ridgemont claims these levers have helped portfolio companies grow around 20% annually over an average four-year hold, while scaling headcount by 50%.

Distributions flywheel 

In addition to maintaining steady deployment, business as usual for Ridgemont means ensuring a continued flow of distributions to LPs. “We’ve always been very deliberate in keeping the flywheel moving, deploying money steadily while bringing it back consistently,” said Purcell.

Regarding exit activity, Mergermarket reported last month that a process was underway for HealthMark Group, a provider of software and services for medical records management that has been in the portfolio since 2019. This follows a separate Mergermarket report about a potential exit from Agape, which was acquired in 2021.

Meanwhile, in May, Ridgemont and co-investor Devon Energy Corp, sold equity interests in the Matterhorn Express Pipeline to I Squared, MPLX and Enbridge. Ridgemont invested from Fund III, backing Austin, Texas-based WhiteWater, an operator of gas transmission projects. Matterhorn Express, designed to transport natural gas through 490 miles of pipeline from Waha, Texas to the Katy area near Houston, was the fourth time Ridgemont had sponsored a WhiteWater project via its legacy energy investing strategy . .

Most exits are coming from Funds II and III. However, Mergermarket also reported earlier this month that a process for Crete United – the first investment from Fund IV – was at an advanced stage, noting that Ridgemont would likely retain a minority interest in the business.

Purcell declined to comment on any of these potential exits but noted that the firm remains active despite a challenging overall market.

“In this environment, we have chosen to bring a good number of businesses to market, with the focus on high-quality assets that have good prospects of getting things done,” he added. “We’ve also taken the tack of leaving some residual ownership behind for the next chapter of a company’s growth.”