US financial services company P10 has reached an agreement to acquire Spain's Qualitas Funds, a provider of alternative investment solutions for the lower-middle market. This transaction, for which it will pay $63 million, is its gateway to the European continent.

Founded in 2014, the Madrid-based company markets funds of funds, direct co-investment and NAV financing opportunities in the European lower-middle-income market. It works for over 1,300 investors, ranging from high-net-worth individuals (UHNW) to family offices and institutional investors. It currently has close to $1 billion in fee-paying assets under management (FPAUM).

Payment in cash and shares
The transaction includes 100% of Qualitas Funds' issued and outstanding shares and 100% of its fee-related earnings. It does not include any accrued interest for inherited funds. P10 will pay $42.25 million in cash and the remaining $20.75 million in shares.

The acquirer could additionally pay up to $35 million  in deferred consideration based on the proceeds associated with the new funds raised by Qualitas Funds between the closing of the transaction, which is expected to occur in the first quarter of 2025, and 31 December 2027. This consideration will be a combination of up to 65% cash, as decided by the seller, and P10 shares.

The co-founders and co-managing partners of Qualitas Funds, Eric Halverson and Sergio Garcia, will continue to lead its management and retain control of day-to-day operations, including investment processes and the investment committee.

Strong performance
P10 President and CEO Luke Sarsfield highlights the fact that this purchase significantly increases its investor base, “positioning us as a leading global multi-strategy private markets firm focused on the middle and lower-middle markets”. After ten years of working hand in hand, he says, “Eric, Sergio and their talented team have built an incredible firm with strong performance and a loyal investor base”.

In turn, Halverson and Garcia are looking forward to “generating accelerated growth and delivering continued value to our clients”, and are committed to “launching additional strategies and vehicles that meet the demands of global investors seeking access to a full range of middle and lower-middle market opportunities”.

^{Photo: Qualitas Funds}