Private equity is private equity -- until it isn't.

There are big differences between the lower middle market, where Triangle Capital (NYSE:TCAP) and Main Street Capital (NYSE:MAIN) invest, vs. the true middle market, where larger players like Ares Capital (NASDAQ:ARCC) pick up most of their deals.

It's not just about the size of the companies -- though size does matter. Instead, it's about risk, returns, and the alignment of investors and management teams in companies all around the United States.

See how a Triangle Capital or Main Street Capital portfolio company would differ materially from a portfolio company at Ares Capital Corporation. 

In the following video, Motley Fool Financials Bureau Chief David Hanson and Fool contributor Jordan Wathen discuss the differences between lower and true middle market businesses. 

Jordan Wathen has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.