What Does
Small And Medium Enterprises Mean?
Small and medium enterprises (SMEs) are decided by the number of employees and or revenues they have. To be considered a small and medium enterprise, these two determinants must fall under a certain standard held by the respective country. Different countries have varying standards to qualify for this identification.
Generally in the USA and Europe, small companies have less than 50 employees and medium-sized companies have less than 250 employees.
Divestopedia Explains Small And Medium Enterprises
Small and medium enterprises are, by definition, small; however, they outnumber large firms by a wide margin. Though they do not have the resources of large companies, their essence is entrepreneurial and, therefore, they are very important to the innovation and growth of a country’s economy.
Small-sized companies can be compared to Main Street companies and medium-sized enterprises can be compared to lower mid-market companies. As it relates to M&A, SMEs will typically attract lower valuation multiples because these companies have less market share and more owner involvement (i.e. personal goodwill).