What Does Middle Market Mean?
The middle market, or "mid-market," is a reference to the size of a company usually in terms of its revenue and/or asset base. There is no universally accepted revenue range that defines middle market companies. Some financial professionals use a range of $5 million to $500 million in revenue, while others use $100 million to $1 billion.
Regardless of the range, conceptually, middle market companies fall between main street companies (below $5 million in revenue) and large multinational corporations (over $1 billion in revenue).
Divestopedia Explains Middle Market
The middle market is a significant part of the North American economy. In the U.S., middle market businesses represent one-third of private sector GDP and employ approximately 25% of the total labor force.
Because of the wide range of company sizes within the definition, the middle market can be further broken down into the following:
- Lower Middle Market: $5 - $50 million of revenue;
- Middle Market: $50 - $500 million of revenue; and
- Upper Middle Market: $500 million - $1 billion of revenue.
It is important to distinguish between upper and lower middle market for a few reasons:
- There are different buyer groups for each level of middle market companies;
- Premiums are typically paid for businesses that can grow into a higher tier; and
- Investment banks tend to specialize in a certain size of business.