The definition of the middle market can vary from source to source. In general, it is the layer of companies that are larger than "small businesses" but smaller than large multinational corporations, such as Exxon Mobil and Google.
Some define the middle market by revenue, while others define it by total enterprise value, profitability, employee count, or asset size. For example, data analytics provider Dun & Bradstreet (DNB) defines middle market enterprises as businesses that generate between $10 million and $1 billion in annual revenues, while data provider PitchBook has defined the middle market as companies valued in the $25 million to $1 billion range.
The middle market is a powerful force within the US economy. DNB’s Middle Market Power Report, which is based on analysis of data from approximately 19 million companies between 2008 and 2014, found that nearly 98% of middle market enterprises are privately owned, and, on average, middle market businesses employ 368 workers and generate $45.1 million of revenue per company annually. A National Center for the Middle Market (NCMM) report from October 2017 notes that the middle market accounts for one third of all jobs in the US and will further account for 60% of all new jobs created, despite representing just 3% of all US companies. According to the NCMM, if the middle market was its own country, it would be the 5th largest economy in the world.
Within the overall middle market, the term lower middle market is also used to refer to a subset of companies with revenues of between $5 million and $50 million. These tend to be family owned and other closely held companies that have unique needs and opportunities as they position for a strategic event.
At Skyline Advisors, our specialty is working within the middle market while opportunistically evaluating opportunities to work with smaller businesses that might be a strategic target for a middle market company or a financial buyer, such as a private equity fund or family office.