What is a Middle Market Company?

A graduate of Bentley University, Kate Merli holds bachelor’s and master’s degrees in accountancy. Since completing her education, she has worked in positions as senior audit associate for KPMG and controller for Atlas Venture. Today, Kate Merli serves as CFO of New 2ND Capital, a private equity fund dedicated to investing in middle market businesses.

Middle market companies are those that occupy the middle of the market in which they operate. Although there is not set value for revenues of a middle market firm, some believe these companies make between $5 million to $3 billion a year, on average. However, there are outliers in any industry, and entities may fall outside this range depending on the other companies in the market.

Since the annual revenue of middle market companies varies so much, it is generally divided into three subcategories: lower, middle, and upper middle market. Lower middle market companies operate in the lowest range of middle market businesses and typically make between $5 million and $50 million in annual revenue. Middle companies make between $50 million and $500 million, and upper middle market businesses make more than $500 million. These distinctions are important, since buyers and investment banks may specialize or focus only on a specific subcategory.

While revenue is the most common way to define middle market companies, these businesses are also categorized by the number of employees they have on staff. Most businesses are considered middle market firms if their employment ranges between 100 and 2,000 employees. Again, this varies depending on what is the middle for a specific industry.