Trending Content
Career Resources
WSO Free Modeling Series - Now Open Through
April 30, 2024
9 Free Financial Modeling Lessons
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
+Bonus: Get 27 financial modeling templates in swipe file
+Bonus: Get 27 financial modeling templates in swipe file
interesado
Parameters of 50-250MM in revenues with comparable enterprise value. That's on the lower mid-market side for PE.
Size of the companies they invest in (revenue). Obviously, there's no real definition, but it almost always means under $1B.
A "lower middle-market" exists within that, which is generally $10M - ~$250M.
Good question - ultimately, both fund size and portfolio company / deal size will determine this, but there's no standard definition
My 2 cents - funds that are MFs have picked up activity in the middle market deal space (e.g., see TPG/Chindex announced today for c.$460mm), while many of the traditional MM firms have been coming up market and doing larger deals. I believe that the former trend is more common than the latter
we view MM as funds between $200-4bn with proportional deal investments
Everyone has their view of what the MM is, but I have seen it semi-consistently classified as $100MM EV to $2.5B EV.
Needless to say, if a IB does deals that are $75MM, then they will say that they are in the "Middle Market," which they estimated to be $50MM - X. I have also seen PE funds invest in $6MM businesses who say they invest on the lower spectrum of the "Middle Market".
Pretty much everyone that doesn't do multi-billion dollar deals says they focus on the "Middle Market," after all, you're not going to say you're in the "Lower Market".
Article on LMM: http://www.virgocapital.com/private-equity-in-the-lower-middle-market/
Rockwood Equity: http://www.rockwoodequity.com/about/ "Our investment team works from offices in Cleveland and New York and collectively has more than 100 years of experience investing in and advising lower middle market companies."
Azalea Capital: http://www.azaleacapital.com/investment-strategy.php "Invest in lower middle-market businesses"
Rotunda Capital Partners: http://www.rotundacapital.com/ "Rotunda Capital Partners is a private equity firm which invests equity and debt capital in established and profitable lower middle market companies."
HCI Equity Partners: http://hciequity.com/strategy/index.php "The team distinguishes itself from other buyout firms in the lower middle market by its substantial operating and investing experience."
Fair point, but I was not referencing "Lower Middle Market". I've been in the Lower MM and it's a great place to make a living. The lack of capital in the space and deal structuring/ participating throughout the capital structure is a great way to provide strong returns.
My general comment was that most funds play up as to where they invest (particularly on the smaller end); goes back to the idea that everyone has their own definition of what the "Middle Market" is. The funds that mention investing in the "Lower Middle Market", may not invest in what many people consider the "Middle Market", but do not want to classify themselves as "Lower Market", giving rise to the term "Lower Middle Market".
Investment Criteria Azalea - $10 - $100MM in revenue Rockwood - $2 - $7MM in EBITDA Rotunda - $5 - $100MM in EV HCI - $20 - $200MM in revenue
These investments are not what some would consider "Middle Market," but again it's all in the eye of the beholder.
Like most of these things, there's no real science to it. It depends on a lot of thing, not just deal size. Blackstone for example has a bunch of smaller MM-type investments in their portfolio (as do many of the MFs), but you wouldn't consider them MM.
There's generally the large cap shops and then everyone else (who is MM). Between the two there's a sliver of grey area where the likes of H&F, THL, Leonard Green etc would fall.
What more relevant in answering your question is what do you intend to use this taxonomy for? That would really dictate how you would stratify the various firms out there.
What is Middle Market? (Originally Posted: 09/27/2010)
Can someone please explain to me what Middle Market is? Thanks
And you're a 1st year IB associate? It refers to the size of companies with which a shop typically does business. 200mm - 2bn give or take
http://www.wallstreetoasis.com/faq
Sapiente qui illo dolorem temporibus et laborum. Minima nisi et praesentium in suscipit molestiae. Sed eaque id dolorem non ut iure. Et praesentium culpa maxime incidunt dolor.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...