What is a 'Middle Market Firm'

A middle market firm is a firm with sizeable annual revenues that fall centrally within the market in which the firm operates. As the term implies, such a firm is one that straddles the middle market between the smaller companies and the billion-dollar giants. In the case of professions, such as the legal, accounting or brokerage fields, middle market firms are those that are just below the dominant firms, such as the Big Four in accounting.

BREAKING DOWN 'Middle Market Firm'

The limits that define a middle market firm are not set, with some definitions setting the lower limit for annual revenues as low as $10 million, while others set the upper limit at $500 million, though the term is generally accepted to refer to those businesses functioning fairly centrally in their respective markets.

Aside from earnings, middle market firms also tend to have a moderate number of employees. To qualify based on the number of employees on staff, most middle market firms have a range of 100 to 2,000 individuals in their employ.

Middle Market Firms and the Economy

Middle market firms are one of the pillars of the U.S. economy, since they account for a significant share of job creation. They are generally among the fastest-growing firms in terms of revenues. Additionally, the cumulative earnings of all middle market firms within an industry are generally substantial and may rival the influence of the dominant firms in the marketplace.

In the investment banking industry, middle market firms include William Blair and Piper Jaffray. As of 2016, William Blair held more than $78 billion in assets with approximately 1,350 employees, while Piper Jaffray had approximately $7.5 billion in assets and approximately 1,330 employees.

Classification within the Stock Market

Publicly traded middle market firms may often be classified as mid-capitalization (mid-cap) stocks, a segment that investors find particularly attractive because of their high growth prospects coupled with a lower degree of risk than small-cap or speculative stocks. Generally, mid-cap stocks have market capitalization in amounts ranging from $1 billion to $8 billion.

Companies within the mid-cap range may be relatively new to the marketplace or well-established within the field, though most are considered to be at moderate risk for investments. Mid caps exist across practically all business industries and serves as a mid-point between large-cap and small-cap options.

The Big Four Accounting Firms

As of 2015, the Big Four accounting firms included PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu Limited, Ernst & Young (E&Y) and Klynveld Peat Marwick Goerdeler (KPMG). Each firm within the Big Four earned between $35.4 billion and $24.4 billion during 2015. In comparison, the fifth-largest firm, BDO International, reported earnings of $7.3 billion, about $17.1 billion less than the nearest earnings of a Big Four firm.

RELATED TERMS
  1. Middle Market

    Definition of middle market
  2. Mid Cap

    A mid cap is a company with a market capitalization between $2 ...
  3. Buy, Strip And Flip

    When a private equity firm buys out a target firm (usually with ...
  4. Big Four

    The Big Four are the four largest accounting firms in the United ...
  5. Middle Office

    A middle office is the group of employees in a financial services ...
  6. Brokerage Account

    A brokerage account is an arrangement between an investor and ...
Related Articles
  1. Financial Advisor

    FAs Should Factor Clients Into Succession Plans

    Financial advisory firms are finally taking succession planning seriously. Here's how.
  2. Personal Finance

    Which Income Class Are You?

    Which income class do you belong to and what defines the middle class?
  3. Investing

    What is private equity?

    Although few people actually understands the industry, private equity (PE) has gained a great amount of influence in today's financial marketplace. Check out what it is and how it operates.
  4. Small Business

    Tips For Fitting In At Your Brokerage Firm

    Part of starting a successful career as a broker is finding the right place to work.
  5. Investing

    Ernst & Young Stock Doesn’t Exist. Here's Why

    Learn about accounting and consulting giant Ernst & Young. Who owns it? Why can't the public buy shares in it? What are its revenue sources?
  6. Financial Advisor

    William Blair & Company: Investment Manager Highlight

    Learn about William Blair's service offering, executive leadership and holdings. Learn about the firm's areas of expertise and what sorts of clients it serves.
  7. Insurance

    Brokerage Functions: Underwriting And Agency Roles

    Learning about these various activities can give insight into how securities are issued and traded.
  8. Managing Wealth

    The Top 5 Growth Equity Managers in the Mid-West for 2016

    Learn about growth equity firms in the Midwest, along with the growth of private funding firms and managers due to the technology boom.
RELATED FAQS
  1. What country has the richest middle class?

    Learn which country has the richest middle class in the world, as well as the factors that have enabled the middle class ... Read Answer >>
  2. What is a typical price-to-book ratio in the financial services sector?

    Understand key distinctions of the financial services sector and learn some of the equity valuation metrics analysts use ... Read Answer >>
  3. Why are most brokerage firms owned by banks?

    Learn about the differences between investing with a bank-owned brokerage firm or with an independent broker. Get real answers ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center