What Is the Middle Market?

The middle market is the segment of American businesses with annual revenues roughly in the range of $10 million to $1 billion, although some definitions set a higher top on the range. There are about 200,000 such firms, most of them privately owned or closely held, and their annual revenues combined total more than $10 trillion.

Middle market companies are responsible for about 30 million jobs and comprise about one-third of the annual $30 trillion in U.S. private-sector gross receipts.

That makes the middle market a powerhouse of the U.S. economy, though many individual companies within the sector are little known to the general public.

Understanding the Middle Market

The middle market is a critical sector of the American economy and an important engine of job creation, accounting for the majority of new U.S. jobs since 2008.

Key Takeaways

  • Middle market businesses are too big to be called small businesses and too small to be big businesses. Nevertheless, they are a powerhouse of the U.S. economy.
  • About 30 million Americans are employed by middle-market companies, and their numbers are expected to grow.
  • Businesses in this sector tend to be service-oriented and may be relatively unknown outside their industries.

It was particularly strong in 2019. In mid-2019, 77% of businesses in the sector reported increased revenues year over year, and 41% expected to hire additional employees in the next 12 months, according to a report from the National Center for the Middle Market.

Companies in this sector are heavily concentrated in service-oriented activities, including business services, health services, and educational services. A significant number of firms that fall under the middle market umbrella are engaged in retail or wholesale trade, construction activity, and manufacturing.

Defining the Middle Market

There is no universally accepted definition of the middle market. Traditionally, annual revenues were the key differentiator. However, some analysts prefer to define the middle market by asset levels or numbers of employees.


The percentage of middle-market companies that reported increased revenue in the year ending in mid-2019.

The lack of clear delineation results in many gray areas when any attempt is made to group businesses by the classic three-level approach that includes small business, middle-market business, and big business.

Challenges for the Middle Market

The interests of middle-market business may be relatively underrepresented in policy and economic debates, locally and internationally.

Big businesses are usually publically-traded companies. They report financial information extensively and employ lobbyists to represent their interests. Small businesses have associations that represent their interests. The middle market, by comparison, is more amorphous and less transparent. They are low-profile, and their products and services are generally recognized only by their customers.

Middle Market Lenders

Relative to big, public companies, middle-market businesses also have a tougher time raising capital, and their costs of debt are often higher. Although middle-market lenders including boutique investment and commercial banks aggressively compete for the business of the middle market, larger businesses enjoy the advantage of economies of scale.

Many theories explain why this is the case but it often boils down to the added transaction costs banks undertake for due diligence and marketing activities when they cater to the middle market.