What Is a Middle-Market Firm?

Malcolm Tatum

A middle-market firm is a business operation that consistently produces annual revenues that are along the middle range of the economic spectrum within a given nation or industry. The term is sometimes used to refer to companies that are only slightly smaller than the five largest companies within a specified industry, regardless of the annual revenue that is generated. This means that when referring to a company as a middle-market firm, it is important to ascertain the criterion that is used to designate between a dominant company, a middle-market company, and a small company.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

One example of how a company may be classified as a middle-market firm is to consider the practice that is common within the finance industry, in particular with accounting firms. In this setting, specific companies are referred to as the Big Four, and are considered the dominant firms. Other accounting firms that are not quite as prosperous as the current roster of firms included as part of the Big Four would be considered middle market companies, assuming those firms generated a certain amount of revenue each year. Opinions on exactly what constitutes the minimum amount of annual revenue must be produced in order to be classed as a middle-market firm varies, even within the accounting industry.

Another point of view on what constitutes a middle-market firm focuses not only on annual revenue but the number of employees associated with a given firm. Depending on the nature of the industry under consideration, a company with anywhere from a dozen to 100 employees and a certain level of yearly revenue would be considered middle-market. With other industries, 100 employees would be considered a minimum, with companies employing up to 1,000 individuals being classed as middle-market.

In most nations, the impact of the middle-market firm on the economy is significant. Job opportunities are often more plentiful within firms of this classification, and the chances to advance are often greater. In addition, the cumulative economic power of these middle-sized firms can usually rival or even exceed the influence of the dominant firms, a factor that helps to promote competition within an industry and ultimately motivate the development of new products and services for consumption by customers. For this reason, many governments have incentives in place that help to support middle-market firm activity as a means of keeping the economy stable, minimizing unemployment rates and in general aiding in maintaining an equitable standard of living for the population.

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