Newspaper headlines and political sound-bites tend to place businesses into one of two discrete categories: big businesses, popularly imagined as corporate titans like Walmart or Amazon, and small businesses. However, while simple and easy to understand, this binary is not the most accurate reflection of American businesses. In fact, there is a broad spectrum of companies that are not necessarily big or small businesses which comprise the middle market, a key element of the economy that is not well understood by the public. Take a look below to learn more or just refresh your knowledge about the middle market.
What is the Middle Market?
While definitions can vary, most experts delineate the middle market as the range of companies with annual revenues between $10 million and $1 billion. There are about 200,000 companies in the middle market in the United States. Notably, the middle market does not refer to a single specific industry, but it includes companies and organizations that are active in all industries and sectors of the economy.
Importance of the Middle Market to the Economy
If it were its own country, the US middle market would be the fifth-largest economy in the world; since it’s not it’s own country, however, the middle market is a vital component of the American economy. It generates over $10 trillion in combined annual revenues, and it accounts for 44.5 jobs—over one third of all private employment. Additionally, middle market stocks, often referred to as mid-capitalization or mid-cap stocks, are often favored by investors because of their high growth potential and lesser degree of risk than small-cap or speculative stocks.
Challenges Facing the Middle Market
Middle market companies face the same challenges as any other business: general economic risks, impacts of government regulation, and so on. An issue that is unique to the middle market is a lack of information on this sector of the economy. While there is plenty of data and analysis on large and small businesses, middle market companies can be overlooked as the subject of studies or research, which results in a dearth of information; as a result, needs of middle market companies can be overlooked in public discussions or new policies.
With that being said, there are several organizations that seek to provide research and insights for the middle market, such as the National Center for the Middle Market at The Ohio State University’s Fisher School of Business.