Middle market banking

Middle market banking is the concept of providing investment banking services to companies having revenues generally in the range of $50 million to $1 billion in sales. The mid-range size of these clients forces bankers to specialize in certain areas, where they prefer to carve out defensible market space. The services offered are similar to those provided to larger clients, which include:

  • Acquisition advisory services
  • Business loans
  • Equipment leasing
  • Industrial revenue bonds
  • Investment services
  • Succession transition planning
  • Tax-exempt bonds
  • Wealth management

Investment banks dealing with this market may specialize in certain industries, for which they employ a cluster of high-expertise individuals. For example, a banker may only accept business from clients in the high technology, natural resources, or health care industries. A banker's focus may also be regional, so that its client base is centered on (for example) natural resources firms located in the Rocky Mountain region, or perhaps biotechnology companies located near San Francisco. A middle market banker is likely to have locations in more than one city, but not to have an extensive international practice that spans many countries.

Clients in the middle market are not just corporations. They may also be not-for-profit entities or government organizations.

Given the broad range of client sizes that an investment bank may deal with in the middle market, it is evident that each bank will closely evaluate each prospective client to see if the client can provide sufficient present or future fees to warrant a long-term relationship. For example, a middle market banker may not usually accept the business of a company with sales of only $50 million, but may be more inclined to do so if it is located in a high-growth segment of a market that the banker wants to deal with, and which has good prospects for future earnings.

In summary, middle market banking caters to a large number of prospective clients with a wide array of services, but tends to focus on specific areas of expertise, either in terms of client size, industry, or location.