The Mid-Market in Private Equity
The mid-market in private equity is the segment of companies and buyout transactions between small businesses and large corporations, and no single source fixes its boundaries: each measures size by revenue, EBITDA, or transaction value.
Reviewed by José Vasquéz, Managing Partner
Mechanism
A definition of the mid-market has two parts: a measure of size and a range on that measure. Revenue describes the operating business, EBITDA (earnings before interest, taxes, depreciation, and amortization) describes earnings capacity, and transaction value describes what a buyer pays. One company can sit inside the mid-market on one measure and outside it on another. The table sets out five published definitions.
| Source | Measure | Published range |
|---|---|---|
| National Center for the Middle Market, Ohio State University | Annual revenue | $10 million to $1 billion |
| PitchBook, US PE Middle Market Report, 2Q 2017 | Buyout transaction size (minority deals excluded) | $25 million to $1 billion, split into lower ($25 million to $100 million), core ($100 million to $500 million), and upper ($500 million to $1 billion) |
| Ares Capital Corporation, Form 10-K for fiscal year 2025 | Annual EBITDA | $10 million to $250 million |
| Main Street Capital, lower middle market companies | Annual revenue and EBITDA | Revenue of $10 million to $150 million and EBITDA of $3 million to $20 million |
| Federated Hermes Private Equity, May 2026 | Median enterprise value of a portfolio | Lower mid-market up to $500 million |
The National Center for the Middle Market states that the United States has approximately 200,000 middle market companies, about 3% of all U.S. businesses, which account for approximately one-third of private-sector GDP and employment, and it fields its Middle Market Indicator survey twice each year, in June and December.
PitchBook states that the lower bound of each band is inclusive, so a $100 million transaction falls in the core band, and it defines middle-market funds as vehicles with between $100 million and $5 billion in commitments, which makes fund size a second axis apart from company size. The Federated Hermes author adds that, depending on who is asked, the lower mid-market can include companies valued at up to $2 billion. PitchBook’s bands vary by report and by measure, and the bands in the table are those of its 2017 report.
Worked Example
Consider two hypothetical companies. Company A has $40 million of annual revenue, $6 million of EBITDA, and is acquired for $60 million. Company B has $400 million of annual revenue, $60 million of EBITDA, and is acquired for $600 million.
Company A is a middle market company under the National Center definition, because $40 million lies between $10 million and $1 billion. Its $60 million price lies in PitchBook’s lower band of $25 million to $100 million. Its revenue and $6 million of EBITDA meet both Main Street ranges, yet $6 million falls below the $10 million floor in the Ares definition, which excludes it.
Company B is a middle market company under the National Center definition, and its $600 million price lies in PitchBook’s upper band of $500 million to $1 billion. Its $60 million of EBITDA lies inside the Ares range, but its $400 million of revenue exceeds Main Street’s $150 million ceiling. Every source classifies each company correctly, and the sources disagree.
What It Means for a Limited Partner
For an allocator, a manager’s statement that it invests in the mid-market does not yet describe a strategy. The reading begins with which measure of size the manager uses and whether it applies that measure to every investment. Managers that quote revenue, EBITDA, and purchase price can each hold the same company and each call it mid-market, so comparison requires converting every portfolio to one measure.
The sub-band matters as much as the label. As reported by crowdfundinsider.com in June 2026, citing SPI by StepStone data, the band of $500 million to $1 billion in total enterprise value closed 2025 at 13.4x TEV/EBITDA, compared with 8.8x for the band of $25 million to $100 million, a spread that had widened from about 3.4 turns in 2023. Entry price therefore depends on where inside the mid-market a manager invests.
In Life Sciences and Healthcare
Size definitions written in revenue or EBITDA presuppose a company that reports both.
A life sciences company with no product revenue sits below the $10 million revenue floor in the National Center for the Middle Market definition by construction, and a company with negative EBITDA falls outside any EBITDA band, such as the $10 million to $250 million range in the Ares definition.
Transaction value is the only one of the three measures that classifies a company before it reports revenue; revenue still classifies a loss-making company, and only EBITDA fails for both. That is why an enterprise-value measure is the more usable frame for growth-stage biopharma, diagnostics, and device businesses, even though PitchBook’s own bands cover buyout transactions only and exclude minority deals. A revenue or EBITDA label on a healthcare company should be confirmed as a reported result, not a projection.
Governing Authority and Sources
The Investment Advisers Act, the Investment Company Act, Regulation D and the SEC’s venture capital fund rule do not use the term mid-market, and the definitions used in private equity are published by research centers, data providers, and investors rather than by regulators.
Where legislatures have drawn a mid-size band, they have used headcount for a specific program. The CARES Act directs the Secretary of the Treasury to seek a lending facility for eligible businesses with between 500 and 10,000 employees (15 U.S.C. 9042(c)(3)(D)), and the European Union’s InvestEU Regulation defines a “small mid-cap company” as an entity that is not a small or medium-sized enterprise and employs up to 499 employees (Regulation (EU) 2021/523, Article 2(22)). Neither provision defines a private equity mid-market.
- National Center for the Middle Market, Ohio State University Fisher College of Business, “Middle Market 101”: Middle Market 101
- National Center for the Middle Market, Middle Market Indicator: Middle Market Indicator
- PitchBook, 2Q 2017 US PE Middle Market Report, methodology section (as hosted by the Association for Corporate Growth): PitchBook 2Q 2017 report
- Ares Capital Corporation, Annual Report on Form 10-K for the fiscal year ended December 31, 2025, U.S. Securities and Exchange Commission: Form 10-K
- Main Street Capital Corporation, “Who We Invest In”: Who We Invest In
- CARES Act section 4003(c)(3)(D), 15 U.S.C. 9042(c)(3)(D), “Assistance for mid-sized businesses”: law.cornell.edu
- Regulation (EU) 2021/523 (InvestEU), Article 2(22): eur-lex.europa.eu
- Federated Hermes, “Navigating competing definitions of the lower mid-market,” Financial Investigator, May 21, 2026: Financial Investigator
- crowdfundinsider.com, “US Private Equity Middle Market Exhibits Resilience Amid Concentration Trends in Q1 2026,” June 15, 2026: crowdfundinsider.com
Frequently Asked Questions
What is the middle market in private equity?
It is the segment between small businesses and large corporations, defined differently by each source. The National Center for the Middle Market uses annual revenue of $10 million to $1 billion, PitchBook has used buyout transactions of $25 million to $1 billion, and Ares Capital uses annual EBITDA of $10 million to $250 million. The measure of size changes the answer.
What is the lower middle market in private equity?
It is the smaller end of the mid-market, and the boundary depends on the source. PitchBook’s 2017 report placed it at transactions of $25 million to $100 million, Main Street Capital lists company revenue of $10 million to $150 million, and Federated Hermes defines it as portfolios with a median enterprise value of up to $500 million.
What is a mid-market private equity firm?
It is a firm whose strategy concentrates on companies or transactions inside a mid-market band, with no universal threshold. PitchBook’s 2017 report defined middle-market funds as vehicles with between $100 million and $5 billion in capital commitments, so a firm can be described by its fund size, by the size of its portfolio companies, or by both.
Related Reference
The mid-market is one input to healthcare growth equity. Related entries: Growth Equity, The Operating Partner, and Family Offices in Private Equity.