What are Middle Market Investment Banks?
Middle market investment banks are financial institutions or intermediaries that deal mostly with mid-market firms, specifically for raising debt or equity capital as well as mergers and acquisitions. Middle market firms are mid-size businesses having annual revenues from $10M up to $500M and 100 to 2000 employees. Some of the popular, middle market investment banks are Robert W. Baird, Piper Jaffray & Co, Needham & Co, and Stifel Financial Corp.
Criteria for Middle Market Investment Banks
A middle market investment bank is one of the broader categories under investment banking operations. The other categories are bulge bracket banks and boutique banks.
Middle market investment banks are distinguished from the others due to the following attributes:
- Deal size – size of dealings or transactions with mid-market firms range from $10M to $500M
- Geographic focus – has a strong local presence but lacks in international exposure compared to a bulge bracket bank that has a multitude of overseas branches and offices worldwide
- Services – services offered include the following: merger and acquisition advisory services, debt and equity capital fundraising, and restructuring
- Client focus – mostly deals with private firms, extends personalized services, and focuses on a particular industry
How are Middle Market Investment Banks Classified?
Mid-market firms are generally classified into the following three groups:
- National full-service middle market firms – expanded their services to combine investment banking, wealth management, equity research, and brokerage and private equity. Examples are William Blair & Co., Piper Jaffray, and Robert W. Baird.
- National Advisory-only firms – primarily include big accounting firms that provide merger and acquisition advisory services in addition to audit and accounting services. Examples are Ernst & Young, PricewaterhouseCoopers, Deloitte, and KPMG.
- Single-industry specialists – focus their services on one industry of middle market companies, such as: real estate, healthcare, consumer products, and retail services. Example is Brown Gibbons Lang & Co.
List of Middle Market Investment Banks
Middle market investment banks interact with middle market firms with annual revenue of less than $1B and a deal size of less than $500M.
Here is a list of the top 7 middle market investment banks:
- William Blair & Co. – provides a range of financial services such as equity research and brokerage, asset management, private equity, and investment banking. Focus lies on various industries, such as: financial services, technology, healthcare, energy, and retail.
- Robert W. Baird & Co. – an employee owned investment banking firm with 3,100 professionals. Offers its services to industries, including, healthcare, real estate, technology, consumer, energy, distribution, and energy and industrial technology.
- Houlihan Lokey – recognized globally as an advisory-focused firm and as one of the best middle market investment banks. Services include financial restructuring, corporate finance, and financial advisory comprised of mergers and acquisitions.
- Lincoln International – considered as an elite institution with multiple offices located around the world. Known for its aggressive approach to merger and acquisition services.
- Stifel – recognized for its IPO advisory services in the middle market sector. It focuses on industries, such as: defense, aerospace, financial institutions, healthcare, energy, and real estate.
- Harris William & Co. – established its name in the Leverage Buyout transactions. Popular among private equity firms with its focus being industries namely media and telecom, healthcare and life sciences, business services, consumer, transportation and logistics, specialty distribution, and energy and power.
- KPMG Corporate Finance – has a strong reputation and long legacy, primarily in professional services, such as: accounting, tax, and audit services. It mainly focuses on 11 verticals – insurance, real estate, consumer markets, media and marketing, technology and communications, energy and natural resources, business services, clean tech and industrial technology, financial services, healthcare, and industrial markets.
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