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Middle Market Investment Banks: Complete Guide (+ Top Banks List)

Kison Patel
CEO and Founder of DealRoom
Kison Patel

Kison Patel is the Founder and CEO of DealRoom, a Chicago-based diligence management software that uses Agile principles to innovate and modernize the finance industry. As a former M&A advisor with over a decade of experience, Kison developed DealRoom after seeing first hand a number of deep-seated, industry-wide structural issues and inefficiencies.

CEO and Founder of DealRoom

When people think of investment banks, the first names that spring to mind are top tier, bulge bracket banks like JP Morgan, Goldman Sachs, and Morgan Stanley.

But what about the middle market? A tier of business composed of hundreds of times more companies where most of the M&A transactions occur? This is the realm of middle market investment banks.

DealRoom is an M&A management software that works with many investment banks and today, we use our experience to investigate investment banks in the middle market.

What is a Middle Market Investment Bank?

A middle market investment bank is an investment bank whose focus is the middle market, composed of mid-tier companies whose annual revenues fall between $10 million and $1 billion. Middle market investment banks tend to offer a reduced level of services to those offered by bulge bracket banks, with less staff and lower budgets.

Below is a comparison of an investment vs typical retail bank

investment vs retail bank

Why do Firms Seek Middle Market Investment Banks?

Middle market investment banks cater to middle market companies in a way that bulge bracket investment banks do not. Differences here include:

Fees

As a rule, the monthly retainer charged by middle market investment banks is much smaller than that charged by bulge bracket banks. Most middle market firms could not afford, or would be unwilling to pay for, the $100K+ monthly retainer fees charged by bulge bracket investment banks.

Local

Middle market investment banks are much more geographically disperse than bulge bracket investment banks, who tend to locate around the biggest cities in each country. This regional presence of middle market investment makes them more accessible to companies in third and fourth tier cities.

Speciality

Their work with middle market firms gives middle market investment banks a speciality in the area that bulge bracket investment banks simply do not possess. A bulge bracket bank, for example, would be unlikely to know the main players in a local distribution market, whereas a local middle market firm would.

Middle Market Investment Banks Differences

There are several differences between middle market investment banks and others. Some of these differences are outlined below:

Client Size

The principal difference between middle market investment banks is the size of client. As mentioned, middle market investment banks focus on the middle market. However, this isn’t set in stone. On occasion, they can be found in billion dollar deals, often with a client company they’ve worked with for several years.

Partnerships

Middle market investment banks often work with other middle market investment banks to pool resources (and share mandates). A good example of this is when a middle market investment bank cooperates with a middle market investment bank in a country where they have no experience or operations.

Service range

Middle market investment banks offer M&A intermediary services as standard. Others will also offer research, trading, underwriting services, and capital raising. Very few middle market investment banks will offer all of these services.

Focus

Because of their smaller size, middle market investment banks will often specialize in one, or a few industries. For example, one middle market investment bank might specialize in FMCGs, while another might specialize in technology. Bulge bracket banks are industry agnostic.

Who Should Seek Middle Market Investment Banks?

Middle market investment banks, as this article has outlined, are specialized in dealing with the transactions of middle market companies.

However, there are so many middle market investment banks, that it pays to research them before committing.

Any middle market company planning an M&A transaction would be well advised to talk to a few before committing to a project, comparing their methodology and pricing, and of course, looking at their previous transactions.

List of Top 9 Middle Market Investment Banks

  1. William Blair
  2. Baird
  3. Lincoln International
  4. Lazard
  5. Stifel
  6. Houlihan-Lokey
  7. Harris William
  8. Raymond James
  9. Brown Gibbons Lang & Co

Here is a closer look at each of the mid market investment banks:

  1. William Blair: A Chicago-based investment bank with a focus on financial services, healthcare, technology, and retail.
  2. Baird: A Milwaukee company with branches around the world, Bair Investment Banking is over 100 years and has also branched into asset management.
  3. Lincoln International: Less than 30 years old, Lincoln International already has branches in over 20 countries worldwide.
  4. Lazard: Lazard’s age (founded in 1848) means that some of its clients are blue chip, but its focus remains the middle market. It has branches in over 30 countries.
  5. Stifel: Remember how middle market investment banks tend to be regional? Stifel is Missouri-based and has a specialization in IPO in addition to dealmaking.
  6. Houlihan-Lokey: In 2022, Houlihan Lokey marks 50 years of investment banking. The company still focuses almost entirely on the United States.
  7. Harris William: Harris William mostly works with private equity companies on their transactions, and has thus built a specialty in LBOs.
  8. Raymond James: Based in Florida, Raymond James began in 1962 and is entirely US-based. Like several others in the field, it has also branched into asset management.
  9. Brown Gibbons Lang & Co: ‘BGL’ is a Cleveland-based investment bank and operates in a limited number of industries which include retail, consumer products, and healthcare.

Conclusion

Middle market investment banks may lack the prestige of their bulge bracket counterparts, but many of their founders began their careers on Wall Street before realizing the potential that exists in the middle market.

The sheer volume of companies in this space (there are about 200,000 of them in the US alone) makes middle market investment banking a highly active field when it comes to dealmaking.

If you’re considering engaging a middle market investment bank, talk to DealRoom about how to hire the best.

Additional Resources

17 Best Investment Banks to Work For in 2023 (by Glassdoor)

Top Tools for Investment Bankers for 2023

Technology Trends in Investment Banking for 2023

9 Tips that'll Get You into Investment Banking (Step-by-Step)

What Investment Bankers Do in M&A - Role, Process, Fees

When people think of investment banks, the first names that spring to mind are top tier, bulge bracket banks like JP Morgan, Goldman Sachs, and Morgan Stanley.

But what about the middle market? A tier of business composed of hundreds of times more companies where most of the M&A transactions occur? This is the realm of middle market investment banks.

DealRoom is an M&A management software that works with many investment banks and today, we use our experience to investigate investment banks in the middle market.

What is a Middle Market Investment Bank?

A middle market investment bank is an investment bank whose focus is the middle market, composed of mid-tier companies whose annual revenues fall between $10 million and $1 billion. Middle market investment banks tend to offer a reduced level of services to those offered by bulge bracket banks, with less staff and lower budgets.

Below is a comparison of an investment vs typical retail bank

investment vs retail bank

Why do Firms Seek Middle Market Investment Banks?

Middle market investment banks cater to middle market companies in a way that bulge bracket investment banks do not. Differences here include:

Fees

As a rule, the monthly retainer charged by middle market investment banks is much smaller than that charged by bulge bracket banks. Most middle market firms could not afford, or would be unwilling to pay for, the $100K+ monthly retainer fees charged by bulge bracket investment banks.

Local

Middle market investment banks are much more geographically disperse than bulge bracket investment banks, who tend to locate around the biggest cities in each country. This regional presence of middle market investment makes them more accessible to companies in third and fourth tier cities.

Speciality

Their work with middle market firms gives middle market investment banks a speciality in the area that bulge bracket investment banks simply do not possess. A bulge bracket bank, for example, would be unlikely to know the main players in a local distribution market, whereas a local middle market firm would.

Middle Market Investment Banks Differences

There are several differences between middle market investment banks and others. Some of these differences are outlined below:

Client Size

The principal difference between middle market investment banks is the size of client. As mentioned, middle market investment banks focus on the middle market. However, this isn’t set in stone. On occasion, they can be found in billion dollar deals, often with a client company they’ve worked with for several years.

Partnerships

Middle market investment banks often work with other middle market investment banks to pool resources (and share mandates). A good example of this is when a middle market investment bank cooperates with a middle market investment bank in a country where they have no experience or operations.

Service range

Middle market investment banks offer M&A intermediary services as standard. Others will also offer research, trading, underwriting services, and capital raising. Very few middle market investment banks will offer all of these services.

Focus

Because of their smaller size, middle market investment banks will often specialize in one, or a few industries. For example, one middle market investment bank might specialize in FMCGs, while another might specialize in technology. Bulge bracket banks are industry agnostic.

Who Should Seek Middle Market Investment Banks?

Middle market investment banks, as this article has outlined, are specialized in dealing with the transactions of middle market companies.

However, there are so many middle market investment banks, that it pays to research them before committing.

Any middle market company planning an M&A transaction would be well advised to talk to a few before committing to a project, comparing their methodology and pricing, and of course, looking at their previous transactions.

List of Top 9 Middle Market Investment Banks

  1. William Blair
  2. Baird
  3. Lincoln International
  4. Lazard
  5. Stifel
  6. Houlihan-Lokey
  7. Harris William
  8. Raymond James
  9. Brown Gibbons Lang & Co

Here is a closer look at each of the mid market investment banks:

  1. William Blair: A Chicago-based investment bank with a focus on financial services, healthcare, technology, and retail.
  2. Baird: A Milwaukee company with branches around the world, Bair Investment Banking is over 100 years and has also branched into asset management.
  3. Lincoln International: Less than 30 years old, Lincoln International already has branches in over 20 countries worldwide.
  4. Lazard: Lazard’s age (founded in 1848) means that some of its clients are blue chip, but its focus remains the middle market. It has branches in over 30 countries.
  5. Stifel: Remember how middle market investment banks tend to be regional? Stifel is Missouri-based and has a specialization in IPO in addition to dealmaking.
  6. Houlihan-Lokey: In 2022, Houlihan Lokey marks 50 years of investment banking. The company still focuses almost entirely on the United States.
  7. Harris William: Harris William mostly works with private equity companies on their transactions, and has thus built a specialty in LBOs.
  8. Raymond James: Based in Florida, Raymond James began in 1962 and is entirely US-based. Like several others in the field, it has also branched into asset management.
  9. Brown Gibbons Lang & Co: ‘BGL’ is a Cleveland-based investment bank and operates in a limited number of industries which include retail, consumer products, and healthcare.

Conclusion

Middle market investment banks may lack the prestige of their bulge bracket counterparts, but many of their founders began their careers on Wall Street before realizing the potential that exists in the middle market.

The sheer volume of companies in this space (there are about 200,000 of them in the US alone) makes middle market investment banking a highly active field when it comes to dealmaking.

If you’re considering engaging a middle market investment bank, talk to DealRoom about how to hire the best.

Additional Resources

17 Best Investment Banks to Work For in 2023 (by Glassdoor)

Top Tools for Investment Bankers for 2023

Technology Trends in Investment Banking for 2023

9 Tips that'll Get You into Investment Banking (Step-by-Step)

What Investment Bankers Do in M&A - Role, Process, Fees

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