Fundamentals
The lower middle market is the group of smaller private companies, often defined by earnings of a few million to about fifteen million dollars of EBITDA.
The lower middle market is the segment between very small main street businesses and large mid-sized companies. There is no single official line. Firms define it by EBITDA, and the ranges differ from one investor to the next.
For example, a regional services company with $6 million of EBITDA is a typical lower middle market business. A shop with $200,000 of earnings is usually too small. A company with $60 million of EBITDA is in a different tier.
This matters because buyers in this segment look for owner-led companies with room to grow. They often bring management help, not just money. Capstreet says it looks for "$3 to $15 million of EBITDA" in "Entrepreneur-owned businesses services companies".
Pricing, deal terms and buyer types change by size, so know where you sit. Read more in lower middle market private equity. See also EBITDA and platform company.
Related terms
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