The Maturing Middle Market is Here to Stay

Watch this space to heat up in 2020.

24 February 2020

Intralinks M&A Maturing Middle Market

When M&A news breaks, it’s usually mega-deals that capture the headlines. However, the middle market – transactions with enterprise value below USD 500 million – is where some of the biggest changes are happening. At Intralinks we gain a unique perspective about the macro landscape of investment banking due to the volume and diversity of firms we work with. Our customer base is worldwide and encompasses bulge bracket bankers to single-person boutique advisory practices.

We’ve been hearing anecdotal changes in the middle market since 2019 and there is no doubt that the middle market is more active than ever in M&A. This is a continued trend for the past five to ten years – depending on the market segment – and is expected to grow in 2020. There are a mix of factors that seem to be at play: increased number of PE funds (which means more dry powder); strong debt market and low interest rates that supports the dry powder from the PE firms; more IB advisors covering the middle market; and corporate entities looking at acquisitive growth in addition to organic growth where historically smaller firms focused more on organic over inorganic growth.

With well-capitalized buyers and tolerance for smaller deal sizes, the middle and lower markets have more exit opportunities, growth partners and sophisticated business strategists available to them.

But rather than questioning if we’ve reached peak middle market, bankers are wondering if the market has “fully matured.” The perception is that the interest in the middle-market isn’t a short-term infatuation that will diminish, but a maturing segment that is here to stay.

There are more advisory firms than ever covering the middle market. As a result of the increase in activity, banks that advised exclusively on big deals are showing an appetite for moving downstream to engage with select mid-market clients. There is also a healthy mix of lower-market dealmakers that have navigated their way upstream into bigger transactions, growing headcount in the advisory firms that always called the middle-market home. There’s also a growing number of boutique practices largely comprised of sophisticated dealmakers that decided to strike out on their own and establish new practices.


Middle-market maturity may also be fueled by the dramatic increase in the number of private equity (PE) firms covering the mid-market (and lower markets). There is no shortage of news headlines about PE kicking off 2020 with more capital than ever before. Some of this is attributed to the mega-funds, but a significant amount of capital is earmarked for the mid-market and a tremendous amount of first funds are focusing on the lower market as a proving ground to raise enough capital to replicate their strategies with middle-market companies.

With well-capitalized buyers and tolerance for smaller deal sizes, the middle and lower markets have more exit opportunities, growth partners and sophisticated business strategists available to them.

It is not only advisors and private equity driving middle-market deal volume. Mid-cap companies have become more sophisticated dealmakers in their own right. The middle-market was conventionally dominated by sell-side advising, but corporations that previously stayed away from transactions are now proactively exploring inorganic growth opportunities and divestitures. Sophisticated dealmaking isn’t exclusively for billion-dollar companies anymore. Once you hear of a competitor or two partnering with private equity, completing a divestiture, or merging with a strategic corporate partner, you too will look at new strategies for corporate growth.

As we enter a new decade, will we see a Roaring Twenties of mid-market dealmaking? Since M&A volume is frequently impacted by unforeseen macroeconomic events and changes in government policy, there is no way to know for sure. For now, however, all signs are pointing upward.

Justin Nowicki

Justin Nowicki

As Senior Manager of Product Marketing, Justin Nowicki is focused on the development and go-to-market strategy for Intralinks’ deal marketing solution. Justin joined Intralinks in 2019, previously he was owner & founder of BankerBox where he focused on solutions for M&A deal marketing and management. Prior to that, Justin was a vice president with North River Capital Advisors. He started his M&A career with The Forbes M&A Group and Headwaters MB (now Capstone Headwaters).

Stay IN the know

Sign up for our newsletter for must-read market analysis and thought leadership, delivered right to your inbox.