$25M to $100M of EBITDA: understanding the core middle market.
In direct lending, not all strategies are created equal. Where a manager chooses to focus shapes the entire portfolio.
The core middle market covers companies with roughly $25 million to $100 million of EBITDA and enterprise values from $150 million to $1 billion: beneath the broadly syndicated loan market and above the lower middle market.
Managers focused here typically face less competition, and often hold entire loans rather than syndicating them. That can mean managers have a portfolio with less overlap with other lenders.
Watch to hear why Andy Frank, Global Head of Origination at Fortress, believes core middle market positioning matters in direct lending.
Andy Frank:
When thinking about direct lending, it's really important to understand that not all strategies are created equal. Fortress's corporate lending business focuses on the core of the middle market, an important distinction that may not be well understood.
Let me explain what I mean by the core middle market and why this positioning creates genuine differentiation. You can think of the core middle market as companies generating roughly $25 to $100 million of EBITDA, and enterprise values from $150 million to $1 billion. This core middle market sits beneath the broadly syndicated loan market and other large club deals and above the lower middle market.
Why does that matter? This means the managers of the core middle market focus typically face less competition from other sources of capital. It means they often hold the entire loan rather than syndicate them out. And it means you still get real structure, documentation, and pricing. This approach also results in a portfolio that has significantly less overlap with other lenders. It's important to note the benefits go beyond diversification. Core middle market lenders establish actual relationships with management teams
