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Lincoln Middle Market Index

Lincoln Middle Market Index

  • Quarterly index provides a unique measurement of changes in enterprise value of private middle market companies
  • Provides a key benchmarking tool for private equity sponsors and institutional investors
  • The Lincoln MMI shows high correlation to public U.S. stock markets but less volatility



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Methodology

Source of Data and Sample Size
On a quarterly basis, Lincoln determines the enterprise fair value of over 1,200 portfolio companies for approximately 100 sponsors and lenders. These portfolio companies report quarterly financial results to the sponsor (i.e., private equity group) or lender. Lincoln obtains this information and computes the enterprise value in accordance with the fair value measurement principles of generally accepted accounting principles. In assessing enterprise value, Lincoln relies on well accepted valuation methodologies such as the market approach and income approach considering each company’s historical and projected performance and other qualitative and quantitative factors. Finally, each valuation is then vetted by auditors, company management, boards of directors and regulators. Upon concluding each quarterly valuation cycle, Lincoln aggregates the underlying financial performance and enterprise value data for analysis.

To construct the Lincoln MMI, Lincoln selects a subsection of the companies valued each quarter, including companies generating earnings before interest, taxes, depreciation and amortization of less than $100.0 million and disregards companies such as venture-stage businesses and non-operating entities, such as special purpose entities that own real estate and specialty finance assets.

Academic Advisors
Professor Steven Kaplan is the Neubauer Distinguished Service Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business. Professor Kaplan conducts research on issues in private equity, venture capital, entrepreneurial finance, corporate governance and corporate finance. He has published papers in a number of academic and business journals. Kaplan is a research associate at the National Bureau of Economic Research and an associate editor of the Journal of Financial Economics. Kaplan teaches advanced MBA and executive courses in entrepreneurial finance and private equity, corporate finance, corporate governance, and wealth management. BusinessWeek named him one of the top 12 business school teachers in the country. Kaplan serves on the boards of Morningstar, Zayo Group and the Illinois Venture Capital Association. He has been a member of the faculty since 1988.

Professor Kaplan received his A.B., summa cum laude, in Applied Mathematics and Economics from Harvard College and earned a Ph.D. in Business Economics from Harvard University.

Professor Michael Minnis is an Associate Professor of Accounting at the University of Chicago Booth School of Business. Professor Minnis studies the role of accounting information in allocating investment efficiently by both management and capital providers, the use of financial reporting in mitigating information opacity issues of privately-held firms, and the interplay within management in the production and use of financial information. His research includes identifying unique data and methods to empirically examine issues in a novel way.

Professor Minnis received his Ph.D. from the University of Michigan and his B.S. from the University of Illinois, where he graduated with Highest Honors.


For more information about the Lincoln MMI, or to speak to an expert in Lincoln's Valuations & Opinions Group, please contact:


leadership

North America

Ronald Kahn
Managing Director
+1 (312) 580-6280
Email Ron
Detailed Bio

leadership

North America

Michael R. Fisch
Managing Director
+1 (312) 580-8344
Email Mike
Detailed Bio

leadership

North America

Larry Levine
Managing Director
+1 (312) 506-2733
Email Larry
Detailed Bio

leadership

North America

Patricia Luscombe
Managing Director
+1 (312) 506-2744
Email Tricia
Detailed Bio

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