Middle Market: Where It’s At!
A recent Philadelphia Chamber of Commerce event focused on the pros and cons of being in the middle. While those of you who are middle children may be subjected to taunts and stereotypes, middle market companies are in vogue. Why? They outperform F500’s and small companies alike, are attractive places to work, and are the lucrative targets of Private Equity firms, as well as those companies looking to grow by acquisition. It is truly a happy time for those in the middle.
Who comprises the Middle Market?
- 200,000 businesses representing 3% of all U.S. companies
- Annual revenues ranging from $10M-$1B
- 5th largest global economy—larger than the entire country of Germany
- Creator of 60% of all new jobs in the U.S.—over $1.1M jobs in 2013-2014
Q4 2017 by the numbers:
- Revenue growth = 7.6% compared with 6.9% in the S&P 500
- Employment growth = 5.2% compared with 1.4% for small businesses and 2.6% for large businesses
- High confidence = 75% in the global economy, 86% in the national economy, and 88% in the local economy
Furthermore, according to Thomas Stewart, Executive Director, National Center for the Middle Market, middle market companies are more attractive than ever. Consumer middle marketers are considered niche, and therefore more interesting and socially responsible. They are successfully chipping away at the market share of name brand products. Think craft breweries, for instance. On the other side of business, B2B industrials are doing well because of their key roles in the supply chain, as connectors, to F500 companies who depend on them for products and services critical to our economy.
Among the top challenges of those in the middle are acquiring and retaining talent, competitive pressures, and the challenges of expanding internationally. Regarding capital investments, 69% plan to expand. While some of the panelists recommended international growth, others have grown primarily by acquisition and will continue to do so. Not surprisingly, workforce engagement is high on the priority list—whether through wage increases, training, or both. Overall, the middle marketers are not an impetuous group. They are not taking on new debt, are expanding capital expenditures judiciously, and keeping inventory levels steady.
We at Markitects are proud to have served middle market companies for over twenty years. For more information, contact us.