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Middle Market Research Fact Sheet
 

Middle Market Research Fact Sheet

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    Middle Market Research Fact Sheet Middle Market Research Fact Sheet Document Transcript

    • Leading from the Middle Fact Sheet Data at a GlanceGroundbreaking ResearchThe Fisher College of Business at The Ohio State University (OSU) and GE Capitalhave partnered on a foundational, multi-source research initiative on the U.S.Middle Market. They polled more than 2,000 business leaders across the UnitedStates on their business, their capabilities and performance, their needs to drivemore growth and their overall economic outlook. This comprehensive insight-driven research uses a compilation of highly reputable data sources, including theBureau of Economic Analysis, the U.S. Census, The CIA World Factbook, Compustatand Dun & Bradstreet, as well as comprehensive primary research led by OSU inpartnership with GE Capital.Key Research FindingsDefining the U.S. Middle MarketMiddle Market firms are a complex collection of almost 2,000 companies with annualcompany revenues between $10 million and $1 billion. There are three sub-segmentsthat exhibit distinctly different operational and financial characteristics:  Small businesses that operate more like the small-business sector, despite their revenue;  Mid-sized businesses that have consistent business practices and project strong growth; and  Large businesses that more closely resemble multi-national corporations, but are still firmly placed in the Middle Market.U.S. Middle Market: Engine of the Economy  Middle Market firms contribute $3.84 trillion annually to the U.S. private sector GDP – the equivalent of the world’s fourth-largest economy, just behind Japan but ahead of Germany.  80% of Middle Market firms expect to grow over the next 12 months. One- third experienced >10% growth in 2010 vs. pre-crisis 2007 – 2008 growth.U.S. Middle Market: Economic Growth & Job Creation  More than one-third of U.S. workers are employed by Middle Market companies.  While big business shed 3.7 million jobs during the recession, the Middle Market added 2.2 million jobs – including nearly 500,000 jobs added in the hard-hit Midwest, where big business shed 4.9 million jobs.  The Middle Market – 3% of all U.S. businesses – provided as many jobs as 5.8 million small businesses and provided 3.2 million more jobs than large companies did in 2010. Leading From the Middle
    • U.S. Middle Market: Resilient in Challenging Times  82% of Middle Market firms survived the recession, compared with 57% of small businesses.  One in four big businesses were Middle Market companies just five years ago. In fact, 27% of all large companies in 2010 were still Middle Market firms in 2005.U.S. Middle Market: Community Pillars  Middle Market firms are durable community pillars, operating on average for 31 years, just as long as the average big business (35 years) and 5 times longer than small businesses (6 years).U.S. Middle Market: Diverse Geography  Middle Market companies are spread throughout the country. They have less geographic dependency than either big business or small business, which respectively have higher relative concentrations in the New York metro area and Southeast – making the sector more diverse and less dependent on specific geographies.  Middle Market firms exhibit greater balance in the markets in which they operate, encompassing local, national and global markets alike. By comparison, big business mostly operates globally (60% vs. 28% for Middle Market), and small business mostly operates locally (60% vs. 42% for Middle Market).U.S. Middle Market: Diverse Industries & Ownership StructureNo single industry makes up more than one-third of the segment, underscoring thediversity of Middle Market companies. The top five industries in the Middle Market are:  Services (31.3%)  Manufacturing (17.3%)  Wholesale (13.8 %)  Retail (12.4%)  Construction (9.3%)By comparison, more than 60% of all big businesses are concentrated in twoindustries – manufacturing and services – and 56% of small businesses are in theservice industry.Additionally, Middle Market firms include a diverse mix of ownership structures:  Privately owned (40%)  Family owned/sole proprietor (31%)  Publicly traded (14%)By comparison, 67% of big businesses are publicly traded companies, and 50% ofsmall businesses are family owned/partnerships. Leading From the Middle
    • U.S. Middle Market: Growth DriversThe five most significant drivers of growth for Middle Market firms include:  Attracting customers/identifying new channels (26%)  Investing in innovation (20%)  Effectively managing operations (19%)  Managing outside pressures (19%)  Resolving workforce issues (16%)U.S. Middle Market: ChallengesMiddle Market firms identified several important internal and external headwinds toachieving success and reaching their full growth potential.  55% do not have sufficient access to capital markets.  84% do not have confidence in the national economy.  45% are challenged by international competition.  71% are challenged by regulatory compliance.  37% are unable to pass on rising commodity costs to their customers.U.S. Middle Market: Growth ChampionsThe study identified patterns and behaviors of the 9% of Middle Market firms that areachieving the highest rate of growth, a subset coined “Growth Champions.”This particular group of companies:  Projects 10%+ growth this year and next; and  Is growing at 3 to 5 times the rate of U.S. GDP growth.Growth Champions share specific characteristics that help drive growth and allowthem to stand out from other Middle Market firms around five key strategic priorities: 1. Focus on innovation 2. Stronger management culture 3. Sharper customer focus 4. Exceptional talent management 5. Broader geographic vision Leading From the Middle
    • Impact of the Middle MarketThe Middle Market is critical to sustaining America’s economic growth and globalcompetitiveness. Middle Market companies are deeply rooted in their communities,buying goods and services from local and regional suppliers, helping to keep localand national economies viable.Middle Market firms successfully weathered the worst recession in modern history,and continue to add jobs when they are needed most. Yet, despite their importanceand success, these are the companies most overlooked and under-resourced. Thissector is the nation’s best hope for continued growth and long-term success, whichis why supporting Middle Market firms must be a priority.For a full set of the research data, please visit NationalMiddleMarketSummit.com. Leading From the Middle