News Column

Small Business Investment Drives Robust Economic and Job Growth

July 31, 2014

Leading middle market indicator highlights powerful impact of the Lower Middle Market

WASHINGTON--(BUSINESS WIRE)-- The Small Business Investor Alliance (SBIA), the leading association for lower middle market private equity funds and investors, responded to the latest economic research highlighting the economic engine lower middle market businesses have become.

The National Center for the Middle Market (NCMM) Q2 2014 Middle Market Indicator (MMI), a quarterly survey of 1,000 C-suite executives, clearly indicates strong confidence from middle market business leaders in their outlook for growth. The latest study showed that today’s lower middle market business leaders are experiencing strong revenue growth and are increasingly confident about continued growth next year. In the last twelve months, lower middle market businesses increased revenues by 6.8%. This outpaces even the most recent GDP growth for Q2 which came in at a solid 4%. SBIA President Brett Palmer stated, “Smaller businesses are continuing to be the unsung heroes of growth and job creation. Our members are proud to provide the growth capital these businesses need to drive this economy forward.”

The study also showed that middle market business leaders are inclined to hold less cash and instead reinvest it in their business. The proportion of executives that choose to hold cash has steadily declined over the last two years as business confidence has increased.

Without the NCMM’s research, the power and the opportunity of the lower middle market would be overlooked. According to the latest MMI, overall middle market revenue growth in the last twelve months spiked 6.6 percent, well ahead of the S&P 500 index, which increased by only 3.4 percent. In spite of the first-quarter drop in U.S. gross domestic product (GDP), seventy percent of executives at middle market businesses surveyed anticipate further revenue growth in the next year. Revenue growth is now expected to be over 6 percent, compared to 4 percent expected at the end of 2013 and in early 2014. According to Palmer “the middle market is one of the few places you can broadly find very strong organic top line growth.”

The middle market contributes one third of non-government U.S. GDP, accounting for 45.6 million jobs, or one third of private U.S. employment. Employment growth for mid-sized businesses grew 3.2 percent over the past 12 months and added an estimated 750,000 jobs to U.S. payrolls so far in 2014. If middle market businesses continue to deliver on their projected job growth rate of 3.3 percent, the sector will generate 59 percent of all new jobs in 2014, according to the NCMM. “These middle market employment numbers should be eye opening, if not jaw dropping, to policymakers. If they want real job creation, they should be focusing on regulatory and tax policies that encourage investment in the lower middle market. These companies are churning out new jobs,” Palmer stated.

The SBIA and the NCMM formed their strategic partnership in January 2014, which includes co-branded content and joint analysis on lower middle market data and trends.

About the Small Business Investor Alliance (SBIA)

The Small Business Investor Alliance (SBIA) is the premier organization of lower middle market private equity funds and investors. SBIA works on behalf of its members as a tireless advocate for policies that promote competitive markets and robust domestic investment for growing small businesses. SBIA has been playing a pivotal role in promoting the growth and vitality of the private equity industry for more than 50 years. For more information, visit www.SBIA.org or call 202-628-5055.

About National Center for the Middle Market

The National Center for the Middle Market (NCMM) was founded in 2011 in partnership with GE Capital and is located at The Ohio State University'sFisher College of Business. The Center is the leading source of research on the U.S. middle market economy. Over the past three years, the Center has awarded 25 research grants, engaged more than 300 undergrad and MBA students to learn about middle market companies and connected with more than 3,000 business executives to learn more about this segment. Learn more at www.middlemarketcenter.org.




BackBay Communications

Chloe Davis, 212-520-1385 ext. 3

Chloe.Davis@backbaycommunications.com



Source: The Small Business Investor Alliance


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