Leading middle market indicator highlights powerful impact of the
Lower Middle Market
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.
Chloe Davis, 212-520-1385 ext. 3
Source: The Small Business Investor Alliance