We are pleased to present findings from the 2013 Mid Market Outlook Survey, now in its fourth year, which polled more than 300 middle market executives during the spring of 2013. The survey reflects perspectives from U.S. executives on the outlook for various topics, including business opportunities and challenges, new technologies, capital spending, personnel growth, and merger and acquisition (M&A) activity.
Middle market companies have experienced some positive momentum over the past year. Business confidence is growing, and executives predict an improved U.S. economy over the next year. The vast majority says their companies have increased revenue over the past year, and they expect continued revenue growth. The growth in hiring has been slower, but a strong majority plan to add employees over the coming year. Overall, these companies are gaining a sense of stability, and they are ready to invest. There is no question that they will look to raise capital or debt, or put pent-up cash in play to invest in growth - both organically and inorganically.
- Growing revenue - A majority of executives say their companies are enjoying stronger revenue. Almost three quarters (73 percent) say revenues have increased over the past year, and more than three quarters (78 percent) expect revenues to continue to rise in 2014. Almost half (45 percent) say they added headcount over the past year, and more than half (55 percent) expect to add to headcount in 2014.
- Investing for growth - Companies are ready to invest to drive growth. Almost two thirds (60 percent) say they will increase capital spending over the next year, and almost half (48 percent) cited geographic expansion as their highest priority investment area. Middle market companies also plan to invest in information technology (31 percent), including the use of cloud technology and data and analytics; new products or services (26 percent); and the acquisition of a business (26 percent).
- Challenges and barriers to growth - Despite their optimistic outlook, middle market executives note several growth barriers and threats to their business models. Executives cite regulatory and legislative pressures (33 percent) and pricing pressures (32 percent) as their chief concerns. Executives also cite political/regulatory uncertainty as the biggest threat to their companies' business models. Very few say their companies are very prepared to manage the impact of public policy and regulatory changes.
- Increasing use of data and analytics - Middle market companies are moving quickly to embrace data and analytics. Nearly half (44 percent) say they are rapidly becoming or currently have high analytical literacy. They identify operational excellence (33 percent) as the best use for data and analytics, followed by acquiring customers (29 percent) and competitive intelligence (28 percent). Interestingly, private companies reported having a higher level of data analytics maturity (47 percent) than public companies (39 percent).
For more information, download the full report below.