For years analysts have pointed out that the lifeblood of the U.S. economy is not the behemoth, billion-dollar companies and their CEOs that get all the press. Rather, it is the hard-working middle and lower middle market business owners and their exceptional teams that drive us forward day in and day out.
Two recent reports show just how true that was in 2022 and will be in 2023. They are:
Both documents demonstrate just how resilient (and important) the middle market is to the U.S. economy. Here are some highlights:
NCMM - The U.S. middle market continues to sustain double-digit year-over-year revenue and employment growth for the third straight reporting period. Overall, 72% of companies say performance has improved compared to one year ago while just 6% say performance deteriorated in 2022.
WSJ - Small companies have been responsible for all of the job growth in the U.S. since the onset of the Covid-19 pandemic and account for almost four out of five available job openings.
NCMM - Throughout 2022, middle market companies experienced year-over-year revenue growth of 12.2%. Four out of five companies reported revenue growth for this period and most of these growers reported growth of 10% or more.
WSJ - Since February 2020, small businesses – companies with fewer than 250 employees – have hired 3.67 million more people than have been laid off or who quit. Larger businesses – those with 250 employees or more – have cut a net 800,000 jobs during that time.
NCMM - Middle market companies of all sizes report strong year-over-year employment growth, propelling the rate of employment growth to 11.1% for the entire middle market, a new high in the history of the MMI. In 2022, 57% of middle market companies increased the size of the workforce and most made significant expansions for the second straight year.
NCMM - Across industries, most middle market businesses see the strong growth continuing in 2023. Companies are calling for 10% year-over-year growth in both revenue and employment over the next 12 months with 58% of businesses expecting revenues to increase and 55% saying they will expand the size of the workforce.
This is truly remarkable news and, since most of our readers operate in the middle market, you should all be very proud of what you are accomplishing today and how you are driving the economy through some very turbulent waters.
But this is especially good news for those entrepreneurs considering an exit over the next 12 months. Despite rising interest rates, fears of recession, and geopolitical unrest privately held middle market businesses are more attractive than ever to professional buyers because of data like I have presented above. This amazing stat sums up the reality to me:
Let that sink in for a bit. Is it any wonder that middle market companies have been finding buyers and investors in the last few years at a record pace?
Since 2019, and even during the pandemic years, of 2020 and 2021, Generational and its family of companies have experienced year after year of deal-closing records. Because of this we have ranked at the top of most Refinitiv league tables and have won a number of industry awards. You can see them all here as well as a sampling of deals we have closed by industry over the years:
We are looking forward to another year of serving and working alongside middle market companies; for guiding them on their growth and exit journeys is what we do best.
So thanks to both the NCMM and the WSJ for affirming once again that the middle market is the backbone and heart of the U.S. economy!
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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