In business school curriculum, new frontiers can be hard to come by. For years, professors across the country have focused on tried-and-true case studies that highlight enterprise strategy, operations, talent management, and other similar topics, usually within the context of large, well-known organizations. Small businesses and entrepreneurial start-ups are often on the syllabus as well, and of course, companies both large and small get their fair share of media coverage.   

But what about the companies in the middle?

Up until a decade ago, the middle tier of organizations – companies who have grown out of being small businesses but have yet to reach the status of multi-billion-dollar behemoths—were largely forgotten.  For the most part, service providers and others had scattered definitions and descriptions of these mid-sized businesses, how they operate, and what they need to thrive. But neither in the academic world nor in the financial press were these businesses ever given much of a mention. 

Since the launch of the National Center for the Middle Market in 2011, that has changed. From the outset, the Center’s mission has been to provide these companies with content, communities, and programs to help them grow. Throughout our 10-year journey, we’ve learned quite a bit about the fundamentals of the mighty U.S. middle market. There are several ways through which we’ve been able to distribute these new insights.  First, only by constantly surveying middle market leaders and segmenting data can the NCMM develop the most accurate, updated insights. Then, we work to accumulate and share these new findings in several ways. Keys to our approach include:

  • A data-driven research platform and ongoing survey of 1,000 different middle market business leaders every six months to track performance, sentiment, and challenges. These findings filter into the Center’s proprietary semiannual Middle Market Indicator, now in its 37th edition. 
  • In-depth research projects on topics, functions, and industries through the lens of middle market executives. We’ve completed nearly 30 of these reports to date.
  • Alignment with sponsors and partners who provide subject-matter expertise through years of working with middle market companies on specific opportunities and needs.  
  • Direct engagement with middle market leaders in our podcasts, through company profiles, in events across the country, and through projects in our educational courses.  

Our Top 3 Takeaways

While our years of research and learning have revealed countless insights, several themes emerge repeatedly and are woven throughout all the content we produce: 

1. The Middle Market Is Nothing if Not Resilient

The Center launched just two years after the Great Recession. One of our earliest insights was that middle market companies have the ability to dig in when times are tough. On average, these companies have been in business over 30 years, which means they have a track record of results and experience dealing with ups and downs. During the financial crisis of 2007-2009, the middle market once again demonstrated its tenacity – while big businesses shed 3.7 million jobs during this period, the middle market added 2.2. million. Similarly, when the Affordable Care Act (ACA) mandates went into place, after some period of initial uncertainty, most middle market businesses figured it out and even helped employees sign up.

The Covid-19 pandemic has been no different. Like the rest of the economy, the middle market was battered in 2020 because of shutdowns, health mandates, and ongoing uncertainty about the future.  However, halfway through 2021, the average growth rates for revenue and employment have rebounded to record numbers, signaling a strong (albeit uneven) recovery within the middle market.

2. The Middle Market Is Diverse

One of the greatest challenges in understanding the middle market is simply the breadth and diversity of this segment. Given the NCMM revenue-based definition (the Center defines middle market businesses as those with $10 million to $1 billion in annual revenues), there is obviously a wide span between the upper and lower ranges, which is why we typically segment data accordingly. Additionally, middle market companies occupy every industry, from manufacturing and business services to retail, healthcare, and technology. Ownership types vary as well. Few of these businesses are publicly listed companies on a stock exchange. Instead, they tend to skew toward family-owned enterprises, many of them with some form of private equity ownership.  Finally, mid-size companies are literally everywhere across the country.
The sum of these factors means the opportunities as well as the headwinds can vary quite a bit for the individual companies within the sector. Adequately categorizing (and ultimately addressing) the needs of these businesses is no small or simple task. Yet, given the middle market’s consistently outsized contributions to both local and national economies, the effort to better understand and support these businesses is more than justified. 
3. The Middle Market Can Be Hard to Reach

Painting an accurate picture of the middle market can be challenging; identifying and reaching these business owners and decision-makers with content and insights that can help shape the future of their organizations can prove an even more difficult task. Since much of the middle market is comprised of privately held companies, a complete list or catalog of who they are, where they operate, and what they need simply does not exist.  Furthermore, while some middle market companies are well-known, consumer-facing brands, the majority of the sector is made up of B2B organizations that operate within the supply chains of other larger businesses. Part of the mystery surrounding this market segment is that many of us simply have never heard of these organizations. 

No doubt, there are benefits to being “behind the scenes.”  Without the scrutiny of quarterly earnings reports or activist investors pounding the boardroom tables, mid-size companies often have the freedom to use the blend of scale and agility to achieve extraordinary results. The downside to this environment, however, is the tendency for leadership teams to spend more time perfecting their craft (internally) while perhaps focusing less on long-term strategy (externally). So, not only are the executives harder to pin down, but they also typically have less time and bandwidth to work on the business as opposed to in it. 

So much more to learn. 

In a nutshell, while the middle market can be somewhat elusive, it is a very real and consistent driver of the economy that deserves to be studied, understood, and supported. At the Center, we continue to be fascinated by the attributes and performance of middle market companies as the fundamental bedrock of the U.S. economy. The past two years have challenged businesses of all sizes, and it will be interesting to follow how mid-size companies adapt, whether it will be through managing digital transformation, entering new markets, and/or finding new ways to attract and retain talent. 

Regardless of the opportunity or threat, one thing seems certain: the middle market will do what it has always done to persevere and achieve future growth. The NCMM will be there to learn from them while supporting them along the way.