InSight

Exit and Growth Strategies for Middle Market Businesses

Middle Market Importance in U.S. Economy

By Kim Levin | Jul 18, 2012

July Issue Middle Market Pulse

As middle market companies carve out an increasingly larger slice of our nation’s GDP, many institutions of higher learning are partnering with business to dissect and analyze this important segment of our economy. One such partnership was established between The Ohio State University Fischer School of Business and GE Capital and seeks to better understand this critical market segment. Results of the joint research have been published and appear online at The National Center for the Middle Market (www.middlemarketcenter.org) and the findings are encouraging for the long term prospects of this growing economic segment.

Middle market business is characterized by revenue of over $10 million, yet under $1 billion, and accounts for over one third of all American jobs and more than $9 trillion in annual revenue. If the middle market were a country, it would rank as the fourth largest economy in the world. During the recent economic challenges, middle market businesses weathered the storm better than both the small business (revenues < $10 million) and large business segments (revenues > $1 billion).

The middle market itself is broken into three segments: the lower middle market (revenues of $10-50 million), middle market (revenues of $50-100 million) and upper middle market (revenues of $100 million to $1 billion). The inherent diversity in size, structure, industry focus and geography provide a natural resilience during tough economic times. Companies in this segment are more often structured with less bureaucracy and can move quickly to respond to changing market conditions. Middle market business that survived the economic downturn (2007 to 2010) created nearly 2 million jobs, where surviving large businesses shed nearly double that number.

An under analyzed and often ignored segment of the economy, the middle market is finally beginning to attract the attention of investors, economists and scholars.

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