in collaboration with CIO Gallery September 12, 2012

Transcription

1 in collaboration with CIO Gallery September 12,

2 Engine of Economy Sustainable Job Growers Community Pillars Middle Market Indicator Conclusions Growth Champions Challenges Resilient and Diverse 2

3 Small Businesses? Large Corporations 3

4 Foundational, multi-sourced research 4

5 Database Sources 5

6 Comprehensive Survey 2,028 C-level interviews (total) 1,447 Middle Market decision maker interviews Principals (Partners/Owner) 16% C-Level Execs 51% MD & EVP 24% Company Officer 9% 6

7 Small Businesses? Large Corporations 7

8 Small Business? Big Business <$10M Annual Revenue ~6M Businesses 35% Employment? Annual Revenue? Businesses? Employment >$1B Annual Revenue ~2,000 Businesses 31% Employment 8

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10 Small Business Middle Market Big Business <$10M Annual Revenue ~6M Businesses 35% Employment $10M - <$1B Annual Revenue 195,000 Businesses 34% Employment >$1B Annual Revenue ~2,000 Businesses 31% Employment 10

11 The Middle Market is resilient. In the face of extraordinary economic challenges and the recent recession, Middle Market businesses survived and grew. 11

12 82% Survivorship rate Unprecedented credit crisis Severe economic downturn Sharply increasing commodity costs Sweeping regulatory changes 12

13 Survivorship Rate by Business Sector 97% 82% 57% Big Business Middle Market Small Business 13

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15 Jobs Contribution per Surviving Business ( ) big business middle market - 2,000 jobs per business +20 jobs per business downsizing growing 15

16 Community Pillars Middle Market firms are foundations of their communities, providing sustainable jobs and more 16

17 In business more than 20 years 71% 70% 16% Big Business Middle Market Small Business 17

18 Supporting the communities we serve is probably the most important part of what we do. CFO, Wholesale Trade $500M and 2,150 employees 18

19 Markets operated in Middle Market 43% 30% 27% Big Business 18% 22% 60% Markets sourced from Middle Market 42% 35% 23% Big Business 20% 32% 49% Local/Regional National Global 19

20 The Middle Market is diverse in revenue, geography, industry and structure 20

21 $10-50M $50-100M $100M-$1B Operates more like smaller businesses, despite revenues Consistent business practices; project strong growth Resemble multi-nationals $9.3T revenue 34% 15% 51% 195,00 firms 80% 11% 9% 40.7 million employees 39% 15% 46% 21

22 The Middle Market is diverse and complex 22

23 Ownership Structure Middle Market Diversity Public Private Family Owned Local/Regional National Global 23

24 Geography 24

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26 Geography Industry 26

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30 Middle Market Growth Champions A unique subset we can learn from 30

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33 Middle Market Growth Champions Distinguishing Characteristics Sharper customer focus 33

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35 Middle Market Growth Champions Distinguishing Characteristics Broader geographic vision 35

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37 Middle Market Growth Champions Distinguishing Characteristics Invest in innovation 37

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39 Middle Market Growth Champions Distinguishing Characteristics Strong management culture 39

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41 Middle Market Growth Champions Distinguishing Characteristics Superior talent management 41

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43 Where are we today? Quarterly release of Middle Market Indicator (MMI) MMI = forecasted revenue growth for the next 12 months 43

44 Research Methodology What National Survey Of C-Level Executives Who 1,002 financial decision makers in Private and Public Organizations with $10 million-<$1 billion in Gross Revenue When Field Period: June 8-19, 2012 How Self Administered Online Survey Insight Areas Past year growth Anticipated growth Confidence in economy Challenges to growth Detailed corporate profiling 44

45 The Middle Market continues to be an engine of growth and job creation. 45

46 Financial Performance Total Middle Market Middle Market Performance & Projections Past Year Reported Gross Revenue Next 12 Month s Revenue Outlook Q1 6.9% 70% Firms Reported Growth 16% Firms Reported Decline 5.2% 69% Firms Reported Growth 9% Firms Reported Decline Q2 6.1% 62% Firms Reported Growth 16% Firms Reported Decline 4.8% 61% Firms Expect Growth 6% Firms Expect Decline The proportion of firms indicating growth in YOY revenues is lower in the 2 nd Quarter 46

47 Past Year Financial Performance Gross Revenue By Revenue Segment $10M - <$50M $50M - <100M $100M <$1B 2Q 1Q 2Q 1Q 2Q 1Q Base: Total Respondents (574) (558) (163) (186) (263) (258) Mean Total growth 5.8% 6.0% 5.3% 6.5% 7.0% 8.3% Growth is strongest among larger firms than smaller organizations. Those in the $50mm to $100mm segment are growing at a slower pace than their peers. 47

48 Past Year Financial Performance Gross Revenue Q1 Q2 Manufacturing, Retail Trade, and Healthcare lead the way while Construction remains a laggard. Manufacturing, Financial Services and Services lead the way while Retail Trade has become the laggard. By Industry Wholesale Trade Retail Trade Financial Services Services Manufacturing Construction Healthcare Other Base Total Respondents 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q 2Q 1Q (169) (157) (172) (176) (66) (66) (44) (47) (67) (63) (178) (168) (81) (53) (223) 272) Mean Total growth

49 Previous Year Employment Growth Total Middle Market 2Q Total 1Q Total Decrease Increase Decrease Increase Stayed The Same Stayed The Same 2.0% Total Growth 1.5% Total Growth Despite headwinds, the middle market continues to add jobs at the same rate as the 1 st quarter. 49

50 Previous Year Employment Growth Revenue Segment By Revenue Segment $10M - <$50M $50M - <100M $100M <$1B 2Q 1Q 2Q 1Q 2Q 1Q Base: Total Respondents (574) (558) (163) (186) (263) (258) Total Growth (Mean) 1.7% 1.2% 2.5% 0.7% 2.2% 2.3% Q2 Q1 Employment growth is stronger among midsized Middle Market Firms. Employment growth was stronger among larger Middle Market Firms. 50

51 Previous Year Employment Growth Industries 2Q: Jobs grew most in: Services Fin. Services Manufacturing Healthcare Construction Total MM 2Q 1Q Base: Total Respondents (1000) (1002) Services +4.8% +2.0% Manufacturing +2.6% +3.4% Wholesale Trade +0.7% +0.5% Retail Trade -0.4% +1.7% Construction +1.1% -2.7% Financial Services +3.6% +1.6% Healthcare +1.9% +3.5% 51

52 Employment Growth Future Outlook 2Q Only One third of middle market firms expect to add jobs over the next 12 months. By Revenue Segment $10M - <$50M $50M - <100M $100M <$1B Base: Total Respondents (574) (163) (263) Mean Total Growth Services Manufacturing Wholesale Trade By Industry Retail Trade Construction Financial Services Healthcare Base: Total Respondents (169) (172) (66) (44) (67) (178) (81) (223) Other Mean Total Growth

53 But going forward, there are headwinds 53

54 Confidence: By Geography Confident Somewhat confident Global Economy US Economy Local Economy 2Q 1Q 2Q 1Q 2Q 1Q Somewhat not confident Not Confident Confidence in both the Global and US economies is dramatically lower than in the 1 st quarter. 54

55 Key Challenges Total Middle Market Highly/Very Challenging 2Q 1Q The cost of health care The cost of doing business Ability to maintain margins The uncertainty of how government actions will impact my business Ability to pass on increased commodity costs Ensuring compliance with regulation Ability to expand into new markets domestically 75 - Effectively managing through external change Ability to attract, train and retain talent Ability of your organization to innovate new products, services or processes Increased domestic competition Corporate tax issues Healthcare costs and other margin pressures are most challenging to MM Leaders. Regulation and uncertainty of government actions are also key issues. 55

56 Actions Likely with Additional $ - Total Middle Market 2Q Total 1Q Total Hold Cash Hold Cash Invest It Invest It Leaders are far more likely to hold an extra dollar as than in Q1. 56

57 The MMI Middle Market Indicator Goal: To provide an ongoing measure of the strength of the Middle Market that is predictive of growth, reliable in its reporting, and enhances NCMM s thought-leadership reputation 57

58 MMI Q1 = 5.2% MMI Q2 = 4.8% MMI: Predicted Revenue Growth for the next 12 months 58

59 The health of the Middle Market is vital to overall U.S. prosperity 59

60 National Center for the Middle Market Research & Influence Corporate Outreach & Growth Accelerator Student Learning & Experience Become the nation s thought leader in the Middle Market 60

61 Research Grants Middle Market Indicator Corporate Outreach White Paper Executive Education Growth Champion CEO Series Student Activities Middle Market Career Fair Fisher Invitational featuring a Middle Market Firm 61

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64 in collaboration with CIO Gallery September 12,