Greater Cleveland Middle-Market Forum July 24, 2012 in collaboration with 1
Engine of Economy Sustainable Job Growers Community Pillars Middle Market Indicator Conclusions Growth Champions Challenges Resilient and Diverse 2
Small Businesses? Large Corporations 3
Foundational, multi-sourced research 4
Database Sources 5
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
Small Businesses? Large Corporations 7
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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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
The Middle Market is resilient. In the face of extraordinary economic challenges and the recent recession, Middle Market businesses survived and grew. 11
82% Survivorship rate Unprecedented credit crisis Severe economic downturn Sharply increasing commodity costs Sweeping regulatory changes 12
Survivorship Rate by Business Sector 97% 82% 57% Big Business Middle Market Small Business 13
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Community Pillars Middle Market firms are foundations of their communities, providing sustainable jobs and more 15
In business more than 20 years 71% 70% 16% Big Business Middle Market Small Business 16
The Middle Market is diverse in revenue, geography, industry and structure 17
$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% 18
Geography 19
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Geography Industry 21
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Middle Market Growth Champions A unique subset we can learn from 25
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Middle Market Growth Champions Distinguishing Characteristics Sharper customer focus 28
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Middle Market Growth Champions Distinguishing Characteristics Broader geographic vision 30
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Middle Market Growth Champions Distinguishing Characteristics Invest in innovation 32
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Middle Market Growth Champions Distinguishing Characteristics Strong management culture 34
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Middle Market Growth Champions Distinguishing Characteristics Superior talent management 36
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The Middle Market continues to be an engine of growth and job creation. 38
But going forward, there are headwinds 39
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. 40
Key Challenges Total Middle Market Highly/Very Challenging 2Q 1Q The cost of health care 90 92 The cost of doing business 89 88 Ability to maintain margins 85 86 The uncertainty of how government actions will impact my business 85 81 Ability to pass on increased commodity costs 79 75 Ensuring compliance with regulation 75 69 Ability to expand into new markets domestically 75 - Effectively managing through external change 73 76 Ability to attract, train and retain talent 70 77 Ability of your organization to innovate new products, services or processes 67 76 Increased domestic competition 66 68 Corporate tax issues 65 59 Healthcare costs and other margin pressures are most challenging to MM Leaders. Regulation and uncertainty of government actions are also key issues. 41
The health of the Middle Market is vital to overall U.S. prosperity 42
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 43
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www.middlemarketcenter.org 45
Greater Cleveland Middle-Market Forum July 24, 2012 in collaboration with 46