Middle Market – Croixstone

The Sizzling Middle Market

Croixstone and the Middle Market. As a boutique management consulting and executive search firm, Croixstone serves a national portfolio of clients of all sizes. That said, Croixstone dedicates significant time and expertise in serving Middle Market clients.

What is the Middle Market? As defined by the experts at the National Center for the Middle Market (NCMM), the U.S. Middle Market is comprised of companies with annual revenues between $10 million and $1 billion. While the Middle Market represents 200,000 businesses (or 3% of all U.S.companies), it accounts for a whopping one-third of private sector GDP and jobs.

What’s happening in the Middle Market? As published in the NCMM’s “Year-End 2023 Middle Market Indicator Report”, the U.S. Middle Market is flourishing in the post-COVID era. The rate of year-over-year revenue growth in 2023 reached an all-time high (12.4%) with 55% of Middle Market companies reporting double-digit growth compared to 2022. The majority of Middle Market companies grew employment, however, the overall rate of year-over-year employment growth slowed.

What are the fastest-growing Middle Market companies doing to drive performance? According to the NCMM, the fast growers are expanding through innovation and entry into new markets. Additionally, they are actively investing in technology and people. These pacesetters tend to demonstrate a greater interest in digitization and AI. They also report a higher average increase in wages for their workforces compared to slower-growing companies.

Learn more. The NCMM provides knowledge, leadership, and innovative research on the U.S. Middle Market. Housed at The Ohio State University Fisher College of Business, NCMM is a collaboration between the University, Chubb, and Visa. Click here to learn more about the NCMM and to review the “Year-End 2023 Middle Market Indicator Report”.

The DNA of Middle Market Growth

“When the growth factors outside of a company’s control conspire against it, it becomes even more important for companies to invest in what they can control.”

– National Center for the Middle Market

A Look Back: 5 years ago, the National Center for the Middle Market (the USA’s leading research institution dedicated to understanding and providing resources to the Middle Market) conducted groundbreaking research to understand what drives growth in this important sector of the economy. This research is worth revisiting given the conflicting economic data and reports that are currently challenging c-suite leaders and private equity firms operating in the middle market.

Insights from 20,000 Companies: The Center analyzed hundreds of data points from 20,000 middle market companies and uncovered seven areas of leadership and managerial-controlled actions that drive growth for companies, regardless of the industry in which they operate.

The research findings showed that the better a company performs across all seven growth pillars, the faster it grows. Middle market companies that achieve breakthrough gains tend to be adept in all seven areas, just as the members of a high-performing team inspire one another.

Seven Growth Drivers: The seven most important growth drivers and their weight in the growth model include:

• Market Expansion (23.4%)
• Formal Growth Strategy (14.4%)
• Investing & Innovating (14.3%)
• Attracting & Retaining Talent (13.7%)
• Financial Management (12.3%)
• Cost Efficiencies (11.2%)
• Staff Development (10.6%)

Learn More: The Center found that the growth DNA of middle market companies is distinctly different from that of larger companies. Learn more about these differences, and the seven growth drivers in the middle market by clicking here.

The Charlotte Business Journal Interviews Croixstone’s CEO

To many outside the industry, terms such as “consulting” and “transformation” can be vague. Croixstone Consulting’s CEO Patti Weber is known for her pragmatic approach in helping others to understand the firm’s business model.

Laura Williams-Tracy (Contributing Writer) of the Charlotte Business Journal recently interviewed Patti to learn how Croixstone fills a niche for middle market companies across the USA.

Read (or listen to) the December 2022 interview here.

Croixstone Recommends: 2Q 2021 Middle Market Indicator Overview Webinar

When we are seeking information on the Middle Market, one of our first “go to” places is the National Center for the Middle Market (NCMM). This organization is a collaboration between The Ohio State University Fisher College of Business and Chubb, and is a leading source of knowledge, leadership, and innovative research on the middle market economy.

Every quarter the NCMM publishes the Middle Market Indicator (MMI) that provides valuable insights into 5 KPIs including: 1) Revenue, 2) Employment, 3) Economic Confidence, 4) Capital Investment, and 5) Expansion. NCMM recently published the MMI for Q2 2021, and we invite you to join us for an exclusive webinar being held Wednesday, August 11 at 1PM EDT where NCMM’s Managing Director, Doug Farren, will be detailing the results of the latest MMI.

We’re Serving Up Consulting BUZZ!

Our leaders at Croixstone spend time each week speaking at length with clients, prospects and consultants across the greater Charlotte region and beyond. We’re often asked the following questions by those in our professional networks.

What’s the buzz out there?
What is top of mind for companies in 2021?
What are you hearing from consultants?

Here’s a bulleted list, in no particular order, of the things we are hearing and seeing from clients, prospects and consultants.

Hiring is difficult. The economy is rebounding, hiring is up, and it is increasingly difficult to fill roles with top-tier talent. The latest Workforce Report from LinkedIn provides insights into the hiring boom.

IPOs are booming. Global IPO deal numbers and proceeds have posted the best performance witnessed in 20 years (and this is driving demand in management consulting). Read EY’s IPO Q1 2021 Report to learn more.

SPACs are hot, hot, hot. Special purpose acquisition company (SPAC) IPOs were more active in Q1 2021 than through all of 2020.

M&A activity is on fire. During the first quarter of 2021, global mergers and acquisitions activity totaled $1.3 trillion, up 94% compared to Q1 of last year.

ERP implementation activity is robust. Many of our clients are planning ERP implementations to go live in 2022. The global ERP software market size stood at USD 38.15 billion in 2018 and is projected to reach USD 71.63 billion by 2026, exhibiting a CAGR of 8.55.

Hackers are targeting the middle market. One-third of middle market organizations reported ransomware attacks in 2020, according to a recent cybersecurity special report from RSM.

COVID-19 trauma is an ongoing issue. Employers are dealing with employee pandemic stress that is inevitably spilling over into at-work life.

Insights into the Middle Market

Croixstone is laser focused on providing expertise to serve the middle market, defined as those companies with annual revenues between $10 million and $1 billion. T he National Center for the Middle Market recently published new data and insights on this important sector of the economy that we found interesting.

While representing barely 3% of all U.S. businesses, the middle market is responsible for 1/3 of private sector GDP and employment.

If the U.S. middle market were its own country, it would be the fifth-largest economy in the world.

During the pre-pandemic era from 2012-2019, average revenue growth for midsize companies was 6.5% and average employment growth was 4.3%.

A Q4 2020 middle market survey showed that average revenue declined by 1.2% and employment dropped by 2.2% over the prior 12 months.

While the pandemic negatively impacted the middle market, the sector overall performed better than small businesses and large corporations.

Middle market companies are typically very resilient, however, the ongoing pandemic presents a serious challenge on how to maintain customer engagement and connectivity.

Learn more here.

Fresh Links – August 19th

A curated list of business, career and community links.

Charlotte’s Latest Growth Report: Q2 2020 was a tough one.

China Takes Over: The USA is no longer #1 on the Fortune 500 List.

Domtar is Cutting Jobs: An estimated 780 employees.

3D Systems is Cutting Jobs, Too: 20% of its workforce.

How’s the Middle Market Performing?: National Center for the Middle Market’s latest presentation.

What’s on the Mind of the Middle Market CEO?

Croixstone Consulting places a heavy focus on serving the middle market. The middle market represents nearly 20,000 companies across the USA that generate approximately $10 trillion of the $30 trillion of annual gross receipts in the country. Middle market CEOs recently gathered at the annual “CEO Connection Mid-Market Convention” at Wharton to discuss critical mid-market issues and challenges. Read this article from Forbes to understand what’s on the mind of today’s middle market CEOs.