Learnings from 3 Challenging Years

Since opening our doors in October 2011, the National Center for the Middle Market has worked to establish the importance of the U.S. middle market. This group of 200,000 businesses spanning industries and geographies lies historically unnoticed between the country's largest household name conglomerates and the dynamic world of start-ups. Yet, if the middle market were its country, it would represent the world's fifth-largest economy. Day in and day out, U.S. middle market companies fuel the nation through outsized contributions to GDP and private sector job growth.

The tremendous challenges of the past three years underscore the importance of the middle market like never before. Between 2020 and 2022, the center had unique opportunities to explore the middle market under its most challenging conditions, gaining new perspective into this critical economic segment. During this time, we aggressively added to the world's largest collection of middle market research and insights, publishing nine new research reports, six new editions of the Middle Market Indicator, a four-part COVID-19 series, and 25 expert perspectives, in addition to participating in 55 outreach events and engaging 3,000 middle market leaders from around the country.We've culled our learnings from these projects and experiences into three top takeaways that illustrate why we will continue to stay centered on the Market that Moves America:

Insight 1: The Middle Market Is Even More Resilient than Imagined.

Without the resources of larger organizations or the established support systems that smaller businesses enjoy, middle market companies largely rely on their own ingenuity and resourcefulness to drive growth and solve challenges. With 39 years in business on average, middle market companies are, and always have been, resilient, navigating through both good and bad macroeconomic conditions with demonstrated success. Indeed, 12 years of center data illustrate that, regardless of the state of the economy, middle market companies consistently outpace the S&P 500 in both year-over-year revenue and employment growth.

Nevertheless, the events of the past several years—the pandemic, geopolitical issues, and decades-high inflation—put these companies to the ultimate test, serving up challenges one after the other. While the initial hit was significant, the center's real-time performance data and ongoing research during the time period prove the depths of the resourcefulness and staying power of these mid-sized businesses.

• As highlighted in the MMI and the center's four-part COVID-19 series:
  Middle market leaders began projecting a return to positive growth as early as Q4 2020.
• Recovery from the pandemic began in the middle market sooner than among the S&P 500.
• Middle market recovery accelerated faster and significantly outpaced that of larger businesses.
• Perhaps most notably, the historically high rates of year-over-year revenue and employment growth achieved in 2021 persisted throughout 2022. Growth rates among the S&P 500 were much more volatile during the same period.

In March 2021, Harvard Business Review published our article, "The Middle Market Is Stressed, But Resilient," to tell this story and highlight the center's findings and data.

Insight 2: Managing Growth in the Middle Market Is More Complex than Ever, and Middle Market Leaders Have an Escalated Need for Focused Support.

While growth and strong performance from middle market companies have been consistent without fail, it has not been without challenges. The center's extensive body of research illustrates that growth-related challenges and opportunities—including talent, digitalization, globalization, supply chain, and access to capital—are uniquely complex for mid-sized organizations compared to their larger or smaller counterparts. For example, when it comes to competing for talent, middle market organizations must overcome the lack of brand awareness, making their employee value proposition that much more important. Any investment in growth or digitization is more difficult for these companies too. Leaders must more carefully consider their limited resources in these decisions, and they have a greater need to ensure ROI.

Each of these challenges has become increasingly complicated over the past several years. In many cases, the middle market leaders addressing the issues have never managed through such complex circumstances before in their careers. Thus, they are looking for guidance and support. Our recent research shows that middle market executives turn to social media first for advice and best practices. However, their trusted advisors—lawyers, bankers, and accountants, to name a few—are a close second. Middle market companies are also actively learning from their industry peers.

In this environment, there is a clear need for the ecosystem that supports the middle market—advisors, partners, service providers, economic development organizations, policymakers, the media and thought leaders, business students, and academic researchers—to strengthen its focus on and understanding of these companies. The opportunity to tailor services and offerings to better meet the needs of this group of organizations has never been greater.

Insight 3: The U.S. Middle Market Is Garnering More Attention than Ever Before.

• Establishing the Congressional Caucus for Middle Market Growth in partnership with ACG Global.
• Offering the first middle market course at The Ohio State University.
• Facilitating a Middle Market White House Fly-In event.
• Establishing the Middle Market Association at The Ohio State University.
• Reaching 55 million listeners via two radio media tours in 2018.
• Launching the Market that Moves America podcast.
• Publishing research in numerous tier 1 publications, including media outlets in 49 states.

The momentum has been building, and in the past several years, we've seen interest in the middle market and the center's work surge among constituents of all kinds. Research organizations, chambers, and other economic development organizations, industry associations, and corporations that serve the middle market are increasingly subscribing to center insights and reaching out to learn more about how to shift focus to this critical market segment. Notably:

• In 2021, Harvard Business Review published two articles written by center leadership featuring our research and data.
• The center welcomed Visa as a new corporate sponsor, alongside Chubb Insurance, in 2021.
• Fifth Third Private Bank and Google Cloud became project sponsors in 2022, looking to better understand middle market companies' needs from a financial and digitalization perspective, respectively.
• In 2022, the center introduced annual renewable memberships to give more companies unique opportunities to play a hands-on role in the center's work and actively contribute to initiatives that support the middle market.

As more organizations take note of the middle market's resiliency and consistently steady growth rates, they are actively looking for ways to service the middle market as a means of fueling their own growth agendas. In a recent interview with our long-time partners at Visa Business Solutions, Leigh Radtke, Head of North America Product, and Rob Ritter, Senior Product Manager, shared this with us, "These companies are the economic driver of the U.S. economy, responsible for a third of U.S. private sector GDP. Yet, they are often underserved. The more we can understand about middle market companies—how they are growing, what business problems they are facing and where they are investing—the more we can dial in and refine our solutions to meet their needs with a strategy that's solely focused on the critical middle market segment."

Expect the Center to Stay Centered

As the middle market continues to receive increased attention, the center will keep its focus on research, outreach, and education as the best ways to support middle market companies, nurture their resiliency, and continue to grow awareness of the segment among all stakeholders. We invite organizations looking to learn more about the middle market and the center to download the Staying Centered 2020-2022 Impact Report for an in-depth look at the past three years' initiatives and to explore tailored membership and project sponsorship opportunities with the center.