Deloitte: Mid-Market Companies Resilient Despite Uncertainty
Mid-market companies show their resiliency in the face of continued uncertainty, according to the findings of a Deloitte-sponsored survey of 503 executives at mid-sized companies in the U.S. during September–October 2013. The fall 2013 “Mid-market Perspectives: Moving Ahead” report underscores mid-market companies’ strengthening fundamentals and points to significant improvements across financial metrics.
Sales at mid-market companies are trending higher, with 58% reporting higher revenues over the past 12 months, up from 44% in the spring 2013 survey. Profits are also up, with more firms reporting higher earnings (44% vs. 35%) and gross profit margins (40% vs. 30%). Almost one-half (49%) of mid-market companies say they have realized productivity increases in the past 12 months, compared to 38% in the spring. Finally, these companies continue to beef up coffers, with 41% reporting higher cash balances compared to 34% in the spring.
“The economy continues to operate with great levels of uncertainty and yet mid-market companies in general are performing well and their executives have an increasingly positive outlook. This is a true testament of this segment’s resilience,” said Tom McGee, deputy CEO, Deloitte and leader of Deloitte’s mid-market practice, Deloitte Growth Enterprise Services and Deloitte’s mergers & acquisitions services practice. “Our findings indicate that despite headwinds, mid-market companies are well poised to take advantage of a potential uptick in the economy.”
Despite the strong performance of mid-market companies, there are ongoing challenges that continue to be top of mind for executives both for their own businesses and the economy at large. Moreover, the majority of these challenges are coming from a common source: the federal government.
Specifically, mid-market executives pinpoint government budget challenges (62% vs. 69% in the spring), rising healthcare costs (59% vs. 60% in the spring), and high tax rates (42% vs. 53% in the spring) as the primary obstacles to their business prospects and to U.S. economic growth.
“Despite improvements in sentiments around budget challenges and tax rates, factors related to the government continue to be a main concern for the majority of mid-market executives,” said McGee. “Furthermore, it appears that mid-market executives link the threat of rising healthcare costs to the passage and implementation of the Affordable Care Act.”
For additional survey results click here.