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The Market That Moves America: Year-End Insights
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Join Doug Farren, Executive Director of the National Center for the Middle Market, as he reflects on the state of the U.S. middle market in 2025 and previews what’s ahead for 2026. This episode covers key economic trends, insights from the Center’s research, and a preview for the upcoming 15th year, including new reports, partnerships, and programs. Discover how middle market companies, and NCMM, are navigating challenges, embracing resilience, and preparing for the future.
For more about NCMM, please visit our website at: middlemarketcenter.org
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Transcript
Introduction and Overview
00:00:02
Speaker
Welcome to the Market that Moves America, a podcast from the National Center for the Middle Market. The center is the leading source of knowledge, leadership and innovative research on the middle market economy. Throughout our podcast, we will feature middle market leaders and stakeholders to hear their real world perspectives on trends and emerging issues.
00:00:24
Speaker
Welcome to the Market That Moves America. My name is Doug Farron, Executive Director of the National Center for the Middle Market, located at The Ohio State University Fisher College of Business.
00:00:35
Speaker
We're taking a little bit different of approach with this episode.
2025 Outlook for Middle Market
00:00:39
Speaker
In the Market That Moves America, we typically bring on all types of subject matter experts, ah middle market company leaders, advisors, anyone in this ecosystem who has a interest shared interest with the NCMM in middle market companies.
00:00:56
Speaker
But as we approach the end of the year, we want to take this time to really talk about 2025, what it has meant for mid market companies, some of the developments and things we've been able to accomplish at the center, and then take a look forward to 2026.
00:01:14
Speaker
and some of the things that we'll be doing and where we see some of the key themes and issues that will be affecting this important segment of the US economy.
NCMM's 15-Year Reflection
00:01:23
Speaker
So those are the three areas I'm going to cover. I'm going to start first with a recap of the middle market itself.
00:01:29
Speaker
So this is our 15th year at the NCMM. We were launched in fall of 2011. And when we get to the preview section, I'll talk a little bit about how we plan to celebrate that milestone next fall.
00:01:46
Speaker
But really, we came into this year seeing quite a bit of momentum and confidence across the middle market. The market itself had been on a hot streak.
00:01:59
Speaker
We're looking at three and a half, almost four years coming out of the pandemic of growth that averaged 12% across revenue and over 10% across employment.
00:02:11
Speaker
Very strong, consistent rates of growth.
Current Market Challenges
00:02:15
Speaker
um We also saw quite a bit of enthusiasm coming out of an election cycle, change in leadership in D.C.,
00:02:25
Speaker
brought with it lots of boosts to both local and national economic confidence. That being said, there were headwinds that existed. High interest rates, still burdensome inflation, high costs of doing business.
00:02:42
Speaker
All these play into the minds of middle market leaders when they're thinking about how to best grow their business and how to remain successful.
00:02:52
Speaker
Certainly with the new administration, there came policy decisions that we wanted to understand the implications to the middle market. And in the spring, we saw that there was primary impact to some of the trade decision making as well as supply chain implications that affect many companies in our country.
00:03:16
Speaker
And the middle market was no exception. At the mid-year, we experienced significant insights into the slowdown across the middle market where both revenue and hiring had decreased quite significantly, which then, of course, foreshadowed some of the economic data that was reported later in the summer and early into the fall.
00:03:41
Speaker
We're still not ready to quite proclaim our middle market indicator as a leading indicator of the U.S. economy, but in this instance, that was certainly the case. ah Middle market companies ah foreshadowed a lot of of that ah
00:04:00
Speaker
impact on these businesses.
Defensive Strategies by Leaders
00:04:04
Speaker
As a result, leaders told us that they were taking a much less aggressive and I would say somewhat defensive posture when thinking about their business.
00:04:13
Speaker
What we saw in addition to Lower hiring. ah We also saw things like less investment of capital. ah In our surveys, we we ask a question ah what companies would do with an additional dollar of revenue.
00:04:28
Speaker
And historically, that has been about 65% to 70% of companies telling us that they would reinvest that. in various areas of their company. It could be technology, it could be physical assets, it could be people or training or making an acquisition, all types of different possibilities.
00:04:47
Speaker
Well, that number ah flipped pretty significantly to where less than half of companies were thinking about that type of reinvestment of their capital.
Year-End Assessment and Resilience
00:04:58
Speaker
We are anxiously awaiting the availability of our year-end 2025 data. That'll be coming out in January at the end of the month when we publish our year-end 2025 report.
00:05:11
Speaker
And some of the things we're curious to see, does this sentiment remain the same? Are companies facing some of the same pressures around increased costs of doing business, some of the talent challenges that have resulted ah We could spend time talking about a lot of the business transition that will be taking place over the next year or two whether that's a founder owner that's getting ready to leave his or her business, a lot of consolidation and private equity and roll-up activity that's happening across the market. And just in general, are these companies feeling at all better than they did six months ago?
00:05:52
Speaker
And how are they going to approach the beginning of this year? There is one thing that we know over many years of looking at these businesses and, and in fact, personally, talking to companies as I travel the country at at different events and gatherings and learning really about how they think about their decision making.
00:06:14
Speaker
And we know that the middle market as a whole is a very, very resilient group of companies, partly due to its ah Diversity, almost like a stock portfolio, it's diverse across you know many different characteristics. You think about all the industries that make up the middle market. You think about the fact that they're in every community, every city, every state.
00:06:41
Speaker
They um employ literally yeah know millions of people across our country. And because most of them are privately held, well over 90% are private companies. They do tend to take the long view So some of the short-term economic shocks that we see in the broader economy may not have the same impact as it would for, certainly for larger companies who can weather those and typically have the type of resources and and perhaps capital reserve to weather the shocks.
00:07:13
Speaker
Small businesses are gonna be jostled a lot more in these instances as we saw during the pandemic. But for the middle market, it tends to take a much longer view And generally, we can confidently say that a lot of these leadership teams tend to think about doing what's right rather than what's convenient or expedient or certainly having, you know, to answer to um either Wall Street or, you know, someone else. So that'll be kind of the things that we're looking for.
00:07:42
Speaker
The next thing I wanted to talk about was just the center in 2025. As I mentioned, it's ah the start of our 15th year. We're very proud of that. We're still the only middle market research center of our kind in the US, which is based at an academic institution at the Fisher College of Business. And we partner very closely with private sector companies who support the middle market in helping advance this knowledge. And our mission has not changed.
00:08:11
Speaker
we create We exist to help middle market companies grow by creating valuable content, by developing supportive communities, and creating programs that can help these companies be more competitive.
00:08:27
Speaker
I think about some of the um other milestones that we have in addition to new leadership at Fisher College, which has been an exciting because of the re-emphasis on the value of corporate relationships.
00:08:42
Speaker
you know we're we are not immune or have not ignored the big changes that are happening across higher education. And being located in that space, ah we're we're fortunate to be at the forefront of a lot of that private sector partnership.
00:08:58
Speaker
And so it's continuing to drive those valuable insights and resources for the middle market that are going to continue to be our focus.
Collaborations and Publications
00:09:07
Speaker
We completed two middle market indicators. We're up to now 13 plus years of data. So we have most likely the longest, you the the biggest longitudinal set of data on the middle market in the country.
00:09:21
Speaker
We also did our second Canadian middle market report with support from our friends at Visa, where we collected data from 300 midsize companies in Canada ah in the summer,
00:09:36
Speaker
and basically explored a lot of the same issues around performance, growth, and sentiment, but also looking at specific themes such as talent, technology, um international trade, these types of issues.
00:09:50
Speaker
We also published in the fall a first-ever report from NCMM on private equity in the middle market. We collaborated with Future Standard in Philadelphia, Pennsylvania to collect data from middle market companies who had both – ah used PE and been involved with PE, wanting to know what that experience was like, the benefits that you received, maybe some of the drawbacks and challenges, as well as those who aren't using it and you know What are the reasons for that? Is it just not a right the good a good fit right now? Is it not needed?
00:10:22
Speaker
Are there you know other concerns? And so very interesting insights and takeaways on that for both the ah private equity and private credit domains.
00:10:34
Speaker
We launched a new content channel, which were case studies. you know For many years, we've known that middle market companies learn best from each other. We see that clearly in a lot of the ah gatherings that we attend and the events and the networking.
00:10:49
Speaker
Talking to a peer who's going through the same challenge or issue that you're facing as an owner or CEO can be hugely valuable. So in that spirit, we have launched a case study series where we interview founder, owner, CEOs, and we ask them about a certain challenge or opportunity that their business has faced.
00:11:10
Speaker
the approach that they took to that challenge, and then ultimately what were the results. And so we've we've got our fifth case in the pipeline right now. We're we're targeting six of these a year.
00:11:24
Speaker
We'll be looking at different size companies, different industries, different challenges, With the long-term vision of building a library of these things that can be used in many, many different ways, and we're already seeing significant consumption of that content because, again, it's it's a lot easier to get you know some key takeaways from reading about a company than reading you know about potentially just research data or things that have been collected in a survey.
00:11:51
Speaker
um We've participated in over 25 events this year ah in over a dozen markets across the country. Again, as the national center, we really pride ourselves in the relationships that we've built over time.
00:12:05
Speaker
And the fact that we get a chance to travel from coast to coast, meet a lot of these um communities you know where they're at in their backyard. And to the extent possible, we customize our presentations with data relevant for for those communities. So that has ah been ah a great success and will continue to be a significant part of our outreach and engagement strategy.
00:12:29
Speaker
We also had the great fortune of being featured in some significant media this year. We had placement, all organic, by the way. These were you know journalists writing about the middle market who reached out to us as the leading experts with pieces this year in the Wall Street Journal, in the New York Times, in Time Magazine,
00:12:51
Speaker
Our MMI press releases continue to be picked up by a number of different outlets ah to share the latest and greatest findings on the middle market. We also um wanted to welcome Wells Fargo.
00:13:05
Speaker
to our group of partners joining Chubb, the world's largest commercial insurance company, who has been with us for over seven years, as well as Visa, who we've been working with for the last four years. So Wells, um you know, definitely interested in that, being one of those trusted advisors who helped during the growth journey.
00:13:27
Speaker
They are working specifically with us on our middle market indicators, And are we are join we are really enjoying getting to know their teams and building some stronger relationships there.
00:13:38
Speaker
um The final thing I'll touch on, well, actually two things I'll touch on. One, we continue to support a training and education program here in the state of Ohio called the CEO ceo Forum, which was launched in spring of 2024 as a partnership between the Ohio Chamber of Commerce and the Fisher College of Business non-degree executive education team.
00:14:03
Speaker
with significant contribution and ah use of information out of the center. That has really been the differentiator for this program. And i want to send my appreciation to Steve Stivers, who's the CEO of the Ohio Chamber, for his vision and kind of bringing this to life with the idea that this program um continues to expand across the state. And I'll talk a bit in a minute about what that might mean even nationally.
00:14:32
Speaker
Finally, as I mentioned, with part of the change in the college leadership, we've all also had the chance to and engage a number of our faculty, whether it be as advisors on our research projects, as speakers at events, as guests on our podcasts, ah where we see opportunity of aligning specific expertise ah to the topics that we're looking at.
00:14:58
Speaker
It only makes our work stronger and and really adds to the body of knowledge. So I want to appreciate our faculty for being so supportive in the work that we're doing here at the center.
Future Plans for 2026
00:15:09
Speaker
The last thing I want to shift then and finish on is just as we look ahead to 2026, some of the things that and we have on our radar, areas that we're going to be focusing on. So we're going to continue to launch you know a number of different projects. We'll be doing our two middle market indicators, our January and July reports for 2026.
00:15:33
Speaker
We're also at the early stages of a project with CBiz looking at how middle market companies go about making decisions and trade-offs.
00:15:44
Speaker
Very excited about this. I think we're going to get some really interesting data ah because we know that in the face of limited resources and some significant constraints, That a lot of middle market companies may be forced to put priorities on the back burner to pursue, you know, some so significant strategic objectives.
00:16:03
Speaker
And, you know, what what does that mean for the business and what are some of those tradeoffs, how how that decision is actually achieved? um In order to mark our 15-year anniversary, we're also going to commission ah look back on where the middle market has been and how it has evolved over the last 15 years.
00:16:24
Speaker
There's been a number of, you know of course, milestones along the way. There have been you know historical and economic events that have affected these companies. But by and large, they've remained very steady growers,
00:16:36
Speaker
But we're sitting on a mound of data. We're we're going to crunch that. We're going to analyze it. We're going to look at you know some of the most significant factors and impacts across this time period. And we're very fortunate to have the opportunity to be able to do that given our ah our our database of information.
00:16:55
Speaker
We'll keep the case study series going. We're going to look to do six more cases. um Again, varying industries, locations, issues. um Really exciting for us. I love the opportunity for us to interview um you know people who are running these companies. Because again, i think where we get the most value is from hearing about the challenges and issues and While NCMM isn't necessarily designed to help solve the problems, we can certainly raise the issues and put them on the table for other middle market companies to think about and then turn to their trusted advisors and resources to solve problems.
00:17:33
Speaker
In terms of this podcast, we'll continue on. We're now well over 100 episodes of The Market That Moves America. I think that puts us in the you know top 1% or 2% of all podcasts, having that length of time going back to 2017.
00:17:50
Speaker
And our challenge is to continue to find really interesting guests. you know really thoughtful subject matter expertise. We want to blend in more company leaders as we're doing with the cases. We want to blend in advisors and yeah again, just people who have interesting information to share, ah things that can be helpful to the middle market. And you know that's how we're thinking about our content calendar for the year.
00:18:16
Speaker
ah Internally, we're going to be relaunching our web website. It's been well over a decade since we've done significant upgrades to that. And that's really all in the interest of the user experience.
00:18:29
Speaker
and We have you know a significant following. We've got about 40,000 people in our subscriber database. We get a lot of visitors to the website. We also know that AI is changing the way that information gets sourced and aggregated.
00:18:44
Speaker
So making our website you know more AI-promptable is certainly one of the goals. So something to be looking you know looking out for probably later in 2026. um We're also going to be thinking about other educational programs. I mentioned the CEO Forum.
00:19:01
Speaker
There's been interest in scaling that nationally. So going to other states and kind of using the model that the Ohio Chamber has developed and working with other you know state chambers and partners to bring this educational tool to middle market companies in different markets and states across the
Expansion and Engagement Initiatives
00:19:20
Speaker
country. So we are um you know talking about that process and are anxious to play a significant role in that. We're also thinking about doing you know some new programming potentially ah later in 2026 or even early 2027 and talking internally with with our partners across the college. We're talking with our corporate partners at Chubb, Wells Fargo, and Visa and really just collecting a lot of um feedback and insights right now about what could be things that are most valuable, again, to support the middle market.
00:19:57
Speaker
We're also going to be doing more market visits. You know, i mentioned our ability to travel coast to coast, present at different conferences, gatherings, you know, intimate dinners, lunch at like We love that opportunity. it you know It has a chance to get us out into the marketplace, ah really engage with middle market leaders.
00:20:19
Speaker
That in turn then gives us you know new things to think about and areas to focus. So there will be more of that to come in 2026. we gearing up. we are you know gearing up for what's going to be ah a very, very busy next year. We've got a very aggressive plan.
00:20:37
Speaker
I think we've got great partners in place. We have a great team in place.
Conclusion and Holiday Wishes
00:20:42
Speaker
I want to you know share our appreciation for our extended partners at RTI Research who collect our research data, Rattleback, our digital marketing agency here,
00:20:53
Speaker
the support of Fisher College of Business, all of our working teams at Chubb, Visa, and Wells Fargo, who we interact with frequently to help support this work. And we're just really excited about the year to come.
00:21:07
Speaker
I want to wish everybody a happy holidays and we'll look forward to talking to you early next year. Thanks and we'll see you soon.
00:21:15
Speaker
Thank you for listening to The Market That Moves America. Never miss a new episode by subscribing anywhere podcasts can be found. You can also subscribe to our email newsletter at middlemarketcenter.org.