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Scaling Smart: How Emerging Middle Market Firms Turn Uncertainty into Growth
177 Plays7 days ago
This episode spotlights lower/emerging middle market companies—fast‑scaling businesses tackling “big‑company” challenges with limited resources—through a candid conversation on working capital, digitization and AI, supply chains, risk, and resilience.
Edward Galvin of Visa and Rob Poliseno of Chubb share practical takeaways for 2026, from building clear digital innovation and cybersecurity plans to succession readiness amid generational ownership shifts, plus how to leverage trusted advisors to translate today’s volatility into tomorrow’s momentum
To read Visa's Emerging Middle Market report, visit this link
To explore Chubb's Middle Market Insights, visit this link
Middlemarketcenter.org
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Transcript
Introduction to the Emerging Middle Market
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 Kim Barnhart from the National Center for the Middle Market at The Ohio State University Fisher College of Business.
Guests Introduction: Edward Galvin and Rob Poliseno
00:00:33
Speaker
Today we're spotlighting the lower or emerging middle market.
00:00:37
Speaker
Firms that are scaling quickly, professionalizing systems and making pivotal decisions about technology, operations and risk. Joining me are two leaders from NCMM sponsor organizations that work closely with this segment.
00:00:51
Speaker
Edward Galvin of Visa and Rob Poliseno Chubb. We'll talk about what they're seeing on the front lines, access to working capital, digitization, supply chain and risk management.
00:01:02
Speaker
and how companies can translate today's uncertainty into tomorrow's growth. Edward, Rob, thanks for being here. Thanks for having us. Thank you. Rob, let's start with you. Could you share a little bit about your background and expertise, particularly on the middle market?
00:01:19
Speaker
Sure. Again, thanks for having me. oh I am currently division president of our North America small and lower middle market division for Chubb. And in this relatively newly defined segment, which we rolled out spring of last year, I am responsible for the strategic alignment of this segment.
00:01:41
Speaker
ah It really combines small business, lower middle market, and our core middle market under one tower. And we believe that this structure better serves our customers in this segment.
Defining the Emerging Middle Market
00:01:53
Speaker
I'm based in Philadelphia. I have close to 30 years of experience in the insurance industry and currently responsible for pricing products, portfolio management, underwriting, pretty much the whole ah kit and caboodle of this segment.
00:02:07
Speaker
So glad to be glad to be here with you. What a veteran to the industry. Thanks for being here. Edward, would love to hear a little bit about your your expertise and background. Thank you, kem and thank you to the National Center for the Middle Market for doing a phenomenal job in amplifying the the emerging middle market that we're going to talk about today. So thank you for having me on. Yes, Edward Galvin. I live in Chicago. i've been with Visa for 15 years.
00:02:33
Speaker
I lead our North America Visa Commercial Solutions Organization. So effectively, that's business lines that serve payment products to large market corporations, middle market corporations, and small business corporations. Right, so fault the full full spectrum.
00:02:49
Speaker
And um yeah, this is a very exciting segment for us from a growth point of view. So happy to talk to you you and Rob today on topic. Both incredible leaders and experts in your respective fields and and very excited to dive in here. um But let's take a step back and and work ah like better understand the definition of the lower or emerging middle market. We all have different ah viewpoints, particularly on revenue. um But you know from NCMM's perspective, it's it's less about that revenue definition, which we use a $10 million to $50 million range, And it's more about the ah characteristics, the challenges, opportunities, and shared issues that these companies face.
00:03:32
Speaker
and And, you know, it's also important to note that this is the largest segment of the middle market, accounting for roughly 80% of all the businesses in that $10 million to $1 billion dollars range that and NCMM uses to define the middle market.
00:03:45
Speaker
So I'm going to have both of you answer this, but we're going to go ahead and start with um Edward on how a Visa defines the emerging middle market, ah both in revenue size, but then also in characteristics.
Economic Impact and Growth of the Middle Market
00:03:59
Speaker
Yeah, thank you. um so I think you your your classification was, i think, 10 million to a billion. um wait i would look at the emerging middle market just from a revenue size of 10 to maybe 50, that segment, if you will. um But like but it it varies, right? And a lot of the partners we work with to define it very, very differently. Net-net, it's a massive segment, right? And we look at if when you look at it, there's about 160,000 companies in this, what we classify the EMM segment. and that are driving trillions in in revenue today, somewhere in the region of two to three trillion in revenue. So it's phenomenally large. Like as a group, you know, they compare it top 10 GDP countries like Brazil, Italy, or Canada. So so in essence, they they kind of keep, they're the backbone of what's keeping America moving today. So so a very important segment.
00:04:50
Speaker
We look at it, um we we look at companies that are in the lower middle market and moving into core middle and and then and then there's emerging middle as well. So so there's some of the, um I guess some of the ways we would look at it and There's high revenue growth, right? You know, typically they're,
00:05:07
Speaker
9 to 11 percent revenue growth year over year. So they they have a large employment growth as well, 8 to 10, which are in some respects and higher than than what we see across other industry segments or sectors as well. So that's an initial perspective, Kim.
00:05:22
Speaker
Thank you so much. Rob? Yeah, so so some similarities and some differences from what Ed just described. But at Chubb, we define the middle market as as companies generating between $30 million and $1 billion in annual revenue. So kind of close.
00:05:36
Speaker
And within that range, we define the lower middle market or the emerging middle market as $30 million to $75 million. So it's it's the lower end tranche of of the overall middle market segment.
00:05:48
Speaker
And it it is the the the small and lower middle market segment for Chubb is a extremely attractive segment ah simply because it's a vital engine of economic growth, job creation and local development, local business development ah for the business community.
00:06:11
Speaker
ah An incredibly resilient sector of the economy.
Challenges Faced by the Middle Market
00:06:15
Speaker
We're going to talk about that a little bit. And these companies are nimble. ah They adapt quickly. They adapt to changing risk environments. They drive innovation ah and and they respond quickly.
00:06:27
Speaker
quicker to customer needs in their local markets. um So providing growth opportunities as well as expansion. So historically, their strong performance, their resiliency underscores kind of their essential role they play in the economy and hence it being a very attractive segment for Chubb to participate in and to serve.
00:06:48
Speaker
ah you know Ed touched on this a little bit, but from an economic growth perspective, like revenue growth generally outpaces the S&P 500 in 2025 alone. 53% of lower middle market companies saw past year revenues growth exceed 10%.
00:07:05
Speaker
um So that's a pretty interesting statistic and and one that we we are encouraged by. ah and finally, from an innovation perspective,
00:07:16
Speaker
lower middle market firms are frequently sources of new products, right? ah So it's part of their DNA and, and very attractive to private equity as well. Oh, that's just a point, but just one more point in ah lower middle market companies are typically community-based. They, they, they serve the neighborhoods that they, that that they're in. So, you know,
00:07:44
Speaker
Supporting regional economies and community development is critical, and it's very much part of what Chubb supports as well. So just one other fine point before I include that part of it and charles just Yeah, yeah it's it's a great point. And it's kind of going to what I wanted to weigh in on. And that is, like we're we're looking at what this size is, but different part we've seen different partners. Firstly, there's the middle market.
00:08:07
Speaker
And we've seen our our partners that we work with define what that looks like. And then taking a really hard look at well what is the emerging middle market versus core versus the top end of the middle market. And And that that is different for different constituents, depending on where they operate, size of their existing business and the kind of their industries they're in today. So and there can be variations across the the scale ah on on size. But um I think metrics and characteristics are pretty common across across all this segment.
00:08:36
Speaker
Absolutely. And and you kind of we kind of already segued into that next question about, you know, why does this segment matter to the community? but And I think you guys largely answered that. But from the NCMM perspective, we understand through nearly 15 years of research that the middle market is the backbone of the economy. um You know, it's a third of U.S. sector GDP and employment. um They are high growers, as you said. They're innovative. They're constantly exploring new
Workforce Dynamics and Hiring Trends
00:09:04
Speaker
products and services. And And that is such a um you know a key attractor, I would imagine, for for companies looking to partner with the with the segment. But ah you know Rob, i'll I'll have you start with this one. Any other perspectives on on from Chubb's perspective on why this segment is so critical to to you or to your industry?
00:09:26
Speaker
Well, I guess it goes to kind of a risk mitigation point of view as well. ah You know, look larger companies have a bigger balance sheet to potentially tolerate ah large losses and and larger events. So our ability to serve the emerging and lower middle market from ah from a risk management perspective and and help educate companies The market on emerging risks, many of which we'll talk about around technology and supply chain, ah is critical. So our ability to serve that market ah growing and and and massive in scale is is very attractive. Absolutely. Edward, any anything else you'd like to add?
00:10:10
Speaker
Yeah. and Look, I'm i'm in the in the payments business, and I would say that this segment has really ignited a demand for the next generation of digital solutions and and be in the B2B ecosystem. Unlike there's consumer constituents, like we all are when we when we when we operate with our payment modes every day, but then there's the business, the business side. And this segment in particular, they're so close to consumer and they're so close to what you and I experience on a day-to-day basis when we when we go to transact at McDonald's or at Starbucks or whatever, and that they you know where they're they're fueling, if you will, the segment like is fueling what the next generation of digital solutions gonna look like. And we're very excited about that.
00:10:53
Speaker
you're You're already teasing out one of my questions on on silver tsunami and generational transfer. So like thanks for that tease there. um But, you know, as before we get into those the 2025 trends that we saw, ah you know, something that NCMM says often is the emerging middle market has big company problems, but small company resources. They're oftentimes tough to reach. They have competing priorities and limited resources. And so from, you know, from your perspective, what do you see as the, as the largest challenges and then subsequently the the biggest opportunities for this segment?
Importance of Technology and Cybersecurity Investments
00:11:29
Speaker
And I'll have, um I'll have Edward go ahead and start with that one. um Okay. So just to back up the, the opportunities. yeah um All right. and I guess so,
00:11:42
Speaker
like Let's just look at the segment in a itself, first and foremost, right? And what's the shift that's happening in there, right? And I'm going to quote a Wall Street Journal. It basically said approximately 4 million people turned 65 in 2024, right? so there's a massive generational shift happening, okay? And this will continue through... 2027, 2028, with baby boomers reaching 65 by 2030. So you have, so but in essence, the the demographic, the core demographic in this segment is going to fundamentally shift and change. right and so that's number one. Number two, i think the um one of the key findings from your with the prior study, which Visa sponsored, was there'll be 30% of companies are anticipating changing ownership in the next 24 months.
00:12:26
Speaker
So when you, and that's up 2x from the prior year, right? So just taking those two stats in particular, like there's a massive shift going on in this industry and that's going to touch every part of how these companies, how they run, how they how they're going to be. how they finance, how the products and services they bring to market, how they leverage technology, how they pay for goods and services. And again, it kind of ties back to my prior point. These individuals that are owning, running, and managing these companies are going to be from their millennial and Gen Z, right? So they're much closer to let's say to what some of the consumer requirements be today in that space. And they will expect that of the providers and the service providers
00:13:21
Speaker
that are working alongside, that are providing services to these these companies and individuals. Okay, so so i I think that answers your question, but I just grounded in the the massive, let's say demographic shift that's happening around and in the segment real time today that any provider or any service provider that's that's showing up and working with these companies needs needs to be very mindful of in in whatever, let's say industry they may be operating in.
00:13:49
Speaker
That's a really great way to ground ourselves um as we close out, as we define this this segment. Rob, any anything else you'd like to add there? Yeah, so so in addition to some of the demographic kind of themes that Ed just highlighted, maybe some more macro themes that that came out, ah you know, leaders of lower middle market companies are are steering through a a complex landscape, a complex risk landscape.
00:14:18
Speaker
there's There's global issues, global interconnections they have to contend with. Obviously, new technology ah creating both opportunities and and significant threats. So so that that's that's huge.
00:14:31
Speaker
um you know Executives at lower middle market companies are feeling the uncertainty of today's environment. The survey made it clear. that they realize supply chain disruptions triggered by number things, climate events, economic volatility, geopolitical instability. ah You hear that every day. Even shocks to secondary suppliers ah can quickly cascade and jeopardize operations. so So no lower middle market, no lower middle market companies immune to that.
00:15:02
Speaker
At the same time, Leaders view technology as both a competitive necessity and potentially risk and a source of concern. So advancing AI and other technologies hold great promise, but also ah significant risk.
00:15:18
Speaker
Absolutely. Absolutely. You know, want to keep going on what you just said about the challenges and risks and kind of as we recap 2025 and we start dive into the trend specifically we're going to talk about today. Rob, want to start with you. You know, we're going kind of transition a little bit and talk specifically about workforce dynamics and talent acquisition and As we saw from the mid-year MMI wave, we saw a significant decrease from just a little over 10% the year-end 2024 down mid-7% by June 2025. But interestingly, didn't see that there workforce reductions, according to our data, and
00:15:57
Speaker
but interestingly we didn't see that there was rip workforce reductions according to our data and um optimistically that we started to see the gap, ah the skills gap in particular, improve. So as you think about this segment and how the 2025 year unfolded, um how are you, ah how are these emerging middle market companies responding to this ever-evolving workforce from your perspective at Chubb?
00:16:25
Speaker
I think yeah yeah you probably have to look at it relative to kind of to companies and and commerce across the the spectrum. So, you know, what we found is that, not what we found, but what the survey found was that lower middle market companies, albeit kind of hiring is slowing down, ah it is the workforce is still increasing substantially faster than both small businesses and larger corporations. And this is supported by ah ADP figures who's who's in this space.
00:17:00
Speaker
ah These companies employ millions of people and are often nimbler in hiring and adapting to market needs in large corporations. So I'll be at a lot of economic volatility, a lot of concern around kind of future economic forecasts. But I would argue that there's still stable kind of hiring practices across the lower middle market relative to the overall environment they operate in.
00:17:25
Speaker
Absolutely. You made a great point. We we can sit we continue to see the middle market outperform the ADP employment numbers and the S&P 500, as Edward must mentioned earlier. um ed Edward, any before we move on to that next perspective, any any color you'd like to add to this?
00:17:42
Speaker
to well I kind of look at, to Rob's point, like investment. like and You know, what we've seen, just what we see across the industry in general is a lot of investment going into technology and IT.
00:17:54
Speaker
Right. um Which I think that that the the the r ROI on that investment will will take some time. Right. But on some scenarios, it's taken away from investment into into personnel. but But like, again, I anchor back in the data in the in the last and ah study we did. You know, the the when you look at the investment allocations of companies in this segment, like 24 percent was in IT, but 14 to 15 percent wasn't wasn the personnel and people.
00:18:21
Speaker
it's still important. right But I think the um what what was with an interesting stat from that study was 20% was in training and development. right so they And I think you've got to think through the the shift that's going on as well. Like these companies, they're moving to a more of a digital and environment in how they operate, and they they need to bring the personnel along the way on that journey with them as well and train them accordingly. So IT investment happening, people investment happening, and then training and development to to get the people to... um to leverage the technology in the best way they can to make to be successful.
Demographic Shifts and M&A Impact
00:18:56
Speaker
That's absolutely a great point. and that actually brings me to my next question. um you know There are endless opportunities for innovation and in technology and digitization um and also new technologies to begin adopting and considering.
00:19:10
Speaker
For these lower middle market companies that are scaling at these really ah incredible speeds, um how do what do you see as most critical for that for those and investment tracks, particularly as it relates to technology and and digitization?
00:19:23
Speaker
Edward? Yeah. um like So that way we're grounded in the fact that they're all about digital and they're investing in digital and they're all into that. But I think that's AI on a ai and automation. like that's like That's here, right? We're in that environment right now. and Modernization. But I think um these companies, and i again, I anchor back to the to the one of the last findings was, you know, 43% of the emerging market companies do not have a clear digital innovation plan.
00:19:54
Speaker
right So while they may be investing and and wanting the latest technologies and digital tools, and you know like there's an opportunity for those partners that operate around the companies in this segment to help these business leaders plan on how best to leverage technology right and get the best or ROI from the technology investments that they're that they're they're working through. i think the other thing we need to be mindful of is cybersecurity as well, right and investment cybersecurity, making sure that that's all and That's all buttoned down. But um yeah, I would say intelligence tools, CRM software and accounting software probably the top three areas where where a lot of that investment is actually going from an IT perspective. and But again, like I call out that you know we also need to help these middle market emerging EMM company owners kind of get to the ah r ROI and the technology that's invested. okay Because they're too busy running their business, basically.
00:20:53
Speaker
Absolutely. absolutely yeah said the magic oh He said the magic word, cybersecurity. So I definitely want to take on that. Yeah, absolutely. It's it's a major area for us. ah we've We've been in the cyber liability market for over two decades.
00:21:09
Speaker
And and when when you talk about technology, i mean, leaders in the middle market space you know view this sector technology both as a competitive necessity ah as well as a source of concern. So just ah the simple kind of umbrella of AI, you hear AI referenced constantly today, holds great promise, but also a lot of risk for operational efficiencies, improving customer experiences, reducing operational costs.
00:21:39
Speaker
um And in our survey, just 56% of lower middle market companies reported that they are ah prepared for potential cyber attacks or risks associated with the greater use of technology. And of those surveyed, less than 44% carry cyber insurance.
00:22:01
Speaker
So to Ed's point, having a plan, like whether it be kind of offsetting or mitigating cyber risks, it's critically important to have a plan oh before obviously the inevitable can happen.
00:22:18
Speaker
So that's it that actually brings me to a question um on that, digital innovation plans. um how like what What kind of advice would you guys give to a lower middle market company that might be hearing this terminology for the first time? like how do you How do you start that? Do you approach your do you approach approach your banker? Do you approach your insurance agent? do you like how do you How do you begin that?
00:22:41
Speaker
Yeah, I would encourage encourage them to seek out advice and consultation and leverage subject matter expertise from a risk management perspective. Absolutely consult your insurance agent or broker to advise kind of whether it's risk mitigation and controls that you can implement in terms of employee trading and employee behavior.
00:23:06
Speaker
ah whether it be clean desk policies or how to manage sensitive information or to accessing kind of offsetting risk associated with technology and cyber to third parties and buying insurance to offset that. So absolutely seek advice um versus kind of go it alone.
00:23:26
Speaker
But that would be my number one recommendation. Totally with you. I think the onus is on, Rob, the onus is on the the existing service providers to be that one-stop shop for the emerging middle market company owner, right? And and what we see today is like, you know, like and service providers to this segment are, they may provide insurance, financial services, technology, digital solutions, like, so you know, they may provide a wide swat of services to help that that company. But I'm totally with you. I think they need the, it's,
00:23:58
Speaker
It goes back to the existing service providers. Who has that expertise? So I'm hearing, going back to an acronym that we've used off and on, is BAIL or BAIL, Banker. ah accountant, insurance agent, and lawyer as their key advisors in and executing any plans and kind of making sure that all of their bases are covered when when um exploring new digital innovation. ah Thank you to both of you for those insights. that's Those are really incredible insights there. um
00:24:29
Speaker
I want to transition a little bit to another trend that we saw in 2025 and are going to continue to see for several years ahead business owner transitions and succession planning.
Future Trends and Predictions for 2025 and Beyond
00:24:39
Speaker
Edward, you had mentioned from our emerging middle market report that we did together that we expect that boomers will all be 65 or older by 2030 with 30% changing ownership.
00:24:53
Speaker
You know, that is such an incredible ah volume of M&A and a in succession planning occurring. And just really would love your take on that from from Visa's perspective, who's seeing this happen and play out in real time.
00:25:07
Speaker
Yeah, um I think it just goes back to what we just discussed. These are new leaders, right? The newer leaders, if you will, right? They're millennial Gen Z leaders in a lot of scenarios who who drive a new way of a drug who kind of bring new thinking into how they want to operate a business, right? and A lot of that is technology and digitally driven, right? so So that therein lies a whole set of incremental requirements that all the service providers around that and that business need to, and and how they show up, right? And um I think these these, this demographic are looking for less solutions rather than more, and it needs to be a digital delivery and be quick and easy to use and simple, keep it simple, right? I think as i as I, you know, like we what we do
00:25:57
Speaker
achieve and deliver in our commercial solutions services that we use just simplicity. Simplicity is the simplicity of use. um And um I think that's that's kind of what these these these owners are looking for into the future as well.
00:26:11
Speaker
Thank you. As a millennial, I can attest to needing to have streamlined technology. um So, yeah, so you're speaking you're speaking my language right there. um ah Rob, any other insights on that perspective? um
00:26:28
Speaker
No, I'm going to let it stand. and covered it. ah Perfect, perfect. Shifting gears, ah you know, once more, one other big trend we saw in 2025 was this consistent discussion on resilience. um You know, we've we've talked about cybersecurity. We've talked about regulatory compliance and supply chain throughout this conversation. But Rob, would really love your perspective um on how these the top three greatest risks that were indicated in the June wave supply chain, regulatory compliance, and cybersecurity kind of played out through the through the rest of 2025 and and you what what you guys are seeing at Chubb?
00:27:05
Speaker
Yeah, so so it's a big area for us. So I have a perspective, so so bear with me. Compared to broader middle the broader middle market, fewer lower middle market companies are well-prepared for a wide range of disruptions. We've kind of alluded to that already.
00:27:22
Speaker
Many are in early stages of building resiliency. ah Based on our on the survey, only 6% engage in resilience building services. twenty Only 29% work with a third party on business continuity planning. And just 27% consider contingent business interruption coverage or CBI coverage. right So those are fairly low low numbers there.
00:27:45
Speaker
Preparedness is further challenged by the need to balance risks related to data security, privacy technology, and other costs. Only 56% of lower middle market companies report being very or extremely prepared for cyber attacks.
00:27:59
Speaker
And like I said before, less than half carry, only 44% less than half carry cyber insurance. So as companies increasingly turn to artificial intelligence, ah they anticipate several key benefits, including improved operational efficiencies, like I said, ah but at the same time incur greater, greater risk.
00:28:19
Speaker
um Despite all this, right greater preparedness is still within reach for this sector of the economy. Lower middle market companies have a key advantage. And I referenced it earlier, it's agility, right? More than half, 58% actually of leaders in this segment say they are very or extremely resilient, reliant on brokers to help manage risks, um relationships that can unlock robust resources.
00:28:44
Speaker
ah So it's good to hear that more than half of the leaders in this space are consulting their subject matter experts, but there's there's more to do there. So maybe some suggestions to advance their resilience.
00:28:58
Speaker
Three actions stand out. So one is invest in business continuity planning, the edge point area plan ahead. A comprehensive business continuity plan prepares organizations for disruptions such as cyber attacks, natural disasters, supply failures. supply failures ah This process involves mapping out mission critical processes, identifying potential vulnerabilities and developing recovery strategies.
00:29:25
Speaker
in advance of anything actually happening. So being prepared and having a plan. um It should be collaborative enterprise-wide with insurance carriers playing key role in uncovering blind spots or strengthening preparedness.
00:29:37
Speaker
The second is assess business interruption insurance. So You manage it and then you can offset it. So companies should work closely with their brokers to evaluate their coverage for potential disruptions.
00:29:50
Speaker
ah Standard business interruption coverage is typically included in commercial property policies. More complex risks may require adjusted limits or additional options like CBI insurance for comprehensive protection.
00:30:03
Speaker
And lastly, kind of alluded to this several times, but elevate your cyber readiness. Every company is interconnected. like There is a cyber exposure regardless of what industry sector you're in.
00:30:16
Speaker
So as a business becomes increasingly digital, cyber resilience is essential. ah Cyber insurance not only protects a company's reputation and finances, but also provides access to critical services such as vulnerability assessments, defense enhancements, and incident response.
00:30:33
Speaker
So the insurance provides product can help both pre-breach as well as post-breach or pre-attack, post-attack. ah So while the challenges facing lower middle market companies can seem daunting, and they do to me just by by talking through them, they are surmountable.
00:30:52
Speaker
So by partnering with brokers and insurers and attorneys and accountants and and bankers. I may have gotten the acronym wrong there. Leaders can gain clarity, access tailored solutions, and and significantly reduce kind of the impact of disruptions.
00:31:08
Speaker
Again, enhancing their readiness. Thank you. That was, um i wasn't know wow. That was, yeah. I mean, it was it was great. It was great. It was very thorough and I appreciated, you know, you kind of started to transition into the next section, which you guys could have just done this without me. I don't think you needed, i don't think I needed to be in here. um But the 20, look ahead to 2026. I know one thing that you talked about, ah ah rob was, you know, needing to elevate your cyber readiness, needing to um be ready for business continuity, planning, resilience building. um These are as an ever global ah world as as companies become more and more global and and digitization and technology become more and more prevalent and in small business and in lower middle market.
00:31:55
Speaker
Needing to continue to build that re resilience is really was really key along with those digital innovation plans that we talked about earlier. um Edward, ah since we kind of heard a little bit of you know recommendations and predictions for 26 from Rob, would love to hear from you what you might see um happen and play out in 26. Okay. um So let me give an economic view first. And um we we at Visa, we produce a a GDP growth metric. And and we had some view back in this week actually on how quarter four into quarter four GDP growth was slightly stronger than we first thought, right? and
00:32:35
Speaker
We also think like as long as like aggregate income growth maintains momentum, consumer spending and economic growth should continue to expand as we go into 2026. And like the, we expect like the positive economic growth will continue in the first quarter with rebound government spending And then there's going to be tax refunds as well. So after, you know, the expectation is that the group GDP growth rate expanded 3.4% year over year this year, which is a revision upwards. So like like, just take that as what it is. our our um Our metrics tend to be pretty pretty solid and pretty bang on. So so there's there's, like, I know we hear a lot of like noise around unemployment, all the rest, but but yet our employment growth, but yet and core indicators are good. I say, I also say this
00:33:21
Speaker
in the context of, you know, there's there's the the continuing uncertainty around tariffs and what that's going to mean. I think that has settled down somewhat, but yet uncertainty is also playing on the minds of um these emerging middle market owners. And they you know a year ago, they may have invested a dollar, or maybe a year and a half ago that they may not invest today. So that's a factor that we need to be mindful of. and We also need to think about supply chain disruption. I think Rob talked about it briefly as well at some point. like and you know We track that very closely on where these companies are buying from as a kind of a direct result of of the tariffs. But there's
00:33:56
Speaker
You know, there's there's some movement in in supply chain, which has an impact. And, um you know, but I go back to, again, I go back to, um you know, as as I kind of meet our financial partners around around around North America, like they're like they're everyone's everyone's engaged in bringing strategies together on embedded payments and digital payments, right? Embedding.
00:34:17
Speaker
payments and financial services into the data, the operations of of small, middle market, large market companies. So anyway, I guess that was a lot, but core themes, growth is growth is going going to continue to continue to improve, right? There is still some noise in the ecosystem as it relates to um the impact of tariffs, supply chain, um but yet, um you know, we see resilience and we see companies being focused on growth in the future.
00:34:45
Speaker
Fantastic. Thank you. What a great projection for 2026. Robert, Rob, any other, any other touches you want to add to that? Yeah, maybe just, just a finer point from my perspective, maybe less economic than what Ed just shared, but like rising costs, like inflation is still at our back, trade policy, economic uncertainty. ah We talked about the talent pressures ah that these companies are facing.
00:35:10
Speaker
so It influences both current day decisions as well as long-term outlooks and investments that lower-middle companies will have to make. ah This is going to be impacting companies on a learned long-term basis. So the other piece is you know it's an ever-evolving risk landscape.
00:35:28
Speaker
it's ah It's a volatile operating environment that that we all arerian So we at Chubb are constantly looking to both monitor the environment and support our clients, both to ensure resilience, as well as to kind of make sure our products, our insurance products and our claims response ah stays in line with our with our clients' needs.
00:35:51
Speaker
Sounds great. Thank you so much. That's that's absolutely true. you know we All of these are key metrics and and macroeconomic conditions that we're going to continue to ah study and assess through our year-end 2025 and then, of course, our our mid-year 26 waves. um that ah that will continue for the middle market indicator. um one question that One final question that we here at the National Center for the Middle Market always ask our podcast guests is what is one piece of advice that you would have for business owners, investors, or um partners to these lower middle market firms?
00:36:29
Speaker
what what what would you What piece of advice would you give to them? And um we'll go ahead and start with Rob on this one. Very simple, straightforward, ah pretty much stay nimble and agile.
00:36:42
Speaker
like You have to be adaptable to to what I just talked about, the ever-changing kind of market and the risk environment you operate in So the more nimble and agile you can be becomes a differentiator relative to your peers in in the industry you operate in.
00:37:00
Speaker
ah The other piece kind of related and and not to be redundant, but have period periodic conversations, engage your insurance agent or broker ah to find solutions that address your coverage risks ah and make sure you're supported both for right now as well as for what the future may hold. ah So nothing scientific there, but pretty practical advice.
00:37:25
Speaker
Thank you. Yeah. I will say just leverage your network, leverage your network. Right. And um yeah. And then whether that is, you know, the the the the user group that you're part of for the financial system that you might be implementing or whether that's to Rob's point, whether that's your insurance broker or whether that's your financial service, your bank or your bill, your bank, your attorneys, your whatever, the them the lawyers, them you know, leverage, leverage, leverage them.
00:37:53
Speaker
So leverage network. Well, thank you. Thank you both. Yeah, being agile and and being open to these conversations with your key advisors are are so key for the for these for the sector of the economy as they're moving fast and they're too and they're oftentimes working in their business instead of on it. So, um Edward, Rob, thank you for a thoughtful and engaging conversation and for the work you're doing to support the emerging middle market.
00:38:18
Speaker
Grateful to have the both of you and Chubb and Visa as partners in this work.
Conclusion and Resources
00:38:23
Speaker
For more resources, visit the National Center for the Middle Market at middlemarketcenter.org. You'll find research, case studies, and prior podcast episodes there.
00:38:32
Speaker
And to explore more content, check out Chubb's Middle Market Insights or Visa's Emerging Middle Market Report by visiting the links in the show notes. Thanks for listening to The Market That Moves America.
00:38:43
Speaker
We'll talk to you soon. 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.