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Mid-Market Executives Focus on Moving Forward During Uncertain Economic Recovery, Deloitte Survey Finds

To weather continued volatility, companies place high priority on greater productivity via training and technology

NEW YORK, May 11, 2012 – In the wake of a slower, less predictable economic recovery, mid-market executives are adapting to managing uncertainty, according to Deloitte’s “Mid-Market Perspectives: 2012 Report on America’s Economic Engine.” The annual survey of 528 U.S. executives indicates that 86 percent of respondents believe that continued uncertainty is tempering their expectations for economic growth.

“Because of the significantly slower growth than we’ve seen in previous recoveries, mid-market executives are increasingly cautious about their expectations for 2012,” said Tom McGee, national managing partner, Deloitte Growth Enterprise Services, Deloitte LLP. “Mid-market companies are now trying to meet the challenges of this volatile economy by taking a more adaptable approach to managing certain key business fundamentals.”

Moving Forward During Uncertain Times

To prepare for continuing, uneven market conditions, mid-market executives are taking careful actions in three key areas in 2012; talent, finance and technology.

Talent

In last year’s survey, respondents were overly optimistic about hiring plans. This year, executives are investing in their people and moderating plans to hire new employees:

  • The percentage of executives planning to expand their domestic workforce dropped to 42 percent from 48 percent in 2011.
  • Despite high unemployment, every executive interviewed acknowledged that it is difficult to find certain categories of skilled talent especially in engineering, healthcare, and IT.

More companies (51 percent) plan to invest in their existing workforce through training compared to last year (34 percent). Additionally, fewer firms plan to increase the number of part-time workers (only 13 percent compared with 18 percent in 2011).

Financing

Mid-market companies remain focused on balance sheet health and improving their cash positions while continuing to invest.

  • Thirty-five percent of respondents are predicting higher cash balances.
  • Ninety percent expect capital investment to grow or at least remain stable.
  • Twenty-seven percent are not planning to secure external financing this year, compared to 14 percent last year.

Interestingly, only 7 percent of privately held mid-market companies would consider going public in the next year.

Technology

Last year’s survey showed that mid-market executives understand the importance of technology to their business. This year, respondents re-affirmed that technology continues to be vital to increasing productivity.

  • Business process automation remains the top investment pick to increase productivity for 46 percent (down from 52 percent last year).
  • Forty percent– up from 29 percent last year – recognize cloud computing and Software as a Service (Saas) as one of the top three technology investments for 2012.
Research Methodology

528 executives at U.S. midsize companies were polled about their expectations, experiences and plans for becoming more competitive. Respondents were senior executives at companies with annual revenues between $50 million and $1 billion. The Deloitte survey was conducted by OnResearch, a market research firm.

Twenty-three percent of the companies represented are public; the other 77 percent are privately held. Of the private companies, about one-third are family-owned and another third are private-equity backed; one-quarter are closely (non-family) held. The remaining companies represented are venture capital-backed, employee-owned or other ownership structures.

Diverse industries were surveyed. The three largest sectors were professional/business services, retail and distribution and technology, comprising 24 percent of the respondents. The other 76 percent were spread across 18 different sectors. Respondents to the survey also represented a diversity of management positions. Finance professionals contributed 23 percent of the responses; general management, 16 percent; information technology, 16 percent; operations and production, 13 percent; and sales and marketing, 11 percent. The other 25 percent were spread across 10 different functions, from customer service to supply chain, procurement, and R&D. Exactly one-half were owners, board members, or C-suite executives; the rest were vice-presidents, department heads, or managers.

The full survey results are included in the Appendix; some percentages may not add to 100 percent due to rounding, or for questions where survey participants had the option to choose multiple responses.

About Deloitte Growth Enterprise Services

Deloitte’s Growth Enterprise Services team delivers a distinctive client experience through service offerings tailored to address the unique needs of mid-market and privately held companies. View the entire Mid-Market Perspectives report here.

As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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