CEO Stories: NCMM - Taking the Middle Market’s Temperature During COVID-19

Non-essential businesses in many states had already been closed, with the national economy in what has been likened to a “medically induced coma.” (The full report can be found here.)

The surveyed companies, who in the fourth quarter of 2019 had expressed more optimism than they had in the previous quarter, were once again showing decreased optimism. The companies had expected top-line growth of 5.8 percent in 2020; now 78 percent expected some level of decline.

IMPACT

Two-thirds of companies now expect employment to shrink, and a quarter of companies believe the impact of the virus will be “catastrophic.” Companies reported the biggest negative impacts (in order) on operations, revenue, payroll, employment, supply chain, and working capital. As leaders, respondents indicated they were struggling more with the things they can’t control:  supply chain, cash and working capital, and customer experience. Close to half—44 percent—say they will restructure as a result of the pandemic.

RESILIENCE

Overall, the middle market has proven itself to be a resilient player in the economy. The survival rate of middle market companies is comparable to that of large businesses, and during the financial crisis of 2007-2009 this segment actually added jobs. With regard to sentiment about the pandemic, 80 percent of the companies surveyed expected to be running at full capacity within six months, and only 19 percent expect a downturn of seven months or more.