Capstone Partners Releases 2024 Middle Market Business Owners Research Survey: CEOs Focus on Performance Improvement, Turn to Capital Market Growth in High Interest Rate Environment

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Capstone Partners has released its 2024 Middle Market Business Owners Survey Report, analyzing data from 404 privately-owned companies. Key findings reveal that 60.8% of CEOs concerned with inflation/interest rates are reducing business expenses, while 44.1% completed capital markets transactions in the past year.

The survey shows that 45% of business owners were approached by private equity firms for acquisition, and 49.5% plan to execute growth strategies in the next 12 months. Notable trends include a 17.1% increase in performance improvement needs and 37.9% of CEOs lacking exit planning. Economic optimism continues to decline, with only 15.3% of CEOs expressing a very positive outlook for 2024.

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BOSTON, Nov. 25, 2024 /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, released its 2024 Middle Market Business Owners Survey Report, with insights from privately-owned companies across the U.S. This report combines Capstone's in-depth middle market knowledge with proprietary data obtained from 404 participating owners of privately-owned, middle market companies. Conducted between July 31, 2024, and August 26, 2024, the survey captures sentiment at a pivotal moment in the U.S., identifying CEOs' decision making processes, growth, financial, and exit plans, and value drivers that characterized middle market business in 2024.

Key Findings:

• The share of business owners afflicted by heightened interest rates increased 5.1% compared to our 2023 survey, rising to the second most prominent hurdle behind elevated inflation.
• Among CEOs concerned with inflation/interest rates, the majority (60.8%) have accounted for the higher-for-longer interest rate environment by reducing business expenses—a strategy that most plan to continue over the next 12 months.
• The lion's share (42.5%) of CEOs surveyed indicated that a party change in the White House (from Democrat to Republican) would have a positive impact on business operations. Macroeconomic issues are slated to be the most important factor in the 2024 election regardless of CEOs' political stance.
• Many business owners have turned to the capital markets to prompt growth amid economic turbulence as 44.1% of CEOs surveyed completed at least one capital markets transaction over the last 12 months.
• Private equity groups have continued to contact owners to explore buyout opportunities, with 45% total business owners surveyed contacted by a private equity firm looking to acquire their company over the last 12 months.
• The share of business owners surveyed that require performance improvement support increased 17.1% year-over-year (YOY) as CEOs have been under pressure to maintain financial stability amid heightened inflation and a difficult operating environment.
• Nearly half (49.5%) of CEOs surveyed plan to execute growth strategies over the next 12 months to capture additional market share and gain scale in preparation for a market rebound.
• The middle market has demonstrated a need for succession planning and growth strategy services as 37.9% of CEOs surveyed in 2024 indicated they have yet to start planning a business exit.
• The share of CEOs surveyed with a very positive U.S. economic outlook has declined each year since 2021—falling to 15.3% in 2024.
• Based on our survey data, revenue growth has continued to have a strong impact on owners' industry outlook, both of which have remained optimistic for 2025.

Through this research, Capstone has evaluated the health of the middle market in 2024, uncovering recent challenges faced by business owners and the resources required to offset these challenges. The report also provides an analysis of forward-looking growth strategies and initiatives, business owners' outlook on their respective industries and the broader U.S. economy, and expected revenue changes.

To access the full report including a breakout of the results by industry, click here.

Make your voice heard in our upcoming survey here.

ABOUT CAPSTONE PARTNERS

For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle.  Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services.  Headquartered in Boston, the firm has 175+ professionals in multiple offices across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams.  Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ: HBAN).  For more information, visit www.capstonepartners.com.

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SOURCE Capstone Partners

FAQ

What percentage of business owners plan growth strategies in 2024 according to Capstone's survey?

According to Capstone's 2024 survey, 49.5% of CEOs plan to execute growth strategies over the next 12 months to capture additional market share and prepare for market rebound.

How many middle market companies participated in Capstone's 2024 survey?

404 privately-owned, middle market companies participated in Capstone's 2024 Middle Market Business Owners Survey conducted between July and August 2024.

What percentage of CEOs have no exit planning strategy in 2024?

37.9% of CEOs surveyed in 2024 indicated they have not yet started planning a business exit strategy.

How many business owners were contacted by private equity firms for acquisition in 2024?

45% of business owners surveyed were contacted by private equity firms looking to acquire their company over the last 12 months.