Government debt is cited as top obstacle for growth; only 8 percent of private companies surveyed want to go public.

An overwhelming majority -- 93 percent -- of mid-market companies expect the United States economy to grow, according to top-line results of a new survey from Deloitte titled, "Mid-Market Perspectives: 2011 Report on America's Economic Engine."

Ongoing concern about government debt and overall strength of the economy, however, tempers respondents' optimism.

Conducted by the Economist Intelligence Unit, the survey gauges the economic outlook of mid-market chief executive officers and executives from across the U.S. and revealed key insights into this business segment's plans for growth and recovery after enduring the worst economic downturn in 80 years.

As many as eight in 10 (81 percent) executives from U.S. middle market (companies with $50 million to $1 billion in annual revenue) expect annual revenue to increase in 2011. Moreover, survey results show mid-market firms are well-positioned for growth after focusing on improving productivity, deleveraging and rightsizing their operations during the downturn.

Two-thirds of companies surveyed report lower debt ratios today than prior to the recession and 54 percent have higher cash balances. Strengthening the balance sheet will continue as a top priority as 63 percent of executives say cash balances will still be up in a year's time and 65 percent agreeing debt ratios will remain down.

Overall, the survey provides a positive and encouraging outlook for growth in the middle market and the U.S. economy. Additional survey highlights include:

• Productivity: Nearly three-quarters (72 percent) of respondents report higher levels of productivity than pre-recession.
• Hiring: A large majority of executives (69 percent) plan on adding full-time employees this year.
• Business expansion: As the majority of firms (56 percent) focus on domestic growth targets, 34 percent of all firms and 44 percent of companies with annual revenue in excess of $500 million will focus on global expansion.
• Access to financing and capital: Despite the challenges to access financing and capital, 38 percent of respondents will pursue financing to expand their businesses in the coming year.

"A review of the economic size and scope of the U.S. middle market makes it abundantly clear that its role is impressive, important and impactful. It represents $6.1 trillion in aggregate revenue – 40 percent of the national gross domestic product – and employs 24.6 million people. Putting it in proper context, the U.S. middle market aggregate revenue exceeds the S&P100," said Tom McGee, national managing partner, Deloitte Growth Enterprise Services, Deloitte LLP, who leads Deloitte's mid-market practice. "Leaders in this segment are cautiously optimistic. The good news for firms that have emerged from the worst of the recession intact is that the nimbleness and adaptability that helped them weather the storm will enable them to capitalize on new opportunities in the future."

Challenges ahead

Middle market executives surveyed also recognize fundamental structural challenges which temper their optimism and influence their business decisions towards mitigating risk. In particular, at all levels –federal, state and municipal – government debt is ranked by half of all survey respondents as the primary obstacle to U.S. growth.

Other concerns expressed by middle market executives include:

• Regulatory issues: There is broad concern that burdensome regulation, as well as healthcare costs and high tax rates, are obstacles to growth in the short- and long-term.
• Economic growth: While an overwhelming majority of executives anticipate the economy will grow, only 20 percent believe it will expand at a pace that will support widespread job creation.

Middle market companies stay private…longer

Executives surveyed also express a desire to stay private, or at least a desire to stay private a little longer.

Only 8 percent of the nearly 80 percent of companies who are privately held indicate any possible plans to go public in the next year. The primary reason, as stated by 66 percent respondents, is to maintain control of their company for decision-making, with the desire to keep information private and the belief that regulatory requirements are too burdensome as the second and third reasons for staying private.

Deloitte Growth Enterprise Services provides services tailored to meet the needs of mid-market companies. The Mid-market Perspectives Survey can be viewed at www.deloitte.com/us/pr/dges/2011perspectives

Research Methodology
The universe for the survey and interviews conducted for this report comprised both private and public companies, with annual revenue between $50 million and $1billion. The Economist Intelligence Unit surveyed 527 senior decision-makers at these companies. Over one-half (51 percent were C-level executives (including owners). All respondents were from U.S.-based companies. Of the total, 20 percent are from the largest revenue bracket ($500 million and 1 billion) and 30 percent are from the smallest ($50 million and $99.99 million). Fifteen different industries were represented by at least 10 respondents. The most-represented industries were business/professional services (18 percent), consumer/manufactured goods (15 percent), and healthcare, pharmaceuticals and life sciences (10 percent). Sixteen U.S. states were represented by at least 10 respondents, but 43 states were represented in total. The states that were most heavily represented were California and New York (13 percent and 11 percent of respondents, respectively, said their companies were based there), followed by Illinois (8 percent), Texas (7 percent), Pennsylvania (6 percent), Massachusetts (5 percent) and New Jersey (4 percent).

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.