Survey looks at middle-market execs’ hopes for capital

Not only are the nation’s middle-market executives hopeful about potential to raise more capital, but many are on the verge of funneling it into growth and job creation, according to new research.The survey, commissioned by CohnReznick LLP, an accounting, tax and advisory firm with offices in Eatontown, Edison, Princeton and Roseland, found that nearly one-fifth of middle-market companies are likely to engage in a liquidity or capital formation event over the next six months.

This could translate to a wave of potential jobs and revenue for banks, consultants and services providers, stated a CohnReznick news release.

There are almost 200,000 middle-market businesses across all industries and geographies, according to the National Center for the Middle Market. The survey revealed that attitudes about capital raising among executives in this category have improved.

“Middle-market businesses are the most important growth engine in the U.S. economy and a critical component to job creation,” Dom Esposito, leader of CohnReznick’s National Liquidity and Capital Formation Advisory Group, said in the release.

“When we hear from executives that they are optimistic about access to capital and comfortable enough to conduct a significant financial transaction in the short term in order to grow their business, I think it bodes well for middle-market growth and the direction of the U.S. economy.”

Respondents identified the four most likely sources of capital as traditional banks, investment banks, private equity firms and venture capital firms.

IPOs ranked on the bottom of the list of likely sources of capital. Perhaps that’s because when asked about the JOBS Act, which was hoped to spur a robust IPO recovery in the U.S., only one-third of executives at smaller middle-market companies claimed to be familiar with components of it.

Only 2 percent of middle-market executives answered that they would investigate provisions of the JOBS Act, which includes crowdfunding, as a potential source of capital.

“The JOBS Act is a remarkable piece of legislation, but unless the smaller middle-market businesses which it is designed to help are leveraging the benefits, its effectiveness as an economic stimulus will remain underutilized,” Cindy McLoughlin, CohnReznick partner and leader of CohnReznick’s National Liquidity and Capital Formation Advisory Group, said.

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