Survey data shows middle market leaders are doubling down on tech, talent, and capital

Companies are growing their revenues and workforce

There’s good news to share about growth in the middle market: most of the leaders KeyBank surveyed reported year-over-year growth in revenue. Those with a positive company outlook reported higher growth than those with lower outlooks, but surprisingly, those with “fair” or “poor” company outlooks also reported high growth.

Compared to other segments, businesses that are based in the Midwest, operate within the technology industry, and have $250-$500 million in total annual revenues all reported the highest percentages of annual growth between 2022 and 2024. Once again, those with a positive company outlook within these segments tended to outperform their peers.

Among business leaders with a positive company outlook, the top three contributing factors (although down from the second quarter of 2024) remained improved efficiency of business operations, improvements in technology, and the ability to attract and retain talent. Additionally, the number of respondents citing potential for lower tax rates (31%) and the new political landscape (29%) increased significantly.

As middle market businesses grow, they’re embracing AI, technology, and research and development (R&D) — and hiring more workers to manage the expansion. Between 2022 and 2024, the share of middle market businesses employing 2,000 or more people increased from 16% to 20%, and the median number of full-time employees grew from 400 to 500. There was also a significant increase in the share of companies planning to expand the scope of their businesses through R&D.

Commercial lending ranks highest among potential sources of capital/credit

More than three-quarters of surveyed middle market business leaders said they used traditional and/or alternative sources of capital and/or credit in 2024 or planned to use them in 2025. Among those concerned with access to capital or credit, that number increased to 95%.

At the end of 2024, commercial lenders were the top source for middle market businesses seeking capital and credit. This represents a shift from six months prior, when private equity and private debt were the top two sources and commercial lending ranked third.

While private equity and private debt deals often attract attention in the marketplace, many executives and business owners prioritize the stability of working with an established commercial lender — particularly as these lenders’ appetites for deals is trending upward.

Fraud and cybersecurity incidents trend downward

Fraud protection and education efforts by middle market businesses and their banking partners seem to be paying off.

The latest survey revealed a decline in both the share of business leaders and executives who said that cybersecurity concerns were currently having a negative impact on their businesses and the share who had experienced a cybersecurity or financial fraud issue within the past 12 months. However, with AI-based fraud tactics still in their infancy, businesses and banks must remain vigilant as new threats emerge.

Middle market leaders also need to be aware of “old” threats. Despite the availability of faster, more secure, and more cost-effective payment methods, 93% of business leaders reported issuing payments by paper check within the past year. 

Businesses that continue to rely on checks, including those that use them infrequently, are vulnerable to the perpetual threat of check fraud — which affected more than one-third of respondents who reported a cybersecurity or fraud issue in 2024.

Conclusion

As illustrated by the survey findings, middle market businesses continue to demonstrate resilience and strategic foresight. Emphasizing investments in technology, cybersecurity, and talent development remains essential for successfully the evolving landscape.

Equally important will be maintaining a sharp focus on operational efficiencies and proactive risk management practices. Companies that effectively balance these priorities are well-positioned to capitalize on emerging opportunities and achieve sustained growth.

Ultimately, trusted partnerships, especially with reliable commercial lenders, will play a pivotal role in supporting middle market companies as they confidently move forward through 2025.