U.S. middle market shows notably strong top-line growth

Private middle market firms continue to power the U.S. economy, driving higher revenue growth than that of small- and large-cap firms.?

Trailing 12-month revenue growth

• The post-election bounce in stocks has cooled off somewhat over the past week, but the Trump trade remains firmly in place. For example, small cap stocks have notably outperformed the S&P 500 during November as investors believe these companies might disproportionately benefit during a second Trump administration.
• Although small cap stocks have taken the lead, small-cap companies remain fundamentally challenged. The quality of the firms in the Russell 2000 Index has deteriorated meaningfully over the past several decades relative to private middle market firms.
• As the chart highlights, trailing 12-month revenue growth across all middle market companies has outstripped that of both the S&P 500 and Russell 2000 by approximately 7% and 10%, respectively, suggesting private middle market firms are driving notably higher growth than public small- and large-cap firms.[1]
• Against this backdrop, the case for the growth and diversification potential that private U.S middle markets may offer has rarely been more compelling as these firms continue to serve as a driving force of the domestic economy.

Catch up on chart of the week.

[1] Bloomberg Finance, L.P. Data for U.S. middle market and S&P 500 as of 6/30/24. Russell 2000 Index excluding financials and companies with less than $25mm EBITDA. The constituent population totals 792 companies.

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