The Great Wealth Transfer: Opportunities for middle market companies and investors by Andrew Weinberg
2018 Milken Institute Global Conference, LOS ANGELES, CALIFORNIA, May 2, 2018 – For the 2018 Milken Institute Global Conference, we asked speakers to identify one event that has changed their industry and the world in recent memory. See their insights and share your thoughts using #MIGlobal. See more coverage on the Milken Institute LinkedIn page.
Middle-market companies have often been described as the growth engines of the U.S. economy, and justifiably so.
It is estimated that such businesses, many of which are privately held and family owned, contribute about half of the nation’s GDP and employ more than 60% of the workforce. However, many of these growth vehicles soon may have new drivers, due to the enormous generational transfer of wealth that is expected to occur over the next few years.
This unprecedented transfer of wealth and ownership will provide significant opportunities – both for the new middle-market business owners to rethink and retool their approaches to operations, finances and growth– and for investors to participate in the resulting value creation. The size of the opportunity is evident from the sheer number of middle market enterprises in the U.S. The country is home to an estimated 200,000 middle-market companies, defined as those with revenues between $10 million and $1 billion. Within that group, there are roughly 32,000 businesses at the upper end of the scale, with revenues from $50 million to $1 billion, according to Dunn & Bradstreet. Such middle-market companies are largely in private hands but wield substantial economic clout, as they represent about 16 times the number of public companies with the same revenue profile.
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