Running a middle market firm is harder now due to rising operational complexity.
Key takeaways
This complexity strains people, tech, data and processes across organizations.
Executives must build and monitor enterprise value roadmaps to manage complexity and allocate capital wisely.
U.S. businesses have become vastly more complex since the global financial crisis of 2007−09.
The nature and pace of technological change alone have been seismic, to say nothing about the macroeconomic, regulatory and capital market changes middle market businesses have endured.
While running a business has always been difficult, the operating complexity necessary to run a successful middle market firm has increased significantly.
This research report is an attempt to quantify the degree to which middle market firms have become more complex. Our aim is also to understand the resulting burdens that this complexity places on middle market C-suite executives, functional teams and the capital allocation process.
Among our findings:
Middle market businesses have become vastly more complex since the global financial crisis, multiple sources of data analyzed by RSM US show.
This complexity places an enormous burden on the people, processes, technology and data needed to manage modern organizations.
Capital allocation has become all the more difficult in this new environment. With a significantly higher cost of capital, businesses will struggle to metabolize this complexity while maintaining returns.
Executives will need to develop industry-specific enterprise value roadmaps to navigate this new business landscape and ensure their operational approaches are achieving their intended gains.
Every day across the globe, thousands of RSM employees meet with their middle market clients, hearing and seeing firsthand how these firms metabolize this growing operational complexity. Our consensus observation: It’s not easy. Understandably, firms have struggled to keep pace with these financial, regulatory and technological changes. Some have flourished; others floundered. But all have been affected.
In this new era of complexity, our challenge is to find the path forward.
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