EU mid market company insight by GE

Mid-market companies– that is companies that are too big to be considered SMEs, but smaller than big, exchange listed businesses – play a key role in the UK and in the other top European economies.

Across the UK, Germany, France and Italy (the EU-4), the mid-market represents a small number of companies (ranging from a low of 1.2% in Germany to 1.7% in France) and yet it generates about one third of private sector revenue and employs about a third of each country’s workforce.

As Europe’s leading economies continue to search for their own path to growth, much of the debate has focused on the role that big businesses will play in the economic recovery.

These answers, however, have not been forthcoming and policy makers and commentators have also looked closely at the role played by start-up businesses, entrepreneurs and “SMEs” – small and medium sized enterprises. The debate has raged and theories have been offered but answers remain elusive.

So where might the solution come from? Perhaps they are to come from somewhere in between?

The purpose of this report is to examine the role played by midmarket companies – too big to be considered traditional SMEs, but smaller than those big, exchange listed businesses that dominate the headlines.

What this report shows is that if Europe wants to find a path to growth then those looking for answers need to focus more on this group of middle-market companies that are, in fact, continuing to grow, even in the toughest of times. Led by the industrious German Mittelstand, but supplemented by the resilient and determined mid market cohorts in each of Europe’s largest economies, the mid-market benefits from the global potential and scale of larger companies combined with the flexibility and drive of smaller ones.

It is a sweet spot for innovation and sustainable employment and, such is its scale, if this relatively small group of mid-market firms was able to grow headcount at just 2% a year (representing 650,000 jobs) between now and 2015, that alone would be enough to push EU-4 unemployment levels back to those last seen in 2007.

Across France, Germany, Italy and the UK (referred to as the EU-4 for the purpose of this report), the mid-market represents a tiny fraction of total companies – ranging from a low of 1.2% in Germany to 1.7% in France – but generates about one third of private sector revenue and employs about a third of each country’s workforce.

Each mid-market, identified by the structural demography of its domestic economy, varies slightly from country to country. A middle market company in Germany tends to be larger than one in Italy, for example. But based on 2010 revenue and number of employees, we identified about 140,000 firms in the EU-4, which are unique in both their structure and economic contribution from either small or large companies and which should be considered
a part of the mid-market. These firms are responsible for 32 million jobs and generate €53 million in revenue1.

Combined, the middle market in the four European countries contributes €1.11 trillion ($1.48 trillion) to the EU-4 GDP2.

This makes the middle market in the EU-4 one of the top 10 economies in the world, ahead of India and Russia3.

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