Middle market companies are an interesting breed. They have found ways to cross the hurdle and insecurity of the startup phase but still face the huge challenge of growing past the $1 Billion revenue range. Obviously, most companies never do this. But, the ones that do have their targets set on that next benchmark and almost always have international business and international growth as part of the key strategy. In this post, we wanted to share some of the key facts that we found about mid-market companies and their international strategy. Specifically while reviewing a great document put together by Mazars called “Business Without Borders” that polled 150 executives of middle market companies:
Importance of International Growth for Middle Market Companies
First, they discovered some key findings in their polling of just how important international business is for these companies:
1. 45% of mid-market companies make more than half their revenues internationally
2. 47% of respondents already operate in more than 10 international markets
3. 50% of respondents say they used a greenfield investment to enter their most successful market
These facts were pretty staggering to us. We help companies of all sizes expand their businesses into new countries. We help companies understand how difficult it can be for a company to make the commitment to one, two, or three new places of business, but to see that almost half of the mid-market companies surveyed had 10 or more was impressive. As we can see though, the rewards are equally impressive with almost half of their revenues coming from those international efforts.
Middle Market Company International Growth Strategy
Here is another interesting fact that Mazars discovered about the strategy of middle market companies dealing with international business:
56% of respondents say international growth is a key part of their current strategy
This fact just solidified to us that international growth is not an afterthought, but is a stepping stone. Companies need to consider international business to reach new levels of success.
How Middle Market Companies Finance International Growth
Lastly, we thought it was really interesting to learn about how these companies were financing their process of international growth:
1. 58% of mid-market firms are most likely to use bank debt to finance their international strategy, with 56% looking to internal profits
2. 31% of respondents expect private equity capital to be one of their top funding sources
This solidified the idea for us that international expansion should be treated almost like an internal startup. Anyone who has ever tried to get financing for any major initiative from banks or private equity knows that a data-driven business plan with clear a clear strategy is a necessity for entry into those conversations. As we discussed in a previous post about international strategy it is proven that the number one factor for failure was an executive team that did not align on the strategy put in place. International expansion should never be reactive. As we can see by these numbers, most middle market companies are inherently proactive and strategic.
Please let us know if you need advice in any of these areas, we do offer international strategy consulting. We have helped many companies by becoming their on-demand expert in all areas of international expansion strategy and execution.