Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

Sponsored by: KeyBank
September 4, 2020

Middle market shaken, but not broken, by COVID-19

Each quarter, KeyBank surveys 400 middle market business executives (defined as those companies within the $10 million to $2 billion range) to understand the impact of current macroeconomic conditions and government policies on the business environment. 

The latest survey, conducted several months after the coronavirus national emergency began, shows outlooks are mixed; while Q2 numbers were better than projected and optimism is trending upward, business owners continue to be wary of the nation’s economic health.

Outlooks have lifted since the pandemic began

Overall, the impact of COVID on middle market businesses has not worsened since the second quarter. Compared to late March, when shutdowns to combat the spread of COVID-19 took hold, outlooks have shifted back toward being slightly more positive. When asked about their business health, 51% of owners stated they were very positive or somewhat positive about their performance (vs. 47% in March); those who reported a negative perception of their business health improved from 37% to 26%.

Matthew E. Hummel serves as Commercial Banking Team Leader for KeyBank responsible for driving the bank’s commercial business growth and leads a team of commercial bankers serving middle market clients in Connecticut and western Massachusetts. He has more than 30 years of commercial banking experience, strategically aligning banking resources to the needs of middle market companies requiring complex debt, capital markets, currency, treasury, and other financial solutions. Hummel has offices in KeyBank’s 100 Pearl Street, Hartford and 195 Church Street, New Haven locations and can be reached at 860-293-4138 and

A strong majority of respondents (70%) told KeyBank that the impact on their business so far has been either as expected or better than the original projections they made when first faced with the economic reality of COVID in March.

Changing How the Middle Market Works

Most businesses had to make changes to comply with regulations designed to keep their employees and communities healthy. A majority (76%) reported changing their operations somewhat or very much in response to COVID-19. Top actions were:

• implementing enhanced safety measures (75%)
• reducing staff (57%)
• applying for loans or lines of credit (51%)

Half of businesses who made changes as a result of COVID-19 report they are somewhat or fully operating again.

Even so, most owners and executives are not staffing their businesses at pre-pandemic levels. Many companies who reduced staff say they are unlikely to bring back all employees.

That said, the majority of customers we’ve talked to believe that the Paycheck Protection Program was effective and helped to save jobs at their companies. 

Impact on middle market M&A

The pandemic has also made the merger and acquisitions forecast murkier. While 44% of respondents reported that they were “extremely likely” or “very likely” to complete an acquisition in the next six months (down from 46% in December 2019), most businesses report that lower company valuations due to COVID-19 are negatively impacting their likelihood to complete an acquisition.

Some Bright Spots in Dark Days

Middle market businesses are slowly restoring more normalized operating and financial positions after taking steps to help their companies withstand the initial brunt of the pandemic. However, it’s clear that their worries are far from over. For the remainder of 2020, economic recovery will be tied to public health and will require continued cooperation from the private sector and state and federal government.

This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisors. KeyBank does not provide legal advice. All credit products are subject to credit approval. KeyBank is Member FDIC.© KeyCorp 2020 CFMA 200817- 858979.