A recent 2025 Middle Market Survey by UHY sheds light on the economic outlook, technological advancements, and strategic priorities of middle-market businesses heading into the new year. The survey polled over 275 executives across sectors such as automotive, construction, financial services, and healthcare, offering invaluable insights for business valuation professionals who work closely with small and medium-sized enterprises (SMEs).
Here’s what valuation practitioners should know about the trends and challenges shaping the middle market:
Economic Outlook: Cautious Optimism Amid Uncertainty
- Optimism Prevails: While only 33% of executives are “strongly optimistic” about the economic outlook for 2025, 48% reported being “moderately optimistic.” This marks a cautious but positive sentiment among business owners.
- Lingering Concerns: Conversely, 19% of respondents are less optimistic about the economy than they were last year, reflecting ongoing uncertainty.
For valuation professionals, these sentiments underscore the need to carefully assess market conditions and economic trends when valuing businesses in this sector.
AI Adoption: Transforming Business Operations
- Growing Integration: An impressive 61% of middle-market businesses reported actively using AI across various functions.
- Biggest Disruptor: AI and machine learning are considered the most impactful technologies for 2025 by 62% of respondents, followed by 5G connectivity (14%) and blockchain (13%).
This increased reliance on AI indicates a shift in business operations that valuation professionals should consider, especially when evaluating technological assets or growth potential in businesses adopting cutting-edge tools.
Cybersecurity Investments on the Rise
- High Risk of Cyber Attacks: Over half (51%) of respondents experienced attempted cyber breaches, highlighting the growing importance of robust cybersecurity measures.
- Increased Spending: A staggering 79% of businesses plan to increase cybersecurity spending in 2025, with 26% committing to increases of more than 20%.
For valuation practitioners, these trends could affect business valuations, particularly when analyzing risk profiles or assessing the impact of cybersecurity investments on operational costs and overall stability.
Outsourcing Accounting: A Growing Trend
- Technology Adoption in Accounting: The survey found that 45% of middle-market businesses now utilize outsourced accounting or a combination of internal and external resources. This marks a significant increase from prior years.
For valuation professionals, the shift to outsourced accounting reflects broader technology adoption trends and may provide more standardized and transparent financial reporting, simplifying the valuation process.
Growth Expectations: Mixed Signals
- Slower Growth Ahead: Just over half (51%) of middle-market businesses expect heightened growth in 2025, while 12% anticipate a decline compared to 2024.
- Conservative Strategies: This tempered outlook builds on the 2024 findings, where 82% of respondents described their growth as aggressive, cautious, or conservative, with 18% aiming to maintain current growth levels.
These insights highlight the importance of carefully evaluating growth projections when conducting valuations, especially in uncertain economic climates.
Key Takeaways for Valuation Professionals
The insights from UHY’s survey reveal key areas of transformation and uncertainty in the middle market. For valuation professionals working with SMEs, understanding these dynamics is crucial:
- Macroeconomic Trends: Incorporate broader economic sentiment into market assessments and risk analyses.
- AI and Technology: Evaluate the impact of technology adoption on business efficiencies, competitive advantages, and long-term value.
- Cybersecurity: Consider how investments in cybersecurity affect operational resilience and valuation outcomes.
- Financial Reporting: Leverage improved financial transparency from outsourced accounting to provide accurate valuations.
- Growth Projections: Maintain a cautious approach to growth assumptions in valuations, reflecting mixed economic and business expectations.
As the middle market evolves, so too must valuation practices. Staying attuned to these industry trends is essential for delivering accurate, informed insights to clients. For the full 2025 Middle Market Survey report, visit UHY’s website.
