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CAN MIDDLE-MARKET FIRMS WITHSTAND A CAPITAL CRUNCH?: Insights from the AlixPartners 18th Annual Turnaround and Transformation Survey
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The capital crunch is the latest challenge for executives
laboring under the relentless pressure of recent events,
from COVID-19 to inflation by way of supply chains. Such
a varied series of challenges would test the resilience of
any business; leadership teams tell us the accumulated
impacts are taking their toll.
We suspect middle-market companies face particularly
intense headwinds. Their relative inability to dictate
price - both with consumers and suppliers - is a major
disadvantage in an inflationary environment. Middlemarket
management teams also tend to have fewer levers
to pull within the business than large, diversified entities.
And smaller corporates drew heavily on government
support during the pandemic, which extended well into
2022 in markets such as Germany. The full impact of its
withdrawal may not have played out entirely.
As lenders weigh such considerations, middle- and lower
middle-market companies may find themselves with
reduced access to the capital that remains in the market,
with priority going to those perceived as safer bets.
Two-thirds of the experts we surveyed said that capital
availability has already decreased in 2023, with just 6%
reporting an increase.
MIDDLE-MARKET
HEADWINDS
Lower middle market companies
WHICH SIZE MARKET OF LEVERAGED
BORROWERS WILL FACE THE
GREATEST RISK OF DISRUPTION
GIVEN THE COST AND AVAILABILITY
OF CAPITAL IN THE COMING YEAR?
Middle market companies
50%
44%
7%
Large companies