Report: Only 1/3 of Executives at Smaller Middle-Market Companies Claim to be Familiar with Key Elements of JOBS Act

Jobs Act 2012 statement redAccording to research commissioned by CohnReznick, an accounting and advisory firm targeting middle market companies, only one-third of executives at smaller middle-market companies claimed to be familiar with the key elements of the JOBS Act legislation that could benefit their organization.

CohnReznick states; “The JOBS Act is a remarkable piece of legislation, but unless the smaller middle-market businesses which it is designed to help are leveraging the benefits, its effectiveness as an economic stimulus will remain underutilized”

The survey was conducted in conjunction with the launch of CohnReznick’s National Liquidity and Capital Formation Advisory Group.  Their data reveals an optimistic outlook on growth, access to capital, and liquidity among companies across many industries. According to the research, nearly one-fifth of middle-market companies will likely engage in a liquidity or capital formation event over the next six months, that has the potential to trigger a significant wave of potential jobs and revenue for banks, consultants and services providers. Respondents identified likely sources of capital as traditional banks, investment banks, private equity firms, venture capital firms, mezzanine lenders, crowdfunding, and IPOs.

“Middle-market businesses are the most important growth engine in the U.S. economy and a critical component to job creation,” said Dom Esposito, CohnReznick Partner and leader of CohnReznick’s National Liquidity and Capital Formation Advisory Group. “When we hear from executives that they are optimistic about access to capital and comfortable enough to conduct a significant financial transaction in the short-term Dom Espositoin order to grow their business, I think it bodes well for middle-market growth and the direction of the U.S. economy.”

“The JOBS Act is a remarkable piece of legislation, but unless the smaller middle-market businesses which it is designed to help are leveraging the benefits, its effectiveness as an economic stimulus will remain underutilized,” said Cindy McLoughlin, CohnReznick Partner and leader of CohnReznick’s National Liquidity and Capital Formation Advisory Group. “Clearly, the SEC and members of the capital markets ecosystem must do a better job educating smaller company executives on the benefits of the JOBS Act, provide definitive guidance on equity crowdfunding, and formalize the Reg A+ provisions. We believe it is time for a JOBS Act II – the sooner the better.”

CohnReznick LogoAccording to the report:

  • 20% of middle-market companies will likely engage in a liquidity or capital formation event over the next six months. With nearly 200,000 middle-market businesses in all industry segments and geographies, according to the National Center for The Middle Market, this could mean a considerable number of transactions through the end of 2014.
  • 88% of middle-market executives, who would likely invest raised capital in an increased workforce, would moderately or greatly increase hiring volume.
  • Only 35% of middle-market executives reported being somewhat or very familiar with the various components of the JOBS Act. 50% of larger companies are somewhat or very familiar with the various components of the JOBS Act while only 27% of smaller companies reported as being somewhat or very familiar.
  • Only 28% of middle-market executives said that they are somewhat or very comfortable with crowdfunding as a legitimate means of raising capital. And when it comes to raising capital, only 2% of middle-market executives will investigate provisions of the JOBS Act, including crowdfunding, as a potential source of capital. 

 



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