Thomas A. Stewart Executive Director, The National Center for the Middle Market Middle Market Update: FINDINGS FROM NCMM’S Q2‘14 INDICATOR SURVEY ACG Global Webinar Series | July 30, 2014 | 2:00-3:00 PM EST

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THE MIGHTY MIDDLE MARKET DEFINED ANNUAL REVENUE $10MM – $1B Business Services 26.7% Manufacturing 16.7% Wholesale 13.0% Retail 12.0% * Source: Market that Moves America Source: Last Available Census NEARLY 200K BUSINESSES † † 3 1/3 PRIVATE SECTOR U.S. JOBS* OF ALL REPRESENTING 3% U.S. COMPANIES † OF ALL

THE MIGHTY MIDDLE MARKET IMPACT † 4

Quarterly Middle Market Indicator A quarterly business performance update and economic outlook survey conducted among 1000 c-suite executives of companies with annual revenues between $10MM and $1B.

THE U.S. MIDDLE MARKET EXECUTIVE SUMMARY Source: 2Q 2014 Middle Market Indicator 6 REVENUE GROWTH IS STABLE AND PREDICTED TO SURGE COMPANIES MAINTAIN PACE OF HIRING CONFIDENCE, ALREADY HIGH, HAS INCREASED SLIGHTLY CAPITAL INVESTMENT PLANS REMAIN THE SAME CONCERNS ABOUT THE REGULATORY ENVIRONMENT CONTINUE TO SUBSIDE

THE U.S. MIDDLE MARKET Q2 SNAPSHOT REVENUE GROWTH 6.6% PAST 12 MONTHS CAPITAL INVESTMENTEMPLOYMENT GROWTH 3.2% PAST 12 MONTHS 63% WILL INVEST 3.3% NEXT 12 MONTHS 3.4% S&P 500 PAST 12 MO. 2.1% SMALL BUSINESS 2.6% LARGE BUSINESS CONFIDENCE 55% GLOBAL ECONOMY 2Q’13 48% 68% NATIONAL ECONOMY 2Q’13 64% 77% LOCAL ECONOMY 2Q’13 79% 5.8% NEXT 12 MONTHS Source: 2Q 2014 Middle Market Indicator 7

THE U.S. MIDDLE MARKET CONFIDENT/SOMEWHAT CONFIDENT 55% GLOBAL ECONOMY 68% NATIONAL ECONOMY 77% LOCAL ECONOMY Source: 2Q 2014 Middle Market Indicator 8

THE U.S. MIDDLE MARKET ECONOMIC OUTLOOK: WILL GROW 46% GLOBAL ECONOMY 62% NATIONAL ECONOMY 63% LOCAL ECONOMY Source: 2Q 2014 Middle Market Indicator 9

THE U.S. MIDDLE MARKET REVENUE GROWTH: PAST 12 MONTHS 6.6% $10M - $1B Source: 2Q 2014 Middle Market Indicator 10 REVENUE GROWTH PAST 12 MONTHS 3.4% S&P 500

THE U.S. MIDDLE MARKET REVENUE GROWTH: NEXT 12 MONTHS 5.8% $10M - $1B Source: 2Q 2014 Middle Market Indicator 11 REVENUE GROWTH NEXT 12 MONTHS

THE U.S. MIDDLE MARKET EMPLOYMENT GROWTH: PAST 12 MONTHS 3.2% $10M - $1B Source: 2Q 2014 Middle Market Indicator 12 EMPLOYMENT GROWTH PAST 12 MONTHS 2.1% SMALL BUSINESS 2.6% LARGE BUSINESS

THE U.S. MIDDLE MARKET EMPLOYMENT GROWTH: NEXT 12 MONTHS 3.3% $10M - $1B Source: 2Q 2014 Middle Market Indicator 13 EMPLOYMENT GROWTH NEXT 12 MONTHS

THE U.S. MIDDLE MARKET INVESTMENT ALLOCATION Source: 2Q 2014 Middle Market Indicator 14 63% WILL INVEST CAPITAL INVESTMENT

THE U.S. MIDDLE MARKET INVESTMENT ALLOCATION Source: 2Q 2014 Middle Market Indicator 15

THE U.S. MIDDLE MARKET TOP 5 BUSINESS CHALLENGES Source: 2Q 2014 Middle Market Indicator 16 COST OF HEALTHCARE COST OF DOING BUSINESS 87% 82% ABILITY TO MAINTAIN MARGINS UNCERTAINTY OF HOW GOVERNMENT ACTIVITIES WILL IMPACT BUSINESS 77% ABILITY TO ATTRACT, TRAIN, AND RETAIN TALENT 77% 1Q 2014: 86%2Q 2013: 91% 1Q 2014: 81%2Q 2013: 85% 1Q 2014: 83%2Q 2013: 84% 1Q 2014: 86%2Q 2013: 83% 1Q 2014: 75%2Q 2013: 78%

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