How middle-market companies compete in 2026 — operational efficiency and more

Leaders of middle market companies are leveraging a multipronged approach to navigate the current environment, according to the 2026 Mid-Market Report.

Planning for the future is becoming even more complex for business owners and executive leadership. Fortunately, surfacing and evaluating data on key trends matched with proactive preparation can help.

Understanding how impactful access to market data can be, our 2026 Mid-Market Report compiles survey results from business leaders across industries and markets. The market data shows how, although they’re optimistic, leaders are employing multiple approaches to navigate the current environment.

Explore the full report or dig into section snapshots:

• For owners and CEOs: Data to help middle-market companies beat uncertainty in 2026
• Four challenges, including supply chain, facing middle-market companies in 2026
• Six high-impact tactics to consider for this year

AI helps drive technology adoption

The data reveals that technology adoption, particularly AI, isn’t only a prime concern for leaders, but also a major tactic for combating increasing overhead costs; 59% of respondents indicate technology is key to their current business strategy.

The data shows leaders who are investing in AI are going all in. Spending in this area ranged from $500,000 (17%) to $1 million (18%). The average investment was over $600,000.

Most of these businesses are using AI to improve efficiencies and incorporate automation (76%), reduce rising overhead costs (60%), and analyze data for better insights (57%).

Results also show leaders recognize the need for AI to attract qualified talent (62%) and stay competitive (50%).

70% of these investments are going towards educating employees on the external AI tools within internal guidelines. 55% are investing in consultants to help determine their AI usage.

This correlation between AI and attracting and retaining talent points to leaders’ understanding that AI is a powerful tool that can enhance human effort, not replace it. It’s also an indication that these younger leaders understand the upcoming workforce expects access to cutting edge technology from their employers.

These results align with ongoing marketplace trends that show leaders understand and accept that technology, specifically AI, is a must-have business tool and that they’re exploring how to leverage it effectively.

Proactive ways CEOs, owners aim for operational efficiency

Many leaders are preparing for increased operational costs due to interest rates (63%), tariffs (61%), and additional regulations (48%). The data shows a wide range of operational efficiencies are being put into play to counterbalance these economic factors that are out of leaders’ control.

As well as increasing technology investments (59%), leaders are also focusing on improving customer relationships and experience (55%), increasing internal productivity and efficiency (55%), and enhancing products or services (49%)

To directly combat tariffs, leaders are implementing proactive measures, like securing domestic suppliers (61%), increasing product prices (55%), and finding cheaper alternatives throughout their supply chain (53%). 42% have dipped into their cash reserves, which is a 4% decrease from our previous report.

Those who cut operational costs have done so by:

• Allowing flexible or hybrid work-from-home policies (79%)
• Eliminating real estate (51%)
• Downsizing office spaces (51%)
• Implementing hiring freezes (41%)
• Removing certain in-office perks (39%)

Combined with the activity around investing in technology, these proactive measures illustrate how mid-market leaders are implementing multifaceted tactics to strengthen and streamline their operations. They’re using a holistic approach that allows them to enhance efficiencies and improve operational effectiveness.

How middle market companies keep an eye on talent

This year’s report uncovers how leaders view talent. 43% report talent shortages as a potential business risk. Results also show a continued focus and investment in upskilling and retaining staff.

For those focused on their current talent, the data shows a continued commitment to providing development and upskilling opportunities (55%) — a 3% increase from our previous report. Other major HR concerns are increasing employee retention (43%) — a 12% increase — and strengthening company culture (36%). Fostering the talent pipeline dropped from 35% in our previous report to 33% in our current report.

Despite this recognition of the importance of talent development and retention, 20% of respondents are considering layoffs. Labor costs often are either a corporation’s first or second largest cost. With costs increasing, unless revenue follows suit, layoffs almost become inevitable.

The emerging concern about labor shortages may reflect difficulty in sourcing qualified talent or workers with specialty skills, like those needed in the construction and technology sectors. The focus is on fostering experienced talent.

The commitment to fostering current talent again speaks to leaders’ multifaceted approach to the current economic landscape. They’re not simply turning to layoffs to bolster cash flow. They’re taking a long view and minimizing talent loss.

Look to the future: Transition plans and succession strategies

76% of mid-market leaders report they’re considering restructuring or a business transition plan to address current market conditions.

Of those looking at business transitions, 62% are creating succession plans, 49% are considering private equity investments, and 42% are creating exit strategies.

The interest in private equity reflects not only private equity’s increasing profile across all industries but also that leaders’ view it as a viable source of working capital in this uncertain economic landscape.

Those leaders looking to leverage private equity did express significant concerns, including that the private equity firm would:

• Prioritize cost cutting (60%)
• Change corporate culture (40%)
• Lose the organization’s mission or view (35%)
• Hinder growth goals (33%)

That succession planning is the primary transition consideration may speak to where the respondents are in their careers. As a young population, these are professionals who may not be looking to retire but rather are looking to begin a new venture. Establishing a succession plan allows them to separate from their current position and prepare them for their next endeavor.