Get Bigger or Get Out of the Way

An Insider’s Guide to Navigating Strategic Growth for Mid-sized Firms

Stuck in the Middle

During the course of my career I’ve spent a lot of time working with and within small and medium sized enterprises as an employee, leader, owner/founder, board director, and more recently also as an adviser/problem solver for CEOs and founder-entrepreneurs.  We are talking about businesses with 100-2000 employees, or smaller, high-turnover generating firms.

I compare the challenges these firms face to the challenges of the middle class in many economies: the super wealthy are accumulating more, and many in the middle are becoming poor or struggling more often.  What used to be the majority middle is being squeezed at both ends.

It’s a bit the same with mid-sized firms.

During the past few decades mergers and acquisitions (M&A) across all professions and industries have created mega-companies – the market share of the top four companies per industry increased by five percentage points between 2000 and 2019^[1].  Increasingly this is the case in services and professions, not just industries with traditionally high barriers to entry such as digital tech and cloud computing, resources, manufacturing and pharmaceuticals.  Over the same period the proportion of workers around the world who are entrepreneurs, freelancers or micro business proprietors has also increased dramatically^[2].

The mega firms have competitive advantages in market dominance or presence almost everywhere, diversified sources of revenue, price-setting power and supply chain negotiating leverage.  They compete on a vast economy of scale.

Small and micro businesses typically have low overheads, usually a high degree of specialisation or personalisation, often close relationships with customers and suppliers, and generally don’t have external investor or shareholder pressure to grow revenue and profits every year.  They compete on adaptability and stickiness but often struggle with productivity.

And the mid-sized businesses?

In my experience they risk having the worst of all worlds – they are neither large nor small, without the scale and dominance of global competitors or the agility and flexibility of their smaller competitors in local markets.

But…..they also have unique opportunities to provide a viable “third way” choice for employees and customers – if they play their cards right.

Your Competition is Global

If you are a director or executive with a mid-sized firm it’s risky to believe you have confined your operations to a domestic market, because you can bet many of your competitors are local offices of global companies, local firms who have been acquired, or joined international franchises or partnerships.

Your competition is probably global, even if your clients or customers are local.

When I was headhunted to establish and lead the Asian operations of an Australian-based firm I played a key role with our CEO in encouraging a shift away from this mindset.  Some of the most iconic companies in Australia were repeat clients of the firm, and competitors were primarily home-grown – although a few had expanded overseas with varying degrees of success.

However, convinced of the benefits and aware of the risks laid out in the detailed business case I prepared, the board backed international expansion.

Once we were firmly established in Asia our client demographic skewed towards multinationals, with regional decision-makers mostly based in Singapore and Hong Kong.  We were smart and built close relationships and were very successful at winning work.

However after the global financial crisis two shifts started to accelerate and converge.

The first was increasing centralisation and homogenisation of decision-making and procurement processes within multinationals, and the second shift was the accelerating acquisition of adjunct and aligned services by multinational competitors, who had spent the early years of the millennium merging into a handful of global full-service firms.

We worked with global clients, so we needed all the systems, processes, QA and compliance that the big guys needed, and we remained competitive and successful.  But with only 300-400 employees spread over 5 offices and a well-defined focus on core services, we had a diseconomy of scale in both pricing and central overheads.  We also lacked the ‘service bundling’ ability of the mega-firms and their network of influential relationships at the top of global hierarchies.

Smaller local competitors continued to challenge us with their lower cost base and ability to pursue smaller projects more efficiently.

I have lost count of the times I said during strategic planning workshops and as an executive director on the parent company board that we risked being stuck in the middle.

Not big or small. Not niche or full-service. Not local yet not global.

My fear was that over the time we would become less competitive, less sustainable and less attractive as a great place to work and a great firm to partner with.

You Might Kiss a Lot of Frogs

I could see this clearly from Asia, but it was less apparent from within Australia, if no less a real medium-term threat.  I wasn’t the only voice that suggested we needed to prune to become stronger and then shrewdly expand further, and at one stage the CEO and I seriously explored expansion of our Asian footprint.

We focussed on the increasingly active and maturing Hong Kong and Shanghai markets where we had experience and networks.  Planting a flag in the ground of Singapore had worked extremely well as a growth strategy, but for a number of reasons it was less likely to be successful in China.

In mainland China we had identified a firm with two well-established offices in Shanghai and Beijing, a single owner (easier to negotiate with), a highly capable and ambitious office director in Shanghai, complementary (and some same) clients, and with similar culture, values and competitive strategy.  Their two offices were not dissimilar in headcount to some of ours.

We received encouraging signs from the founder – who like me was an expat – and agreed to commence talks and in parallel engage in regular knowledge sharing to provide new professional learning opportunities and contacts for our employees.  Although the potential for an acquisition remained highly confidential, we both saw the employee engagement initiative as a good test of cultural connection and openness to new ways of doing things.

However, our negotiations fell through during early due diligence, mainly as a result of different expectations of shareholding and voting rights and to the restructuring needed to achieve efficiency gains, which was a key objective of any growth-oriented acquisition.

This was disappointing, but the right outcome.

Like Likes Like – Leveraging Mid-size Advantage

M&A’s can be an extremely effective way for mid-sized firms to improve competitive advantage by growing footprint, products and/or services, reducing competition and/or accessing new customers, or by increasing efficiency (eg by accessing new systems or technologies).

It can also create more nuanced value for both organisations in other important ways, such as:

• Provide opportunities from strategy through negotiation, implementation and integration for emerging leaders to step up and gain visibility and valuable skills and learning;
• Demonstrate to employees that the firm is committed to pursuing growth which can increase opportunities for promotion or movement into different locations or market segments;
• Diversify the ownership base and potentially strengthen succession planning, particularly within the senior ranks;
• Demonstrate to the customers, partners, competitors, employees and potential future employees that the company does not accept the status quo as being ‘good enough’ and strives to improve its ability to bring value to customers; and
• Raise the organisations profile and provide marketing and PR opportunities.

While these strategic advantages of a mid-size acquisition can also benefit large and mega-companies, the effects can be diluted by their existing scale.  Also, the integration tends to be more complex, slower and often meets with more employee resistance as the benefits for them are less obvious.

Leaders of mid-sized firms are also often suspicious of the motives of mega-firms, and wary of the scale of cultural, structural and process change a take-over is likely to mean for their company and its people.  Many would prefer to engage with a partner where the size differential is smaller, making SME-SME M&A options more plentiful and attractive (at least on the face of it).

The Middle Ground is Full of Potential – For Now

The middle ground in business has never been more precarious – or more full of potential.  Mid-sized firms face real and growing pressure from both ends: mega-firms with their scale, reach and bundled services on one side, and nimble, low-cost specialists on the other. Standing still is not a neutral position; it is a slow retreat.

But as this article has argued, being mid-sized is not simply a disadvantage waiting to be resolved.  It is a distinct strategic position with genuine strengths – closer leadership, more agile decision-making, a clearer cultural identity, and the ability to pursue M&A partnerships where both parties see themselves as equals rather than predator and prey.  The failed China acquisition was not a setback; it was due diligence working exactly as it should.

The firms that will thrive are those that see M&A not as a panic response to competitive pressure, but as a deliberate, well-timed tool for building a stronger, more differentiated business.

Done well, it accelerates growth, deepens leadership capability, energises employees, and sends a clear signal to the market that the firm is playing to win.

The strategic window for mid-sized firms is real – but it won’t stay open indefinitely.  As consolidation continues across industries and professions, the pool of attractive, well-aligned acquisition targets will shrink.  The firms that move with clarity and conviction now will be the ones that define the competitive landscape of tomorrow, rather than simply respond to it.

Get bigger, get smarter, or get out of the way. The choice, for now, is still yours.

If this feels worth exploring further, I’d welcome the conversation.

Caroline M Burns

This article was originally published in the June-July 2025 edition of my newsletter The Regenerative Edge.

If you would like to read more on the cultural aspects of merger and acquisition strategy, read this Sucessful SME post next.

Notes and References

Some company and situational details in the examples shared have been changed or blended with other cases to protect confidentiality.

^[1] Sara Calligaris et al., ‘New Approaches to Measure (Increasing) Concentration in Europe’, in CEPR, 2025, https://cepr.org/voxeu/columns/new-approaches-measure-increasing-concentration-europe; Rose Jacobs, ‘Rising Corporate Concentration Continues a 100-Year Trend’, Chicago Booth Review (Chicago, Ill.: Chicago Booth, 15 August 2022), https://www.chicagobooth.edu/review/rising-corporate-concentration-continues-100-year-trend.

^[2] Anu Madgavkar et al., ‘The Rise of MSMEs (Micro, Small, and Medium Enterprises)’ (McKinsey & Co., 2 May 2024), https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-spotting-opportunities-to-boost-productivity.