Middle-market finance executives reported strong performance last year across a number of key measures in comparison with 2024, according to research by Valley Bank.
Atop the list of improvements was cash flow. Among 500 financial decision-makers with annual revenue of $5 million to $249 million, a vast majority of them, 92%, rated last year’s cash flow as “good” or “very good” on a five-point scale.
That was a gain of 13 percentage points from last year’s survey by Valley Bank, a regional bank based in Morristown, New Jersey, with about $64 billion in assets.
Applying the same approach to other important measures, productivity increased 10 points to 95%, profitability was up 10 points to 89% and customer acquisition climbed 6 points to 85%. Employee retention and customer retention stepped up by 5 and 4 points to 84% and 89%, respectively.
“Middle-market companies are entering 2026 with strong momentum and clear intent,” Valley Bank wrote in its research report. “Many are performing better than they were a year ago, and optimism remains high.”
However, the bank stressed that this is not an apt time for business leaders to let a strong year create a sense of complacency. While internal operations have become more stable, several key risks are coming from external factors, requiring continued vigilance and adaptability.
When respondents were asked what difficulties they’ve experienced in reaching performance goals, 31% said the combined effects of inflation and interest rates have been difficult or very difficult. Next came finding good employees (30%) and cost or availability of materials (21%).
“Strong performance does not eliminate operational drag — it raises the stakes,” Valley Bank wrote. “When costs are moving and talent is hard to secure, the businesses that win are the ones that tighten execution.” That often entails removing manual steps, shortening cycle times and creating clearer visibility into cash and risk.
Pointing out some “execution gaps,” the report noted that, for instance, while 49% of the survey respondents rated profit margin management as “very important,” just 36% saw their performance in managing margins as “very effective.” Similar gaps were evident with several other key execution challenges.
Such gaps can quietly slow growth. For example, Valley Bank noted, teams sometimes compensate for inefficient processes with manual workarounds “that keep things moving but don’t scale.” That, unfortunately, can hamper productivity, add operational risk, and “blur visibility when decisions need to be faster and better informed.”
