Mid-Sized Businesses Are Roaring: Latest Research By BDO Australia

Mid-Sized Businesses Are Roaring: Latest Research By BDO Australia

Latest research from leading accounting and consulting firm, BDO Australia, shows that the nation’s mid-sized businesses are showing strong growth even with the economic headwinds created by the COVID19 pandemic.

According to the BDO Growth Index 2021, produced in collaboration with Commonwealth Bank, mid-sized businesses - those with annual turnovers between $10 million and $1 billion - have seen year-on-year annual revenue growth of 7.63% over the most recent *three-year period. For the most recent reporting year, mid-sized businesses generated annual revenues of $351.7m. Profits have also been rising, with average Profits before Tax (PBT) of $19.9 million.

BDO Sydney Office Managing Partner, Grant Saxon, said the slice of the Australian economy, which continues to tick the box for economic success, is the quiet-achieving middle market.

“Mid-sized businesses continue to punch above their weight in terms of generating growth,” Grant said.

“They are unique in that they are large enough to invest and make a meaningful impact on the economy, yet small enough to be entrepreneurial and nimble, often with a clear market niche.

“Whilst there is plenty of innovation occurring in the start-up community, innovation is commercialised in the mid-market. Their ability to adapt and quickly respond to changing markets are key characteristics of successful businesses in the middle market.”

Mark Couter, Executive General Manager, Commercial Banking Commonwealth Bank added that: “Mid-sized businesses have had to deal with a changing regulatory environment, as well as heightened expectations of businesses’ role in society. Customer needs and expectations continue to evolve. Whatever their last best-in-class experience was, they expect the same from all interactions with businesses, regardless of industry.

“The pandemic has only accelerated many of these trends. The business landscape is as dynamic as ever, making resilience, adaptability, and the ability to innovate at pace essential qualities for mid-sized businesses wanting to grow.”

The report identified that more than half of all mid-sized businesses in Australia (59%) operate within just five core industries – manufacturing and wholesale trade; financial services, professional services; construction; and retail. The transport, postal and warehousing sector, together with retail achieved the highest revenue growth of around 27% each, nearly three and a half times faster than the market average (7.63%).


Wholesale Trade and Manufacturing

The Manufacturing and Wholesale Trade industry combined represents 36% of total businesses within Australia’s mid-sized business market. Each sector contains twice as many businesses compared to any other industry (e.g., Financial Services 9%, Professional Services 8%).

The majority (88%) of these businesses are located in Australia’s southeast, with 50% operating within New South Wales and 33% in Victoria.

Mid-sized businesses within each sector are most likely to be privately owned, with 85% of Wholesale Trade businesses companies and 73% of manufacturing businesses being registered as privately owned.

Businesses within these sectors generate a large amount of revenue, however, are less profitable than other mid-sized-market industries. On average, Wholesale Trade businesses generate $361m of revenue and $18m of profit in the most recent trading year. This compares to Manufacturing companies where average company revenue is also $361m while average profits are marginally lower at $14m.

Top five Wholesale Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. iNova Pharmaceuticals
  2. Baker Hughes
  3. Louis Dreyfus Company
  4. Mitsui & Co Australia
  5. Boehringer Ingelheim Animal Health

Top five Manufacturing Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. Real Pet Food Company
  2. Marubeni-Itochu Tubulars Oceania
  3. Knorr-Bremse Australia
  4. AMA Group
  5. Technicolor

Financial services

The Financial Services sector is the third-largest industry by business count (9%) and the largest profit generator.

During the most recent reporting period, Australia’s mid-sized Financial Services businesses recorded a total Profit before Tax of $3.7b. This was a result of total revenue across the industry equal to $27 billion.

Businesses within the Financial Services sector are most likely to be publicly listed companies (64%), rather than privately owned (27%) or otherwise structured (9%).

The industry has been experiencing growth over the past three years with average revenue CAGR and PBT CAGR increasing at rates of 6.65% and 0.54% respectively.

Top five Financial Services Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. Zip
  2. Afterpay Touch
  3. Columbus Capital
  4. Gen Re
  5. Gen Re Life Australia

Professional, Scientific and Technical Services

The fourth-largest industry among mid-sized businesses in Australia is Professional Services. Professional, Scientific and Technical Services represent 8% of businesses within the market.

The sector is also ranked fourth in terms of total revenue generated ($24b) and is the seventh most profitable ($1.1b) after other key sectors such as Utilities ($2.8b), Manufacturing ($2.3b) and Mining ($1.3b).

Mid-sized businesses within the Professional Services sector are only marginally more likely to be privately operated (50%) rather than be public companies (46%).

Top five Professional Services Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. JCDecaux Australia
  2. Appen Limited
  3. Amazon Web Services Australia
  4. Verbrec
  5. Lockheed Martin Australia

Construction and Logistics experiencing the fastest growth

Historically influenced by Australia’s growing population and supported by continued government investment, average revenue CAGR has been growing at the fastest rate within the Construction industry. The Construction industry, which represents 6% of all mid-sized businesses in Australia, has seen average revenue CAGR increases of approximately 10%. However, average CAGR in terms of profitability is not as strong, reflecting a 3% reduction in profitability growth rates across the most recent 3 years.

The geographic distribution of mid-sized Construction companies is slightly different to the regular distribution of mid-sized businesses. While New South Wales still contains the largest proportion of construction companies (30%), it is closely followed by Western Australia (26%) and Victoria (22%).

Two in three Construction mid-sized businesses are privately owned companies (66%). The remaining third (33%) are public companies.

Construction companies within the mid-sized market are almost twice as likely to be Australian owned and operated compared to foreign-owned companies in the sector. Nearly two-thirds (65%) of Construction companies in the mid-sized market are Australian owned compared to 35% which are owned by overseas parent organisations.

Top five Construction Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. Boskalis Australia
  2. Daiwa House Australia Pty Ltd
  3. SRG Global
  4. J & P Richardson
  5. Jan De Nul (Australia)


The 2021 BDO Growth Index has also revealed that the Retail Trade is another key contributor to the Australian market for mid-sized businesses.

Representing 6% of mid-sized businesses and 7% of the market’s total revenue, the Retail Trade is the sixth largest industry sector. During the most recent reporting period, Retail Trade businesses within the Australian mid-sized business market generated revenues of $21b, growing at an average revenue CAGR of 26.59%. This was the second fastest growing average revenue CAGR, with the industry growing more than twice as fast as the next fastest industry, Accommodation and Food Services (12%). 

PBT across the sector is lower than some of the other key sectors at $611m, ranking it as the 11th most profitable industry. On average, mid-sized retailers earn a PBT of $11m per annum.

Nearly three-quarters of mid-sized Retail Trade businesses are privately owned and operated (72%).

The Retail Trade sector is dominated by Australia’s eastern states with nearly half of all mid-sized retailers located in New South Wales (48%). There is also a comparably large proportion of retailers in Victoria (39%) compared to any other states such as Queensland (9%) or Western Australia (4%).

Top five Retail Businesses in terms of annual revenue percentage growth (3-year CAGR):

  1. Amazon Australia
  2. Conti Trade Australia
  3. Temple & Webster
  4. New Aim
  5. DFS Australia

Geographic insights:

New South Wales the home of mid-sized manufacturing:

  • Nearly half of all mid-sized businesses are based in New South Wales (46%). Two-thirds of these are private companies (66%), which is the highest proportion of privately-owned businesses compared to any other state or territory in Australia (56% Victoria and 55% South Australia).
  • Revenue growth has remained positive among mid-sized businesses in New South Wales, increasing at an average revenue CAGR of 7.05%. This ranks New South Wales as the fourth fastest state for average revenue growth among mid-sized businesses.
  • The three most common industries for mid-sized businesses in New South Wales are Wholesale Trade (24%), Manufacturing (14%) and Financial Services (13%). Not only do Wholesalers in New South Wales represent a large proportion of the state’s market (24%), but they represent over one-tenth (11%) of the Australian market for mid-sized businesses.
  • In terms of percentage revenue growth – the fastest growing mid-sized business in NSW is Amazon Australia (achieving a 549.81% Revenue CAGR over the most recent 3 years).

Mid-sized businesses growing in Victoria

  • Victoria contains over a quarter of Australia’s mid-sized businesses (28%). The 2021 BDO Growth Index has revealed that mid-sized businesses in the state are growing at an average revenue CAGR of 8.57% (over three years) which ranks the state in third position in terms of annual revenue growth.
  • The most common industries include Manufacturing (22%), Wholesale Trade (20%) and Retail Trade (8%). Nearly two-fifths of Australia’s mid-sized retail businesses (39%) are located in Victoria.
  • In terms of percentage revenue growth – the fastest growing mid-sized business in Victoria is Emergent Cold (achieving an 863.41% Revenue CAGR over the most recent 3 years).

Prominence of publicly owned mid-sized businesses in Queensland

  • Queensland is one of only two states and territories where mid-sized businesses are slightly more likely to be publicly owned (45% compared to 44% privately-owned companies). The only other state to record a higher proportion of public companies (53%) compared to proprietary businesses (39%) is Western Australia. 
  • Mid-sized businesses are growing at an average rate of 4.03% in Queensland, based on revenue CAGR. This ranks Queensland as the sixth highest state/territory based on the BDO Growth Index 2021 results. Queensland is marginally behind South Australia in terms of CAGR Revenue growth (4.18%) and Tasmania (4.17%).
  • The largest industry segment among mid-sized businesses in Queensland is manufacturing, which comprises 25% of the market, followed by Professional Services, which account for one in 10 mid-sized businesses (10%), and a similar proportion of Construction businesses (9%).
  • In terms of percentage revenue growth – the fastest growing mid-sized business in Queensland is Verbrec (achieving a 66.96% Revenue CAGR over the most recent 3 years)

Western Australia dominates the Mining sector

  • Western Australia is one of the fastest growing states in terms of mid-sized business revenue growth over the last 3 years. Organisations in Western Australia have achieved an average of 12.55% Revenue CAGR. In Western Australia, the largest industry segment is mining which represents 39% of the state’s market. Nearly two-thirds of all mid-sized mining companies (65%) are in the western state.
  • In terms of percentage revenue growth – the fastest growing mid-sized business in Western Australia is Boskalis Australia (achieving a 289.53% Revenue CAGR over the most recent 3 years).

Other states and territories

  • The remaining states and territories contain 15% of Australia’s mid-sized businesses. ACT reflects the highest growth rate in terms of Revenue CAGR (14.34%), however, the sample size is small.
  • In terms of percentage revenue growth – the fastest growing mid-sized business in South Australia is Sealink Travel Group (achieving a 73.06% Revenue CAGR over the most recent 3 years).

The BDO Growth Index 2021 is now available online.

Research methodology

*Year-end dates vary for mid-sized businesses; however, the majority (88%) have year-ends of December 2019 (45%) and June 2020 (43%).

The BDO Growth Index takes a robust sample of nearly 900 Australian businesses, which are used to uncover the distinct characteristics of the market for mid-sized businesses.

BDO analysed the most recent three years of financial data and demographic information of organisations across Australia. To focus our definition on the market for mid-sized businesses, BDO removed those organisations with annual revenues exceeding $1bn and those with revenues below $10m from the dataset.

The primary metric considered within the BDO Growth Index is the Compound Annual Growth Rate (CAGR) of annual revenues and CAGR of Profit before tax (PBT). While there are many possible metrics that could be used to evaluate organisational performance, the emphasis of this report is on growth. CAGR presents a well-accepted metric to identify organisations that are achieving revenue and profitability growth. Throughout this report, we have calculated the CAGR for annual revenues and profitability over the most recent 3 reporting periods (years) of the organisations, to identify a growth trend across numerous years.