According to the most recent quarterly Middle Market Business Sentiment Survey by KeyBank Commercial Bank, contrary to predictions for 2013, this is not the year that middle market companies will set new records for mergers and acquisitions. But that doesn't mean the middle market is standing still.

While nearly half of the middle market leaders polled said they have not been merger-minded so far in 2013, 57 percent of companies indicated they will expand their businesses within the next six months, usually by adding employees, buying equipment or adding new facilities.

Cindy Crotty, head of KeyBank's Commercial Banking Segment, said it appears the middle market wants to hedge its bets given ongoing uncertainty about significant issues such as the US debt crisis and companies' final tab for compliance with the Affordable Health Care Act.

"Until they have more clear information about these big issues, middle market companies just are not willing to take the risk of investing in and integrating acquisitions," Crotty said. The full report is available at www.key.com/MMinsights

According to the survey, 49 percent of middle market business leaders polled had no interest in making an acquisition, and only 24 percent of those polled completed an acquisition. An additional 27 percent indicated they considered but did not complete an acquisition.

Significantly, middle market leaders remain risk-averse despite their growing confidence in the economic outlook nationally, locally and for their businesses.  More than half characterized the US economic outlook to be good to excellent for the remainder of 2013 and early 2014.

Crotty said companies that passed on M&A opportunities so far still might take the plunge: "There are a lot of factors that make this the right time to buy, including taking advantage of interest rates that are still low – at least for now," she said.

Other insights of note include:

• New jobs will fuel middle market expansion, according to the most recent survey. Sixty-one percent of the companies planning growth will do so by adding employees. Expansion through adding new facilities or locations and making significant equipment purchases are secondary.

• Cash reserves are on hand for middle market companies financing expansion. Half of the middle market leaders polled will increase cash reserves over the next six months; of those, 39 percent want deep reserves on hand as they plan for company investment or expansion.

• Access to credit increases middle market leader confidence in their ability to finance growth. A combined 70 percent of those polled indicated they are either extremely confident or very confident in their ability to obtain credit.

• Time hasn't eased healthcare cost concerns. More than half those polled are more concerned now than last year at this time about the cost to provide or continue providing healthcare to employees. A significant percentage of those polled – some 62  percent – are very or extremely concerned about the cost to provide adequate healthcare to their employees. Approximately 49 percent indicated they are very or extremely concerned about the cost of continuing to offer healthcare.

KeyBank partnered with Lieberman Research Worldwide on the Middle Market Business Sentiment survey to understand what businesses sentiments are impacting each organization's strategies and tactics, and to determine which regulatory and global economic issues are affecting them. Online surveys were conducted in mid-April and involved 400 financial decision-makers in middle market businesses ranging from $20 million - $4 billion annual revenues.