Insights.
Actionable intelligence, once a week. Macro and sector moves, curated news with “why it matters,” top deals/targets with scores, and the calendar that moves markets.
Insights.
Actionable intelligence, once a week. Macro and sector moves, curated news with “why it matters,” top deals/targets with scores, and the calendar that moves markets.
Insights.
Actionable intelligence, once a week. Macro and sector moves, curated news with “why it matters,” top deals/targets with scores, and the calendar that moves markets.
Macro & Micro :
Headline U.S. inflation re-accelerated to 2.9% YoY in August while unemployment has drifted up to ~4.3%, and the Fed just cut 25 bps to a 4.00%–4.25% funds target, signaling an easing bias into year-end even as near-term price pressures stay sticky; that mix (cooling labor, still-firm core) argues for selective risk-on with quality and cash-flow resilience.
Next steps:
Stress-test portfolios for a 3.5%–3.75% policy rate path in 2025, then pivot assumptions to 3.25%–3.5% in 2026; favor sectors with pricing power and secular demand (AI infrastructure, power grid, defense) while trimming rate-sensitive cyclicals; use credit where spreads remain near tights only for issuers with clear deleveraging visibility.
Macro & Micro :
Headline U.S. inflation re-accelerated to 2.9% YoY in August while unemployment has drifted up to ~4.3%, and the Fed just cut 25 bps to a 4.00%–4.25% funds target, signaling an easing bias into year-end even as near-term price pressures stay sticky; that mix (cooling labor, still-firm core) argues for selective risk-on with quality and cash-flow resilience.
Next steps:
Stress-test portfolios for a 3.5%–3.75% policy rate path in 2025, then pivot assumptions to 3.25%–3.5% in 2026; favor sectors with pricing power and secular demand (AI infrastructure, power grid, defense) while trimming rate-sensitive cyclicals; use credit where spreads remain near tights only for issuers with clear deleveraging visibility.
Macro & Micro :
Headline U.S. inflation re-accelerated to 2.9% YoY in August while unemployment has drifted up to ~4.3%, and the Fed just cut 25 bps to a 4.00%–4.25% funds target, signaling an easing bias into year-end even as near-term price pressures stay sticky; that mix (cooling labor, still-firm core) argues for selective risk-on with quality and cash-flow resilience.
Next steps:
Stress-test portfolios for a 3.5%–3.75% policy rate path in 2025, then pivot assumptions to 3.25%–3.5% in 2026; favor sectors with pricing power and secular demand (AI infrastructure, power grid, defense) while trimming rate-sensitive cyclicals; use credit where spreads remain near tights only for issuers with clear deleveraging visibility.
Private Equity
Dealmaking is thawing but exits and fundraising remain uneven: Europe led H1 activity/exits as faster rate cuts and policy clarity pulled in U.S. sponsors, while global fundraising is still off recent peaks and backlogs persist, creating opportunity for add-ons and creative liquidity (continuation funds).
Next steps:
(1) lean into buy-and-build where multiples are more rational;
(2) underwrite to base cases with slower 2025 EBITDA growth (tariff and wage pass-throughs are real);
(3) sharpen exit optionality (dual-track, sponsor-to-sponsor, minority recaps) as windows re-open in late-2025/2026.
Private Equity
Dealmaking is thawing but exits and fundraising remain uneven: Europe led H1 activity/exits as faster rate cuts and policy clarity pulled in U.S. sponsors, while global fundraising is still off recent peaks and backlogs persist, creating opportunity for add-ons and creative liquidity (continuation funds).
Next steps:
(1) lean into buy-and-build where multiples are more rational;
(2) underwrite to base cases with slower 2025 EBITDA growth (tariff and wage pass-throughs are real);
(3) sharpen exit optionality (dual-track, sponsor-to-sponsor, minority recaps) as windows re-open in late-2025/2026.
Private Equity
Dealmaking is thawing but exits and fundraising remain uneven: Europe led H1 activity/exits as faster rate cuts and policy clarity pulled in U.S. sponsors, while global fundraising is still off recent peaks and backlogs persist, creating opportunity for add-ons and creative liquidity (continuation funds).
Next steps:
(1) lean into buy-and-build where multiples are more rational;
(2) underwrite to base cases with slower 2025 EBITDA growth (tariff and wage pass-throughs are real);
(3) sharpen exit optionality (dual-track, sponsor-to-sponsor, minority recaps) as windows re-open in late-2025/2026.
M&A Deals
Global M&A is back above $2.6T YTD (Aug) with megadeals and AI adjacencies as catalysts; high-grade acquirers are funding with more equity/cash and less debt, while regulatory process remains a gating item (e.g., Capital One–Discover cleared; Chevron–Hess closed after FTC action).
Next steps:
(1) prioritize “AI-enabled” targets and carve-outs where corporate sellers seek focus;
(2) model equity-heavy consideration and longer regulatory timelines; (3) maintain a live pre-clearance playbook for sensitive sectors.
M&A Deals
Global M&A is back above $2.6T YTD (Aug) with megadeals and AI adjacencies as catalysts; high-grade acquirers are funding with more equity/cash and less debt, while regulatory process remains a gating item (e.g., Capital One–Discover cleared; Chevron–Hess closed after FTC action).
Next steps:
(1) prioritize “AI-enabled” targets and carve-outs where corporate sellers seek focus;
(2) model equity-heavy consideration and longer regulatory timelines; (3) maintain a live pre-clearance playbook for sensitive sectors.
M&A Deals
Global M&A is back above $2.6T YTD (Aug) with megadeals and AI adjacencies as catalysts; high-grade acquirers are funding with more equity/cash and less debt, while regulatory process remains a gating item (e.g., Capital One–Discover cleared; Chevron–Hess closed after FTC action).
Next steps:
(1) prioritize “AI-enabled” targets and carve-outs where corporate sellers seek focus;
(2) model equity-heavy consideration and longer regulatory timelines; (3) maintain a live pre-clearance playbook for sensitive sectors.
ETA/Search Funds
The core ETA model continues to deliver: the Stanford 2024 study still shows strong long-run returns, and IESE’s 2024 international update reports ~18% IRR and 2.0x MOIC, with acquisition success rates higher ex-U.S. Practical edge remains in repeat-purchase B2B services with durable cash conversion.
Next steps:
(1) convert theses into 100-name proprietary lists by SIC/NAICS + geography;
(2) pre-wire financing (senior + SBA/uni-tranche/private credit) and QoE providers;
(3) use a “first meeting” framework—customer concentration, renewal mechanics, price uplift levers, and owner objectives—to qualify fit fast.
ETA/Search Funds
The core ETA model continues to deliver: the Stanford 2024 study still shows strong long-run returns, and IESE’s 2024 international update reports ~18% IRR and 2.0x MOIC, with acquisition success rates higher ex-U.S. Practical edge remains in repeat-purchase B2B services with durable cash conversion.
Next steps:
(1) convert theses into 100-name proprietary lists by SIC/NAICS + geography;
(2) pre-wire financing (senior + SBA/uni-tranche/private credit) and QoE providers;
(3) use a “first meeting” framework—customer concentration, renewal mechanics, price uplift levers, and owner objectives—to qualify fit fast.
ETA/Search Funds
The core ETA model continues to deliver: the Stanford 2024 study still shows strong long-run returns, and IESE’s 2024 international update reports ~18% IRR and 2.0x MOIC, with acquisition success rates higher ex-U.S. Practical edge remains in repeat-purchase B2B services with durable cash conversion.
Next steps:
(1) convert theses into 100-name proprietary lists by SIC/NAICS + geography;
(2) pre-wire financing (senior + SBA/uni-tranche/private credit) and QoE providers;
(3) use a “first meeting” framework—customer concentration, renewal mechanics, price uplift levers, and owner objectives—to qualify fit fast.
IB/Leverage
Financing conditions improved post-Fed cut: IG issuance spiked in early September and “reverse Yankee” euro deals hit records; HY is constructive but selective; banks still report tighter C&I standards, and private credit remains pivotal for sponsor deals as equity checks modestly fall from 2023 highs.
Next steps:
(1) for LBOs, size debt to withstand 200–300 bps rate sensitivity and 1.0x EBITDA wobble;
(2) pre-place flex with both BSL and private credit to protect certainty;
(3) treat euro prints opportunistically for IG issuers;
(4) lock in call-light structures where possible.
IB/Leverage
Financing conditions improved post-Fed cut: IG issuance spiked in early September and “reverse Yankee” euro deals hit records; HY is constructive but selective; banks still report tighter C&I standards, and private credit remains pivotal for sponsor deals as equity checks modestly fall from 2023 highs.
Next steps:
(1) for LBOs, size debt to withstand 200–300 bps rate sensitivity and 1.0x EBITDA wobble;
(2) pre-place flex with both BSL and private credit to protect certainty;
(3) treat euro prints opportunistically for IG issuers;
(4) lock in call-light structures where possible.
Amortization
Expect Term Loan A to amortize evenly over ~5–7 years while Term Loan B remains largely bullet with nominal (often ~1%–5%/yr) mandatory paydown plus excess-cash-flow (ECF) sweeps—key levers that accelerate deleveraging when cash generation is strong. Draft these carefully alongside covenants and builder baskets.
Next steps:
(1) negotiate lower ECF sweep tiers once net leverage passes set hurdles;
(2) model optional prepayments versus growth capex to maximize equity IRR;
(3) favor springing ECF triggers tied to cash conversion/working-capital metrics for seasonal businesses.
Amortization
Expect Term Loan A to amortize evenly over ~5–7 years while Term Loan B remains largely bullet with nominal (often ~1%–5%/yr) mandatory paydown plus excess-cash-flow (ECF) sweeps—key levers that accelerate deleveraging when cash generation is strong. Draft these carefully alongside covenants and builder baskets.
Next steps:
(1) negotiate lower ECF sweep tiers once net leverage passes set hurdles;
(2) model optional prepayments versus growth capex to maximize equity IRR;
(3) favor springing ECF triggers tied to cash conversion/working-capital metrics for seasonal businesses.
Amortization
Expect Term Loan A to amortize evenly over ~5–7 years while Term Loan B remains largely bullet with nominal (often ~1%–5%/yr) mandatory paydown plus excess-cash-flow (ECF) sweeps—key levers that accelerate deleveraging when cash generation is strong. Draft these carefully alongside covenants and builder baskets.
Next steps:
(1) negotiate lower ECF sweep tiers once net leverage passes set hurdles;
(2) model optional prepayments versus growth capex to maximize equity IRR;
(3) favor springing ECF triggers tied to cash conversion/working-capital metrics for seasonal businesses.
Valuation
The S&P 500 forward P/E (~22–23x) sits well above 5- and 10-year averages, so multiple expansion is thin ice; sector dispersion remains wide (e.g., U.S. software EV/EBITDA medians in the high-20s), making ROIC-vs-WACC and unit-economics sanity checks non-negotiable.
Next steps:
(1) triangulate value with EV/EBITDA, DCF (implied ERP), and payback on invested capital;
(2) build scenario trees that flex pricing power and cost of capital;
(3) for private comps, haircut public multiples for liquidity/scale and align to cohort LTV/CAC and net retention.
Valuation
The S&P 500 forward P/E (~22–23x) sits well above 5- and 10-year averages, so multiple expansion is thin ice; sector dispersion remains wide (e.g., U.S. software EV/EBITDA medians in the high-20s), making ROIC-vs-WACC and unit-economics sanity checks non-negotiable.
Next steps:
(1) triangulate value with EV/EBITDA, DCF (implied ERP), and payback on invested capital;
(2) build scenario trees that flex pricing power and cost of capital;
(3) for private comps, haircut public multiples for liquidity/scale and align to cohort LTV/CAC and net retention.
Trending for 2026
AI infrastructure & power: hyperscaler capex and chip-fab builds keep data centers and grid equipment tight; global electricity demand growth remains elevated into 2026, and fab pipelines (CHIPS-driven) are robust. Defense & dual-use tech: NATO now meets the 2% GDP target across members, with higher outlays supporting C4ISR, cyber, and munitions. Nearshoring: Mexico continues to attract record FDI as U.S. supply chains localize. Energy: LNG may swing to oversupply by 2026—great for buyers, margin risk for exporters.
Next steps (how to play 2026):
(1) build an AI-power bottleneck basket (transformers, switchgear, grid software, advanced packaging, specialty chemicals);
(2) pursue dual-use defense roll-ups with long-cycle aftermarket;
(3) structure Mexico manufacturing JVs with FX-hedged supply contracts;
(4) lock multi-year LNG offtake on buyer-friendly terms and evaluate gas-to-power arbitrage.
Trending for 2026
AI infrastructure & power: hyperscaler capex and chip-fab builds keep data centers and grid equipment tight; global electricity demand growth remains elevated into 2026, and fab pipelines (CHIPS-driven) are robust. Defense & dual-use tech: NATO now meets the 2% GDP target across members, with higher outlays supporting C4ISR, cyber, and munitions. Nearshoring: Mexico continues to attract record FDI as U.S. supply chains localize. Energy: LNG may swing to oversupply by 2026—great for buyers, margin risk for exporters.
Next steps (how to play 2026):
(1) build an AI-power bottleneck basket (transformers, switchgear, grid software, advanced packaging, specialty chemicals);
(2) pursue dual-use defense roll-ups with long-cycle aftermarket;
(3) structure Mexico manufacturing JVs with FX-hedged supply contracts;
(4) lock multi-year LNG offtake on buyer-friendly terms and evaluate gas-to-power arbitrage.
Trending for 2026
AI infrastructure & power: hyperscaler capex and chip-fab builds keep data centers and grid equipment tight; global electricity demand growth remains elevated into 2026, and fab pipelines (CHIPS-driven) are robust. Defense & dual-use tech: NATO now meets the 2% GDP target across members, with higher outlays supporting C4ISR, cyber, and munitions. Nearshoring: Mexico continues to attract record FDI as U.S. supply chains localize. Energy: LNG may swing to oversupply by 2026—great for buyers, margin risk for exporters.
Next steps (how to play 2026):
(1) build an AI-power bottleneck basket (transformers, switchgear, grid software, advanced packaging, specialty chemicals);
(2) pursue dual-use defense roll-ups with long-cycle aftermarket;
(3) structure Mexico manufacturing JVs with FX-hedged supply contracts;
(4) lock multi-year LNG offtake on buyer-friendly terms and evaluate gas-to-power arbitrage.
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Contact us