DEER ISLE: Insights, Flows & Investment Trends
It’s the People … But, Is It Still?
Has the value equation in business fundamentally changed from a focus on people as value drivers to machines, robots and AI as they have become more effective and capable. It’s true that the relative value driver has changed representing increasing “productivity” (same number of people for greater output) but machines, robots and AI still require people to create the values, frameworks and innovation that are the hallmarks of successful companies. Companies that integrate human leadership with technological advancements as well as regulatory considerations are best positioned to maximize capital value creation.
- Old Equation: People = Value
- Workforce size and skill main drivers of business success.
- Investors evaluated human labor and expertise.
- Transition Phase: People + Machines = Greater Efficiency
- Automation replaced repetitive tasks (e.g., industrial robots, ATMs).
- Companies gained productivity, but human oversight remained essential.
- New Equation: (Value-Add People) + (Machines/AI) = Maximum Value
- People supply leadership, innovation, culture and creativity
- Machines/AI now can handle entire processes:
- Driverless tractors replace farm workers.
- Fully automated McDonald’s eliminates frontline employees.
- Dark factories operate with no human labor.
- AI in finance executes trades and underwriting faster than humans.
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INVITATION: LSTA DealCatalyst U.S. Private Credit Industry Conference on Direct Lending, this May 12-13 at the Omni Nashville Hotel. Last year’s conference saw:
- 1,000+ attendees including 450+ fund managers and allocators
- 70+ industry leading speakers
- 24+ hours of content and networking opportunities
LPs/Allocators can register for free for a limited time using by CLICKING HERE [Use link https://hubs.la/Q037LSGm0]
Deer Isle have secured a 20% discount on tickets for GPs, just enter the promo code Deer20
Capital Provider Interest: Large single-family office looking for pre-IPO companies that have at least $100 million in revenue.
Secondaries: Secondaries market continues to be robust and to grow. Hearing that price to NAV can be as broad as a 30% discount to NAV to a 10% premium to NAV. Not surprisingly, VC has the biggest discounts, and PE has the best chance of pricing above NAV.
Private Equity: Funds that started their capital raise in 2023 or earlier (ie: started capital raise prior to current capital winter) are reaching the end of their formal capital raising period. Many must contend with smaller than expected funds while some are successfully asking for extensions.
Private Credit: The dawn of Asset Backed Financing characterized by more idiosyncratic underlying assets has arrived. ABF assets have often been tied to consumer finance such as line of credit financing, and have expanded to more esoteric assets such as diamonds, music royalties, fine art, artists payments, etc.
