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DEER ISLE: Insights, Flows & Investment Trends

by Dianna Radele February 21, 2023

Rolling Recession?  Or, Old Fashion Cyclical Sectors?

There is a new term being “heard on the street” … “Rolling Recession”.  A Rolling Recession seems to be a description of an economy where some sectors (including hospitality, healthcare, oil & gas, non-discretionary consumer) are expected to outperform and continue to hire people, while other sectors (including housing, manufacturing, finance, and IT) are expected to underperform and hiring will be tighter.

The sectors which are expected to outperform and underperform seem to be the same sectors that have traditionally been known as cyclical versus non-cyclical sectors.

The more things change – the more they stay the same!

Given the liquidity in the market (see previous newsletter ), it seems likely that the markets will continue to outpace, on the upside, economic predictions.

Please contact us at info@deerislegroup.com if you or someone you know would like to learn more about how we can help them with their capital sourcing.  We believe that the earlier, especially when capital markets are tough, an organization receives professional help defining their investment proposition, the better the results will be.

Capital Provider Interest – We have demand for stable, cash flowing middle market companies that capital investment can modernize to enhance returns.

Private Equity – European Leverage?  We are seeing banks in Europe continuing to lend at attractive rates in contrast to US corporate lending. Typical rates for middle market companies ($75 million+ revenue) seem to be:

  • Sr Bank Debt – Euribor+1.5 to 2.5%
  • Interest Only Bank Debt – Euribor 2.5 to 3.5%

Venture Capital – Lay-offs to Conserve Cash: We are hearing that its not only the big tech firms that are laying off to improve cash flow.  Many smaller firms are doing so as well which means hiring weakness in this sector is greater than the headlines.

GP/LP Secondaries/Continuation Funds:  We have seen 5+ Continuation Fund deals in the past month alone as GP’s continue to use the structure to create liquidity.

Contact Us:

Deer Isle Group

info@deerislegroup.com

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Founded in 2007, Deer Isle is an innovative investment bank that equips capital market participants with the tools they need for transparent, seamless, and efficient capital markets transaction success.

Since our inception, we have facilitated over $5 billion in capital transactions through Deer Isle Capital, LLC—our FINRA-registered broker-dealer—for companies and funds across various security types, sectors, and geographies.

At the core of our approach are effective, unbundled capital solutions, offering expertise and guidance that can be customized to meet each client’s unique needs. Our services, available on an "as-needed" basis, include:

  • Strategic Capital ConsultingTM (“Outsourced Strategic CFO services, Deer Isle Executive Management/Board Bootcamp or Sprint”) to prepare for a capital or M&A transaction leveraging the Deer Isle proprietary AI enhanced 4 pillar capital framework and real-world experience.
  • Beacon (“Proprietary Technology”) offers White-label and Turnkey Capital Provider engagementwith customized content and data analyticsfrom a relevant subset from a universe of 17,000+ institutional (fiduciary) capital markets organizations/50,000+ institutional capital market people.
  • Closing Advisory/Guidance (including “Shepherding”) expertise, through Deer Isle Capital, for structuring, negotiating, and completing a successful capital/M&A transaction.