Taylor Wright: Good morning. I'm joined today by Spyros Svoronos. Spyros runs our global industrials team, and we're here to talk about topline trends for his clients. Spyros, thanks for joining me. 

Spyros Svoronos: Thank you, Taylor.

TW: So look, I think we're just going to jump right in. Really want to spend some time with you talking about the things that are top of mind for your industrials clients heading into 2025.

SS: So, one of the key trends in the industrial space is the need for focus. A lot of companies are becoming more simplified and less diversified. Some of that trend is being magnified by the activists, who are either encouraging or sometimes forcing companies to make changes. 

TW: So that's a catalyst for spin-offs and split offs, which we've seen, and then probably some sub IPOs. And then for our, our sponsor clients, it's potentially an opportunity for them to make a great investment, but also solve a problem for our corporate clients.

SS:  We've seen a big increase in spin activity. I think that will continue. Spins tend to outperform the general markets, and we have seen increased interest by private equity clients and corporate clients for transactions that are carve-out related. 

TW: Spyros, as you know, we've done a lot of work around AI and it cuts across all industries in one form or another. How are you seeing it manifest itself in industrials? 

SS: So, most of our industrial clients are really the picks and shovels of the AI boom. They are making things or providing services for the investment in the infrastructure that supports AI. Whether it's data centers or just the electrification investment boom, our clients are really exposed to that.  

TW: So thus far, at least it's been quite capital intensive. So there's been real opportunity to make private investments over time. There'll be public company investments and then you've seen public companies who have lower cost of capital, make strategic acquisitions or invest directly into the AI boom. So are you seeing that among your client base?

SS: Yes. Right now there's a lot of public company interest. A number of companies are trading in much higher multiples that have exposure to that boom. The private equity interest is high, the number of transactions hasn't followed that yet but we do expect increased activity in 2025 and 2026.

TW: Actually, another industry that's getting a lot of attention in your space is aerospace and defense. It's an industry that's undergoing a real transformation. What are you hearing from your clients?

SS: We're an inflection point in the aerospace and defense technology space. We have the increased usage of drones, both in terms of development and actual usage in in the theater of war. And we have significant interest and development in AI usage in aerospace and defense applications in particular.  

TW: And the combination of that investment and the growth of these businesses probably means you end up with a series of IPOs coming out of this space over time.

SS: Yes. Right now, the investment that's happening is mostly on the private side, venture capital, a bit of private equity. Other companies are still fairly early stage, but as they grow and there's actually a lot of increased appetite by public company investors to get exposure to those trends. You will see in 2025 and 2026 a number of IPOs I suspect. 

TW: I really appreciate your time. I want to keep you on time for your next client meeting, but thanks for spending a few minutes with me today. 

SS: Thanks a lot, Taylor.