Good morning. In occasions of uncertainty, CFOs prioritize resilience.
That’s what Stephen Philipson, vice chair and head of wealth, company, business, and institutional banking at U.S. Financial institution, informed me he’s listening to from finance chiefs. “Our CFO purchasers are cautious, however they’re not standing nonetheless.” Total, CFOs are centered on optimizing liquidity, managing threat, and sustaining optionality within the present surroundings, he stated.
“We’re seeing stable financing demand from corporations for each upcoming liquidity wants and long-term progress drivers,” Philipson defined. As well as, there’s a noticeable uptick in working capital finance, which displays a proactive stance on money stream administration.
Analysis factors to commerce coverage and tariffs remaining a high concern for CFOs. However Philipson stated a lot of their cautiousness is pushed by three important points: heightened anxiousness across the tariffs, a weaker greenback, and rising working capital wants.
U.S.-based importers are dealing with increased prices as a result of weakening greenback and new tariffs, prompting companies to hunt extra financing and unlock idle money to satisfy rising working capital calls for, he stated.
In the meantime, overseas alternate (FX) threat administration is entrance and middle. For instance, he’s seeing extra use of collars (an choices technique that protects in opposition to massive losses) to hedge draw back threat whereas preserving upside potential. “And lots of companies are shifting to pay overseas distributors in native currencies to satisfy provider calls for and scale back prices,” Philipson famous.
There’s additionally an uptick in receivables finance and provide chain finance utilization. These instruments assist companies maintain money longer whereas enabling suppliers to receives a commission quicker, he stated.
“It’s been attention-grabbing to watch how middle-market companies are stepping up their risk-management efforts this 12 months,” he stated. Center-market companies are more and more seeking to proactively mitigate dangers like rates of interest and FX, whereas massive firms—with sturdy treasury operations—proceed to deploy hedging instruments.
When requested concerning the M&A outlook, Philipson stated momentum is constructing as we transfer into the second half of the 12 months. “The financial institution mortgage and bond markets are providing enticing circumstances, with credit score spreads close to historic tights,” he stated. This means that buyers see little further threat in company debt, holding borrowing prices low for corporations.
“We’re seeing extra mid-tier offers—bigger than tuck-ins however not absolutely transformational—as corporations develop extra snug with coverage and market dynamics,” Philipson stated.
He continued, “We count on M&A exercise to proceed choosing up as corporations get more and more snug with ‘certainty round continued uncertainty’—the concept that macro headlines are more likely to persist and should be a part of the calculus round strategic selections.”
Sheryl Estrada
sheryl.estrada@fortune.com
Leaderboard
Matt Puckett was appointed CFO of Ibotta, Inc. (NYSE: IBTA), a digital promotions community, efficient Aug. 25. Most lately, Puckett served as CFO of VF Company, a world chief in branded life-style attire and footwear. Over his 23-year tenure at VF, he held a number of working CFO roles, together with a four-year worldwide task in Switzerland overseeing finance throughout Europe and Asia. As enterprise CFO, Puckett led a world finance crew. Puckett will change Valarie Sheppard, who has served as Ibotta’s interim CFO since March 14. Sheppard will proceed to serve on the corporate’s board.
Chris Pudenz was named CFO of Juanita’s Meals, efficient instantly. Pudenz brings over three a long time of senior monetary management. He beforehand served in CFO roles at Tetrad Company, Marco Applied sciences, Milk Specialties, and ABRA Auto Physique & Glass, amongst others. Pudenz additionally held monetary management roles at ConAgra Meals, AMCON Distributing, and Value Waterhouse.
Huge Deal
S&P World Market Intelligence information exhibits that international personal fairness entries dropped in July, as U.S. tariffs and a difficult macroeconomic outlook weighed on deal exercise.
Non-public fairness and enterprise capital entries totaled $52.59 billion worldwide in July, a decline of almost 7% from $56.44 billion in June and over 29% under the $74.47 billion posted in July 2024, in response to the findings. The variety of offers additionally fell, with 911 transactions recorded globally in July, in comparison with 1,103 in June and 1,232 in July final 12 months.
The know-how, media, and telecommunications (TMT) sector led personal equity- and enterprise capital-backed exercise in July, accounting for 34% of whole deal worth. The commercial sector ranked second with 25%, whereas the monetary and well being care sectors every contributed 13% to the mixture.
Going deeper
“One FOMC dissenter may need simply referred to as out the Fed for its shifting base interest-rate coverage” is a brand new Fortune report by Eleanor Pringle.
From the report: “Federal Open Market Committee (FOMC) member Michelle Bowman has urged consistency in rate of interest coverage, following questions on why the FOMC lower charges in late 2024 however is holding regular now regardless of related ranges of inflation and unemployment information. Citing sharp downward revisions to U.S. job progress, Bowman reiterated her forecast for 3 cuts this 12 months whereas warning that declining information reliability complicates policymaking.” You may learn extra right here.
Overheard
“In 2035, that graduating school pupil, in the event that they nonetheless go to varsity in any respect, may very effectively be leaving on a mission to discover the photo voltaic system on a spaceship in some fully new, thrilling, tremendous well-paid, tremendous attention-grabbing job.”
—OpenAI CEO Sam Altman stated in a latest interview with video journalist Cleo Abram. Although it’s unclear how widespread house exploration will increase within the coming years, aerospace engineers are rising quicker than the nationwide common of all jobs, Fortune reported.
