00:00America has been the talk of the town when it comes to the investment community, but for the
00:04middle market companies that you work with, that you serve, it sounds like it's a much different
00:09conversation. It is a different conversation, and in global commercial banking at Bank of America,
00:14we work with U.S. and Canadian-based companies. They're across a variety of sectors, and we also
00:19cover their U.S. or their international subsidiaries, and so what we're seeing is that our clients have
00:26gone from caution to confidence, and they are looking for growth, and that could be growth in
00:30the U.S., and it's definitely growth outside of the U.S., and then we also see companies that are
00:35based outside the U.S. wanting to invest in the U.S., so we see growth across the globe. Well,
00:41let's talk
00:41about that switch from caution to confidence. I'm curious what the catalyst is. What has changed in
00:47the past few months, especially when you think about trade policy at this juncture? Is it just
00:51time sort of healing all wounds here, or was there a specific, you know, event that you can point to?
00:57I mean, I think despite the ongoing economic uncertainty, despite the political environment
01:07globally, that our clients are saying, you know what, we have to grow, and we've got to find ways
01:11that we are going to do that, and so they're really looking at three ways to get after those
01:16opportunities. The first is organic growth, and that could be in the United States. It could be
01:22outside of the U.S., and they're looking at all options. The second is growing through acquisition,
01:26and we have seen our M&A pipeline grow 30 percent year over year. I mean, it really started to
01:32pick
01:32up the second half of last year, actually, as our clients got more confident, and then the third is
01:37that global expansion, and so really picking and choosing where they're going to invest, and we see
01:43those opportunities across the board. I am curious, though. I mean, obviously, the geopolitical risk,
01:48the tariff issues, that still kind of lingers, and I am curious as to whether, at least for those folks
01:52that are borrowing money, is there a premium that effectively they might have to pay because some of
01:58these issues are still unresolved? You know, there really isn't, because when you think about the,
02:03we're in a really good credit cycle right now, actually, and credit availability is there for our
02:08clients. It is not a challenge, you know, for them to access credit, and so I think when you have
02:12those
02:12type of economic trends, then they're going to take advantage of that and invest. Yeah. What industries
02:19are most of your clients, and what's the, where's the largest cluster? Is it kind of on the industrial
02:24side, the tech side? We cover everything. So there's, it's really what sector do we not cover,
02:29and there isn't one. So it's everything from the commercial and industrial sectors that you would
02:33think of, a lot of the emerging, what we call new economy sectors, so that's healthcare,
02:39it's technology, and then we have a professional sports and advisory practice, we cover commercial
02:45real estate, automotive dealers, we cover the economy. So we have a really good sense of what
02:50is happening across the U.S. economy, and what we are seeing is that clients want to grow.
02:54And my understanding is middle market, the way that you're defining it, is annual revenues of up to
02:59$2 billion, correct? Yes. And it's interesting, taking a look at your notes, you point out that
03:04a lot of these businesses are actually family owned, that there's several generations into being
03:10family owned. And I wonder, you know, how working with that client is different than, you know,
03:15a more normal business that doesn't have that family connection. You know, it's a, it's a great
03:19segment that we cover. And so we call these companies family enterprises, and they're typically now
03:24third to fourth generation owned. And what's important about these clients,
03:29they generate 25% of the U.S. GDP, and 30% of the workforce in the United States are
03:36employed by
03:36family enterprises. They're a big segment of the U.S. economy. But what's a little different about
03:42these sectors, or these companies, versus, say, a private equity owned company or a publicly traded
03:47company, is their long-term orientation. They think for the long term, they make decisions over
03:52the long term. And so they're very patient. And I'll give you an example. We have a middle market
03:58sized company, Family Enterprise, based in the Midwest. And over the last couple of years, they
04:03were looking at, if you remember the reshoring, near-shoring, there was a lot of conversation
04:07about that. They were looking at what they had invested in Asia for their supply chain, and then
04:13also some manufacturing. They reorganized that, brought some of it back into LATAM. So they're not
04:19necessarily positioning for growth globally, but they are looking to manage the risk. And so they've
04:26got a long-term orientation around how to do that, and we can help them. I'm curious, with regards to
04:29the growth, though, the potential growth of their business and what they're looking for, has that
04:34sort of accompanied an increase in hiring? I mean, how do they feel right now about taking on the
04:40long-term costs of bringing in new employees? So, you know, it depends on what their growth strategy is.
04:45Certainly adding human capital is one of them. Making investments into their operations to grow
04:51is another. And then looking at other technologies like AI is the third way they think about growth.
04:56And, you know, I think there's been a lot of hype around AI. What we're seeing is that our clients
05:00are actually growing through that hype and actually using AI to improve their efficiency and to manage
05:08their companies more effectively. Well, we only have about a minute left, but I'm curious about what
05:12exactly, you know, that means in terms of how that translates to some of these companies. Does
05:17that mean they're hiring fewer employees or just that they're able to maybe unlock some productivity
05:22gains there? I think that they are unlocking productivity games. They're getting more efficient,
05:26and they are thinking about the impact that it is having for the workforce. And so they want to
05:29make sure that where it's appropriate that they are upskilling, reskilling, and retraining.
Comments