65%

Aerospace, Defense, Aviation & Space (ADAS)

Record OEM backlogs and historic defense spending across the United States, Europe, and Asia define the current moment: a sustained structural expansion with no near-term ceiling in sight. Growth is reinforced by rising orbital launch demand and heavy investment in critical defense infrastructure, including solid rocket motor (SRM) capacity, missile and interceptor production, and early-stage Golden Dome development. Whether this backlog expansion converts to revenue and profitability will depend on disciplined, risk-aware capacity expansion across the supply chain.

Automotive & Industrials

Tariff exposure, uneven vehicle volumes, and evolving powertrain strategies are forcing OEMs and suppliers to protect margins and reassess where and how they operate. Suppliers are increasingly focused on pairing operational improvements—including targeted adoption of AI and automation—with disciplined commercial strategies to pursue pricing and cost recovery from OEM customers, while localizing supply chains, optimizing cost structures, and selectively investing in differentiated capabilities. We expect continued supplier consolidation, restructuring, and portfolio realignment as the industry prioritizes operational resilience, capital discipline, and sustainable profitability over growth at any cost.

Consumer Product & Retail

Consumers are demonstrating a “second wave” of value-seeking behavior, rotating toward discount chains and private labels as cost pressures persist. Retailers must adapt by focusing on SKU rationalization, sharpening supply chain execution, and making sound purchasing decisions to stay competitive in an increasingly price-driven environment.

Energy

A massive investment supercycle is underway, driven by the dual needs for grid stability and the integration of renewable energy sources to meet surging demand from AI data centers. While nuclear fusion and small modular reactors (SMRs) represent the next frontier for carbon-free baseload power, the near-term landscape is defined by a 70% surge in global energy storage pipelines and record capital flows into hydrogen infrastructure.

Engineering & Construction

Strong AI-related infrastructure demand is sustaining the project pipeline, even as architectural billings soften and office, retail, lodging, and education markets lag. However, elevated financing, labor, and material costs, along with compressed AI project schedules, are pressuring project economics and working capital, while equipment lead times, tariffs, and permitting uncertainty contribute to procurement challenges and project delays.

Healthcare & Life Sciences

Healthcare and life sciences face a collision between expanding demand and the ability to finance it. In 2025, hospital expenses rose 7.5% vs 3.3% and drug prices increased over 13%. Over next 12 months, we expect sharper payer controls, continued margin pressure and greater scrutiny of acquisition synergies and biotech runway. Sponsors must prove earnings durability, lender, cash repayment; counsel, defensible reimbursement, and restructuring teams must be equipped to redesign operations and commercialization – not just the balance sheet. The CFO’s defining mandate is to identify where clinical and scientific value translates to cash – and where capital is financing an unsustainable model.

Hospitality & Entertainment

High-income consumers kept the lights on in Q3, but middle-market operators including regional hotels, casual dining, and live entertainment venues are running out of runway. Labor cost inflation, softening discretionary demand, and overleveraged post-COVID capital structures are converging, pushing more names toward the restructuring table.

Other Industries

Business services and financial services firms continue to feel margin pressure from elevated labor costs and AI implementation spend that has yet to yield offsetting productivity gains. Commercial real estate remained a fault line, with office and mixed-use exposure straining regional bank balance sheets and private credit portfolios alike. Government-adjacent businesses face budget uncertainty as federal spending priorities shift under the reconciliation process.