Greenhill & Co Inc (GHL) 2014 Q2 法說會逐字稿

Good day and welcome to the Greenhill Second-Quarter Earnings conference call. All participants will be in listen-only mode.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Chris Grubb, Chief Financial Officer.

Please go ahead, sir.

Thank you.

Good afternoon and thank you all for joining us today for Greenhill's Second-Quarter 2014 Financial Results conference call. I am Chris Grubb, Greenhill's Chief Financial Officer. And joining me on the call today is Scott Bok, our Chief Executive Officer.

Today's call may include forward-looking statements. These statements are based on our current expectations regarding future events that, by their nature, are outside the firm's control and are subject to known and unknown risks, uncertainties, and assumptions. The firm's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements. For a discussion of some of the risks and factors that could affect the firm's future results, please see our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Neither we, nor any other person, assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date on which they are made.

I would now like to turn the call over to Scott Bok.

Thank you, Chris.

Our comments today will echo all the key points we made last quarter, as transaction activity both in the market generally and at our firm has continued to develop largely in line with our expectations a quarter ago.

Looking at the market generally, it's important to start with completed transaction activity, as that is the primary driver of revenue for transaction advisors like Greenhill. As of midyear, there were 3% fewer transactions completed year to date; and aggregate completed deal volume was down 7%. If the first half run rate continues for the full year, which is quite possible given that many of this year's largest announced deals are contested situations or face considerable regulatory delays, both the number and volume of completed transactions will likewise be down for the full year versus last year, and slightly below the average level of the past four years.

Announced transaction data provides a much more positive perspective, one that is indicative of an increasingly active market and bodes well for both the near- to medium-term outlook. As of midyear, the number of announced transactions is up 7%. And if that run rate continues, that figure will be basically flat for the full year versus last year. However, announced deal volume at midyear was up 66%, driven by an increase in the number of very large transactions.

For example, there were two-and-half times the number of $5 billion or greater transactions announced in the first half relative to the same period last year. And that activity was heavily strategic, as opposed to involving private equity, heavily focused in a few sectors, like health care, media and telecom, and primarily focused on the US market. But also with some encouraging activity in Europe, particularly on tax inversion transactions.

While this is not what one would yet call a broad-based recovery in transaction activity, we do believe this could be the beginning of a sustained recovery in M&A activity as industries are transformed by major strategic transactions, which in turn forces competitors in those industries to respond with strategic transactions of their own. I should also add from a macro perspective that we believe the long-running trend of clients increasingly turning to firms like ours for strategic advice remains intact.

A large majority of the major transactions announced this year have had at least one firm like ours involved. And we expect that the strengthening of our brands, brands like ours, and weakening of the brands of the major banks, will cause that trend to remain in place for the foreseeable future. And when I refer to our brand, I'm referring to our reputation for a single-minded focus on advising clients; a lack of conflict of interest; a better ability to protect confidentiality, given our size relative to the big banks; and a growing list of credentials across industry sectors and regions.

Our first-half results are a fair reflection of the current market reality that I just described. Our year-to-date advisory revenue is down 32% relative to a particularly strong first half last year when it was up 39% from the year before, while our large bank peer group was then down. But particularly late in the second quarter this year, we began to see the increase in our significant transaction announcements that we signaled in our comments a quarter ago.

And our pipeline would suggest that this trend of significant transaction announcements should continue in the weeks and months to come. As our investors have seen repeatedly over the past decade since our IPO, a particularly strong period like we had in the first half last year, or a particularly weak period like our first half the year before that, has tended to balance out over the course of the year as the random timing of transaction completions is less impactful over longer periods. For instance, our largest transaction of this year to date closed on the first day of the third quarter, while last year our largest deal of the year closed several weeks earlier in the second quarter.

Looking at our sources of revenue through the second quarter, M&A completion fees are down meaningfully; but announcement fees are higher. Restructuring has continued to be slow, given highly accommodating credit markets; but we have more than offset that with some significant equity financing advisory roles.

And we had a large increase in fund placement revenue in the first half, largely attributable to multiple big successes in the real estate area. Looking at activity regionally, we are particularly pleased to have an increase in first-half revenue from European clients on top of an increase last year. In recent months, we have been involved in some major transactions for leading European companies demonstrating the long-standing strength of our brand in that market, which should pay significant dividends for us as activity there continues to rebound from a multi-year soft period.

Meanwhile, our Australian business is down. But we are seeing increased cross-border opportunities into that market from elsewhere. And it is still early days for us in Brazil, but we like what we see from our new team and the assignments they are winning. Finally, by sector, we are seeing increased activity across most sectors including consumer retail, energy, healthcare and industrials.

In closing, we are encouraged by the increasing number of deal announcements and behind-the-scenes activity, pleased with the assignments we are winning across industry sectors and geographic regions, and continue to have a positive outlook for this year and beyond.

Given our discipline around costs and very limited need for capital, both of which Chris will now speak to, we are well-positioned to return to our historic sector-leading metrics in relation to productivity, profitability, and return of capital to shareholders, as M&A completions and advisory revenue rebound.

Now over to Chris.

Thank you, Scott.

I will address compensation costs, non-compensation costs, dividends and share repurchases. And I will briefly touch on our remaining principal investments.

Starting with compensation costs. Similar to the first quarter, our absolute dollar amount of compensation costs year to date was lower due to a lower accrual of cash bonuses compared to the prior year, as well as lower amortization costs from restricted stock units.

The increased ratio of compensation to revenue is a function of the lower revenue result in the first half compared to a year ago. As we have commented previously, we have consistently achieved our annual goal of a GAAP compensation ratio that is the lowest among our peer group. And we expect to maintain that position for the full year, even as we increase the absolute dollar amount of compensation going forward.

Moving to our non-compensation costs. Our second-quarter non-comp costs were $15.4 million, comparable to the second quarter of 2013. On a year-to-date basis, our non-compensation costs are well under control and totaled $29.7 million, down slightly from $31.1 million in 2013. Our non-compensation costs have been fairly flat the past two years, and we continue to expect fairly stable non-compensation costs for the foreseeable future. Putting our two categories of costs together, our costs year-to-date are down in absolute terms. But, obviously, the ratios are higher given the reduced completed transaction volume and related advisory revenue.

Our pre-tax profit margin is 12% year to date, but our cost structure is such that there's significant operating leverage for that margin to improve significantly at higher revenue levels.

Looking at our dividends and share repurchases. Our dividend this quarter was again $0.45 per share, consistent with the quarterly distribution made in recent years. During the second quarter, we repurchased a small number of share equivalents for tax settlement purposes on divesting of RSUs.

On a year-to-date basis, the Firm has repurchased approximately 350,000 share equivalents, at an average cost of $51.85 per share, for a total cost of $18.2 million. We ended the quarter with a share count similar to a year ago. And we continue to maintain a share count that is effectively flat with our 2004 IPO, despite significant annual stock-based compensation and the acquisition in Australia, which compares very favorably to both our large and small competitors.

We ended the quarter with cash of $29.2 million and debt of $37.5 million. Our Board of Directors has authorized the repurchase of up to $75 million of our common stock through the end of 2014, of which approximately $57 million remains available. The level and timing of stock repurchase activity going forward will primarily be driven by the timing of cash generated in our advisory business over the remainder of the year.

Let me finish with our remaining principal investments. During the second quarter, we realized a bit of cash from the portfolio and had a net investment loss of $1 million, leaving us with a remaining principal investment balance of only $4.5 million. We are very near our goal of fully exiting our historic merchant banking investments. And since we don't expect any material movement going forward, we don't expect to provide much in the way of further updates.

Now let me turn it back to Scott.

Before we take questions, let me briefly reiterate that while data for completed transactions has barely moved since its precipitous decline in 2008 and 2009, we are optimistic about the market outlook, given the strong improvement in announced transaction volume this year. While so far the gains have been driven by a small number of very large transactions, we are hopeful that this is the precursor to a broader rebound in transaction activity. And Greenhill is better-positioned than ever to take advantage of such a recovery.

We expanded our capabilities substantially by sector and region in the early days of the financial crisis, and in the past few years have significantly upgraded the team while leaving overall headcount and our cost structure roughly flat. Our brand is increasingly well-known in many regions around the world and stands for pure client advisory, lack of conflicts, and the kind of quality that comes from a senior team that has deep expertise and no job other than helping clients achieve their strategic goals. Being the most globally diverse of our closest peers, as the M&A recovery spreads across regions, we should capture an outside benefit from that.

With that, we're happy to take any questions.

Thank you. We will now begin the question-and-answer session.

(Operator Instructions)

Devin Ryan of JMP Securities.

So I appreciate the commentary around expectations for the year and that revenues are going to be more back end weighted, and so, I guess, just a two-part question there. First, do you think that the year for Greenhill is shaping up more like this because of random timing, I guess, as you put it, or has there really been a noticeable pickup in activity internally over the past six months, that is driving the revenue towards the back half? I'm just trying to understand the dynamic there.

And then, secondly, as you guys have done maybe the past couple of years, you have given some additional context around how you see the year shaping up relative to revenues from the prior couple of years. And so I don't know if it's a reasonable to think that this could be another year that looks similar to where we have been over the past couple -- or really over the past handful of years for you guys?

I think as far as first part of your question, look, I think it's both random transaction timing and I think it's also the market is picking up. There is no question about that. The randomness, what I mean by that, is had one particular deal closed one day earlier, things would look a little smoother, but we just don't worry about that. Obviously, we would prefer to have things not fall on January 1, but, frankly, falling between quarters of the year we really don't worry about at all.

There is some randomness. Of course, there always is, but I think fundamentally things are picking up pretty materially. You can see it in announcements. We see it in our pipeline.

In terms of giving any sort of guidance or projection, we have never really done that specifically. I think what is clear this year is that, as we said in the release, it's going to be a back half weighted year in a revenue sense.

Exactly where that comes out is hard to say because we have had a fair number of substantial announcements this summer. We expect quite a few more this summer. They're announcing the summertime and that's going to raise a question with some situations depending on regulatory approvals and so on, whether it closes late in the year or the beginning of next year. But the important thing from our point of view is that the second half looks a lot stronger and the pipeline is certainly building for beyond that, as well.

Got it. So even with respect to the backlog -- the backlog, which we have seen over the past few months for you guys, you have been on a number of deals, but the backlog is also accelerating which could start to actually impact 2015, as well, I'm assuming?

For sure. We feel very good about not only sort of the pipeline or backlog of things that are very close to announcement, but also very interesting new things that are just entering the pipeline or backlog that should come to fruition in the coming months, as well.

Okay, great. I appreciate the color.

And then, just with respect to the hiring outlook, should we expect anything else for the rest of the year here or is it kind of quieting down? Just with respect to the fund placement areas, specifically, are you guys looking to scale back up in that business or do you really see the real estate area being the bigger focus for the time being there?

We have always had a more, as you well know, more opportunistic view toward hiring. We like to hire when really good people are available to fill important roles and not worry about hiring when we aren't coming across such people.

I don't know how the rest of the year will pan out. There are still some very active dialogs we have, in some cases, relating to even multiple people. So time will tell whether they get done over the next few months or whether they drift forward and happen after the end of the year. Certainly, we are still very active in recruiting market.

As far as fund placement, we have essentially made our money in the real estate side. Certainly, this year that has been true more than ever, although it's really always been the case, and as some of the reports have indicated, you can see that in the numbers we have reported over the years.

As what we do there specifically, I would, again, say we are going to be fairly opportunistic. We have the capability certainly to do lots more than real estate, even as we sit here today. Whether we make a bigger bet in other areas, whether it's broadly across private equity or in certain niches and so on will just depend on the opportunities we see as we look at what is out there.

Okay, great. Thank you.

Ashley Serrao of Credit Suisse.

I was hoping maybe you could size the benefit to compensation from the departures this quarter? And then, you spoke about $130 million in fixed cost as a good place to be. Is that still the case?

That's -- I don't think we want try to sort of size specifically. I don't think it was particularly large this quarter in terms of RSU forfeitures. The fixed costs may be a little bit below for the year where they have been, but I would not expect a big change there.

I think the way we think of our compensation, the way we like our shareholders to think of it, is we manage each year to a GAAP compensation ratio that includes absolutely everything. The cost of new hires, the cost of severance, and, obviously, the offsets against that if somebody, for example, leaves the firm when they have unvested stock. We manage historically to the lowest ratio among our peers, and I think we feel like we're going to do that again this year as we have indicated in our comments.

Okay. And then, just switching gears more broadly to Europe. You made a lot of comments, a lot of people are talking about the resurgence there.

But it feels like it's really dominated by a handful of transactions, a lot of tax inversion-related deals. When do you think the deal counts will start to catch up?

There's no question that Europe is probably even more lumpy than the US right now. I don't think it is just limited to tax inversion transactions. We have worked on some of those in the past, but none so far this year and yet are having quite a good year in Europe. So I think that is an interesting new part of the European business, but it is not a predominant part of it.

I think we see maybe a little more in our pipeline than what you read in terms of the press that Europe is improving, but I would agree, that it's kind of a little lumpier. The things we are doing there tend to be quite large and there are probably fewer of them, but you make up for it by them being more significant.

All right. Thanks for taking my questions.

Brennan Hawken of UBS.

Did the 2Q revenue include any portion of the Forest Labs deal?

Well, we never comment at all on the specifics of any client arrangements that we have in specific engagement letters. I would say that very typically our engagements involve, very often, some type kind of retainer, almost always some kind of a transaction announcement or opinion fee, and almost always the bulk of the fee due on completion. But that's a general comment and just for obvious reasons we would never comment on a specific client.

Okay. But that particular deal closed after the quarter, right? So if we think about the typical layout, or the profile, as you just walked through, then we would expect the bulk of those revenues to come in 3Q? Wouldn't that be right?

That would be correct.

Okay. And then, thinking about maybe some of the elevated turnover recently, it's drawn a lot of investors' attention, and we get a lot of questions inbound on it. I don't know whether or not there's anything that maybe you would like to point out or go on the record on that front? It might be helpful to hear your comments?

Sure. I don't actually view it as all that elevated in the sense -- we still have a remarkably stable team. I think recently at an investor presentation we put in a lot of data about how old -- one of the demographics of our team, how old are they, how many years of experience, how many years with Greenhill. I think those numbers look like a very stable, very senior team over time.

We clearly -- I alluded to the fact that we have done a lot of upgrading over the last few years and that is kind of our nice way of saying that a very large percentage of departures were really at our decision, as opposed to the employee's decision. That's not the case in every case, but in some cases like I was very clear -- and I think at press story picked this up and some analysts did -- with our private equity portion of our fund placement team that is not a dilutive loss in the sense that we essentially have been making all of our money on the real estate side. That team is not only fully intact but growing.

So I think, as I've said many times, this business is like managing a sports team. You try to win every day, but you also try to constantly improve the roster. That means some people can be upgraded and occasionally you're going to lose somebody you may care about. But we really haven't lost anybody who I would worry about in a revenue or earnings accretion sense for quite a long time.

Okay. And somewhat related to that, if we look at the MB headcount and run some of the numbers there's roughly about a quarter of guys that have been promoted since 2011.

When we think about modeling your firm, I would think that that would weigh on productivity numbers at least somewhat until those newly minted MBs can come up, ramp up scale. Is that right way to think about it or should we think about it in a different way?

I think when you say promoted since 2011, I think you would need promoted or recruited. We certainly haven't promoted that many people internally that have -- that big a percentage, but, look, there are a fair number of new arrivals, which is a good thing. Some of them were internally promoted, a lot of them, I think the majority, were recruited as senior experienced MBs from outside.

And, yes, I think it's fair to say that in the near term, of course, that weighs to some degree on productivity and, therefore, you would expect a pickup going forward. I would even add, I know we and others in our little sector have talked many times about sort of the ramp-up period and all that, is it 18 months, is it two years? What is it?

Having been at this for quite a long time, I see a lot of cases where we are getting meaningfully more productivity out of somebody who has been with us, say, five years instead of two years, or somebody who was a terrific banker in their early 40s and is way beyond that in their late 40s. I do think there's a lot of upside left just in terms of the productivity of the people we have, let alone other ones we may bring on board.

Cool. And last question, just on the balance sheet, do you guys have a minimum level of cash that you need to run the business? Just because cash sort of took a big step down here this quarter. I think it's down about $7 million from last quarter even though the buybacks were pretty small.

I think we're certainly comfortable with where our cash has been at the worst point. I can tell you it does swing a little bit sort of quarter-to-quarter, it's materially higher today than it was even at the time of that June 30 announcement, so we don't pay too much attention to sort of small short-term gyrations.

We are completely comfortable with our cash position, our dividend, and our ability to continue buying back stock based on everything we can see today, at least, in terms of the pipeline and the outlook for the business.

Joel Jeffrey of KBW.

Just follow-up on Brennan's questions, just wondering about the revenue breakdown a little bit and the amount? Did you see sort of outsized announcement fees during this quarter just because the stuff that looked like it was coming through the public pipeline would have led you to believe that the revenue line would be a lot softer than it was?

Yes, there were some significant announcement fees in the quarter. Certainly, that picked up pretty meaningfully. We had a lot of announcements right toward, not only in June, but even in the last week of June, so we did have a significant increase in some sizable announcement fees.

There are also -- we have always been reasonably good at making money in ways that aren't that easy for analysts like you to figure out. And there are more of these things in the financing advisory area that have had a meaningful impact so far this year, as well, and those aren't always transparent to the outsider. Certainly, they are not picked up by the standard databases.

Okay. Great.

And then, just thinking about the decline in the diluted share count. I'm just wondering if that had more to do with the decline in the stock price and how that is accounted for, or was it just more the timing of the buyback that led to the decline?

It's just nothing but buybacks -- buybacks are, obviously, a negative. Shares coming into the share count from stock that granted to employees is an additive and when people forfeit RSUs it is a negative. There's nothing else that impacts our numbers at all.

We don't have any warrants or converts or anything like that outstanding where the share price makes any difference at all to our share count. Obviously, when share prices are cheaper you can buy back more with a given amount of cash, but there's no sort of swings in our share count as a result of share price movements.

Okay. And then, just lastly one for me, and just in terms of the general outlook, you have commented that a lot of the deals that have been driving the market volumes have been of the larger size. And I'm just wondering, from a regulatory perspective, is there any specific industries you think are more at risk from these deals being held up than others?

I think it's probably -- I think you can look at it really on almost a deal by deal basis is the only way to. Obviously, we have our antitrust rules in this country and similar rules around the world, and they look at all industry sectors. You can see in some sectors there are big deals happening, but the resulting companies don't have extraordinary market shares, and in other industries there are some big deals happening where they will have some very extraordinary market shares.

I think -- I wouldn't want to count on every one of the top 10 or 15 deals announced this year happening, but I'm sure people wouldn't be announcing them if they didn't feel they had a good chance of getting them through.

Great, thanks for taking my questions.

Sure.

Alex Blostein of Goldman Sachs

So a quick question on Europe. You mentioned a couple times that you guys, obviously, have a fairly outsized exposure there and that is probably something that has been weighing on your overall productivity that we get to see from the outside. Is it possible to think about the number of MBs you have in Europe, what kind of productivity they have seen over the last couple of years, and what you guys think the opportunity there is?

It's hard to get too specific on that, but it is interesting. To give you sort of a high end example, in 2007, we have $370 million of advisory revenue and more than half of that came from European clients. It was actually a bigger business than North America that year, and we had a considerably smaller European team at the time.

It was very much a UK business. We still have a fabulous franchise in the UK, but it certainly has branched across continental Europe, particularly in northern Europe a lot since then. I would say, facetiously, sort of the sky is the limit, but it's very hard to put specific metrics around where we think the business can get back to. It really depends on where the cycle gets back to.

Got you. And then, second question, I guess, around the market share comments, and I guess we have heard a similar dynamic from the M&A banks as reported earnings so far. But it seems like this theme about independent shops getting market share is still alive, but when you look at the data, at least, this year -- I know market share sometimes is hard to measure. But at least if you look at just the dollar volumes it looks like the banks have gained a little bit more market share relative to what we've seen over the last couple of years.

I guess the question is why do you guys think that is? Is it just the nature of the deal, so larger deals maybe require more financing and that's what's been driving that, or there has been a shift in the focus here a little bit?

I think there are lots of ways to measure market share. The only way I really think is that legitimate is to look at revenue, and I think when we get to the end of the year I think as a group you will probably see the independents continuing to gain share relative to the big banks.

They can often be named, the larger banks, as advisers on some things. Playing a very small advisory role, maybe even getting a very small advisory fee, but they're getting lots of other fees on financings an so on.

So I think it's really hard to look at sort of transaction data and draw conclusions, particularly for short periods of transaction data and draw conclusions about market share. I would just say anecdotally from what we see and just from looking at deals we're not involved in, but some of our independent peers are involved in, we still feel like the trend toward us, in our favor, is very much intact.

Got it. And then, just a quick last one from me. Obviously, we mentioned inversion deals is a big driver so far this year.

Any thoughts at all on this topic? Clearly, the rhetoric out of DC continues to get, I think, a little bit worse on the situation. So I was wondering if you could provide any incremental color on how you think things potentially could shake out?

Certainly, we don't have any sort of pipeline as to what is actually happening in Washington because I'm not sure anybody really does. I think if you look at sort of the stalemate in Washington on so many issues, there's got to be a reasonable chance that despite lots of people wanting to change the rules that they won't be able to change the rules in the short term. I think that's why a lot of companies continue to look at these transactions.

And I don't think there will be hundreds of them. There haven't been hundreds in their whole history, but I do think there will be more. I even look at our own situation and the tax rates we pay in different jurisdictions around the world and it's just wildly different what we pay on European profitability, for example, to what we pay on US profitability. I think until the law changes there will be more of these transactions, and I'm probably not that optimistic in terms of there being any rapid change in Washington that would stop these.

Got it. Makes sense, great. Thanks, guys.

John Dunn of Sidoti

I just wanted to touch quickly in the restructuring business. Just given your experience with it, do you think we need to see, wait until some movement from the Fed, or can that business start to improve in anticipation of that?

I think to improve significantly I think you're going to need some increase in rates, whether that is driven by a move by the Fed or not I don't think really matters. But you're going to need to see some increase -- and not just in rates, but in constraining a little bit the very accommodating credit markets that we've had. I'm not saying it is entirely dependent on that because some of it is just -- there are a lot of deals done, call it, five years ago, that, or more, where people have done various things to postpone the need for refinancing. You can't do that forever, and at some point there will need to be a refinancing of some of the highly leveraged companies out there.

So we think it will get better. For it to get a lot better, clearly, you are going to need tighter credit markets. In the meantime, we're trying to do more things, and things like the equity financing advisory area which is, obviously, a business that can do a lot better in booming equity markets like we've had today.

Got it. And then, just on the capital advisory business. Do you think -- does it feel like it's shaping up to be another seasonably strong, 4Q being the most strong of the year?

No, I would not say that. As a matter of fact, that's kind of the flip side of the fact that I said they are off to a fabulous start.

Historically, and I have no idea whether this is a long-term seasonal trend, but historically, it did seem like a lot of the revenue came at the end of the year. For whatever reason, this year, we've had some very significant transactions that have closed and some more that have closed even already this quarter. So it looks like it's going to be much more balanced over the course of the year than it was in the past.

Michael Wong of Morningstar.

I was wondering if you could give a quick update on your managing director headcounts?

I think we are 65 or 66, something like that right now.

Okay. And back to independent advisory market share. Would you say that currently independent financial advisory investment banks would have a greater share of strategic transactions, or transactions that don't require financing compared to the universal banks?

I don't actually think that financing drives things that much. We get involved in lots of transactions, obviously, and if you look at some of the bigger ones we are involved in, many of them required very substantial financing. And sometimes we've had a sole advisory role, yet alone a major advisory role in those. I don't think financing is that big an issue in terms of our ability to advise.

What I would say is a bit of an issue is, if there are a lot of private equity deals, which there aren't right now, but if you get to market when there's a lot of private equity deals, I think those do tend to lean toward the big banks because they need lots of financing. They are not companies with access to credit and equity markets. They're sort of newly formed private equity vehicles to buy things. There is a leaning toward the big banks there, but I feel like everything else, anything in sort of the public company world is completely fair game and a good opportunity for us.

A follow-up from Devin Ryan of JMP Securities.

Thanks, just a quick one. You mentioned getting paid in ways we can't necessarily see, and so I just wanted to maybe touch on ratchets and fee conversations, and if you're seeing any pickup there? And I know that makes our jobs much more difficult, but just given your strength on the sell side, I would suspect that if that trend is moving in that direction that could be a positive theme for you guys?

Certainly, we've benefited from some of those over the years, and those are, obviously, where the fee gets materially bigger as the deal size gets a little bit bigger. I don't -- that's not really what I was referring to. I was referring more to sort of different types of advice and different types of client situations.

But, clearly, we -- fees are, I would say, holding up well. We haven't really sensed any meaningful change in fee policy over the years, and certainly not in the current more active period. But as part of that, I would say that ratchets have always been an attractive thing that we seek to get on sell side situations where we think we can perform well for the client, but I don't think there's been a meaningful sort of change in that.

Okay. Great. Appreciate it.

Okay, and thank you. I think that was our last question. We will look forward to speaking to you all again in about three months. Bye, now.

Ladies and gentlemen, the conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.