PJT Partners 3Q26 Earnings Call - PJT PARTNERS INC

Good day, and welcome to the PJT Partners Third Quarter 2026 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead, ma'am. Thank you very much. Good morning, and Welcome to the PGA partners, third quarter and nine months 2026 earnings conference call. I'm Sharon Pearson with Investor Relations at PJT Partners, and joining me today is Paul Tadman, our Chairman and Chief Executive Officer, and Erin Cowra, our Chief Financial Officer. Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-thinking statements are subject to various risks and uncertainties, and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. We believe that these factors are described in the risk factor section contained in PJT Partners 2025 Form 10-K, which is available on our website at pjtpartners.com. I want to remind you that the company assumes no duty to update any forward-looking statements and that the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAP metrics and the GAAP reconciliations, you should refer to the financial data contained within the press release we issued this morning, also available on our website. And with that, I'll turn the call over to Paul. Thank you, Sharon. Good morning, and thank you all for joining today's call to review our third quarter and nine-month results. For the third quarter, revenues were $385 million, down 14%. Adjusted pre-tax income was $72 million, down 23%, and adjusted EPS was $1.41, down 24%, as fewer completions across all businesses weighed on our results. The nine-month period stands in sharp contrast with record revenues, record pre-tax income, record EPS, led by record performance in strategic advisory and restructuring. Results in any one quarter can be greatly influenced by the vagaries of transaction completion dates, which is one of the many reasons why we choose to measure our progress in years, not quarters. the year, we remain on track to deliver record results with all three principal businesses tracking to record performance. Before I turn the call over to Aaron, please allow me to say a few words about our CFO transition. I am deeply grateful for Helen's innumerable contributions to our firm, and I have the utmost confidence that Aaron will build upon the Strong's Finance Foundation, Helen, has established. After Aaron takes you through our financial results, I will review our business performance and outlook in greater detail. Aaron, welcome. Thank you, Paul. Beginning with revenues, total revenues for the third quarter were $385 million, down 14% year-over-year. For the first nine months, total revenues were $1.29 billion, up 9% year over year, and as Paul mentioned, a record for the nine-month period. Revenues in strategic advisory, restructuring, and PJT Park Hill decreased for the third quarter, and in contrast, revenues in these businesses increased for the five-months period, with record nine- month revenues in both strategic advisory and restructoring. We had a number of transactions that met the criteria to be pulled forward in the third quarter, totaling $35 million across eight transactions, which is identical to the pull forwards in the second quarter. Going to expenses. Considering the prior quarters, we have presented the expenses with certain non-GAAP adjustments which are more fully described in our EK. We accrued adjusted compensation expense at 66.5% of revenues for the first nine months of the year, compared to 67.5%, for the same period last year. This ratio continues to represent our best estimate for fall year 2026. Total adjusted non-compensation expense was $57 million in the third quarter, up 10% year of the year and $170 million for the first nine months, up 11% year-over-year. As a percentage of revenues, 14.7% in the third quarter and 13.2% in first nine month. The main drivers of the non-contact expense increase for the nine months of the first year were higher occupancy and depreciation expense relating to the expansion of our global office footprint, higher travel and business-related expenses, and higher communications and technology expenses. Our full-year guide for our non-compensation expense remains unchanged from last quarter. Turning to adjusted pre-tax income, we reported third quarter and first nine months adjusted pre- tax income of £72 million and £262 million respectively. Our adjusted pre tax margin was 18.8% for the third quarter compared with 21% for the same period last year, and for the first nine months, 20.3%, compared with 19.5% for the same year last year. The provision for taxes. We present our results as if all partnership units had been converted to shares and that all of our income is taxed at the corporate tax rate. Our expected tax rate for the First Nine Months of the year was 19.2%, which represents our revised expectations for the full year. This rate is below our previous full-year estimate of 20.5%, and as a result, the affected tax rate for the third quarter was 16.9%. The reduction in the full- year rate is primarily due to an updated estimate of our income allocation across state, local and foreign jurisdictions. Earnings per share. adjusted if converted earnings per share was $1.41 for the quarter, down 24% year over year. For the nine months, our adjusted if-converted earnings per share was a record $4.92, up 11% for the same period last year. On share count. For the quarter our weighted average share count was 42.7 million shares, down 2% versus a year ago, and during the quarter we repurchased approximately 200,000 shares and share equivalents, primarily through open market repurchases. Our purchases for the first nine months of the year totaled approximately 2.3 million shares and share equivalence. On the balance sheet, we ended the quarter with a record 766 million in cash, cash equivalents and short-term investment and we have no funded debt outstanding. We have also extended our existing $100 million credit facility for three years on substantially the same terms with Bank of America, Truist and PNC as our lenders. Finally, the Board has approved a quarterly dividend of $0.25 per share and with that, I will turn the call back to Paul. Thank you, Aaron. Beginning with restructuring, we continue to see elevated levels of demand for liability management and restructuring advice around the globe. We expect these higher activity levels to continue as companies across a wide array of industries contend with significantly higher interest rates, challenged business models, accelerating technological change, and an increasingly fraught geopolitical environment. Our restructuring and liability management team continues to be very active with a record pipeline of transactions across a broad array of industries. We continue to expand our restructoring and liability management team's market-leading presence as we benefit from an enhanced geographic footprint and an expanded coverage universe of financial sponsors and corporates turning to pjt park hill the overall private capital solutions market continues to grow as gps and lps pursue alternative liquidity solutions and the investor base in secondary products continues to expand. At the same time, the environment for primary fundraising remains challenging. Our nine-month results for PJT Park Hill reflect significant growth in private capital solutions and modest declines in primary fundraising. Notwithstanding declines and third quarter performance, PJT Park Hill remains on track to deliver record 2026 revenues driven by record-setting results in a private capital solutions business. Turning to strategic advisory, while market sentiment regarding overall M&A activity has bounced around quite a bit throughout the year, our take on the M&A environment has remained essentially unchanged. Our perspectives on global M& A activity are relatively simple and straightforward. On the one hand, the strategic importance of M& A has never been greater, and for companies contemplating strategic combinations, the regulatory backdrop has arguably never been more favorable. At the same time, there are many factors which have made getting deals over the finish line more challenging, whether they be elevated interest rates, heightened geopolitical risk, greater market volatility, concerns about the sustainability of capital expenditures linked to ai or concerns regarding the disruptive impact of ai development consistent with our prior prognostications annualized global announced m a activity is trending up modestly from year ago levels and 2026 remains on track to be the second best year ever for M&A, as measured by announced volumes. In our strategic advisory business, we entered the year with a relatively low level of announced transactions, but a relatively high level of pre-announced transactions. As the year has progressed, we have had strong success in converting our pre-annonced pipeline into announcements and closed transactions. Importantly, we expect to begin next year with a meaningfully improved pipeline of announced pending closed transactions compared to what we had entering this year. As we continue to add senior talent to our platform, as more of our investment gets to critical mass, and as the platform continues to mature, we are in an ever more powerful position to gain share in our strategic advisory business, independent of market conditions. For full year 2026, our strategic advisor business remains on track to deliver another year of record revenues. Turning to recruiting, we remain highly successful in recruiting talent to our firm across industries, geographies, and disciplines. Of note, 2026 is shaping up to likely be our biggest partner recruiting year ever, with most of these partner additions showing up in our partner count by early next year. As we look ahead, we remain focused on ending the year strongly and with the greatest possible momentum heading into 2027. We continue to invest in our businesses to enhance our footprint, our capabilities, and our brand, with the goal of better serving our clients and continuing to expand our market share. As before, we remain confident in our near, intermediate, and long-term growth prospects. And with that, we will now take your questions. Ladies and gentlemen, at this time, the floor is open for your questions to ask a question, please press star one on your telephone keypad. To get out of the queue, press star two. We'll take our first question from Devin Ryan with Citizens Bank. Your line is open. Thanks so much. morning, Paul and Aaron. How are you? Good morning. Very well. Good morning, Dan. Good. Appreciate some of the color and kind of the broader M&A outlook, Paul, and obviously some of some of those indicators that you're watching. Because you should drill down a bit more into what you're seeing right now in the backdrop. It feels like, you know, kind of mixed environment, large cap, you have a lot of maybe catalysts to do deals over the next year. At the time your sponsors have been slower to come back so can you just put a finer point on what you're seeing about kind of large deals the ben expectations for sponsors re-engaging are you seeing signs that's happening has that been improving even in recent months just an additional color there would be helpful thank you sure so look um i think the urge to pursue inorganic opportunities has never been greater. And we've been on this theme for a very long time. And I think the cost of standing still, the cost of inaction, the costs of not reimagining one supply chain, creating more onshoring, creating capabilities through acquisition, discarding or finding homes for businesses that are subscale where you can't create the right management attention, capital allocation, the need to have a highly competitive cost of capital, which might mean, you know, rethinking whether a company should remain as one or separate or spin off businesses. The fact that companies that traded, you Know, significant discounts, find themselves with active board members, active shareholders, active private equity firms who want to deploy capital. All of those things are more present today than they've ever been. And then when you throw on top of that an inviting regulatory backdrop, not a perfect backdrop, but an inviting backdrop, you're going to see a lot more investigation. And we see that. We see that in terms of mandates. We See that in terms of files being open. We think about serious conversations, investigations, and that's only speeding up. At the same time, you know, this is a choppy environment and therefore getting deals to the finish line or ensuring that deals that are presented are well-received by share owners, that's still challenging, which just means there's a lot of discussion, there's lot of discourse, there is a lot that gets to be presented, but it's almost as if at the top of the funnel, the number of situations that are being tracked down, investigated, evaluated, has expanded dramatically. The filter has tightened but yet what's coming out the other end is still greater than it was before and it's still near record levels but the conversion rates are just lower on the on the private equity side we've also been consistent that well everyone loves to talk about all the dry powder all of the ability to go out and do deals that it's the it's the core business of these alternative asset managers that it is not that simple because it's great to have buyers who are prepared to put capital to work, but you need to have willing sellers. And most private equity acquisitions are acquisitions from existing owners, and those owners are also private equity firms. So you need To create that supply. And I do think that you have a challenge right now because a lot of assets are marked at levels which make clearing that hurdle by a comfortable margin challenging and as rates pick up i think it becomes more challenging now what you're seeing is really a bifurcation which is for the best assets but the best assets are put on the block whether it's from a strategic or from a private equity firm you are seeing real engagement real engagement from private equity firms for high quality strategic assets and real appetite from private equity firms when other private equity firms are prepared to partner with their most valuable, attractive assets. It's when you go down a level or two where they are nice to have, but not must have, long-term investments, where it's much more about price and financing conditions, and with prices creating big, bid-ask spreads, given how assets are marked. I don't think we've really seen sort of those gates open up. I think we're seeing a little bit of the frost come off the windshield, but we're still not where we'd like it to be. And the hope is that over time, as more portfolio companies either, you know, grow their way into some of these uh marks or find a way to rethink levels at which they're prepared to transact or liquidity pressures uh you know builds or interest rates you know come down a bit something in there is going to open up the system but right now i think it's very much a slow and steady opening of that part of the market I really appreciate all the color there, Paul. Thank you. And as a follow-up, can you make a presentation that you guys put out, it's a nice presentation going back in the years. You show that the client base has increased from 209 in 2015, I know, different firm at that point, to 445 today. Revenues have grown from roughly $400 million to around $1.8 billion today. So that implies revenue per client has more than doubled. As we think about the growth opportunity for PJT moving forward, I'm sure you'll continue to add more partners and new relationships. Can you just talk about the effort and outlook around continuing to earn a larger share of your existing clients' activity just as you add more capabilities and more expertise? Because it seems like that's been a really good story, but zooming out, we'd just love to hear kind of what you guys are doing there and how much more you can do with existing clients. Yeah. Look, I think that's a great question. And look, we've always said that it's not just the bankers that you have on the platform, but it's also the brand awareness and whether or not it's repeat business. And that just takes time. So if you just think about it, in the early days when we're trying to break into a client that has heretofore not worked with our firm, we're doing what we can to really showcase our firm. And it may be that we're given a smaller assignment to work on. Out of that comes better appreciation for what we offer. And from there, we end up with the next large assignment. or we may be brought in just as a second set of eyes on an existing project. And by the time that concludes, there's a sense that on the next project they'd like us to lead it. So all of these things are happening over time as we continue to expand our field presence with clients. And what we've always said is we have spent a disproportionate amount of our time building out our capabilities first as opposed to the sales force. And from our perspective, that's the only way to build out a world-class firm is you have to have truly differentiated best-in-class capabilities, and you need to have highly satisfied clients who, once they see us in action, just want more of our firm, they want more access to our firm and have a greater appreciation for our firm. And we're now getting to the point where because we've made such a heavy investment in all of those capabilities that we now can continue to expand the reach of the firm and at the same time the brand awareness and all of the other constituents in the ecosystem, whether it be legal, board members who've seen us in action in other situations, whatever it is, that should dramatically increase our win rates. It should dramatically decrease those situations where we're brought in without a competitive process. It should drastically increase our fee realizations, all of the above, but it sort of takes time. and we've been on this journey and I think we're going to continue to benefit from from all of the investment that we made. Great thanks for taking the questions Paul. Good thank you Doug. Thank you. We'll take our next question from James Yarrow with Goldman Sachs. Your line is open. Good morning and thanks for for taking the question. Paul, I wanted to touch on the restructuring backdrop. Could you comment on the ability for this business to accelerate into rising debt maturity walls over coming years and combined with higher interest rates? And if possible, could you perhaps differentiate between the liability management part of the business versus the inside and out of court bankruptcy part of the business. Sure. I mean, I don't know what the inflection points are going to be, but I've said this for a long time, which is people were overly grounded in an environment which was anomalous, which was near zero interest rate environment, where a lot of debt had recently been raised with very giving covenants. And as a result, there were no real choke points. Companies had long runways, long maturity runways. And we had benign economic conditions and zero interest rates. We're near zero interest rate. And, as a results, the default rates were so far off of historic levels. And now what has happened is with every turn of the screw, we're starting to see that While there are many industries that have a lot of tailwind to them, there are also a lot of industries that are really finding it quite challenging because of either AI disruption, spike in commodity prices, refinancing rates and spreads that are barely recognizable to the cost of capital than the original loan was financed. And as a result, stress is slowly building in the system, and it's affecting different industries in different ways. And even in industries where the industry overall is thriving, you have second, third, fourth tier players who are finding that in the scale game, they're being squeezed and they're being left behind. So we continue to think that overall restructuring and liability mandates should remain at these levels for a while or build. We're not assuming that they're going to build, but it's a distinct possibility that they will build. And if they do, you can see, to your point, a sharp inflection in activity levels. That's not what we're budgeting for, that's not why we're forecasting, but I think we're exceedingly well positioned for that to occur. At the same time, we're focused on meaningfully increasing our addressable market. And as you think about that, it's the interplay of geographic presence, it's having more strategic advisory coverage bankers who have relationships on the corporate side, and it's further penetration in the private equity ecosystem. And I think on all three of them, we've been able to achieve a leadership position in restructuring and liability management before we've fully built out our geographic footprint, before we fully built down our industry footprint, our corporate coverage footprint, or our coverage of private equity firms. And as we continue to put it in that white space, we have a greater and greater addressable market. So we're focused on what we can do in a static macro environment, But if we also see that the world becomes more challenging and more companies are struggling to deal with looming maturities, that's just another leg of growth. So it's out there, but it's not what we're assuming until we see those conditions deteriorate. And they may, they may not. That's not who we're focused on. we're focused on how do we do more in this environment and we think this environment is kind of the new normal environment even though it's quite different than the environment of five or ten years ago and as it relates to whether it's proactive liability management or it's it's in court I think you're starting to see maybe some move towards more input but it's not dramatic I just think that it's probably the balance is moving a little bit that way and some of that is after all of the proactive liability management exercises have been exhausted and companies have been given every opportunity and the flexibility to sort of right-size their businesses and to chip away at the debt, at some point there needs to be a more dramatic resolution. So you're starting to see that direction of travel move a little bit in that way. That's really helpful. Thank you, Paul. Just a quick follow-up here. We've seen recently rising debt costs for AI financing from both higher rates, but also a more challenging market backdrop. How do you think about the impacts of further indigestion in the space for a more prolonged period, and could this be an opportunity for your restructuring business as well over time? David Morgan I think everything ultimately is sort of the addressable market, which is as the quantum of debt that's issued just grows by leaps and downs. Inevitably, not all of it is going to end successfully. That's just the reality And when you think about the TAM, you have to think about it, not just default rates, but you need to think of value, what are you applying that to, and the quantum of debt is dramatically greater. At the same time, when you have such voracious users of debt capital, what you're going to see is a crowding out phenomenon, and you're gonna see, you know, spreads widen out, and you know, the multiplicative effect of spreads starting to widen and base rates remain elevated, that puts a lot of pressure on refinancing. And clearly, you know all of the exotic financings that are being employed and all of a vast quadrants of capital, I think it's safe to say that there will be situations that will not go as they were initially expected. And those will present opportunities. But that's true across all industries. But I think the bigger theme is that as so much capital needs to get raised, and if there are legs down, and if they're on credit losses, and the credit funds begin to feel the pressure, then what they're going to require to commit to the next deal, you're just going to see spreads you know potentially gap out so that's that's something which uh we're ever watchful for and uh that may present itself it may not as i said we we can only focus on what we can control so we assume that the market remains pretty much as is and the question is can we do more in the current environment because we don't control the environment we just control our ability to capitalize on any market environment that's presented to us. That's great. Thanks a lot, Paul. Thank you, Jay. We'll take our next question from Brennan Hawken with BMO Capital Markets. Your line is open. Hi, yeah, this is Josh Brechtel filling in for Brennan Hawk. I appreciate you taking the question this morning. Of course. Good morning, Josh. Good morning. Yeah, our first question is going to be on Park Hill and just kind of the competition and consolidation you're seeing in that market. That's competition for mandates and talent. Just if you could speak more broadly, I know your outlook for this year is pretty strong. Just wanted to hear what you're seen in the market. Look, I think what we're seeing on the market is that for all the reasons we've talked about with a lack of portfolio monetization, but the IPO market remaining challenged for mid-sized companies with, you know, all of the challenges in the ecosystem in creating real DPI that asset managers are increasingly looking for alternative means to create liquidity, and you're seeing more structured solutions, you're saying more LPs want to proactively manage their portfolio of relatively illiquid assets. And we're at the forefront of all of that. We continue to grow our footprint. We continue the grow our share of market. We think we have tremendous opportunity in front of us. And while everyone, you know, would like to grow their businesses, I think we have the benefit of having an established platform with a lot of momentum. We continue to grow the business, and we continue to find that it's a very attractive destination for talent. And, you know, the number of dedicated professionals that we have continue to glow, and we're quite comfortable in putting more resources against this opportunity. At the same time, you know, the primary fundraising world is challenged for all the reasons we just talked about. It's sort of the other side of that same coin. But it creates opportunities for us to take relationships that we have where there is real interest in PJT Park Hill leading a primary fundraise and being able to think more holistically about how we can work with asset managers to help them create liquidity through structured solutions. solutions. At the same time, we work with them on new fundraisers. And because we have such deep relationships with all of the purveyors of capital, all of these LP relationships, that then puts us in an attractive position as it relates to proactive LP reweightings of their of their portfolio so we're we've been on this for years and we have a very clear approach to the business which we think differentiates us and it's starting to show up in our numbers and in our results and we're quite proud of the effort got it got it definitely appreciate the color there thank you and then our next question will be kind of on the really strong year-to-date revenue i know this quarter was a bit softer but year-to-date results have been impressive um and the outlook seemed to remain constructive so we just wanted to know what that meant for uh 4q comp leverage as it typically comes through there and then we're a couple years in the cycle and a couple yeah a couple of years into the cycle i'm just curious on your expectations um in the medium term of operating leverage as we move and progress right well there's a there's a lot in in all of that um let's just go with your last question first operating leverage so if you look at you know our pre-tax margin which is what we focus on the most because at the end of the day that's what creates sureholder value is pretty tax margin and we think that as managers we should have the latitude as to you know where we make investments and not go down you know each component line of expenses the question is in a holistic manner and all this is interrelated too because if you're going to make big technology investments then you're going to see an i.t budget that balloons but that may create connectivity with human capital so everything relates to everything else and it's not just that you can just pull on one string you need to look at the entire weave of the uh of the expense space and if you just take down the two anomalous years of COVID of 2020 and 2021, when there was no travel, there was no entertainment, and there was not a realistic expense base. I think we're sitting here today at our best or near best pre-tax margins that we've experienced in our history, and the hope is that over time, you'll see more. But we don't want to be slaves to how much, how soon. But as you think about the direction of travel, the reality is, excluding those two anomalous years, we're sitting here today with, notwithstanding all the competitive pressures and all the expense inflation, we are sitting here with some pretty impressive pre-tax margins. And then I appreciate your other point about being two years out of the cycle because it gives me an opportunity to talk about something that's near and dear to my heart, which is if you go back five years, you get to 2001. If you look at 2001, that is the record for M&A activity. And if you fast forward to 2026, this is going to be the second best year. And if you look at how much our revenues have grown in the last five years, and you benchmark it to large firms, small firms, mid-sized firms, it's a very impressive track record. And that's why when we talk about measuring in years, not quarters, we're really in this for the long term. We really want to measure this in decades and beyond. And this is a business where we have incredible confidence in our ability to execute. We have our incredible confidence and our ability to succeed, but it just doesn't work on a quarter-to-quarter basis. You need to look with a longer lens. And the longer the lens, I think the clearer it is as to how strong our results have been. And so, in some ways, we're two years into the cycle, but I kind of think point to point, you know, the last time we saw an environment like this was pretty much five years ago, and we're quite proud of what we've accomplished. Thanks, Paul, for taking the questions. Appreciate the insight, as always. Absolutely. We'll take our next question from Stephen Chubak with Wolf Research. Your line is open. Hi, this is Annie. I'm for Steven. I wanted to just start with a question on the impact for midterms. And can you speak to how you anticipate the midterm will affect deal activity across different sectors and any particular sectors you expect will be more or less impacted? Steven Fiala- Well, I think it'd be fair to answer that question and actually see what happens in the midterm. It's unclear exactly what is going to happen and what the what the shape of the new Congress is going to be, I'd like to think that a week from now we'll have a much better sense as to, you know, what specifically is going to require a pivot. Maybe in a related manner, give me the following opportunity, which is I do think that there are companies that very much think that they're on the shot clock. And the way they think about it is, regardless of the midterms, to some extent, if you wait six months from today to investigate a large consequential strategic combination, And if you just assume that from approach to engagement to back and forth to bring it over, it takes another six months, you're going to find yourself a year away from presidential election. And I do think for a lot of companies, if they have a view on what the regulatory framework is today and they wait more than six months, they're really subjecting themselves to an unknown environment and an unknown framework. So my sense is that you may see a little bit on some of the largest, most consequential deals where there could be a robust regulatory discussion and debate. You can see a little bit of a pull forward where the next six months might well be, you know, an attractive window, and then after that, there might be a desire to sort of put things to the side on very large, audacious, you know, proposed combinations to then wait to see if there's greater clarity on what the next administration looks like. So I just think that that's a factor to consider. But as far as the shape of the midterms, let's give us all an opportunity to see what happens and to digest that. And then we'll give you our best view on how that's likely to affect the world. But I think it's fair to say that we haven't seen any of our clients sort of slow things down, you know, leading results from today's election day. Okay, great. Thank you. And then just for my follow-up, we had a question regarding tax code section 162M, and it appears this tax change, which goes into effect next year, could limit tax deductions by increasing the number of covered employees. And recognizing this is not just a PJT-specific issue, can you provide any preliminary guidance as to how impactful this could be to your go-forward tax rate beginning in 2027 versus the current Yes, thank you for the question. And you're right, this isn't unique to PJT, and we are thinking about the impact and modeling it. As we sit here today, it's still early and we'll come back with our fourth quarter to give you a better estimate of our effective tax rate for 2027. But we think an appropriate starting point is around 25% for 2026, and And that includes the impact that we believe the 162M extension will have on our tax rate. Okay, great. Thank you so much for taking my questions. We'll take our next question from Alex Bond with KBW. Your line is open. Hey, good morning, everyone. Thanks for taking the questions. Paul, you mentioned a little earlier getting deals over the finish line is still challenging given the macro and geopolitical backdrops, which makes sense, but wanted to drill down there a little bit and see if, A, if this is delaying maybe early-stage deal activity more so than more putting a temporary pause to deals that are already maybe well in the works or at a later stage, and then also if you're seeing more of an impact in certain deal-size cohorts than others, maybe if the $1 billion to $5 billion or $5 to $10 billion ranges are more or less impacted than um the mega cap side just use any further point um you could put around um that that topic would be helpful thank you yeah yeah i think i think my it's a general comment which is that i think if you think about it as a deal funnel i think we've never seen more more situations more opportunities that are starting out on the top of the funnel where everyone is trying to investigate you know what are the strategic options whether they're buyers sellers or the like so but and that's reflected in mandates engagements in activity I just think that this is not a one-way market where you know if you go back to 2021 that was a one way market it was a one-wave market where it was just clearly risk on where very few processes went to final bids. There were preemptions. Companies were getting real interest. They had a very good sense of the market. And those that wanted to preempt the process were able to do so by leaning in, and everybody was comfortable, and they didn't need to see it played all the way out. I think this is not a one-way market. It's not a risk-on-only market and there are a lot of puts and takes and a lot of these deals are finally calibrated and when you see big swings in sentiment in market prices you know the ability in a public company deal to uh to land on a price that works for buyer and seller and can be well received going forward it just becomes more challenging And as rates keep, you know, being pressured, and financing conditions and credit availability, while it's still quite available, it's become pricier and pricyer. And finally, calibrated deals, it is just more difficult. And then on the regulatory front for large deals, While I think there's much greater mapping as to how the U.S. will react in European regulations, I think China is probably more of a wild card today than they've been for a very long time. So that injects some uncertainty into deals where there otherwise might be a regulatory line of sight. And as a general matter, smaller deals that are under the radar that are private, you have fewer interveners, you have newer constituencies to complicate. You know, all else equal, those probably are less subject to some of the factors I've been talking to. But the basic trend is if this was a retail store, there are more people that are in the store that are browsing. that are looking to purchase, but while the cash register is increasing, it's not increasing to the degree that the foot traffic has increased. And I think that's what you're seeing. You're seeing more companies looking at situations where probably conversion rates are down, but if you take it all in totality, activity level is still up. And let's not lose sight of the fact that this year, while it may be disappointing for some folks who uh had unrealistic expectations last january it's still tracking to be the second best year on uh on record i think it's disappointing only relative to what were some unrealistic beginning of your expectations but in absolute it's one uh one attractive market and uh and we're happy to be part of it got it now that makes sense thanks for the color there um and then wanted to ask a follow-up um just around um uh industry consolidation and inorganic growth there's been some press reports um around potential consolidation within the m a industry so just wanted to to double click there and see how how you uh think about inorganics growth for pjt um as a use of capital um and then just any any color commentary that you would have on on industry consolidation at the m a level um also also would be helpful thanks paul sure um i thought i'd get away without without having to answer that question um look here's what i think about m a as a general matter m a is all about risk reward and i think in professional service organizations the risk is greater than in industries or businesses that are not as people sensitive. So the risk is meaningfully higher. If the risk is meaningly higher, the reward sure as heck better be a lot higher. Otherwise, it's hard to imagine it making sense. Where we've spent our time has been on smaller transactions where it's big enough to be worth the time and the effort, but clearly on the risk reward spectrum, it is highly accretive to our franchise and very low risk and that is our clear preference and i think the lesson all of this is the larger the larger target the larger of the number of people you're trying to deal with the the risks of a successful integration go way up and you need to be very very comfortable that you can manage those risks and you needed to be extraordinarily comfortable that the rewards are meaningfully greater than the risk you're assuming. And that's why when we've done this, we've focused on smaller but consequential transactions. Got it. Makes sense. Thank you, Paul. Thanks. Thank you. This concludes our question and answer period. I would now like to turn the call back over to Mr. Teltman for closing remarks. I guess my closing remark is I'm going to make a public service announcement, which is if you haven't voted, vote. And we will look forward to seeing you when we report fourth quarter results early next year. So until then, be well, and we appreciate your support and your interest in our company. Thank you. Thank you.