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spk08: Good afternoon and welcome to the Mollis & Company earnings conference call for the first quarter of 2023. To begin, I'll turn the call over to Mr. Matt Soukroof. Please proceed.
spk09: Good afternoon and thank you for joining us for Mollis & Company's first quarter 2023 financial results conference call. On the phone today are Ken Mollis, Chairman and CEO, and Joe Simon, Chief Financial Officer. Before we begin, I would like to note that the remarks made on this call may contain certain forward-looking statements which are subject to various risks and uncertainties, including those identified from time to time in the risk factor section of Molson Company's filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable gap measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our investor relations website at investors.mullis.com. I will now turn the call over to Ken.
spk03: Good afternoon, everyone. Our first quarter adjusted revenues of $185 million were down 38% from the prior year. The decrease in revenues is primarily attributed to a significant slowdown in the global M&A market, which experienced a 46% decline in completed transactions during the same period. Despite seeing more activity in M&A at the beginning of the year, the impact of the recent banking crisis has elongated processes again. I'm often asked what we would have done differently if we go back to the great financial crisis of 2007 and 2008 when we founded the firm. And my answer is always the same. We were extremely aggressive, and I wish we had been more aggressive in adding talent to our business during that unique moment in time. The current dislocation in the banking market has once again given us the opportunity to expand our franchise for the long term. As we've consistently pointed out for the last several years, our most significant areas of white space have been technology, industrials, and healthcare. where we have historically been underweight relative to the size and potential of these sectors. For context, technology and industrials have produced the two largest global fee pools, each totaling approximately $30 billion since 2018, and healthcare represents approximately 20% of U.S. GDP. These markets are enormous, and the need for high-quality advice is significant. This is the reason that in the last two quarters we have announced 22 managing director hires who are leaders in their specialty. As you might have seen in our announcement earlier today, we have significantly expanded our technology investment banking franchise with the hiring of 11 managing directors, many of whom have worked together for a number of years. They build on our core technology capabilities and expand the breadth and depth of our subsector coverage. With the addition of these senior hires, we now have 25 technology-focused managing directors and have doubled the size of our technology investment banking team. Additionally, we continue to invest in other areas that are key strategic importance to the firm. We hired one managing director in our private funds advisory group, who joined in April, and two managing directors who will join over the coming months, one focused on industrials and one focused on capital structure advisory. We've positioned the firm with an unlevered balance sheet to seize on just these types of opportunities. Unlike many industries, however, our investments go directly through our income statement. As a result, our compensation ratio and pre-tax margin will fall outside the bounds of our target range until the market improves and these new hires become fully productive. We are thrilled with the MDs who have joined. These investments greatly enhance our capabilities, and I've never been more optimistic about the firm's future. I'll pass it over to Joe now.
spk05: Thanks, Ken. Ken highlighted our revenue, so I'll start with expenses. We accrued our first quarter comp ratio to be 80%. We're focused on investing in the business, so our compensation ratio will remain elevated relative to our target range. Depending on revenues, a higher comp ratio is likely to persist for the next 12 to 18 months. Turning to non-comp expenses, our first quarter non-comp ratio was 22.1%, largely a function of reduced revenues. The underlying run rate for non-compensation expenses remains approximately $40 million per quarter. Based on our expectation of market conditions and senior hiring, our underlying effective corporate tax rate is expected to be elevated primarily as a result of the combination of lower pre-tax income and relatively large non-deductible expenses. We expect the long-term target of 27% to 28% to resume once we can achieve a more normalized level of productivity. Regarding capital allocation, the board declared a regular quarterly dividend of $0.60 per share. Also, during the first quarter, we repurchased approximately 1.1 million shares, totaling $45 million. The buyback was in connection with the tax withholding related to our annual RSU vest. And lastly, we continue to maintain a strong balance sheet with no funded debt. We'll now open it up for questions.
spk08: If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2. Again, to ask a question, please press star 1. As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking your question. We will pause here briefly if questions are registered. The first question comes from the line of Devin Ryan of JMP Securities. Please proceed.
spk06: Hey, great. Hey, Ken. Hey, Joe. I guess first question, obviously, on the comp expense, you hear the comments. Just trying to think through some of the moving parts here. Does the comp accrual include any bonus accrual? And then is there any other parameters you can just maybe help us think about around like the full year because of both the revenue environment but all the hiring that you're doing? And then just, I guess, interrelated to that, what does that imply for capital return potential?
spk03: Let me start on the accrual technicalities. I'll turn it over, Joe, on some of what went into the accrual. So just how you think about this. I mean, this morning, 44 people showed up at our office in the technology group. In fact, it was pretty, let's call it, it was positive that everybody got to start as of today. I mean, and we were able to bring the whole team in. and get them going. But I don't think they'll be immediately productive, but they will hit our payroll immediately. And the way to think about it, and by the way, that's just, that's 11 of the MDs of the 22. We also took advantage of hiring some of the bankers out of Credit Suisse. We did some very significant healthcare hires at the beginning of the year, and that goes into the 22 MDs we're talking about, and the juniors that support them. You know, the way we're thinking about it, and I know it's hard to put this into a pro forma, but it's almost the equivalent of a pretty substantial acquisition in the technology sector, except that it all goes through your income statement. You put it on and you don't capitalize. There's no upfront, but you end up covering the first few months of ramp up. And we're trying to estimate, Devin, you asked a very difficult question. I'll let Joe get to the, is where does the revenue go? That's hard enough, by the way. Our comp ratio would be hard trying to figure out with the Fed and the banking environment is where it is, what our revenues are going to be. And then we have to overlay that, which is what are the increased expenses going to be from carrying essentially 15% to 20% expansion of the headcount you know, during this period. So, again, I'll let Joe talk to the specifics of the accrual.
spk05: Yeah, so to answer your first question, yeah, we did make an accrual for bonus this quarter in order to kind of push it to the 80%, which we looked at as being kind of the best estimate for the full year. Two, with respect to how we are thinking about the macro environment, we're thinking about it as being kind of relatively consistent with where we are right now. and basically we factored in all those new hires. So we factored in only what we know today into that. And, you know, one of the things that we don't know is where revenues are ultimately going to land, and we also don't know what the market for banking compensation is going to be, which will happen at the end of the year. But that's our best guess right now, and that will obviously be adjusted when and if appropriate.
spk06: Yeah, got it. Okay, thanks. And so I guess the other part of that question is, it would seem just with all the elevated hiring and then the revenue backdrop that, you know, the company's under earning the dividend. So I guess just the question is, why continue to pay the dividend in the near term, to the extent that's true, maybe I'm off there, but just kind of thought process. And then the other part of what we're talking about is these additions, you know, it's kind of under a unique circumstance. And so I'm assuming, you know, they would probably ramp faster than normal. just given that some of them are joining probably with little interruption from where they're leaving. So maybe that's kind of the follow-up, but there's two different parts to it.
spk03: Yes. The answer to your second part is we weren't really sure of when everybody would be able to join and what all the complications might have been. We've gotten through that, and I think you're right. The fact that we've gotten to a, I would call it an agreed method for how we're going to cover existing clients, service deals in progress. I do think it'll be more rapid. You know, and I will tell you that was happening on a real-time basis. We put the announcement out this morning so you can imagine when all of those details got done. So you're right about that. We do expect a more rapid than normal uptick, especially since we've avoided sort of a 90-day, you know, garden leave or any of those issues. On the dividend, look, we are debt-free. We are sitting with excess capital. We think we've just added significant value. I think most companies, if they make an acquisition, don't cut their dividend. We are cash generative, and we're very confident that we've just added significant value to the firm and very comfortable with the dividend.
spk06: Got it. Okay. I will let others ask, but I appreciate you taking the questions.
spk08: Thank you. The next question comes from the line of Ken Worthington of JP Morgan. Please proceed.
spk10: Hi, uh, good afternoon. Thanks for taking the questions. Um, so you, you, you kind of, uh, fleshed out, you know, you know, big, big hiring MDs from Credit Suisse and elsewhere. Um, you also mentioned that you wish you sort of, you know, built and hired more, uh, around COVID. So, so given all that you've done, thus far and recently and quickly, what is the appetite for you to build even more here? And I'll go really out on a limb and say you've had some failures or near failures of some pretty high-profile banks. Is there the opportunity to maybe broaden talent from those businesses or even lift out some advisory businesses that that they had you know sort of you know further building out your your business and operations um you know i'll just start there uh what what is the appetite and opportunity uh there okay just to reframe one thing i was actually the last time we really moved this uh was the gfc you mentioned covet but it was really in the global financial crisis where we
spk03: expanded way faster than most people thought was possible because of the availability was unique back then, not COVID. But let me start with one thing. I think if you went back and you listened to our conference calls, I must have said technology to the point of making everybody nauseous, that we could use more. And technology was very hard to get enough throwaway. You know, you can hire a person here or a person there. Even that was a struggle. The biggest feed pool, I think, by far right now is software. And in this group, I'd say you define seven or eight of the people as touching on the software category. And by doing it at once and in mass, you just have the throw weight to become important in the space. By the way, marry it up with the fact that we have an existing coverage platform. And again, I'll spend two seconds just explaining Our coverage platform was doing very well, mostly on corporates and strategics. And it's interesting, the group that we brought in is very much weighted towards sponsors. So we think the fit was almost perfect. So that was why we did it. I mean, that's a large chunk, about half of the hiring that I've described to you. And let me say this, we would continue to be aggressive if something like that were to come. I mean, that seemed to be a slow fastball right down the middle for what we needed to move the firm into the next generation and really extend our growth. The same thing happened with a group of healthcare bankers that we took out. And Ken, to your question, if there is a space, and I don't See it exactly. There are some one-offs out there, but you're right. If it were something we needed that we felt like technology and software was so integral to the future growth of the company, yeah, we would continue to be aggressive. I think I said it on the last call, is these types of teams don't come up often. They're very difficult to do in a good market. I would tell you in 2021, there would have been zero chance of doing this And the negative is it only happens during tough times. It's tough to pull the trigger because somebody will ask me about the business soon, and I'll say it's not great out there in M&A land, but that's the only time it becomes available.
spk10: And then how do you think about taking losses? So the earnings were pretty close to breakeven. Um, the outlook doesn't seem to be, you know, better if it, if it deteriorates, you know, are you, are you concerned about, you know, pushing into losses or, or. Reasonable size losses to build the business for the longer term, or is the focus so much on the longer term, you know, losses for, you know, a couple of quarters or the year, you know, don't, don't phase you. And it's really about the longterm.
spk03: I don't want to lose money. And, and, uh, you know, that's not a goal of ours, but the difference. So, and look, I think that the first quarter, do I see it getting worse? You know, I don't know. It's, it's pretty bad. First quarter was pretty bad. I'm hoping that we have slight, you know, that it starts to get better from here. I'm not planning on losses. I don't want losses, but, but let me say the one thing about it is if I were, you know, we, we said it's, it's somewhat like an acquisition. where to gather a group of people like this might cost several hundred million dollars. Now, that would not result in a loss. It would result in a capitalization of the cost. If the cost of doing this is to run $5 million through your income statement, it feels bad. But that's cheaper than several hundred million dollars of acquiring it. I get it. That doesn't go through your P&L. But the return on investment on what we just did is, I would say, significantly better than anything we could have envisioned putting up the money in some type of M&A transaction. The negative is it will pressure the income statement in the short term.
spk05: Okay. Thank you very much. And I would just add to that, just remember that we're not expecting losses, but if we were to have some modest losses. It's not cash flow. Cash flow is different than earnings in our business, and it's important to keep that in mind. Thank you.
spk08: Thank you. The next question comes from the line of Matt Moon of KDW. Please proceed.
spk04: Hi, good afternoon. uh just one for me regarding the hiring obviously that was extremely strong and the result of some opportunistic activities but i guess just looking at the outlook and kind of revenue pipelines across the industry um you know just curious how long of a sustained downturn or to what magnitude would be needed to come about before You would consider addressing either the headcount or even at the minimum freeze hiring. And then, you know, in terms of recruiting packages, has there been at all a shift in terms of, um, you know, how these are structured in this type of environment and any call that would be great.
spk03: So we are adjusting our headcount by the way. I think we have been much more active in also exiting, um, Every year we're disciplined. I don't want to say we're disciplined now. Every year we probably eliminate between 2% and 4% of our head count on managed nutrition. I think we're somewhere near double that, and we have been doing that aggressively. But the business is the people. The business is quality people, motivated, and also structured against the economy, which technology and health care is where the economy is going and where we could have – More throwaway was definitely a positive for the future of the company. Are we changing the packages? Yes, sure. Packages are different. They change all the time. And it will change with the economy and the market and how unique and singular the talent is you're looking for and how irreplaceable it might be. So we do do that, but I'll give you our pipeline we think is about down 20%, something like that. It's a pretty strong pipeline, but as I said on the last call, I think it remains a fragile pipeline, meaning that it's very hard to take your backlog to market to complete an M&A deal. Financing is still very difficult. Valuations are in fluctuation. You've heard all that. This could go on. It'll definitely go on another quarter. And, you know, it could go on six months. But, again, having done this in the GFC and seeing that it basically created the firm, having the talent and the organization, and two years later, that was the asset. And you withstood the temporary downturn. The asset we're building now, is a unique franchise in technology and in healthcare and in sponsors and in media. And I do think that asset, although not capitalized on a balance sheet, the people will be here for longer than most assets that are capitalized. We hope those people will be here for a very long time. And so we think the return is significant and will be to the shareholders' benefit over a long period of time.
spk04: Great. And then, Joe, just one more of a cleanup type question. Just last quarter, you talked about a kind of six to eight percentage point impact from retirement eligible share based comp. Just curious if that was kind of in the right range of that impact in the first quarter or any more specifics you could provide on that actual impact. Yeah, the six to eight percent was kind of.
spk05: referencing kind of flat revenues with the fourth quarter so as you know now we we were a little lower than that so it might have been a little so that that that ratio would have been probably a little higher when you kind of do the math okay great i'll hop back in the queue thanks guys thank you the next question comes from stephen schubach
spk08: of Wolf Research. Please proceed.
spk02: Good afternoon. This is Brendan O'Brien filling in for Stephen. So first I just want to touch on the M&A environment. In the press release, Ken, you indicated that you felt the market was in a holding pattern at the moment. We've heard you and your peers talk about a few different conditions that are needed for an M&A recovery, including the narrowing of bid-ask spreads, greater macro clarity, and financing availability. Just want to get a marked market on these various factors at the moment relative to where they were last quarter. And what do you view as being a potential catalyst for M&A in the near to intermediate term?
spk03: Probably the single most difficult is financing right now. I think the recent bank problems have caused credit spreads to widen. I think they'll continue to, by the way. I think that's a fundamental. You know, you had the Fed. And then in order to do a transaction, you know, there's a confidence level. And I think people feel like they're out in a minefield and, you know, you look left and you see a bank blow up and you don't know how many mines are out there. I just think it's one of those things too, which is a confidence level that you can underwrite the risks and sort of have a Nobody ever has certainty. I think there's always risks, the risks, you know, and the known unknowns and the unknown unknowns. But for right now, I think people are just waiting for just some stabilization that they can underwrite. Even if you had to underwrite a five and a half Fed rate, a wider credit spread, I think people could get there. But you have all those issues moving. And that may be it's just too easy to say, why don't we wait for a little more information before going forward? again, like we just did, M&A, and making these decisions involves making a long-term bet. And I think having all factors moving, I'd like two out of the three of those to stabilize. And so possibly the Fed stabilizes, and then maybe we get the bank market to stabilize. But I will say I think the credit spreads are going to fundamentally be wider than they've ever been. And then you have the Fed as the benchmark rate, which is higher than it's been. So I think those things are going to take their toll.
spk02: That's great, Collier. Thanks for that, Ken. And then I guess, not to beat a dead horse, but pivoting to the comp ratio. In your prepared remarks show, you mentioned that the comp ratio could remain elevated today. for the next 12 to 18 months, depending on the environment. Just understand that, obviously, you mentioned that it's difficult to even set the comp ratio for this year in this type of environment. But as we think out into next year, I just want to get a sense as to what level of revenue or revenue growth you would need to be able to see to work the comp ratio back below 60% on a full year basis. And also, just wanted to clarify one of your earlier remarks. Were you indicating that the full-year comp ratio will be 80% for this year?
spk05: So to answer the last part of your question first, yeah, that's our current best estimate based on all the assumptions that we've talked about, kind of a consistent macro, these new hires. but without the understanding of where bank or comp is going to be at the end of the year and without knowing where revenues will actually land. I think in terms of next year, we're just kind of providing some caution. We don't know when things will stabilize on the macro front. They could, to Ken's point, stabilize in the next six months, in which case, it would be a a different a different answer and the 12 months would probably be more more likely but ultimately the macro sustains for a little longer that's why we're saying that it could it could bleed into 24 as well yeah look my guess is especially since we we were putting together our queue and some of this while we were still trying to figure out whether we would get the team on the field
spk03: uh today or in 90 days or you know each individual especially on the tech team what their um garden leave requirements non-compete and all that was it just so happens that everybody got to show up this morning and we have an agreement on how we can continue to service existing clients that is a positive to the point of um the hires causing the comp ratio to stay elevated longer than just this year, I would say that's probably not what we're – that's not going to happen. I think that it's a this-year phenomenon as to the hires, and maybe we went 12 to 18 months just being conservative because who knows how bad the market is for how long. But, you know, if I had to break it down, I'd say most of the compensation, given how quickly we've got them on the field, should be covered by the production of the hires by the first quarter of next year, then you tell me how the market is, how the M&A market is.
spk02: Thanks for taking my questions.
spk08: Thank you. The next question comes from Brendan Hawkin of UBS. Please proceed.
spk01: Hi, thanks for taking my question. This is Ben Rubin filling in for Brennan. Appreciate the aggressiveness on the recruitment front given the market environment. Just could you give us a rough sense of how the bankers and MDs that you just brought on compare in terms of their productivity to your existing tech group and also what type of trajectory should we expect in terms of their ramp up now that they're in the building? Thank you.
spk03: I think because these are selected, I would put them in the top quartile to, and by the way, I'm just talking about our full plethora of bankers. I think, you know, not comparing it to the tech bankers we have, but you're probably trying to do a what's the revenue per MD. I would say their top, you know, they would fit in the top third, top quartile of where we've been, something like that, on average. And that's on average across them. And I think the ramp-up, which I was, again, concerned about the tie-ups you have when you do this, trying to move people. I think it'll be a lot quicker than I thought because we were able to reach agreement as to lots of things regarding that, information, clients, et cetera. They're a pretty aggressive group of people. In the context of the market, I think they'll be back up to their full run rate in three to four months. But then, of course, the new deals they're bringing in have to close, so that delays it a little bit. But they're here. All of them are on premise. All of them are working. And they have, I mean, one of the very unique things about it is they even have access to existing information and client information. in the client access, which a lot of times when you cross hire somebody, you have a lot of issues around that.
spk01: Great. Thank you for the color. And just to pivot a bit away from the recruiting, given that the restructuring environment seems to be improving, you know, each quarter, how are you thinking about the boost to revenue from restructuring this year? Or is it more of a 24, 25 event? And also what percentage of your advisory revenue did restructure and contribute this quarter? I know historically it's been around 20, 25%, but how quickly could we see it rebound to those levels? Thank you.
spk03: I think the best way to look at that is restructure is a lot of restructuring right now is also rescue financing. So our, our capital advisory, our capital markets plus restructuring was about 35% of revenue. You're right, restructuring was probably right around the numbers you were talking about, if you really peel it off. But those things are starting to work hand in hand. And I do see an acceleration. Again, we talked about like a year ago when the Fed started raising, did we see restructuring? Well, I think I said back then, when you make one quarter of elevated interest payments, it's pretty easy. When you start to make a full year, And then that full year is at the full fed benchmark up where it is now. And lastly, I also think the ability to refinance, that is closing. It's getting tighter. People are getting more aware of how difficult that market is and starting to call in for advice earlier. I think we're starting to see an inflection point where restructuring and liability management is inflecting upwards pretty rapidly. could continue that way if the market stays difficult.
spk01: Great. Thank you for taking my questions.
spk08: Thank you. The next question comes from the line of James Yarrow of Goldman Sachs. Please proceed.
spk07: Good afternoon, and thanks for taking my questions. So maybe if we just turn to the non-M&A, non-restructuring businesses, You know, how are the large buckets within that part of the business performing in this weaker macro environment, and when would you expect those to improve as well?
spk03: Well, the other big buckets we have are private funds advisory and capital markets. Capital markets actually had a good first quarter. And as I said, you know, if you assume restructuring was about 20%, you know, that was – And the combined 35, it was about 15. And the only reason I fudge on that is because some of these bleed into each other. They start in one place and are solved in another place. And I do believe that bespoke capital is going to be the name of the game. There is nothing you can just put out into a Salesforce plain vanilla. Well, not nothing. I shouldn't say absolutes. But you notice there are very few IPOs, very few stock offerings. Investment-grade debt market is still active, so that can get done. But anything below double B and even equity needed is getting to be very structured, very bespoke, and those calls are going into pension funds, sovereign wealth funds, the big private equity credit firms. And I actually think we're a better access point and a more creative and nimble access point for that than some of the large distributed universal banks, so I think that will go up with restructuring. I think you'll see that continue to climb.
spk07: That makes a lot of sense. I'd love to get your longer-term perspective on what the stress on the banking industry means for the M&A business. Within that, how do you think it affects different types of M&A, be it large-cap M&A versus mid-cap versus small-cap M&A, if there are differences there?
spk03: There's a lot in that question. So first, look, the distress and it just, the access to capital is sort of lubricant for M&A and it is very difficult out there. Now, you know, one of the areas that you asked me about the other buckets, I do think the market is going to be rife with activism because you have companies that are going to have difficulties and some of it will just be the market and, you know, their capitalization. It'll give openings. to people who want an opening in order to get their voice heard. They're looking for that opening. It's going to be hard to avoid those openings in a difficult market. And we have very good activism, Group 2, that's very active. And I just want to say that was part of the buckets that are, quote, non-M&A that are accelerating. The difference between large cap and small, they both have their own problems, by the way. Large cap has a regulatory DOJ problem in that you truly have to have courage to attempt one of those right now. Now, if they're not overlap, if it clearly works, I get it, but it's amazing the theories that have come up for the DOJ to get involved with large cap deals. And the exact opposite, the small cap deals can get done, but their financing is most often you know, non-investment grade and bank or SOFR-related financing, and that is just very expensive to go after. So I think both parts of the market are having their own issues at the same time.
spk07: Okay, that's very helpful. Thanks so much, Ken.
spk08: Thank you. The next question comes from Ryan Kenney of Morgan Stanley. Please proceed.
spk00: Hey, good afternoon.
spk08: Good afternoon.
spk00: Can you update us on what you're seeing in terms of M&A appetite among sponsors versus strategics? And on the sponsor side, understand that every deal and firm is nuanced, but in aggregate, how long can this group sit on the sidelines before they have to deploy capital?
spk03: Well, I do think the sponsor community is on the sidelines. I think they would prefer not to make it, you know, they'd almost prefer not to make a decision. And look, if there's a, if there's a, again, a fat pitch, they're going to go for it. But on the margin, I think they would like to be able to model better than they have. And they would like slightly better, uh, capital than they could get. So the whole thing is just not optimal for them to move. Now you remember it's a big world. I'm not talking about every deal. Um, but on the margin. You know, that is where it is. But they continue to have capital. They continue to raise capital. They continue to want to be innovative around that capital. And we will see it. There is a lot of pent-up demand to either exit successful companies that were invested in three to five years ago and then to put new capital to work. That is the business they're in. They're not in the business of sitting on their hands. So they will move, and that's why I think they will move well before the markets move. I think like in COVID, I remember our June call of 2020. I think we did it in August, and we were seeing the sponsors realize that the Fed had their back. for whatever reason, that COVID was going to be taken care of, that earnings were going to be okay, and they were extremely active. And that was well before, remember, the sponsors are actually trying to take advantage of anomalies in the market. So they're not the last to move. They will be the first to move out of this and try to figure out where they can create value for their investors or asking them to figure this out. So I do think that M&A was the first into the tank in this market because M&A the sponsor group was the first to realize that the Fed was serious and it was going to get ugly, and they started to pull their deals in last February, March, April. I think they'll be the first to reach out and put capital out into a market they think will reward them. Remember, they don't have to mark-to-market quarterly. Well, they do have to. Sorry, they do have to mark-to-market quarterly, but they are in it for long-term investment gains. So they can put money up. on the basis of a three to five year business plan. I think they'll be the first move. And then strategics are still very active. Our conversations in the strategic corporate market are very active. And, you know, it's just a matter of, I think it's for them, it's just a matter of stabilize on pricing and also getting a good read on the DOJ. That's been an issue.
spk06: Thank you.
spk08: Thank you. There are currently no additional questions registered at this time, so I will pass the conference back over to the management team for any closing remarks.
spk03: Thank you. I know our earnings release this time was probably more complicated than most, given what we've happened in the last 24 hours and a significant hiring. Feel free to call Joe or myself if anybody has any follow-up questions. Thank you.
spk08: And with that, we will conclude today's conference call. Thank you for participating.
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