LCLN (LCLN) Q2 2026 Earnings Report, Transcript and Summary

Good day, and welcome to Lincoln International's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the call over to Alexandra Deignan, Chief Marketing Officer and Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Lincoln International's earnings call for the second quarter of 2026. Earlier today, we posted our earnings release and an investor presentation on the Investor Relations section of our website at www.lcln.com. A replay of today's call will also be available on our website following the conclusion of the call. Before we begin, I'd like to remind everyone that today's discussion may contain forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to our earnings release and our filings with the SEC. Except as required by applicable law, Lincoln International assumes no duty to update or revise these forward-looking statements. In addition, during today's call, we will discuss certain non-GAAP financial measures. We believe these measures provide useful supplemental information to investors regarding the performance of our business. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in the earnings release and our investor presentation, which is available on our website. Joining me on today's call are Rob Brown, Chief Executive Officer; Ted Heidloff, Chief Financial Officer; and Brian Garfield, Head of Portfolio Valuations. Rob and Ted will provide opening remarks, and then we will open the call to questions. With that, I'll turn the call over to Rob.

Thank you, Ally, and thank you, everyone, for joining us this morning. We are pleased to report record second quarter and first half revenues and adjusted earnings for our initial quarterly results as a public company. These results reflect broad-based strength across both of our businesses, momentum we're seeing in the private capital markets and the benefits of investments we've made over the past several years. As you likely know, during the quarter, we completed our successful initial public offering and began trading on the New York Stock Exchange on May 20. We are very excited to welcome all of our new shareholders and remain focused on creating long-term value for all stakeholders. Becoming a public company provides us with the capital and flexibility to invest for growth, while importantly, preserving our culture and broadening ownership across the organization. All of this positions us to accelerate towards our long-term vision of becoming the best investment banking advisory firm in the global private capital markets. In the second quarter, we reported $226 million of revenue, reflecting growth of 51% year-over-year and 43% growth from our first quarter this year. Adjusted operating margin was 20% in the second quarter and adjusted net income grew 48% from the prior year period. Our strong performance in the second quarter was driven by both of our business segments with Investment Banking revenues up 56% and Valuation and Opinions revenue up 35% from the second quarter of 2025. The diversification within each of our segments contributed to our strong results with M&A, Capital Advisory, Private Funds Advisory, Portfolio Valuations and Transaction Opinions each generating double-digit revenue growth. We believe these results reflect the breadth of our platform, our authentic client relationships and deep sector expertise, which have allowed us to capture market share. Our performance also reflects an improving market backdrop, although the recovery clearly has not been linear. Robust performance in the second quarter relative to the first quarter aligned with an improving macro environment, as pronounced challenges early in the year gave way to more positive trends. As the second quarter progressed, moderating geopolitical risks and a healthy economy supported market improvements and a higher level of confidence. As M&A picked up and while capital remained accessible, we saw pricing become more transparent and buyers and sellers gaining conviction to transact. While markets do remain selective, companies and financial sponsors are increasingly looking beyond near term volatility and focusing on executing long-term strategic priorities. While we believe this recovery is in its early stages and some sectors do lag, private equity remains a powerful catalyst for future M&A activity. Elevated dry powder, extended hold periods and the large inventory of portfolio companies continue to create pressure to both deploy capital and realize investments. More broadly, strong corporate fundamentals, stable interest rates and continued access to financing have reinforced confidence. At the same time, uncertainty has not disappeared, and we do continue to closely monitor the macroeconomic and geopolitical factors that affect our markets as well as the overall business performance of our clients. We believe, however, that the environment today is more constructive than it was during the first quarter and that the pace of transaction activity has the potential to build momentum. And we're seeing these trends across each of our business segments. Within Investment Banking, M&A activity in both the U.S. and Europe accelerated as the year progressed, particularly in Industrials and Business Services. Our software practice, which for us is underweighted relative to our other sectors, continue to face some headwinds. However, even that market is beginning to improve as it becomes more clear which companies stand to benefit from artificial intelligence and which may face greater disruption as a result of it. Overall, our near record backlog continues to build, and it's supported by strong new business activity. Beyond M&A activity, Capital Advisory performed well across both healthy financings and distressed situations. This aligns with the pickup in M&A and also the need to address over-levered businesses. Private Funds Advisory continues to see demand for capital solutions, including secondary transactions. We believe the continued growth of both Capital Advisory and Private Funds Advisory highlights the benefits for our clients of our full suite of solutions as well as the material investments in talent that we've made in both of these businesses over the past few years. Our Valuations and Opinions business also continued its strong momentum as demand for Portfolio Valuations and Transaction Opinions increased. This market continues to expand. It's supported by growth in assets under management, more frequent reporting requirements and the expansion of retail-oriented market products and the strong level of continuation vehicles and other secondary transactions, particularly for our Opinion business. These trends broaden the universe of investments requiring third-party valuations, increased the frequency of valuation activity and have driven greater demand for fairness and solvency opinions. Supporting this growth is our continued investment in talent. In addition to the 6 managing directors promoted at the beginning of the year, 7 managing directors joined us lateral hires in the first half of 2026 across both the U.S. and Europe. This brings our total managing directors to 162 firm-wide. These hires included senior people in key sectors such as Asset and Wealth Management, Pharmaceutical Services, Technology, Restructuring, Capital Advisory and Transaction Opinions. In addition, we have more managing directors joining us later in the year and a robust pipeline of strong lateral and internal Managing Director candidates. In recent years, we've prioritized Managing Director hiring to drive growth and improve productivity. Throughout 2024 and 2025, after carefully mapping our needs in new and existing sectors as well as refining our recruiting strategy, we hired more than 30 managing directors across nearly all products and geographies. As these managing directors ramp up in productivity, they are starting to contribute more meaningfully to our results, and we expect this impact to continue to grow as they further integrate into our platform. As we look ahead, we remain optimistic about the long-term growth of the private capital markets and the opportunities that it creates for Lincoln. The first half of 2026 demonstrated the market's ability to absorb volatility and investors' ability to pivot and recalibrate business strategies. We believe our strong market position, reputation for excellence, deep relationships, unique data insights and very importantly, our differentiated culture position us well to benefit from the positive trends in our markets, and our results this quarter reinforce our confidence in the strategy we have been executing. Overall, we're encouraged by both our performance and the improving market backdrop. We believe we're entering the second half of the year with strong momentum, a healthy pipeline and a diversified platform that positions us well for continued growth. With that, I would like to turn the call over to Ted to review our financial results in more detail.

Thank you, Rob. We're pleased to report strong second quarter and first half results following our initial public offering. It's been an exciting period of growth and transition for our firm and our people. Our performance this quarter reflects strong revenue growth in both of our businesses, a disciplined focus on operating margins and our strengthened balance sheet post IPO, which provides flexibility and the ability to invest for growth. Before reviewing our financial results in greater detail, I'd like to note that my comments today will focus on adjusted financial results and that our acquisition of MarshBerry in October of 2025 impacts the comparability of 2026 results as compared to the prior year. In the second quarter, we generated revenues of $226 million, an increase of 51% from the second quarter of 2025 and adjusted diluted earnings per share of $0.26. Given our partnership structure prior to the IPO, there is not a comparable EPS figure in the prior year period. Investment Banking Advisory revenues were $178 million for the second quarter of 2026, up 56% from the prior year period. We closed 140 transactions year-to-date, which is up 46% from the prior year. We closed 73 transactions in the second quarter, up from 67 in the first quarter, an increase of 9%. Our average fee in Q2 increased meaningfully from Q1, including our highest transaction fee to-date. Our Valuations and Opinions business continued to see strong growth in the second quarter. Revenues were $48 million for the second quarter, up 35% from the prior year period. We completed 19% more Portfolio Valuations in the second quarter compared to the prior year quarter. The number of Transaction Opinions is also trending positively, driven by Fairness Opinions in connection with new continuation vehicles and a growing number of special committee engagements for public and private companies. For the first half of 2026, total revenues of $383 million increased 36%, reflecting contributions from Investment Banking revenues up 39%, and Valuations and Opinions revenues up 29%. Turning to expenses. Our adjusted compensation expense was $138 million for the second quarter of 2026, resulting in an adjusted compensation ratio of 61%. We continue to have significant flexibility in managing compensation expense as we evaluate our business performance throughout the year. We currently anticipate an adjusted compensation ratio of around 61% for the full year 2026. As we've discussed previously, becoming a public company has allowed us to introduce equity as a meaningful component of long-term compensation. In connection with our IPO, we granted RSUs to every employee in the firm to more fully align incentives with our performance and the creation of shareholder value. While our compensation philosophy remains unchanged, we are shifting from deferred cash awards to equity awards, which is expected to provide a benefit to our adjusted compensation ratio over the next 3 years as the program matures. Our adjusted non-compensation expense was $42 million in the second quarter, resulting in an adjusted non-compensation ratio of 18.7%. This compares to an adjusted non-compensation ratio of 24% in the second quarter of 2025. Our adjusted non-compensation ratio has continued to improve as strong top line growth drives operating leverage across our fixed cost base. This includes our ongoing investments in technology, particularly around artificial intelligence as well as recent investments in our real estate footprint. Shifting to taxes. Our adjusted effective tax rate for the second quarter was 34% compared to 26% in the first quarter of 2026. We currently expect an adjusted effective tax rate of around 31% for the full year 2026, which reflects an updated projection of the geographic mix of our income and a more refined view of the impact of recent changes in the deductibility of executive compensation. Turning to the balance sheet. We ended the second quarter with approximately $251 million in cash and cash equivalents and long-term debt of $102 million, resulting in a net cash position of $149 million. During the second quarter, the company repaid a significant portion of outstanding debt incurred primarily to finance the MarshBerry acquisition with proceeds from our initial public offering, further strengthening our balance sheet and enhancing financial flexibility. Finally, our Board of Directors declared a quarterly cash dividend of $0.07 per share of Class A common stock, which will be paid in September. Returning capital to shareholders is an important component of our capital allocation strategy. With that, I'll turn it back over to Rob.

Thank you, Ted. Overall, we are pleased with our performance this quarter, and we're encouraged by the momentum we're seeing across the business. But I would like to point out that none of these results would be possible without the dedication, the professionalism and the hard work that our employees exhibit every single day around the world. And I truly want to thank them for everything they do for our clients and our firm. With that, we'll open up the call to your questions.

[Operator Instructions] Our first question comes from James Yaro of Goldman Sachs.

Rob, congrats on the IPO success and on the excellent results right out of the gate. I hope to unpack the trends that you're seeing in what was the MarshBerry business and the outlook for that business, given this is -- or was a substantial portion of overall revenue back when we had the disclosure.

Yes. Thank you, James, for the congrats. And in fact, I just -- I had dinner this week with the Head of MarshBerry. That business is on track for its forecast. Our business as a whole, our Investment Banking business as a whole, I think as most people know, tends to be a back-end loaded business with the fourth quarter being the most important quarter. That's more pronounced in their business historically. One piece of data is that their backlog at this point in the year is the largest it's ever been relative to what they need to achieve in the back half of the year. So we remain confident about the performance of that business. And I think I would also point out one of the reasons to do that deal was to marry their expertise in insurance and wealth management with our relationship with private equity, and we're seeing some real successes there.

Excellent. That's very clear. And just as a follow-up, and you touched a little bit on this already, but I was hoping you might be able to comment a little bit on the revenue outlook for the back half of the year. I think we've seen some divergent trends across some of your peers as to whether there will be normal seasonality in the second half of the year. So could you just comment on whether you do expect that normal positive seasonality in the back half?

We do. We do expect that. I think if -- as I look at some of the positive trends in our markets, and we mentioned this before, we don't think this is a dam breaking. We think this is an ice dam that's melting that really probably started to melt the second half of last year and given some of the events in Q1 took a bit of a pause and it seems to be starting again. We think that's going to continue. I look at our backlog and what we're expecting that we are going to expect that kind of normal seasonality and pickup in the back half of the year. I think if that were not to happen, I think it would be driven by macro factors and business performance. And as people likely know, in our Valuation and Opinions business, we value about 1/3 of all the private equity holdings in the U.S. And as a result, we have a real insight into business performance and business performance through Q2 is quite good. And so I think as long as that continues and there's no macro shakeups, we feel optimistic about the back half of the year.

Yes. James, I would just add that the fourth quarter is typically 30% to 40% of the year, and I think that's consistent with what we're expecting.

The next question comes from Devin Ryan of Citizens Bank.

I also want to echo congrats on a very good first quarter out of the gates here. So good to see that. I want to start with a question just on the broader middle markets backdrop. Obviously, good to see these results. It sounds like you're seeing some encouraging signs in the backlog and the client base. But this has obviously been an uneven recovery, I think just across M&A, middle markets are not just one market. So it would be great just to dig in a little bit around what you're seeing with clients. Are we still primarily focusing on just the ultra-high-quality assets? Or are you seeing other types of assets come to market or at least being explored, being sold? And is it just still primarily the most motivated sellers? Or is it broadening out?

Thanks, Devin. And it's -- we think it's broader than that. Clearly, the A assets continue to get done, and they continue to get done over the last several years as well. But even on the businesses that maybe haven't performed in their investment thesis, we're seeing conviction to sell those, and we're seeing conviction on buyers to acquire those and work through diligence issues. I think for our business, in particular, we have very strong businesses in Industrials and Business Services. I think those have been more active sectors. I think that's clearly helping us. But as we think about -- and I think, actually, the other thing we're seeing, I think we're just seeing activity among the sponsors. It's clearly, they're selling their A businesses. I think as time has gone on, they're realizing, hey, I probably just need to do something with this business. It's not going to maybe do what I thought. But we're also seeing an increase in foreclosures, right, that private equity is starting to say, "Okay, I have to deal with these businesses. I have to figure out what are the ones I'm going to sell, what are the ones that maybe I have to turn over the lenders and what are the ones that are going to really drive value." And I think, as I mentioned in my comments, I think this concept of conviction is something we're seeing more of as opposed to, well, "If I get a great price, I'll sell it. If not, I'll pull it off the market." And we're seeing more of, "Okay, this is a fair price, and I need to start focusing on what I want to do over the next 5 years."

Okay. Good to hear. And a follow-up on the Valuations and Opinions business. 35% growth year-over-year, quite a bit better than our model. Can you help separate to any degree you can kind of contribution from new clients versus additional assets from existing clients or just higher valuation frequency? And as you look ahead, which of those represents the largest opportunity, just begin to get a little more detail after a really good quarter?

Brian, why don't you answer that question?

Devin, thanks for your question. So as Rob mentioned and Ted mentioned, we've seen an increasing count in portfolio company activity on our business. We're now evaluating about 7,400 portfolio companies, which is up 19% from a year ago. I think the drivers of this really stand behind the retailization of the private capital markets. In that, we're seeing a couple of things transpire. There's more monthly valuation requirements. There's more daily valuation requirements. That's leading to increased valuation needs and then ultimately, revenue opportunity for Lincoln. Additionally, as you called out, we're seeing an increasing share of names that are getting valued by third-party now. There's additional pressure to do so as the retailization unfolds. And that's across an array of asset classes and throughout several different geographies. So there's diversification and retailization, I would say, are our 2 key drivers. I'd expect those 2 key drivers to really continue.

The next question comes from Steven Chubak of Wolfe Research.

Congrats on the IPO. So I wanted to start just to dig into just the recruiting and M&A outlook. Certainly encouraging to see you buck the industry trend in terms of middle market sponsor activity, which has been relatively tepid. And I want to get a sense as to whether you're seeing attractive opportunities emerge to poach talent among middle market sponsor bankers just given the more subdued activity. And while you've been less active than some of your public peers, at least on the acquisition front, whether similarly, you're seeing more opportunities to maybe expand inorganically and take advantage of some of the better momentum that maybe you're seeing relative to the broader space?

Thanks, Steven. We don't like the word poach, so we'll think of a different verb. But it's a very good question. Historically, if you think about and you noted this, we've had a very good organic growth story, and that's really been driven by both lateral MDs and internally developing MDs. And those are really important levers of our growth strategy that we see continuing. I do think the IPO and people may be understanding the size and depth and breadth of our firm has actually helped us on that front with more people reaching out to us. We are very strategic about this. We always have a list of the sectors where we really feel going laterally is really going to help us, and we continue to have success there. As I mentioned, we've hired 7 managing directors year-to-date with several more slated to come when they work through their garden leave. So I think that's going to continue. We had a very large strategic push on that, that we implemented at the end of '23. We've always felt the best time to bring on senior talent is when markets are going sideways because the best people lift their heads up and it's a little less competitive. I think as markets continue to improve, it can become more difficult to have people leave their current firms because there's more friction, but we are having success. And then on the acquisition front, we've never had more opportunities in front of us. I think that the combination of the MarshBerry transaction was a very sizable transaction in our market, one of the largest in years. And also as a result of going public. I think one of the reasons that really drove that is we wanted a more permanent capital base to make sure as our industry consolidates, we can make the right decisions in doing that. So there are lots of opportunities in front of us. We are down the path in a few discussions, but nothing really imminent at this time.

That's great color. And for my follow-up, just on the non-comp outlook, given just the strong revenue momentum, the AI investments that you've earmarked, I was hoping you could speak to the non-comp growth outlook for full year '26 and whether the $42 million that we saw this quarter, if that's a reasonable jumping off point, recognizing that included some elevated professional fees as well likely tethered to the IPO?

Yes. Steven, thanks for the question. High single digits is what we're expecting for non-compensation growth over the course of the year. It's really been a focus of the firm as we've embarked upon the public company journey to ensure we're managing that as effectively as we can. I think what you're seeing is certainly leverage as the business grows, we've built a platform to be a much larger business, and you're starting to see that reflected in the results already. So much of the real estate investment is behind us, though you're never done. And I think technology is where you're going to see us continue to make those investments, but it is a real focus of the firm, something we put a lot of time on organizationally, I think high single digits is best expectation.

The next question comes from Brennan Hawken of BMO Capital Markets.

I'd also echo congrats on the IPO. It was a challenging market, so good job there. Brian, I'd like to start with one for you. So just a few days ago, we heard Marc Rowan give us an update on daily pricing. So they've applied daily pricing already to their IG and ABF assets, looking at October 1 for target for their direct lending assets. What are you hearing about daily pricing from other valuation clients? What are the implications of daily pricing for your business? And maybe thinking about it a little bit more deeply, what do you think this means for the long run? Like it seems to suggest a path of daily liquidity in the secondary markets. How do you think this chess game several moves forward?

Thanks, Brennan. Great question and something that I think is going to lead to a tailwind for our business overall. As I mentioned earlier, the retailization of the private markets is real and the democratization and moving downstream to the retail investor is happening. What we are hearing from GPs and LPs is really a need to increase transparency across the private capital markets and having third-party valuation firms like Lincoln and our Portfolio Valuation business provide valuations of those assets on a more frequent basis is only going to help lead to that transparency. What we're seeing across our client base is that it tends to be the case that as funds themselves have more redemption or subscription activity that leads to the need for more reporting and then ultimately more marks being produced. Ultimately, this again, results in us producing an incremental valuation, which is an incremental fee opportunity for our business. There may be opportunity as well for liquidity in these positions, and we have seen an increase in liquidity across some of the investments that are held in the private markets on a single asset basis. However, those are episodic currently. And to your point earlier, they're just driving a liquidity opportunity for specific investors. Yes. I got a lot of questions in there. So hopefully, I unpacked all of them. But if I miss anything, just let me know, I'm happy to address it.

No, no, that's really helpful. What I'd like to follow-up on is sort of similar to the retailization actually, but from a different perspective. So financing is really important in middle market transactions. And this year, we've seen the liquidity gates in the non-traded BDCs. What kind of an impact is that having on the supply of financing as far as the deals you're advising on in the IBA business? And what are the implications that you see? It sounds like it's not hurting your outlook, but how is that working its way through the system?

Brennan, it's something we continue to monitor, but -- and we talk with our -- all of our bankers, our capital advisors and PFA. We're just not seeing it affect the ability to finance transactions in any meaningful way. I still think there's more debt financing that wants to be put to work and there are opportunities to do it. And so even in the software world, we're seeing deals get done where there was a pullback pretty materially in the first quarter on that. And so we're just -- the institutional capital is still there, even if the retail pulls out, you're seeing institutional investors still want to go into this asset class. And so we just -- we have not seen it affect the transaction side of our business despite the fact that it's still there, it's still increasing. And I think this is just my opinion, and Brian alluded to this, I think the retailization of the private capital markets is happening. It's going to continue to happen. There's going to be learnings. There's going to be speed bumps, roadblocks. I think one of them is these are long-term assets and redemptions are always going to be limited in long-term assets. And I think there's a learning that has to happen there, but it has not resulted in any tightening of liquidity in the debt capital markets from our perspective.

The next question comes from Ryan Kenny of Morgan Stanley.

Congratulations on first earnings call, first of many. So I'll start off with an easy one. So you mentioned differentiated culture in the prepared remarks. And I'm wondering for investors who are new to the story, how do you define the culture at Lincoln? And then how do you protect the culture as you scale?

Yes. I think -- well, we define it at a very granular level. We actually have a culture document that is quite long. It's in excess of 50 pages. It's a PowerPoint, some of the pages only have a few words on them, but we send that to every employee every year, and that's the cultural promise that we say we all need to hold each other to. So we define it at a granular level. We measure against it with our engagement survey, which we interchangeably call our culture survey. And then we manage to it. And we manage to it very, very granularly and institutionally. And so I think it's something important to you, and you can all agree, this is the definition to measure against an issue. We just got the results back from our engagement survey this week, and they were quite positive. So I think we're feeling good about that. And I think it's just something that I think there's always tension between maintaining your culture and growth. You could probably accelerate growth at the expense of culture, and you can limit your growth if you define your culture too narrowly. And I think as a management team, it's something we spend a lot of time on. And core elements of our culture is a culture of collaboration. It's a culture of respect, it's a culture of excellence. It's a culture of growth. But I think the process in terms of how we've institutionalized it is the unique element of it.

And then you mentioned integrating employee comp into -- or integrating employee stock into comp. And so I'm wondering if you can walk us through the trajectory of how that impacts the compensation ratio over the next 3 years as that phases in?

Yes. Brian, it was really important for us to grant all of our employees equity as part of the IPO. We just wanted to instill a culture of an ownership mentality. And so that was something that we made a priority. And so I think one of the things we've been focusing on in the transition to becoming a public company is there are certainly some things that changed like this call, but also a lot of things that aren't changing, which is one of our compensation philosophy. And so I think as we're planning for the next couple of years in terms of the compensation ratio, we're really just replacing deferred cash with equity here. And we think that's going to be really good for retention, really good for value creation and shareholder alignment over the long-term. We do expect a temporary benefit just as the stock comp amortizes a little bit longer, one more year than the deferred cash. So it'll be this a temporary benefit for the next 3 years as the program matures and we get that -- until we have comparable results also, again, as the business continues to grow, you'll see a little bit of a benefit there. So that's how we're thinking about the progression as we move forward.

Yes. I think, Ryan, one way to look at it is I think an offset to that kind of temporary benefit is one of the things that we've seen even without this is our comp ratio coming down as we've just gotten more productivity out of our people through hiring the right people, developing the right people, investments in technology. So it is our expectation over the next several years while that temporary benefit of moving the RSUs and deferring them over a longer period goes away, that's going to be offset by continued improvements in our productivity. And our hope is that it doesn't have a meaningful effect on the compensation ratio that we are feeling today.

And just to clarify there, the temporary benefit, did that show up in the second quarter numbers? Or does that show up starting third quarter?

A little bit in the second quarter, but yes, Ryan. Yes, it will flow in through the -- out of profit, yes .

Ryan, did that answer your question?

Yes. Got it.

The next question comes from Alex Bond of KBW.

I want to echo the congratulations on the IPO. You noted that both the U.S. and European M&A activities improved as the year has progressed. Wondering if you can maybe compare and contrast your expectations for each of the 2 regions on the M&A side through the end of the year? And maybe if you're seeing more disruption to international deal time lines as a result of the geopolitical situation? And any additional color you can maybe just add on the U.S. versus international trends in the market that you're seeing today would be helpful also.

Yes. I think some of its market, some of its decisions we've made over the last several years that I think has put our European business on a very good trajectory. The answer to your first question is the European business is may be a little more back-loaded. Good second quarter, good first half. But relative to kind of their budget for the year that business has more as a percentage in the back half of the year than the U.S. business. So that's one element of it. The question on extended time lines is a good one. I mean, we saw time lines extend a bit over the last few years. They've kind of stabilized. We haven't seen an increase in time lines this year, either in the U.S. or in Europe. I mean, with Europe, there may just be so much going on, they've just kind of become numb to everything and where we're at today is the new normal. One of the few things we've done over the last several years that I think has really resulted in a growing backlog and taking share in Europe is we really evolved from when we first went into Europe, it was very kind of regional and country focused, and we really evolved over the last 5 years to really be organized in Europe much more along areas of expertise, industry expertise, product expertise. We're growing our Valuation business in that market. Europe is always different than the States. You can't have United States of Europe. There are certain elements and being deep in the right geographies is also really important, but making sure you're maximizing your global expertise across Europe, I think has really helped our business there.

Got it. Okay. No, that's helpful. And then maybe wondering if you can also just spend a little bit more time on the non-M&A businesses within IB Advisory. Maybe just if you could speak to the growth of those units as well as -- and just the overall non-M&A contribution to the IB Advisory line in the quarter? And then maybe taking a step back, just the growth potential that you see for each of those businesses would be great to kind of get your longer-term view there as well.

Yes. I'll start with the second piece of that in that we see the growth potential in both of those businesses being really substantial. Our ability to come to our clients with a full suite of solutions, whether that's selling the company, whether that's recapitalizing we have put a lot of time and effort to really improve on that element of cross-selling. The Capital Advisory business, in particular, which is, as I said, it's Debt Advisory for both healthy companies and restructuring. They had a very good first half of the year compared to last year. And as I mentioned, both that business and our Private Funds Advisory business had double-digit growth. So they're both growing at a very good rate. And I think our expectation over the long-term is that those businesses will become larger portions of our overall Investment Banking revenue.

The next question comes from Ben Rubin of Evercore.

And just to echo everyone else, congrats on surviving the IPO process. I want to start off, of course. I just want to start off. In your prepared remarks, you attributed some of the advisory strength in the quarter to higher average fees, and you even flagged a record event during the quarter. Some of your peers have flagged a bifurcation where some of these larger cap deals have held up better than the middle market. And certainly, the industry data does support that. So I guess my question is, is the average -- is the higher average deal size a sign that you're doing less middle market deals? And maybe relatedly, if you could contextualize your backlog in terms of average deal size, that would be very helpful as we think about the back half of your business.

Yes. I don't think it's only the large deals are getting done. I mean, if we -- I do think just as a whole, our average deal size has gone up as we've grown with our clients. The fee we mentioned that was a record fee for this quarter. It was a business that we had actually sold to a private equity group. They were looking to sell it next year in 2028. We came to them with some ideas of, "Hey, there's -- your sector is good. There's a handful of really good buyers. Why don't we go see if something can get done." Really wasn't even in our backlog, and we were able to get it done. So I think that's going to continue to happen. And as I look at our backlog, we have deals in our backlog that are actually larger than this record fee. Over the last several years, our record fees have not lasted very long. They keep getting surpassed by a new record fee. So -- but with all that said, we're still hitting a lot of singles and doubles. And that's the key to our business. I mean, we want to work with companies throughout their life cycle. And as they continue to grow, we want to grow with them. So I don't think -- I think clearly, in the market as a whole, the mega deals have been at a better pace than the private capital markets. Our experience is that always -- the private capital markets always lag. It's probably lagged a little longer than everybody would have liked. But the short answer to your question is no, we don't think this is just the larger, better deals getting done. We're seeing growth across all of our sectors and all of the sizes.

Yes. And Ben, I would just add that the MarshBerry platform also focuses on a little smaller average fees from what Lincoln has historically focused on there. And so you're seeing that balance the portfolio as well. But I think seeing growth in both volume and average fee.

And really on MarshBerry, it's really a function of their client base is mostly owner entrepreneur businesses that are -- that get to a certain growth phase where they need to start bringing in institutional capital. So they also have large fees, but on average, their deal size and fee size is a little smaller.

Makes sense. I do have a question for Brian on the Valuation business, maybe more so on the pricing dynamic versus the volumes. You've spoken to the tailwind from the retail push into private markets and the calls for more frequent marks. But AI does cut both ways. It can be an expense benefit, but also it risks commoditizing the market itself since more of your business is recurring Valuations and Transaction Opinion. So I'm just trying to help me -- can you help me think through the different crosswinds impacting Valuation business, just given some of your peers have flagged pricing pressure in the space in some of the prior remarks?

Thanks so much, Ben. So on the fee point, we're always monitoring this, but we really haven't seen a material change in the fee pressure. And I think what's really driving that is our differentiated data and specifically the insights that we're placing in the market. In 2026 alone, as you're aware, we announced a collaboration with S&P, launching the S&P Lincoln Senior Debt Index Series, which measures direct lending returns. We announced a client portal that provides data and insights via a platform called Lincoln Lens. We've added regional perspective and insight in the Middle East and India, and we've added new industry-specific insights in asset-backed finance and energy and infrastructure. We believe all these things are areas for us to capitalize on and mitigated the fee pressure alluding to. As you talk about the technology, the way we feel about technology is we're at the forefront here of that. And we've really been able to leverage it in our business. If you look at what's happening, we're augmenting the way we're doing things focused on data ingestion, process enhancement and allowing for deeper insight and analysis through the use of technology. And to your point, by leveraging the technology, it's allowing us to keep up with the speed in the ever evolving retailization of the private capital markets, which is really important. And so those are kind of all the areas of focus for us on the technology side, and we feel we've been a winner in that area.

This concludes our question-and-answer session. I would like to turn the conference back over to Rob Brown for any closing remarks.

Thank you guys for joining us today. And we remain encouraged by the level of client engagement and activity we see across the business. And I think with the strength of our business leaders, the differentiation of our platform we talked about and our pipeline, we do believe we're well positioned for continued growth, both in the short term and in the long-term. And we really look forward to updating you on our progress after Q3.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.