PJT Partners Inc. (PJT) Q3 2026 Earnings Report, Transcript and Summary

Thank you for your continued patience. Your meeting will begin shortly. And a member of our team will be happy to help you. Please standby. Your meeting is about to begin. 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 PJT Partners Third Quarter and 9 Months 2026 Earnings Conference Call. I am Sharon Pearson, Head of Investor Relations at PJT Partners. And joining me today is Paul Jeffrey Taubman, our Chairman and Chief Executive Officer and Arun Kalra, 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 looking 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 Factors section contained in PJT Partners 2025 Form 10 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 GAAP 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 will 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 9-month results. For the third quarter, revenues were $385 million down 14% Adjusted pretax 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 9-month period stands in sharp contrast with record revenues record pretax income, record EPS led by record performance in strategic advisory and restructuring. Results in any 1 quarter can be greatly influenced by the vagaries of transaction completion dates. Which is 1 of the many reasons why we choose to measure our progress in years not quarters. For the year, we remain on track to deliver record results with all 3 principal businesses tracking to record performance. Before I turn the call over to Arun, 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 Jason will build upon the strong finance foundation, Helen, has established. After Arun takes you through our financial results, I will review our business performance and outlook in greater detail. Arun, welcome.

Thank you, Paul. Beginning with revenues. Total revenues for the third quarter were $385 million down 14% year over year. For the first 9 months, total revenues were $1.29 billion up 9% year over year. And as Paul mentioned, a record for the 9-month period. Revenues in Strategic Advisory, Restructuring and Park Hill decreased for the third quarter and in contrast revenues in these businesses increased for the 9-month period with record 9-month revenues in both Strategic Advisory and restructuring. We had a number of transactions that met the criteria to be pulled forward in the first quarter, totaling $35 million across 8 transactions. Which is identical to the pull forwards in the second quarter. Turning to expenses. Consistent with prior quarters, we have presented the expenses with certain non GAAP adjustments which are more fully described in our 8-Ks. We accrued adjusted compensation expense at 66.5% of revenues for the first 9 months of the year compared to 67.5% for the same period last year. This ratio continues to represent our best estimate for full-year 2026. Total adjusted non-compensation expense was $57 million in the third quarter up 10% year over year and $170 million for the first 9 months, up 11% year over year. As a percentage of revenues, 14.7% in the third quarter and 13.2% in the first 9 months. The main drivers of the non-comp increase for the first 9 months of the 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 pretax income. We reported third quarter and first 9 months adjusted pretax income of $72 million and $220 million respectively. Our adjusted pretax margin was 18.8% for the third quarter compared with 21% for the same period last year. And for the first 9 months, 20.3% compared with 19.5% for the same period last year. The provision for taxes We present our results as if all partnership units have been converted to shares and that all of our income is taxed at the corporate tax rate. Our effective tax rate for the first 9 months of the year was 19.7%, which represents our revised expectation for the full year. This rate is below our previous full year estimate of 20.5% And as a result, the effective 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 states, local and foreign jurisdictions. Earnings per share. Our adjusted if converted earnings per share was $1.41 for the quarter, down 24% year over year. For the 9 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 thousand shares and share equivalents. Primarily through open market repurchases. Our share repurchases for the first 9 months of the year totaled approximately 2.3 million shares and share equivalents. On the balance sheet, We ended the quarter with a record $760 million in cash, cash equivalents and short term investments and we have no funded debt outstanding. We have also extended our existing $100 million credit facility for 3 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, Arun.

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 restructuring and liability management teams market leading presence, as we benefit from an enhanced geographic footprint and an expanded coverage universe of financial sponsors and corporates. Turning to Park Hill. The overall private capital solutions market continues to grow as GPs and LPs pursue alternative liquidity solutions, and the investor base and secondary products continues to expand. At the same time, the environment for primary fundraising remains challenging. Our 9 month results for Park Hill reflects significant growth in private capital solutions and modest declines in primary fundraising. Notwithstanding declines in third quarter performance, Park Hill remains on track to deliver record 2026 revenues, driven by record setting results in our 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 1 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 preannounced transactions. As the year has progressed, we have had strong success in converting our pre announced 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 investments get 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 Advisory business remains on track to deliver another year of record revenues. Turning to recruiting. We were made-- 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. We will take our first question from Devin Ryan with Citizens Bank. Your line is open.

Thanks so much. Good morning, Paul and Arun. How are you?

Morning.

Very well. Good morning, Devin.

Good. Appreciate some of the color on kind of the broader M&A outlook Paul, and obviously, of indicators that you are watching. Could you drill down a bit more into what you are seeing right now in the backdrop? It feels like kind of mixed environment, large cap a lot of maybe catalysts to do deals over the next year. At the same time, your sponsors have been slower to come. So can you just put a finer point on what you are seeing among kind of large deals but then expectations for sponsors reengaging? Are you seeing signs of it happening? Has that been improving even in recent months? Just some additional color there would be helpful. Thank you.

Sure. So look, I think the urge to pursue inorganic opportunities has never been greater. And we have been on the scene for a very long time. And I think, you know, the cost of standing still, the cost of inaction, the cost of not reimagining 1's supply chain, creating more onshoring creating capabilities through acquisition, discarding or finding homes for businesses that are sub scale where you cannot create the right management attention, capital allocation, the need to have a highly competitive cost of capital, which might mean rethinking whether a company should remain as 1 or separate or spin off businesses. The fact that companies that traded 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 have ever been. And then when you throw on top of that, an inviting regulatory backdrop Not a perfect backdrop, but an inviting backdrop you are 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 is only speeding up. At the same time, this is a choppy environment, and therefore, getting deals through the finish line or ensuring that deals that are presented are well received by shareowners, that is still challenging, which just means there is a lot of discussion, there is a lot of discourse. there is a lot that gets to be presented. But it is 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 is coming out the other end is still greater than it was before. And it is still near record levels. But the conversion rates are just lower. On the private equity side, we have also been consistent while everyone loves to talk about all the dry powder, all of the ability to go out and do deals, that it is the core business of these alternative asset managers that it is just not that simple. Because it is great to have buyers who are prepared to put capital to work, but you need to have willing sellers. And most private equity acquisitions or 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 may make clearing that hurdle by a comfortable margin challenging. And as rates tick up, I think it becomes more challenging. Now what you are seeing is really a bifurcation. For the best assets-- when the best assets are put on the block whether it is 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 part with or partner with their most valuable attractive assets. it is when you go down a level or 2 where they are nice to have but not must have, long term investments. Where it is much more about price and financing conditions And with prices creating big bid ask spreads given how assets are marked. I do not think we have really seen sort of those gates open up. I think we have seen a little bit of the frost come off the windshield. But we are still not where we would like it to be. And the hope is that over time, as more portfolio companies either grow their way into some of these marks or find a way to rethink levels at which they are prepared to transact. Or liquidity pressures build. Or interest rates come down a bit, something in there is going to open up the system. But right now, I think it is very much a slow and steady opening of that part of the market.

Really appreciate all the color there, Paul. Thank you. And as a follow-up, can you make a presentation that you guys put out some nice presentation going back into the year? You showed 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 billion today. So that implies revenue per client has more than doubled. As we think about the growth opportunity for PJT moving forward, I am sure you will continue to add more partners and new relationships Can you talk about the effort and outlook around continuing to earn a larger share of your existing clients activity just as you add more capabilities, more expertise? Because it seems like that is been a really good story. But zooming out, would just love to hear kind of what you guys are doing there how much more you can do with existing clients?

Yes. Look, I think that is a great question. And look, we have always said that it is not just the bankers that you have on the platform but it is also the brand awareness and whether or not it is repeat business and that just takes time. So if you just think about it, in the early days when we were trying to break into a client that has heretofore not worked with our firm where doing what we can to really showcase our firm, and it may be we are 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 is a sense that on the next project, they would 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 have 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 is 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 they have a greater appreciation for our firm. And we are now getting to the point where because we have 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 they the legal Board members who have seen us in action and other situations, whatever it is, that should dramatically increase our win rates. It should dramatically increase those situations where we are brought in without a competitive process. It should dramatically increase our fee realizations all of the above but it sort of takes time. And we have been on this journey And I think we are going to continue to benefit from all of the investment that we have made.

Great. Thanks for taking the questions, Paul.

Thank you.

'll take our next question from James Yaro with Goldman Sachs. Your line is open.

Good morning and thanks 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 the 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 do not know what the inflection points are going to be, but I have 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 forgiving 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. Or near zero interest rates. And as a result, the default rates were so far off of historic levels. And now what has happened is with every turn of the screw, we are 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 and the original loan was financed. And as a result, stress is slowly building in the system and it is 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 are being squeezed and they are 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 are not assuming that they are going to build but it is a distinct possibility that they will build. And if they do, you could see, to your point, a sharp inflection in activity levels. that is not what we are budgeting for. that is not what we are forecasting. But I think we are exceedingly well positioned for that to occur. At the same time, we are focused on meaningfully increasing our addressable market And as you think about that, it is the interplay of geographic presence is having more strategic advisory coverage bankers who have relationships on the corporate side and it is further penetration in the private equity ecosystem. And I think on all 3 of those fronts, we have been able to achieve a leadership position in restructuring and liability management before we have fully built out geographic footprint, before we have fully built out our industry footprint, our corporate coverage footprint, or coverage of private equity firms. And as we continue to expand in that white space, we have a greater and greater addressable market. So we are 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 is just another leg of growth. So it is out there, but it is not what we are we are assuming until we see those conditions deteriorate.

And they may, they may not that is not what we are focused on.

We are 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 is quite different than the environment of 5 or 10 years And as it relates to whether it is proactive liability management or it is in court, I think you are starting to see maybe some move towards more in court. But it is not dramatic. I just think that 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 rightsize their businesses and to chip away at the debt at some point there needs to be a more dramatic resolution. So you are starting to see that direction of travel move a little bit in that in that way.

that is really helpful. Thank you, Paul. Just a quick follow-up here.

We have 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?

I think everything ultimately is sort of the addressable market, which is as the quantum of debt that is issued just grows by leaps and bounds. Inevitably, not all of it is going to end successfully. that is just the reality. And when you think about the TAM, you have to think about it not just the fall rates, you need to think about 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 are going see is a crowding out phenomenon, and you are going to see spreads widen out and the multiplicative effect of spreads starting to widen and base rates remain elevated, that puts a lot of pressure on refinancing. And clearly, all of the exotic financings that are being employed and all of the vast quantums of capital, I think it is safe to say that there will be situations that will not go as they were initially expected and those will present opportunities. But that is true across all industries. But I think the bigger theme is that as so much capital needs to get raised and if there are if there are legs down, and if there are credit losses, and if credit funds begin to feel the pressure, then what they are going to require to commit to the next deal you are just going to see spreads potentially gap out. So that is that is something which we are ever watchful for.

And that may present itself, it may not.

As I said, 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 do not control the environment. We just control our ability to capitalize on any market environment that is presented to us. that is great. Thanks a lot, Paul.

Thank you, Jeff.

We will take our next question from Brennan Hawken with BMO Capital Markets. Your line is open.

Hi. This is Josh Brechtold filling in for Brennan Hawken Of course.

Good morning, Josh. Jeff.

Good morning.

Yes.

Our first question is going to be on Park Hill and just kind of the competition and consolidation you are seeing in that market? 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 are seeing in the market.

Look, think what we are seeing in the market is that for all the reasons we have talked about in terms of portfolio monetization, but the IPO market remaining challenged. For midsized companies with 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 are seeing more structured solutions, you are seeing more LPs want to proactively manage their portfolio of relatively illiquid assets. And we are at the forefront of all of that. We continue to grow our footprint. We continue to grow our share of market. We think we have tremendous opportunity in front of us And while everyone 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 is a very attractive destination for talent. And the number of dedicated professionals that we have continue to grow. And we are quite comfortable in putting more resources against this opportunity. At the same time, the primary fundraising world is challenged for all the reasons we just talked about. it is 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 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 at the same time we work with them on new fundraisers. And because we have such deep relationships, with all of the creators of capital all of these LP relationships that then puts us in an attractive position as it relates to proactive LP reweightings of their portfolio. So we have been on this for years, and we have a very clear approach to the business, which we think differentiates us And it is starting to show up in our numbers and in our results, and we are 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. And the outlook seems to remain constructive. Just wanted to know what that meant for 4Q comp leverage as it typically comes through there. And then we are a couple of years into the cycle and or a couple of years into the cycle, I am just curious on your expectations in the medium term of operating leverage as we move and progress?

Right. Well, there is a lot in all of that. Let's just go with your last question first, operating leverage. So if you look at our pretax margin, which is what we focus on the most, because at the end of the day, that is what creates shareholder value is pretax margin. And we think that as managers, should have the latitude as to where we make investments and not go down each component line of expenses. The question is in a holistic manner. And all of this is interrelated too because if you are going to make big technology investments, then you are going to see an IT budget that allow for that may create productivity with human capital. So everything relates to everything else. And it is not just that you can just pull on 1 string. You need to look at the entire weave of the expense base. And if you just take out the 2 anomalous years of COVID, 2020 and 2021, when there was no travel, there was no entertainment, and there was not a realistic expense base, I think we are sitting here today at our best or near best pretax margins that we have experienced in our history. And the hope is that over time, you will see more. But we do not want to be slaves to how much, how soon. As you think about the direction of travel, the reality is excluding those 2 anomalous years, we are sitting here today, with notwithstanding all the competitive pressures and all the expense inflation, we are sitting here with some pretty impressive pretax margins. And then I appreciate your other point about being 2 years ahead of the cycle, it gives me an opportunity to talk about something that is near and dear to my heart. Which is if you go back 5 years, you get to 2001. If you look at 2001, that is the record for M&A activity. As you fast forward to 2026 is going to be the second best year And if you look at how much our revenues have grown in the last 5 years, any benchmark it to large firms, small firms, midsized firms, it is a very impressive track record. And that is why when we talk about measuring in years, not quarters, we are 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 incredible confidence in our ability to succeed. But it just does not work on a quarter to quarter basis. You need to live with a longer lens. And the longer the lens, I think the clearer it is as to as to how strong our results have been. So in some ways, we are 2 years into cycle, but I kind of think point to point the last time we saw an environment like this was pretty much 5 years ago. And we are quite proud of what we have accomplished.

Thanks, Paul, for taking the questions. Appreciate the insight, as always.

Absolutely.

We will take our next question from Steven Chubak with Wolfe Research.

Hi, this is Annie on for Stephen. Wanted to just start with a question on the impact from the midterms. And can you speak to how you anticipate the midterm will affect deal activity across different sectors in any particular sectors you expect will be more or less impacted?

Well, I think it would be fair to answer that question and actually see what happens in the midterms because it is unclear. Exactly what is going to happen and what the shape of the new Congress is going to be I would like to think that a week from now, we will have a much better sense as to 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 are on the shot clock. And the way they think about it is, regardless of the midterms, to some extent, if you wait 6 months from today to investigate a large consequential strategic combination if you just assume that from approach to engagement to back and forth, the haggling is over, it takes another 6 months. You are 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 6 months, they are 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 could see a little bit of a pull forward where the next 6 months might well be an attractive window And then after that, there might be a desire to sort of put things to the side on very large audacious proposed combinations. To then wait to see if there is greater clarity on what the next administration looks like. So I just think that is 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 will give you our best view on how that is likely to affect the world. But I think it is fair to say that we have not seen any of our clients sort of slow things down awaiting 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 162(m). 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 baseline?

Yes. Thank you for the question. And you are right, this is not unique to PJT. And we are thinking about the impact and modeling it As we sit here today, it is still early, and we will come back with next quarter to give you a better estimate of our effective tax rate for 2027. We think an appropriate starting point is around 25% for 2027, and that includes the impacts that we believe the 162(m) extension will have on our tax rate.

Okay, great. Thank you so much for taking my questions.

We will take our next question from Alexander 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 backdrop, 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 putting a temporary pause to deals that are already, you know, maybe well in the works or at a later stage. And then also, if you are seeing more of an impact in certain deal size cohorts than others, Maybe if the $1 billion to $5 billion or $5 billion to $10 billion ranges are more or less than the mega cap side.

Just any further point you could put around that topic would be helpful. Thank you.

Yes. I think it is a general comment, which is that I think you think about it as a deal funnel. I think we have never seen more situations, more opportunities that are starting out on the top of the funnel where everyone is trying to investigate what are the strategic options, whether they are buyers, sellers or the like. And that is reflected in mandates, engagements, inactivity. I just think that this is not a 1 way market where if you go back to 2021, that was a 1 way market. It was a 1 way 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 a way that made everybody comfortable and they did not need to see it played all the way out. I think this is not a 1 way market. it is 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 you see big swings in sentiment in market prices, the ability in a public company deal to land on a price that works for buyer and seller and can be well going forward. It just becomes more challenging. And as rates keep being pressured, and financing conditions and credit availability while it is still quite available, it is become pricier and pricier. I am finally calibrated deals, it is just more difficult. And then on the regulatory front for large deals, while I think there is much greater mapping as to how The U.S. will react and a European regulator. I think China is probably more of a wildcard today than they have 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 intervenors. You have fewer constituencies to placate. All else equal, those probably are less subject to some of the factors I have 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 is not increasing to the degree that the that the foot traffic has increased. And I think that is what you are seeing. You are seeing more companies looking at situations for 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 had unreal expectations last January. it is still tracking to be the second best year on record. I think it is disappointing only relative to what were some unrealistic beginning of the year expectations. But in absolute, it is 1 attractive market and we are happy to be part of it. Got it.

No, that makes sense. Thanks for the color there. And then wanted to ask a follow-up just around industry consolidation and inorganic growth. there is been some press reports around potential consolidation within the M&A industry. So just wanted to double click there and see how you think about inorganic growth for PJT as a use of capital? And then just any color commentary that you would have on industry consolidation at the M&A level also would be helpful.

Thanks, Paul. I thought I would get away with that. Without having to answer that question. 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. And if the risk is meaningfully higher, the reward sure as heck better be a lot higher. Otherwise, it is hard to imagine it making sense. Where we spend our time have been on smaller transactions where it is big enough to be worth the time and the effort But clearly, 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 to all of this is the larger the target, the larger the number of people you are trying to deal with. the risks of a successful integration play out and you need to be very, very comfortable that you can manage those risks and you need to be extraordinarily comfortable that the rewards are meaningfully greater than the risk you are assuming. And that is why when we have done this, we have 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. Taubman for closing remarks.

I guess my closing remark is I am going to make a public service announcement, which is if you have not 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.