Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the current mood and activity levels within the sponsor community, especially considering the potential impact of a prolonged high-interest rate environment?
A: John S. Weinberg, Chairman & CEO of Evercore Inc., noted that the sponsor community is showing a renewed intensity and intention to push forward with transactions despite the high-interest rate environment. He highlighted the significant amount of dry powder available, approximately $3.8 trillion, which is motivating sponsors to be more active. The limited partner (LP) community is particularly eager to see transactions happen to rejuvenate healthy returns and reinvest capital.
Q: How is Evercore handling the non-compensation expense ratio in comparison to pre-COVID levels, and what are the expectations moving forward?
A: Timothy Gilbert LaLonde, Senior MD & CFO, explained that while non-compensation expenses have increased, they are generally in line with the growth in employee headcount. He anticipates that the full-year non-comp expense ratio will be consistent with or better than pre-COVID levels, depending on revenue performance.
Q: With the U.S. election approaching, is there any anticipated impact on M&A activity?
A: John S. Weinberg remarked that historically, U.S. elections have not significantly impacted M&A markets. He believes that other factors such as market performance, geopolitical stability, and inflation are more likely to influence M&A activity than the upcoming election.
Q: What is the outlook for the restructuring business in light of the "higher for longer" interest rate scenario?
A: John S. Weinberg indicated that the restructuring business remains strong and is expected to benefit from the higher interest rates. He also noted the importance of liability management for companies with capital structures built during low-interest rate periods, suggesting continued robust activity in this area.
Q: Can you provide insights into Evercore's compensation ratio strategy and expectations for the remainder of the year?
A: Timothy Gilbert LaLonde discussed efforts to improve the compensation ratio while balancing the need to invest in firm growth. The final compensation ratio for the year will depend on revenue performance and other factors such as headcount and market compensation levels.
Q: What are the expectations for senior managing director (SMD) hiring and the impact on Evercore's growth strategy?
A: John S. Weinberg expressed optimism about the robust pipeline of high-quality SMD candidates and emphasized the importance of recruiting top talent to drive growth. He noted that the number of hires is an output of ongoing robust dialogues with talented individuals, indicating a flexible but aggressive approach to talent acquisition.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
