Greetings. Welcome to BRP Group, Inc. partnership conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Brad Hale, Chief Accounting Officer. Thank you. You may begin.
Thank you, operator, and good morning. By now everyone should have access to our partnership announcements and slide presentation, which were released prior to this call and which may also be found on the investor relations portion of our website at baldwinriskpartners.com. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates, and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties, and other factors that are difficult to predict and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance, and therefore undue reliance should not be placed upon them.
We refer all of you to our recent filings with the SEC, including our Form 10-Q filed on May 13, 2020, and our annual report on Form 10-K for the year ended December 31, 2019, for more detailed discussions of the assumptions, risks, uncertainties, and other factors that could impact the future operating results and financial condition of BRP Group. The partnerships discussed on this call or both, including those relevant to our integration and matters assessed in our due diligence of these partnerships, as well as those related to the potential effects of the COVID-19 pandemic on our business, financial condition, and results of operations. On this call, we refer to the effects of COVID-19 and related government shutdowns, stay-at-home orders, business closures, travel restrictions, social distancing and other preventative measures, business disruptions, economic contraction, and COVID-19 related developments by generally referencing COVID-19 or the pandemic.
We disclaim any intentions or obligations to update or revise any forward-looking statements, except to the extent required by applicable law. In addition, this call is being webcast and an archived version will be available after the call on the investor relations portion of our website. I will now turn the call over to Trevor Baldwin, Chief Executive Officer of BRP Group.
Thanks, Brad. Good morning, everyone. We appreciate everyone taking the time to join us this morning on the back of our two new partnerships with Rosenthal Brothers and Trinity Benefit Advisors, Russ Blakely & Associates we announced yesterday afternoon. I first want to warmly welcome our new colleagues, clients, and community stakeholders from these two partnerships. We are thrilled and honored to be entrusted as the ideal partner and home for the talented group of insurance professionals. Very much look forward to growing together as we leverage the respective expertise and capabilities of our newly combined platforms. During this call, I'll provide a brief update on the M&A landscape we find ourselves in today, as well as a few highlights on the two new partnerships. Our Chief Partnership Officer, John Valentine, will provide an overview of the two businesses.
To wrap up, Kris Wiebeck, our Chief Financial Officer, will provide a quick refresher on how we think about deal structuring and de-levering our upfront purchase multiples over time as our new partners continue to grow on our platform, as well as a brief update on our financial position pro forma for the two announced partnerships. Of course, at the end, we'll open up the line for Q&A. First, a quick update on the M&A environment from our perspective. While we have certainly witnessed some impact from COVID in the form of longer timelines to close, changes in deal structure, and a smaller number of potential buyers for larger acquisitions, the market to us feels relatively healthy.
Importantly, over the past month, we have continued robust due diligence with high quality firms, many of with whom we had strong preexisting relationships and others whom we are interacting with in a meaningful way for the first time post-COVID. While the continued deal flow in a COVID impacted world may seem counterintuitive, we attribute it to a number of factors. First, on a historical basis, current industry valuations remain highly attractive to sellers. While pricing may be coming down for low quality or more mediocre assets, we believe premium assets well positioned for COVID are by and large holding value similar to the past 12-18 months. Second, there seems to be a growing groundswell of attention within the seller community on the upcoming U.S. presidential election and potential for changes to the long-term capital gains tax rate.
While we don't believe a hypothetical change in the capital gains rate would meaningfully impact future deal volume, it certainly would impact the post-tax dollars received by a seller, thus an impetus to consider a sale now versus waiting. Importantly, from a BRP perspective, our reputation as a truly differentiated buyer of choice for the leading independent insurance brokers continues to gain traction in the marketplace, which has resulted in an increased level of inbound opportunities, especially for larger, high quality businesses like the two partnerships we announced last night. It's worth noting that both Rosenthal Brothers and Trinity Benefit, Russ Blakely & Associates, were deals we had in our pipeline pre-COVID. Both diligence processes were extended as everyone involved digested how the pandemic was unfolding. Thankfully, as the worst case scenarios have not played out, we moved quickly.
That said, as we always do, no matter the environment, we've been laser-focused on the diligence front as it relates to COVID's potential impact on both businesses. John will go into more detail on the business in a minute, but ultimately, we believe these are both fantastic businesses, well-positioned to navigate the post-COVID environment and grow over the long term, and that we feel will thrive on the BRP platform. In aggregate, the partnerships represent $36.1 million of annualized acquired revenue and $15.5 million of annualized acquired EBITDA. The blended upfront EBITDA purchase multiple on the combined transactions is approximately 12.4x, which is a reflection of the quality of both businesses, their growth characteristics, and margin profiles.
We've talked about in the past, and a concept Kris will cover in more detail later in this call, both of these agreements feature earn-out structures that, should the businesses meet certain growth targets, would deliver incremental consideration to the sellers and also lower our effective purchase multiple into the high single digits. Including these two new partnerships, our 2020 year-to-date acquired annualized revenue, calculated as revenue attributable to acquired businesses for the most recent 12-month period evaluated in the quality of earnings review prior to acquisition, now sits at $78 million, less than halfway through the year. Importantly, we remain in a strong financial position and will look to continue to be opportunistic and to prudently invest in the long-term sustainable growth of our business. With that, I'll turn it over to John to walk through the businesses of our two new partners.
Thanks, Trevor. To reiterate some of your remarks at the outset, we consider ourselves incredibly fortunate that Rosenthal Brothers and Trinity Benefit/Russ Blakely have chosen to join us, and we're extremely excited to welcome their colleagues into our organization with open arms. I'll start with Rosenthal. Rosenthal Brothers is a leading middle market agency in the Chicago metro area for MSA, which meaningfully expands BRP's middle market presence into the third largest MSA in the country. Rosenthal generated $18.8 million of annualized revenue in the most recent period evaluated through diligence and has grown its revenue consistently over an extended period of time, generating a compound annual growth rate, or CAGR, of 8% since 2015. This $18.8 million of revenue excludes approximately $1 million of annualized revenue associated with an acquisition completed by Rosenthal in December 2019.
Rosenthal brings to BRP specialty expertise in the large habitational real estate industry, which accounted for approximately 70% of their core commissions and fees in 2019. We're excited by the expertise and energy they bring to BRP. Similar to BRP, the Rosenthal team has displayed a strong focus on cultivating internal talent through a proven training and development program, which has yielded risk advisors with long runways for continued success. Four of Rosenthal's five current largest books of business have been written by risk advisors under the age of 42, compared to an industry average age of 54, as cited in our recent S1. Importantly, we're also excited about potential revenue synergies between Rosenthal's larger habitational real estate focused clients and our MGA of the Future's renters product. Lastly, a few points on Rosenthal as it relates to COVID.
First, we believe that the habitational real estate industry has fairly resilient exposure unit dynamics as we think about potential impacts to commissions. In most cases, the clients here are typically owners and managers of large residential buildings or condo associations who are purchasing coverage on the building and its operations. Importantly, brokerage commissions and fees are not contingent on, and thus far have not been impacted materially by tenants deferring rent payments. Second, we are seeing some acceleration of hard market pricing trends in this line of business, which should benefit future commissions. In summary, we're excited about what BRP's resources and the MGA of the Future can do to further support its future growth in addition to the favorable industry and pricing dynamics. On to Trinity Benefit/Russ Blakely, or TBA-RBA, as I'll refer to it.
TBA-RBA is a leading provider of employee benefits consulting and brokerage services to the upper middle market and large clients across the state of Tennessee and the broader Southeast region of the U.S. This is a rare asset of scale in a vibrant and important market. From its footprint in Knoxville and Chattanooga, TBA-RBA has built deep client relationships across the state and provides BRP immediate scale in Tennessee, one of the most attractive and fastest-growing states in the country. TBA-RBA generated annualized acquired revenue of $17.3 million in the most recent period evaluated through diligence. Since 2015, they have grown revenue at a 10% CAGR. Similar to Rosenthal, TBA-RBA leadership team is highly experienced with a combined 50 years of experience amongst the management team. TBA-RBA also has a highly productive group of risk advisors with an average book size of $2 million, over twice the industry average.
We believe TBA-RBA's client base is diversified and relatively well insulated, with significant exposure to manufacturing, healthcare, transportation and governments, utilities and municipalities, and very little exposure to the retail and leisure industries.
Given TBA-RBA's focus on employee benefits, we are incredibly excited about the potential cross-sell opportunities to capitalize on BRP's more comprehensive product suite and niche industry experience for TBA-RBA's risk advisors. As it relates to COVID, it's important to note that a significant majority of TBA-RBA's clients are based in Tennessee and operate largely in the Southeast, an area of the country that has been both relatively less impacted by COVID and that has been quicker to reopen its economy. That being said, we spent an extensive amount of time studying TBA-RBA's business at the individual client level, and into early May, enrollment was effectively flat from February across their largest clients.
In summary, we are incredibly excited about our new partnerships with both Rosenthal Brothers and Trinity Benefit-Russ Blakely, to welcome their colleagues into our organization and about the many ways we complement the future growth of our relative businesses in the broader BRP platform going forward. With that, I'll turn it over to Kris.
Thanks, John. I want to spend a few minutes on the concept of how the combination of the earn-out structure we employ in our deals, plus the fast-growing nature of our partners, works to lower our effective purchase multiples as new partners continue to grow on the BRP platform. It's a topic we've talked about numerous times since the IPO, but we thought it would be helpful to put a few numbers in print to demonstrate this, which you'll see on page six of the partnership announcement presentation we put up on our investor relations website yesterday evening. In the first row of the table, you'll see the aggregate total upfront consideration, revenue, EBITDA, and the implied EBITDA multiple of all nine partnerships we have completed 2020 year to date, which reflects an implied EBITDA purchase price multiple of 12.1.
In the bottom row, you'll see the same, taking into account earn-outs, assuming all of the nine partners grow at a compounded annual growth rate of 25%. Note this is blended, and not all earn-out structures for individual partnerships are the same. Thus, as partners grow, the total consideration increases for the earn-out consideration earned. The revenue and EBITDA also increase to reflect the growth of those businesses on our platform. Thus, at the end of the earn-out period, we've effectively lowered our purchase multiple to 7.9x. Do all partners always meet their full earn-out? No. It's worth stating that at the time of the IPO, when analyzing all the partners that have been with us for at least a year, they had averaged 11% year-over-year growth in year one on our platform.
Note that this stat does not include our MGA of the Future business, which just recently crossed the one-year threshold and has far exceeded that 11%. It's also worth noting that we believe that the first year is arguably the most disruptive period for those businesses and their risk advisors, as they are fully integrated into our platform, training new computers, new systems, new go-to-market strategies. Thus, historically, partners average results that are somewhere between 50% and 100% of max earn-outs. In addition to the multiple buy-down, it's also worth noting that the growth of new partners on our platform over the earn-out period effectively helps to partially fund the earn-out consideration through additional cash flow. To wrap up, a few quick comments on what we have accomplished 2020 year to date and our pro forma financial position.
As Trevor mentioned at the outset, year-to-date, our 2020 acquisitions have represented acquired revenue of $78 million and acquired EBITDA of $24.6 million. We note the implied margin on those numbers is a tad higher than the 29% blended target we've mentioned in the past. Going forward, we still think that 29% is a good number for modeling purposes. We also note that with these deals closing in June, the impact will really start to show up in our numbers in Q3, and both deals being middle market, there is more seasonality, with Q1 being the largest revenue quarter for them.
Pro forma for the two announced partnerships, we remain in a strong capital position with over $100 million of unrestricted cash and borrowing capacity and responsible net leverage of 2.96, both of which allow us to continue closing new partnerships this year and to invest in the long-term growth of the business. With that, operator, let's open up the line for questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Greg Peters with Raymond James. Please proceed.
Good morning, everyone. First question would be on the earn-out. I was looking at page six, and it brought to mind that you have existing companies within, like MSI, that has an earn-out, and now MSI's going to benefit in part, it looks like, from the Rosenthal relationship. Does that help the MSI earn-out? I'm just trying to understand how the earn-outs change when you bring new companies into the fold or partnerships into the fold, and if you keep the synergies or you share those with your partners.
Hey, Greg. This is Trevor. Good morning. We do share those synergies with our partners and look to do so in a thoughtful manner where we can keep everyone on our team aligned and motivated on our common goal of outsized organic growth.
Got it. The other question I just had, I noted, Kris, you said that your leverage is, I think, 2.96 pro forma with $100 million of capacity. Do you have sort of an upper-end threshold that you guys don't want to go beyond, or can you give us some framework that we should think about your debt leverage as you continue to look at other properties to acquire?
Sure. Thanks, Greg. We definitely think that kind of three and a half times is where these businesses are kind of.
Should operate kind of consistently, right? We're not quite to where the leverage ratio, where we think kind of the risk-reward trade-off is, and that's at three and a half. We've also said historically, we're willing to go to four and a half, if there's a big deal or a great opportunity, and then kind of quickly de-lever back from that. I think you put the upper bound at four and a half. In the current COVID environment, that four and a half probably becomes 4.25, again, it's pretty fluid and things do seem to be getting better each week. That's kind of the construct you can think about.
Got it. All right. Thanks for your answers.
Our next question is from Elyse Greenspan with Wells Fargo. Please proceed.
Hi, thanks. Good morning. My first question, if we look at, sorry, some of the disclosure in the slides, if that's into these two deals running at around a 43% margin. That's obviously better than what you guys typically target, in terms of bringing on deals at. Just trying to get a sense as these come on to BRP, do you think you can maintain that margin? Is there a certain level of investment that these platforms would need? Just any color you can give us from a margin perspective would be helpful.
Yeah. Hey, Elyse. Good morning. It's Trevor. As we've talked about in the past, we still believe in aggregate, 29% is a good target for the margin of kind of the aggregate partnership revenue we'll add in a given year. Different properties are gonna have different margin profiles, and with these two partnerships in particular, they do have higher margin profile as a result of their specialization and a particular industry niche, and focus on employee benefits consulting. Based on our diligence, we do believe their outsized margin is sustainable. However, we will continue to make investments that we believe are gonna pay off, with long-term sustainable organic growth that meaningfully exceeds the industry average.
Okay, that's helpful. These businesses have been showing about double-digit growth on a revenue basis. Can you just give us just expectations from here? Just how we should think about if there's, like, a COVID impact as they come on or just any color to think about in terms of the revenue growth that these platforms could run at, I guess, from when they close through the balance of this year and then perhaps some color into 2021 as well.
Yeah. Great question, Elyse. The first thing I'd say is these are incredibly rare and high-quality businesses. We're incredibly excited and honored to be able to be the partner of choice for them. The part of the scarcity of their business is the track record of outsized organic growth that they've been able to generate over the past few years. We do believe over the intermediate to long term that that is a sustainable go-forward path. Now, of course, there's always the exception of the uncertainties that are coming from the COVID impacts. We believe that these businesses are particularly durable in the COVID-impacted world for all the reasons we've highlighted, both in our earlier remarks and in the slide deck. At this time, we continue to believe that their historical growth rate is a good indicator for what's possible going forward.
We're excited to be able to leverage the combined strengths of our business and theirs to be able to accelerate our success going forward.
That's helpful. My last question, earlier you said, just in terms of the environment being fluid and things getting better every week. I'm not sure, obviously this call is just in terms of these transactions that you announced, but could you perhaps just give us a little bit of an update on the overall environment, just things started to seem better right as of your conference call, has kind of maintained the same progression just in terms of your organic growth view? Any just high-level color you could give us would be helpful. Thank you.
Hey, Elyse, it's Kris. Given the kind of notice of the call, we do wanna keep the call to these deals. I think the general comment, is one that we do see things getting better each week, but just given that we didn't give folks kind of three days notice, we don't wanna give updated stats on the existing business.
Okay. I appreciate that. Thanks for the color.
Thanks, Elyse.
Our next question is from Meyer Shields with KBW. Please proceed.
Great. Thanks. Good morning, all. Trevor, you talked about cross-sell opportunities, I was wondering if you could give us some sort of timeline. Does that come after the integration period? Does that come concurrent with it? How should we think about that incremental benefit to, I guess, the legacy businesses?
Yeah, great question, Meyer. What I would say is it builds over time, right? Part of our integration process is building education and awareness, both with our existing internal teams and the teams of colleagues that are joining us through these new partnerships about the capabilities that exist in our combined platform. Over time, as that awareness grows, as those relationships internally build, the ability for us to execute on those cross-sell opportunities grows in momentum. The way I would be thinking about that is you really probably don't start to see an impact for six months as we're getting through the blocking and tackling of integration, and that builds over time as the businesses come together and truly begin operating as one company with one culture.
Okay, great. That's very helpful. On the seasonality side, you talked about a focus on one, two, and I think that's almost the default for employee benefits. Is it true for Rosenthal Brothers as well?
Hey, Meyer, it's Kris. Yeah, generally, Rosenthal Brothers doesn't have quite the same sensitivity to Q1 as the TBA, RBA, there is still some Q1 seasonality like you see in the rest of our middle market business.
Okay. If we use the established sort of seasonality, that's good enough for modeling the inflow of revenues from these guys?
Yeah, I think that's the best benchmark right now.
Okay. Final question. I know you talked about having $100 million of cash potentially available. How should we think about going beyond that? In other words, potential funding sources, assuming that there are a lot of deals and there's maybe time pressure for capital gains tax considerations.
Sure. I think you start with the $100 million we have, plus our ability to do rollover equity. Certainly gives us a good runway going forward. I think you pivot, you look at what we've been able to achieve thus far. We kind of have a nice blue chip banking community. We're registered with the SEC, we have kind of an abundance of capital options, especially options that some of our private equity peers that we're competing with don't have. We think we're in good shape, but we'll obviously reevaluate in real time based on what's going on in the pipeline and what's going on in the business.
Okay, excellent. Thank you so much.
Thanks, Meyer.
As a reminder, it is star one on your telephone keypad, if you would like to ask a question. Our next question is from Pablo Singzon with JP Morgan. Please proceed.
Hi. Good morning. The first question is, I just wanted to follow up on Elyse's question on the margins of your new partners. I think most public brokers have a comp ratio in the mid 50s, and you layer on probably a mid-teens expense ratio, and obviously 43% is a pretty good number. Can you talk about where these partners are differentiated, whether from a comp ratio or expense ratio standpoint, and maybe discuss the synergies you're factoring into the 43% acquired margin?
Pablo, good morning. A couple things. One, we're not factoring any expense synergies into the EBITDA margin that you're seeing in the slide deck. I think about how you gap up from what you would kind of outline as those kind of industry standard margin to what we're seeing with these two particular partnerships, I'd say it's really three areas. One is more efficient operating expense load. Some of that has to do with the geographies that they're operating in and the cost structure there. Some of that has to do with the specialization from a particular industry segment, which allows for more efficient processes and practices. Certainly, overall compensation is a tad lower than what you would reference there at that 55%. That gets back to a more productive team.
When you look at kind of revenue per colleague statistics compared to the industry, these businesses in aggregate are meaningfully more productive than the average. That gets back to their really focuses in either the specialty area of habitational real estate and employee benefits consulting. Last is what I would call more of a revenue contributor where their specialization has enabled them to garner a bit more in supplemental commission revenue than some of their peers would have otherwise had. You put all that together and that's what's generating the margin profile you're seeing.
Got it. Thanks. Trevor, a more generic M&A question for you. As you think about the deal pipeline, I recognize sort of the positive factors you highlighted, but do you think, I guess an additional filter for accrued risk when you're evaluating partnerships materially changes the opportunity that you see versus maybe a quarter or two ago? Right. The market's big, but I guess as you put in sort of additional filter in your evaluation process, how does it change the opportunity set for you?
Yeah. Pablo, what I would say is a few things. One, we continue to be pleasantly surprised with the strength and volume of our pipeline and the size and quality of potential partners that we're in dialogue with. Despite the COVID environment, we continue to have a very robust pipeline. As we think about the filter, the incremental filter that we apply to potential partner evaluation as a result of COVID, it's really not that dissimilar to the filter we were already looking for, focused on really identifying super high quality businesses that can deliver sustainable and durable outsized organic growth. We're looking at what's the geographic exposure and how does that play into the impacts from the COVID environment.
We're looking at the end markets that they're serving and how those end markets have ultimately been impacted, whether it's the product lines they're focused on or the industry sectors that they tend to serve. We're pooling that together with our assessment of the quality of the people, the uniqueness of their go-to-market approach, and the success of their historical track record of growth. All of that is enabling us to develop a viewpoint on whether a particular business is somewhat durable, even in the current environment, and worthy of ongoing dialogue and engagement.
Got it. Then the last one for me, a numbers question. How much incremental amortization and interest expense do you expect from these new partnerships, I guess, in 2Q and 3Q? Probably 3Q will be the full run rate, but if you could sort of speak to what will show up in 2Q and then 3Q.
Hey, Pablo. It's Brad. What we've said before is, if you look at the sticker price of these partnerships, typically around 30% of that becomes customer-related intangibles that they're typically being amortized in a 15-year period range. That's the general guide we've given. Clearly, with these just closing yesterday, we haven't fully finalized valuations and hammered that out. That's what's been our historical metric.
Then on the interest expense piece?
Hey, Pablo, it's Kris. I think we filed our debt agreement. We do tick up a little bit in leverage, basically we're between L+200 and L+300, depending on leverage. We're still pro forma below three. The cost of capital is pretty low. As you said, these really are going to start in Q3 versus Q2. I'd also add on to Brad's question one thing. Obviously, that's the GAAP amortization. There's a significant tax amortization for the intangibles that will effectively benefit us and also continue to keep our effective tax rate lower. We think from a financing perspective, we're fortunate to have a lower cost of capital.
Got it. Kris, are you able to give the actual dollar amount you're borrowing for these deals? Is it like in the $150 million range? Is that sort of the incremental borrowing you're doing?
Right. We incrementally borrowed about $141 million.
Okay, perfect. Thank you.
Our next question is from Alison Jacobowitz with Bank of America. Please proceed.
Thanks. I'm wondering if in the context of M&A, if you're noticing any change in the personality of your pipeline. In the context of COVID, has it brought people to the table that wouldn't have otherwise come? Have you had any surprises in what's crossing your desk? Also, as you're looking at your appetite, have you had any changes in the areas that you're targeting for future acquisitions? Are you looking at different locations or different business areas? Overall, has there been any shift in how you're thinking about it or how those sitting on the other side of the table are thinking about it?
Hey, Alison. Good morning. Great question. I'd say a few things. First, as we sit here today, I think about the kind of active dialogues that we're in, I would remark that the quality of potential partners that we're talking with has grown over time. I'm not sure that that's necessarily attributable to the COVID environment as much as maybe it's more attributable to the growing reputation that we're enjoying as a true acquirer of choice for the leading independent insurance brokers across the country. As I think about what we're focused on, I'd say broad brush hasn't really changed, which is we're looking to build a leading franchise across the U.S., recognized for our ability to execute for clients at an extremely high level and be a true destination for the industry's top-tier talent.
What that means is that we're interested in having dialogues with potential firms in key geographies across the U.S. that have demonstrated expertise in particular industry segments that are attractive, that have product line expertise that is portable across our platform, and that has recognized talent that is going to culturally fit and align with what we're looking to build.
Thank you.
Thanks, Alison.
We do have a follow-up question from Greg Peters with Raymond James. Please proceed.
Thanks for letting me ask a follow-up. As I was listening to some of your comments, I thought maybe you could, and maybe this is an area John can comment on, talk to us a little bit about the process that was run and the bidders. I guess ultimately what I'm trying to get at is, pre-COVID, there was a tremendous number of private equity sponsored vehicles that you were competing against in addition to other strategics. I'm just curious in this new market environment, if there's been a change in the appetite from some of these private equity vehicles, if you've seen them pull back. Just give us some flavor of what's going on in the marketplace from other acquirers.
Greg, this is John speaking. That's a great question. To these two deals specifically, we actually were under LOI in the pre-COVID environment. They were both represented transactions. They had very quality representation. They were relatively closed processes, I would say. They weren't broad auctions. We have a very good relationship with all the best investment banks in the space. Those relationships continue to pay dividends. Now, to the second part of your question about what we have noticed. We've obviously paid very close attention to things like the amount of capital that some of our private equity peers have, whether they've tapped the markets, where their leverage loans are trading. We've been watching their activity relatively closely. We have been able to gather quite a good bit of intel on that front.
I would just say that broadly speaking, for smaller transactions, their appetite has not really changed other than maybe the filter has gotten a little bit tighter in terms of quality of assets. The real impact has been mediocre assets have probably dropped off in price. Where we see probably the biggest shift is that the universe of buyers for sizable assets has, and this is just an estimate, has probably been cut in half. There are fewer people willing to do relatively large transactions right now, because if they have to go back out and refinance in this environment, they're stuck with whatever liquidity they have right now, they really don't want to have to test the market, they're not sure when it's going to open back up for them. We're seeing a bit more caution from them.
That's very insightful, John. I know you watch the competitors in the private equity space. I'm curious, if the private equity shops have revalued the equity component of their total enterprise value. I know they're running at seven or eight times debt to EBITDA leverage. With the reduction in valuations across the group, that could literally wipe out the equity if they were to mark to market their investments. Are you seeing any private equities look at that and causing them to tighten up their outreach?
That is a great question. We've wondered the same thing ourselves, we do not have any intel on how they are marking their equity internally. That's certainly a question I would have if I were a seller. We don't have any firsthand knowledge, I don't want to speculate where I don't have any intel. It's a very interesting thought. We've had the exact same discussion here.
Got it. Hey, thanks for the answers.
Thanks, Greg.
We have reached the end of our question and answer session. I would like to turn the conference back over to Trevor for closing remarks.
We really appreciate everyone joining us this morning to learn about these two new fantastic partnerships. We're incredibly excited, honored, and humbled to be the chosen partner of choice for both of these firms. We look forward to working together to become better together as we continue to grow our business well into the future. Thank you for your continued support and interest, and we look forward to seeing many of you in the near future. Take care.
Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.