Okay, let's get started then. So next up, we're pleased to welcome Scott Beiser, Houlihan Lokey CEO, and a member of the, the firm's board of directors. Scott has been at Houlihan Lokey for 34 years now, I think, if I have that correct, and previously led Houlihan's infrastructure services and materials practice. With him is Gregg Newman, Global Co-Head of Houlihan's Capital Markets Group, where he works in debt and equity capital financing, and has been at the firm for 10 years. Thank you both for joining us, and, really, really appreciate your time.
Thank you for having us.
Okay, so let's jump right in here with you, Scott. It's really great to have you back on stage. You know, I think maybe we could just start with sort of the bigger picture macro discussion and, you know, just your perspective on the macro at this point, and how it's, frankly, affecting the overall business. But then maybe if you could just also within that, talk a little bit about some of the geographic differences. You know, you've broadened your footprint so much, I think you now have a little bit more of that perspective on Europe and maybe even Asia as well.
So I said in a, maybe it was an earnings call or two ago, that we kinda think the trough in the marketplace for what we do is probably in April. So we do continue to see improvements, I think, not necessarily exactly day by day and month by month, but things have been improving. There's a, I think, a variety of reasons. Stock prices have held up pretty good. Interest rates, the vast majority of people now believe that they've, you know, peaked. And so there's some stability in that. I think most are feeling that there isn't necessarily a recession or a significant one ahead of us. And so all this is providing some incremental impetus for certain companies to start doing transactions again.
Each and every day that the private equity firms aren't doing a deal, eventually there is that pent-up demand. We now have grown from, you know, where we were a couple of decades ago. While we still have more business in the United States anywhere else, we're a meaningful player in Europe, a growing player in Asia, Latin America. The U.S. is still the biggest marketplace for doing financial type of transactions, but we think that the U.S. financiers continue to effectively take their skills and go across the globe. And so we're finding at different times, different parts of the economy and different industries are performing at different levels. I think one of the key words that we always talk about is diversification.
So we try to have diversification in our skills of bankers, diversification in different industries, diversification in geographies, different product lines, and that's enabled us to, I think, continue to be able to, grow, better than, hopefully normal, and has allowed us to maintain a more probably, stable type of margin than some of our other, you know, competitors. And it is that going to different geographies, and there's still lots of places that we can continue to grow to, but it's gonna be decades, I think, before we fully fill out the globe. It's not something we'll accomplish in the next couple of years.
Okay, that makes sense. So maybe, you know, just one other very big picture one, which is, you know, we're now sort of in a- looking like it's gonna be a third year of weaker investment banking activity. I think you sit in boardrooms with a wide variety of clients, and maybe you know, just your perspective on what's sort of top of mind in boardrooms today. And I guess just what are the key concerns or key things that people are focused on differentiating between sponsors and strategics?
So the first part of your question, I think the general view of either investors, private equity firms, CEOs, they're getting more confidence. Predictability is getting better for them. Predictability on what they think next year's EBITDA might be, predictability on where interest rates might be, predictability on where the economy is going. They cannot predict geopolitical issues. They can't predict, you know, election cycles and things of that nature. But the more predictability that they have, the more confidence that they have to go do a transaction. So I think that is meaningfully improved today from where it was, call it, a year ago. Yeah, in terms of the strategic versus the financials, and our business is generally split 50/50, not a perfect split like that.
The financial folks have obviously been impacted by interest rates. Most important, and Gregg will talk about it a little later, is availability of capital is most important to us. Having lower interest rates would be better, but I think companies are starting to get a little more comfort in being able to deal in today's interest rate world. We do think that at a certain point, the private equity firms, they're in the business of doing transactions, and they cannot go year by year by year and not do transactions. So, if I might, they're jumping off the diving board into the pool at a little faster pace, not a heavy pace, but more than they were, you know, a couple of quarters ago. The strategics are. It's a mixed bag, I think.
Some of the strategic firms, especially if they're public, might be sitting with a higher stock price than they would have thought of a year or two ago, so they're feeling a little more buoyant to be able to buy business, and they have the access to a currency to go do it. And some of the other strategics are trying to effectively continue to position themselves, and at times, compete against the financial firms. I don't think we see a huge difference where we'd say one of that subgroup is doing much more activity than the other. They're both calling to increase activity versus shrinking to activity.
Okay. Then I guess just one last big picture one. I feel like it's important given, you know, 2024 is an election year. Is that something that comes up with clients? Is it something that you think could impact, you know, activity? You've obviously seen many election cycles, not only in the U.S., as well as, you know, abroad.
... So I don't think the election cycle, at least in the U.S., is top of mind for most of our clients right now. I think it's a little too early. I think as we head into late spring, early summer, it will be something that's talked about on a couple factors. There's always the antitrust issue on, you know, is the Congress and the administration more controlled by Democrats or Republicans? That's less of an issue for what we do. I think in the middle market-sized deals, antitrust is not a major influencing factor. I think tax code is probably more of the issue. So depending upon what people think, we know there's the a lot of what was done under the Trump era is due to expire in 2025.
There was speculation when Biden got in there'd be certain changes in the tax code. There haven't really been, but whatever people see or expect will happen, that will start impacting them on the tax code. Now, having said that, you know, the U.S. elections are in early November, so once you know what's going to happen, it's probably too late to complete something if you're motivated by trying to do it by December 31, 2024. But most tax changes don't necessarily occur on December 31. They occur whenever Congress administration will start talking about it. So if people do believe there's a potential for some tax changes, they will be kind of racing against the clock to potentially do something in advance of those tax code changes, if they do in fact occur.
See, that's really interesting. So I guess maybe you could just talk about the tax code changes. You've obviously seen... This has happened before. So how do buyers think about that, right? Does that just mean that the target's worth less if they think there's going to be a higher tax rate, you know, as some of those provisions sunset? Is that how that works? And, you know, how in the past has that sort of worked itself out?
Yeah, I think it influences sellers and borrowers more than probably buyers and lenders. So, you know, if there are changes in the estate tax laws, if there's changes in the capital gains scenarios, if there are changes in, you know, private equity lending, those will impact certain things. If there's a fundamental change and an increase in corporate tax rates, once again, people will assess how much that changes the valuation of that asset. But all of those things, changes in the tax code in many regards are good for advisors. And whether you're a lawyer, or you're a banker, or you're accountant, having something change causes people to think about doing something. Albeit, it's easier to plan when things are constant. And sometimes, people have been wrong, but I've seen this over the decades.
Usually, when there's expected changes in X, Y, Z year, you will start to see an increase in transaction activity as people on both sides of that equation, want to try to accomplish something in advance of the code change.
That's a positive. Okay, great! So maybe you can tell us your strategy. You know, you obviously do operate in a different part of the market than I think a lot of your public peers in the midcap space. So maybe you could just talk about the competitive environment today, and then, I guess, you know, whether you do see enhanced hiring opportunities or, you know, what the outlook, I guess, is for hiring, you know, into 2024 and 2025.
So I think we've been relatively steady in our hiring. We've almost never really had a target that says, "We need to hire X number of people." But if you look during good times and bad times as a percentage of our existing MD count, we've been at a pace for probably about 2 years, and I'd say 1.5 MDs per month. That means it comes in exactly like that. We've not been in an environment where we're purposely trying to accelerate or over-hire or purposely because we think the economy or business is poor to under hire.
I think it's different in the folks that are not in the middle market, have had a different mindset and strategy in terms of hiring and have, purported that they have, you know, hired, a larger statistical amount, than they'd seen in the, you know, previous years or two.
Okay. So maybe, you know, just digging into some of the strategy for different businesses, maybe we could start with corporate finance. That's obviously your biggest segment. You know, where do you see the best opportunities to expand, you know, in that segment in particular?
A number of places in no particular order. One is in the capital markets side. It's probably the biggest growing on a percentage basis within what we define as corporate finance. There are just more and more opportunities to be an agent or an advisor on the debt placement side for private companies. There are another 200 sub-industry sectors, so we see the world, and we're divided up in our M&A folks, not just on an industry level, but really a sub-industry level. So the trick is, how many more incremental sub-industries can we and should we get into without overextending ourselves? There's a geographical component. I think we're very satisfied in our presence in the U.S. and Europe. Still have a long, long way to go.
We just opened up our first office in Latin America. We only have one or two offices in the Middle East. And, you know, we're nowhere where we can and eventually need to be in Asia. So there's growth there. Our best total clients, if you think about it, is the private equity or financial sponsor community. Since they're in the business of doing deals, we want to continue to find how we can do more things for them and how we can do more work with additional private equity firms or hedge funds, or sovereign wealth funds, or family offices that we haven't done before. And part of it's a branding exercise. You've got to get your name out there, and you got to get the right people and the right talent in places.
We think within corporate finance, there's still quite a bit of a growth, and one way to look at it is our market share. We think within the middle market is bigger than anybody else's, but it's still in the smaller, you know, single digit. There's still plenty of room to grow.
...And then maybe, you know, FVA, which I think has been a business where it's changed a lot over the past few years. You know, how are you thinking about the opportunity set for, in that part of the business? Where is sort of the, you know, the best opportunities to grow, I guess?
So what we call FVA is really where the firm started back 50 years ago, and it's still a very vibrant, important part of the business. It does very well, makes money. It's not meant to be a market-leading machine in the rest of the business. Overly simplified, I'd say half of the business is not tied to the capital markets or M&A marketplace. And therefore, it means the more regulation, the more tax changes, the more accounting needs, the more litigation that's out there, all of those things are good things to help our FVA business. The other half of the business is tied to the M&A marketplace, and right now, I believe it's probably a lagging indicator versus a leading.
Sure.
And mostly because FVA is not on a contingency basis, it's on a fixed fee basis. So clients are not interested in really hiring that part until they're more confident a transaction will go through. And so I would expect that will increase as the M&A activity increases. There are still a lot of, I'll call it sub-service line areas, that we can continue to grow into. Nobody quite knows how big that total industry is, but we think it's, it's huge. But there's lots of hundreds of much smaller players and types of businesses we don't really want to go after. But long as there is a need by investors and regulators, and accountants, and buyers and sellers to want to know what something's worth... It's the way we describe it.
If you can't find the answer on a Bloomberg machine, you should contact Houlihan Lokey or some other firm like ours to help in that valuation exercise.
Got it. Okay, so maybe just one thing about your skew. The business mix has changed over time. You have moved more to, you know, the M&A side of the business with, you know, the GCA acquisition a few years back. So maybe you could just talk, you know, about the philosophy for, you know, remixing the business mix overall, and then, you know, just what that means for your cyclicality.
I mean, it's fair to say we are now more tilted towards healthy business environment than a negative business environment, just where the business has grown. And a part of it, it's not just GCA. There is more opportunities to do things, and what we define as corporate finance and FVA. There is a limited size in the total restructuring marketplace. But I think we are always focused on diversification, and which to us is not only those business cycles that we talk about, but get into enough sub-industries, getting into enough geographies, getting into hiring enough relevant and important bankers. So we're never heavily dependent on a particular sub-area which may work against us at some time.
It's that mindset that really, you know, started with the founders of the firm, and I think it's been carried on through the management teams over the decades is kind of how we've continued to balance the business. And why I think if you look at our financial results compared to some of our peers, we just tend to have less volatility, not only in revenues, but also in profit margins.
Okay, that's great. So, maybe just a little bit on M&A. Specifically, I know you've given some stats around this historically, but I think it's just helpful because I think it's, you know, a lot less of a consolidated or industry. In the mid-cap M&A, I think, you know, they're just frankly... It feels like there are so many different competitors out there. So maybe you just talk about what your market share is today, and I guess what your aspirations are three to five years from now.
So one of the statistics we put out, which isn't a totally easy way to figure out market share, we know how many total deals get done because they get advertised by the various houses that put that information out. When you look at the total number of deals we close, you get to a very small percentage that we deal.
Mm-hmm.
Now, a lot of the deals that get announced by Refinitiv, et cetera, aren't necessarily deals that are of the right size that we or our competitors would do. But I think when we do talk and understand and look at the numbers provided by some of our other competitors, we've got a bigger market share than most, but it's still, like I said, relatively small in the grand scheme of where we could go. One component is to continue to work with companies that had never thought about hiring advisors. Some of it is, like I said, by getting into these different sub-industry groups. One of the things that people always ask is, it's the productivity level or how, you know, what was the seasoned component of your MDs?
So one of the things we looked at in corporate finance, about 25% of our managing directors in corporate finance have been in that position or at our firm for under two years. So that's a combination of promotions, a combinations of hirings, and a combinations of acquisitions. So I did that statistic after we did the GCA acquisition, because it, therefore, wouldn't skew it as much. And so, you know, I think almost everybody in the industry does describe, and we'd say the same thing, somewhere between, you know, probably two to three years is the timeframe for that group to continue to mature to what we'll call as a normalized productivity level. So you will get some growth in that just due to the, you know, maturation of that group.
And I think those are some of the, you know, reasons that we think we can continue to grow the business. I don't think we necessarily have an exact percentage where we can get to, but I think there's no reason we cannot double our market share and double our revenues over some period of time. How long that takes, I think, is a much tougher question, but we do not have a feeling at all that, you know, we're close to peak. It and the same would hold true for FVA. It'd be a different answer in restructuring. There are fewer competitors, and we have a bigger market share there, so we need some market help to double the revenues and restructuring. I think we have the inside skills and talents to double our corporate finance revenues.
It'd be nice to have help by the marketplace, but we don't exclusively need help from the market.
Okay. So you talked about being past the trough in M&A, but, you know, it still feels like deals are being elongated. So maybe you could talk about what breaks the logjam or however you want to put it, and really gets things rolling. And then I think the other side of that is just in the mid-cap space, normalization probably happens faster than in large cap M&A. But how are you thinking about normalization timeline and frankly, you know, just what that actually looks like?
So the two positives, I'd say the number of new things hitting our new business committees, which is the initial funnel, is as good as it's ever been. The conversion of that new business potential into engagement letters or actually clients getting hired is as good as it's been. The percentage of deals that ultimately never get to a closing state, die, or go on permanent hold is still higher than normal, and the timeline to close deals is still higher than normal. What breaks that? You know, ultimately competition, and I don't mean our competitors, but if you have 10 great buyers all at the same price, that forces buyers to do something quicker than if you only have two okay buyers, as an example. If you have more lenders who are trying to compete against each other, that helps break the logjam.
part of it is, we still think there's a bit more sway, that buyers have sway over sellers, and lenders have sway over borrowers. When that, it's much closer to equilibrium than it was a year ago, but there are times when it swaps the other way, and that was kind of 2021. And then you find time frames get constrained because buyers are more concerned if they don't close, they're gonna miss the deal, and lenders close more quickly. But we're still in an environment that everybody's saying, "How about another month or another quarter worth of information, and let's investigate that?" They're not necessarily walking away from deals, but they have the ability to keep asking a few more questions.
Okay. All right, Gregg, well, let's bring you in here. You co-head the, the capital markets business that's within corporate finance. Maybe you just speak to, you know, what your business does, how it's performing in a challenging financing backdrop, and then the other side of that is, as things start to normalize, what does that mean for your business?
Sure. Happy to do it, James. So we're about 95 professionals globally. The team has a little over half here in the U.S., with the residual across Europe and the Middle East, largely Germany and the U.K. And the way to think about what we do is we raise capital in the private markets, both debt and equity, and those situations that we're getting involved in typically have some level of complexity. Otherwise, our clients know how to call their local banks or access the syndicated markets, or call their, you know, top two or three relationship lenders. So what is complexity, right? Complexity comes in lots of different shapes and sizes. In this environment, a lot of what is complex has stress in it, right?
These are balance sheets that are overleveraged, need capital for liquidity, or to refinance looming maturities, or to address covenant breaches. So that's an area of complexity. In good times, complexity can come with aggressive acquisitions, significant and unique financing structures to grow businesses, to pay dividends to shareholders, to buy businesses that might be turnarounds and are difficult to finance in a traditional manner. So our business, in many respects, is a microcosm of the overall Houlihan platform. We have good tailwinds in strong markets and good tailwinds in difficult economic cycles. And that's why you'll see for us, we'll partner both with our M&A colleagues around acquisitions and financings in for their clients.
We'll work with our restructuring bankers, where clients are trying to understand is the best solution, restructuring with existing creditors, or is it to bring in new capital? And then we've got direct calling and relationships through our financial sponsors coverage universe, where we're getting called on specifically for our relationships with investors and know-how. And it is a unique platform. We obviously have competitors, like every business has in the world, but just the scale and size of our platform and our unique approach to how we're trying to work with sponsors is quite different from our competitors.
Okay, that's really helpful. So you obviously have the expertise on you know, financing. So maybe we could just talk a little bit about, you know, the different financing providers out there. Maybe we just talk about, you know, the health of the syndicated markets. And then, I guess, thinking about private debt, what is the appetite for companies to continue to take on debt that's, you know, with yields over 10%?
Yeah. All good questions. I'd say, I think we're of the view that syndicated markets are here to stay. They're not going anywhere. But there's no question that private debt has grown immensely over the past decade plus, and we've certainly been the beneficiaries of that. And so really, companies have the alternatives to bake those different markets off, try and understand in what environment the right capital makes sense for them, which avenues to go down. Today there is more capital available than there was 6-9 months ago, so that is a good thing. You are seeing the private credit markets active in competing on transactions. Even the syndicated markets, while slow, it's a little bit of it is choice, right?
Do companies want to go out and raise capital at the cost of capital that we've got today? And it is a challenge, there's no question about it. Where base rates are, we've seen spreads come in, and we're starting to see base rates normalize, and the outlook for them are to stay steady or potentially decline... But to your point, the impact of the cost of capital is probably the single most impediment, biggest impediment to a true resumption, in my mind, of the M&A business, right? And I think the M&A business will start to grow, and the impediments that exist will ultimately be overlooked, because you, the nature of that business and PEs, PE firms, their business is buying and selling businesses. Their LPs expect liquidity.
If they want to raise the next fund, they're going to have to provide liquidity to those LPs, and ultimately they'll get back to business, and they'll accept the new normal valuations that higher interest rates imply. But certainly, if interest rates were to decline, significantly, that, that would accelerate the resumption.
Okay. And then maybe this one's for both of you, which is just thinking about the fundraising, you know, side of the your business. You know, what do you think the structural pressures on private equity in terms of going from zero to higher rates mean? Does that mean you have to shift the business model in the fundraising, you know, advisory vertical? And then I think on the secondary side, you know, that's obviously been a growth, you know, avenue, but, you know, it, it's not necessarily taking off as fast as perhaps I would've thought. So just thinking about the secondary side as well.
Yeah, loaded question, lots of parts. I would say-
Yeah
... the fundraising in my environment today is depressed, right? It's depressed for the reason I just articulated, which is until PE firms start delivering liquidity to LPs, LPs can't recycle that capital. So there's that element to it. Having said that, there are always new entrants, new professionals that are starting up new funds, want to launch new vehicles. So there'll always be a consistent flow. Depressed doesn't mean, you know, grind to a halt, but even the biggest of players out there, you're seeing their new funds being smaller in size than the last fund, and taking longer to execute on. But I do think that starts to unlock over time, certainly as the M&A market picks up again.
I would say the secondary business, you know, it is another tool that many PE firms are using today, right? They're using that tool in the form of GP-led secondaries. It's an alternative to a sale. It's often used for businesses that GPs feel like they'd like to continue to own. There's more work to do in terms of growing it, so it's an important product in the marketplace. There's other business lines in and around the fundraising business and secondary businesses that are interesting to our client base. A lot of times, they don't want to sell businesses, or there aren't alternative ways to get liquidity out of their portfolio companies, so they can raise capital at the portfolio level through NAV loans, which we assist them with.
Often they'll raise capital at the GP level and take that money and use that money to seed new funds. So there are lots of new and interesting ways to work with the asset managers that are out there. And I'd say the only other trend that I think is, you know, very visible today in the market is the diversification of many asset managers, right? Adding onto not just equity, but having large credit strategies and infrastructure strategies, and some of the fundraising in those strategies is different, right? It's not all institutional money. Some of it's insurance-backed, some of it is retail-driven.
So there's a lot of interesting, new and dynamic things that are going on broadly for GPs and how they operate and manage their businesses, that Houlihan and our competitors can assist them with.
Okay, great. So maybe turning back to you, Scott, on restructuring, I think you've talked about how that, that business should be in that $120-$125 million quarterly run rate. I guess two questions. First of all, are you really starting to see any of the traditional Chapter 7, Chapter 11 activity really pick up yet? And then, I guess, what would it take for this restructuring cycle to, you know, get materially above that $120-$125 sort of run rate?
So first of all, I think we describe it much like interest rate, higher for longer. We're at an elevated level. We think it's going to last for longer than what we typically see. So, we do not expect, and we've stated this for a while, you know, there's not another 50% growth rate from where we're at, and then you'd see a, you know, X% drop from there. And, you know, it's a whole spectrum from kind of distressed, try to find a solution in the balance sheet to a true Chapter 11 to a Chapter 7. A lot of the true liquidation Chapter 7s does not work for bankers because it's just a liquidation.
And while you clearly see statistics on the number of bankruptcies, unfortunately, you don't necessarily see statistics published on really restructuring activity in a classical sense, because it's not described in that fashion. We're not in a crisis type mode that we were in 2008 and 2009, or the early days of COVID, or in the, you know, the 2001, 2002 type of time period. And so I think, and my response would be, and we say this all the time to investors, if they said, "You know, Houlihan Lokey, we want you to increase your, you know, restructuring revenues by fill in the blank, 50 or 100%," we couldn't do that without some market help, and the market help would have to be a recession.
And I personally don't think we're in a recession, don't think we will go in one, or if it is, it'll be a rather mild one. But if we were to enter a recession, not like a 2008 or 2009, you would see restructuring revenues meaningfully increase, but it will also then put a damper on the corporate finance business we have.
Right. Okay, that makes a lot of sense. So maybe just turning to the other side of the P&L, thinking about your expenses and margins. It's obviously still a somewhat challenging operating environment. Maybe you could just talk about some of the dynamics affecting your operating margins into next year. And then, I guess, you know, you've had a pretty steady comp ratio, so I think I know the answer there, but maybe just talk about some of the non-comp ratio dynamics.
Yeah. So on comp, look, we've shown since we've been public, and even before, when we published stuff, we've been by far the most steady comp payout ratio firm. There's a whole bunch of reasons why, and we don't see anything that's gonna change that going forward. Doesn't mean we will always be exactly at the same number, but just don't expect much volatility from there. On the non-comp side, you get economies of scale as you get bigger. That's the good news. The bad news is we have been impacted by inflationary costs in lease rates, in IT expenditures, and travel costs. We think some of those inflationary components are starting to come back down to a more normal, much like general inflation.
So we think for the foreseeable future, you might find the economies of scale will slightly outweigh the increase in inflationary costs. I think the better way to really analyze non-comp is not as a percentage of revenues, but as a dollar amount per employee. And we are kind of back slightly below, but pretty close to pre-COVID levels, and I just don't see. There aren't market fact patterns that are gonna get us to the operational benefit that the whole industry got during COVID, when there was lots of business, and we weren't traveling, and you just spent less.
Okay. All right, so just two, two last ones here. The first one is just on, you know, capital returns, your priorities there. You've obviously slowed the capital returns this year, which makes sense, challenging operating backdrop. But just how are you thinking about buybacks and dividends at this point?
I think we always start with, we want to always have a dividend, a core dividend. Always would like to see it, you know, raised year by year at some level. That's probably priority number one. We are always focused on trying to repurchase the same number of shares that we issued in any comp cycle. We won't necessarily do it that exact month or maybe even within the year. We don't store money per se, for acquisitions, but we are cognizant of what's in our pipeline and probability and whether we're buying that business for stock or cash. And then, after all of that, we are looking to generally do any incremental share repurchases. We've never done a special dividend.
We'll always talk about it, but that's not something that I would say is high on our chart to consider.
Okay. And then lastly, just, you know, on the acquisition side, how does the pipeline for those deals look? And then, I guess, are there any sort of business types that you're looking at and you think would be additive to Houlihan today?
Yeah. I think we're always actively talking to probably a handful of companies at different time periods. They do take a while, meaning it could be years, probably at least quarters. You know, we announced a couple of months ago a deal that's already signed, finally got regulatory approvals, something called 7 Mile, that will officially close, hopefully in the next week or so. There are a couple companies we're talking to now. Maybe all of them will close; maybe none of them will close. That's the nature of the business. I think there's always areas. We are looking for industry, some industry tuck-ins. We're looking for some geographical areas. We're looking for stuff within the capital markets. We're looking for things within the placement area.
We're looking for some incremental sub-service lines in the FVA business. The one thing I'd say is the GCA acquisition was more an aberration. We're not afraid to do those. There aren't as many of those around. And, you know, most of our bread-and-butter acquisitions have been 20-person to 70-person type groups. And that's kind of how we think about it, and we're pretty agnostic between... We like to obviously internally develop and promote people. We'll also opportunistically hire, and we'll also do acquisitions, and we're open-minded about all three and different reasons why you need to do them over time.
Okay. That's really clear. Thank you so much.
Thank you.
Thank you.