Good afternoon, and welcome to the Moelis & Company Earnings Conference Call for the third quarter of 2021. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. To begin, I'll turn the call over to Mr. Chett Mandel, Head of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us for Moelis & Company's third quarter 2021 financial results conference call. On the phone today are Ken Moelis, Chairman and CEO, and Joe Simon, Chief Financial Officer. Before we begin, I'd like to note that the remarks made on this call may contain certain forward-looking statements, which are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Moelis & Company's filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements. Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results.
The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our investor relations website at investors.moelis.com. I will now turn the call over to Joe to discuss our results. Joe?
Thanks, Chett, and good afternoon, everyone. On today's call, I'll go through our financial results, and then Ken will comment further on the business. We achieved $516 million of adjusted revenues in the third quarter, an increase of nearly 150% over the prior year. This represents our largest quarter of revenues ever. Our robust growth during the third quarter was primarily attributable to high levels of transaction completions, with particular strength coming from both our sell-side and buy-side M&A activity. In addition, our restructuring and capital markets were strong contributors as our model truly has three powerful revenue engines. Our nine-month total revenues of $1.1 billion are up 119% from the prior year period.
Our adjusted revenues include gains from the sale of Moelis Australia shares, as well as gains on the firm's investment in our affiliated SPAC entity, Atlas Crest One. These revenues were reclassified from GAAP other income because our employees in the Moelis platform were instrumental in creating the related value. Moving to expenses, our compensation expense was accrued at 59.3%, consistent with prior periods. Our third quarter non-comp expenses were $31 million, resulting in a non-comp ratio of 6%. Through focused expense discipline and an outstanding revenue quarter, we achieved a 35% pretax margin, which is our highest quarterly pretax margin in history. Moving to taxes, our underlying corporate tax rate was 26% for the third quarter. Regarding capital allocation, as always, we remain committed to returning 100% of our excess capital.
Consistent with that philosophy, our board declared a $2.50 per share special dividend in addition to the regular dividend of $0.60 per share. This is our third special dividend declared within the last 12-month period and highlights the business's powerful earnings and cash generation capabilities. Lastly, we continue to maintain a fortress balance sheet with no funded debt. I'll now turn the call over to Ken.
Thanks, Joe, and thank all of you for joining the call. Since this time last year, we've achieved our strongest four quarters of revenue ever, added 11 new Managing Directors, bought back 1.8 million shares of our stock, and declared $9.18 per share in dividends while producing a trailing 12-month pretax margin of about 33%. We are generating a tremendous amount of leverage from our platform by building a fully integrated network with a focus on internal talent development and organizing around one incentive pool. We have created a collaborative franchise with a differentiated advisory offering. The speed with which companies are adapting their business models is accelerating. These companies require an advisor that puts a premium on teamwork and holistic coverage across products, regions, and sectors.
As a result, our ability to rapidly deliver innovative ideas and solutions to the highest level decision-makers around the world discreetly and without conflicts has made Moelis & Company a uniquely valuable platform. With that, I'll now welcome any questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Devin Ryan with JMP Securities. Please go ahead.
Hey, great. Good afternoon, Ken and Joe. I guess first off, congratulations on first $500 million+ quarter. Obviously, big accomplishment, big number. It would be great to maybe just unpack that a little bit. Ken, I know you've spoken a lot about kind of the evolution of financial sponsors and how Moelis is kind of creating a menu of services for, you know, those sponsors and just getting closer to that group. So can you maybe just give us a sense of, like, how relevant that was to this quarter, and the backlog? Or just a little more flavor for the momentum with sponsors. Then also just outside of the U.S., how are you building out your sponsor teams?
Kind of, where do you feel like you are? Obviously, we're seeing a lot of capital being deployed in Europe and increasingly so in Asia. How much more are you guys looking to do with sponsors outside the U.S.?
Well, look, the sponsor portion of M&A continues to accelerate. I think this year it's the largest it's ever been. I would say when you look at our numbers, sort of 2/3 of our revenues are M&A and 2/3 of M&A, you know, maybe 60% touches a sponsor. We always say touches a sponsor because remember, the decision-maker. This is why it's an interesting coverage model. The decision-maker of a company could be the CEO of that company. It's very hard to define, you know, what touches a sponsor or what, you know, what is a sponsor deal.
By the way, I also wanna say our strategic corporate M&A was strong too, 'cause, you know, even 1/3 of $500 million is a lot of non-sponsor business. If you go to Europe, we're doing very well in Europe. I think we started a couple of years ago to make sure that strategy was on track there. We've done some phenomenal deals in Europe. We even did a sponsor transaction out of Asia this year. You know, I would say, look, the U.S. is the center of deal volume, but, you know, Europe is pretty active, and we're gonna continue to focus on that client base in Europe as well. Capital is accumulating there, you know, the same way, just off a lower base.
Okay. Terrific. Maybe just one for Joe on expenses. Joe, if you can just maybe you know help us think about the trajectory of you know both on non-comps here as you know travel starts to pick back up. Do you have any sense of kind of at least at this point, kind of where that starts to normalize here as travel re-accelerates a bit? Also you know just delivering kind of terrific margins here heading into the fourth quarter, it would seem like there may be some room on the compensation ratio to make an adjustment there. Any kind of early thoughts or frameworks to think about the puts and takes here? I get it's a competitive environment, but also revenues are coming in incredibly strong. Any kind of early thoughts around the moving parts in the comp ratio as well?
Joe, why don't you take expenses and I'll take comp after that?
Yeah, sure. You know, we pursued a number of one-time benefits, which we realized this quarter. The true quarterly run rate, assuming current travel level, which is probably 45%-50% of pre-pandemic, is about 33-34. I'm assuming that, you know, that kind of 50% area is probably a good measure for the next quarter. You know, I just don't have enough of a feel for anything further out than that.
On the leverage, I just wanna remind everybody, we made a 35% pretax margin. That means our shareholders are getting, before paying the government, more than 1/3 out of every $1 of revenue. That's historically the highest split I can ever remember, the highest margin. I think I've tracked comparables for as long as we're public, at least. We're getting tremendous leverage out of our personnel and the system, and my goal is to keep that pretax margin up. I know everybody, you know, you focus on comp, but my goal is we've had now 33% for nine months. That's a lot of leverage out of a system in which everybody's doing a great job. That's the number I'd like you to continue to focus on.
Got it. Fair enough. Well, congrats on a very strong quarter. Look forward to catching up again soon.
Thanks.
The next question is from Manan Gosalia with Morgan Stanley. Please go ahead.
Hi. Good afternoon, Ken and Joe. Clearly, you know, very strong quarter here. Can you talk a little bit about, you know, how the pipeline is being replenished? You know, particularly for deals that will happen in 2022. You know, basically, if you can talk about any thoughts from, you know, your conversations with companies and sponsors, in any deals that are in front of your new business review committee right now, that sort of gives you an insight into activity levels for, early 2022 specifically.
Well, our pipe is very near its all-time highs, and that's after. Remember, you know, $500 million does empty out some of it, so it's very close to all-time highs. It's up significantly from where we started this year from last year. So, you know, those deals will print. A lot of our deals in the pipe, I mean, we're now at October 27. So a lot of those, you know, have to print next year, I think. It feels like the run rate is very similar. I will tell you, there is a moment at a company that when you're generating a quarter like we just generated, I think with the same level of personnel.
You sometimes worry that you're in such execution mode that, you know, are you generating new business fast enough? To have our pipeline very near its all-time highest levels, I think is a great achievement. That is where it is. I don't know exactly, you know, what quarter they roll out into, but, you know, the year's almost over.
Got it. You know, are you seeing any level of urgency from clients in terms of getting deals done ahead of any you know, changes in tax policy next year?
I think we saw that early in the year. If you were worried about a change in capital gains, I think you moved in the first half of the year and started the transaction in motion. You know, it's almost getting late for that. I think there are some transactions people would prefer to close this year than next year if they could. I don't think you're seeing anybody start things or let's say very little would start at this point and hope to get done in an M&A transaction by year-end.
Great. Thank you.
The next question is from Richard Ramsden with Goldman Sachs. Please go ahead.
Hey, good evening, everyone. Ken, as we think about the financial sponsor business going forward, how do you think the evolution of churn in private markets is gonna evolve from here? I guess specifically, we're seeing this growth in core products, we're also seeing this rapid growth in secondary businesses. Do you think that's gonna impact the velocity of private equity holdings in a material way as you think out over the next, you know, one, two, three years?
It's hard to judge. You know, there are these secondary, you know, single deal extensions. You know, we have one of the leading bankers in the world on that, and we did that purposely because we think that could become a product. Look, the world has continued to accelerate, Richard. I can't tell you how fast transactions that would be held for five years are now held for three. That could be a function of how fast the stock market has appreciated. I do. It's not just the amount of capital that's going into private equity, it's how aggressive they're being in extending their product lines. Almost everybody who's in a singular product line wants to be in multiple product lines, wants to be a larger alternative asset manager. We have those relationships.
We have trusted relationships, and that just means they're gonna transact with capital somewhere across a capital spectrum. Again, I think it's a very limited amount of companies that really get the right attention. If you think about it, the number of private equity firms is getting larger every day, and the number of investment banks that generate quality ideas for them is not. We continue to service a larger and larger client base with sort of the same amount of banks.
Okay, that's helpful. On the corporate side, there's obviously been a lot of focus on supply chain disruption. There's a lot of focus on inflation, higher rates. When you talk to boards, you know, how concerned are they about these? When you think about the impact on the M&A cycle in 2022, do you think these factors are gonna be positive or negative in terms of driving, you know, activity levels?
I think people are concerned about their own particular supply chain problems. There is concern at the board level about, you know, about their operations. I think the only thing that you have to worry about in a supply chain is if you're in a deal and it seems like there's an ability for a company now to come up with a quarter that is an unpredictable event. You know, that can disrupt a deal. When you have volatility in the midst of a transaction, you could have that happen. But that would be very idiosyncratic. You would hope that you'd be talking about that during the deal conversations. It would be taken into account.
That's usually what happens. These conversations are discussed during the private due diligence part of it and somebody pre-adjusts price or tries to see through the supply chain situation. I will say there are issues at companies. I don't know. I don't think it'll be a big effect on M&A, but companies are having issues. I'm sure you've seen that.
Okay. That's very helpful. Thanks a lot.
The next question is from Ken Worthington with JP Morgan. Please go ahead.
Hi. Good afternoon. As we think about growing the ranks of senior bankers at Moelis, does the composition between experienced hires and promotions from outside the firm change from the current mix as you look forward over the next couple of years, either due to environment or the greater ability of Moelis to develop its own talent internally? It seems like the rapid rise of bank share prices, you know, could in fact alter the math for you as you make those decisions. I wasn't sure what to think about that as we look forward. As we think about the senior banking talent at Moelis, you know, the numbers, even though you continue to add new bankers, there's some attrition on the other side.
That MD count has been reasonably stable over the last few years, and growth has really come from increased banker productivity. Now it's been massive increases in banker productivity, but that's been the driver. I guess my question as you think about, you know, your business and growing it. You know, do we need to see the MD ranks actually start to grow at some point, or is growth through productivity really a, you know, a, you know, an appropriate long-term growth strategy? I think I got two questions in there.
I'm gonna give you a fulsome answer on this because I think it's something that's happening in the industry that's changed the economics. It's probably why our margins are so high. Again, I hate to go back, you know, I'm an old guy, so I hate to go back, but you know, when you did strategic M&A, which drove a lot of the market 20 years ago, the CEO was usually a person closer to my age than you know than 35, right? It was a person who climbed up the ranks, and then the board was older. So you would tend to have these very senior superstar M&A bankers. The reason was it was.
That was what was required to go into a boardroom of, you know, 12 people and hold their attention and make a tactical strategic M&A. Today, with the rise of, I think the alternative asset managers and the sponsors, you have a decision-making person who is significantly younger. Take any of the major, you know, the largest private equity firms in the world. There may be 5-10 people that are 40 years old or younger that have a larger checkbook than the biggest company, you know, in America had the CEO had for all the years you always wanted to be their banker from the. You know, there's just.
There are sector heads of divisions of private equity that are writing five checks a year for, you know, $5 billion, $3, $4, $5 billion deals. Now, what's happening is that person, it's much more about the numbers, much more about the analysis, much more about your sector expertise. Very rapidly, we're finding our vice presidents, our executive directors, our first-year managing directors, and all of whom we've trained to be managing directors. We didn't put them in. You know, just say, "Here, do some spreadsheets, and then, you know, you'll leave, and we'll hire some other superstar senior bankers." We've been training them to be productive bankers, and they are coming on very strong. When you say. That's why I never liked this revenue per MD number. You see it as all productivity of the MDs.
I don't have a number, but I would tell you there is significant revenue generation and deal origination from non-MDs who are experts in their sector. The sectors are younger these days. There's, you know, there are sectors that are being created faster than we can even understand them. I believe we're getting more leverage on the whole system, not just the MDs. Now, that being said, yes, we wanna grow our MDs. We think we have the best class we've ever had of internal promotions, and we'll add to that from outside. I think I've said this before, without putting anybody down, I think we've done a good job of working on the workforce and optimizing the talent we have with the platform we have. I think that's what you see in the margin.
You're right. The MD count hasn't grown as fast as it probably will in the coming years. I think we did some repositioning, let's just say.
Okay, great. That was a fulsome answer. I really appreciate it. Thank you.
Thanks.
The next question is from Brennan Hawken with UBS. Please go ahead.
Good afternoon. Thanks for taking my questions. Ken, I'm curious, you know, seeing the very interesting development here on the restructuring side in China, you've won a large creditor side mandate in that market, and it seems as though there's a shift. The market seems to be embracing sort of more of a Chapter 11 style approach. What kind of opportunity do you think this can present? And how should we be thinking about this as far as, you know, potential for your restructuring bankers here, as we move forward?
We don't wanna talk, we don't talk about any specific client, but I would say that it's interesting in the business that when you're in a region or a sector early and you are in the first two or three deals, and we have done several very prominent restructurings over the last five years in China and Asia. It creates some momentum around the project. Now, these markets are all much more difficult to do restructurings in than the Chapter 11 environment of the U.S. It is difficult. They're much more difficult environments to restructure companies.
As the world becomes, you know, more global and, everybody around the world now is taking on a little more debt and becoming a little more aggressive, you're right. I think the restructuring franchise is a global one. I, you know, as I said, I think we've got the best restructuring team in the world, and they've globalized it. Brennan, the short answer is I don't know how much in these more controlled economies you wanna say that, and less Chapter 11-oriented economies the business could get, but you never know. I mean, you know, there's been a lot of companies created in the last five years, and some of them are gonna need help.
Fair enough. Yeah. It was hard for me to have guessed this would have even happened and you would have gotten a restructuring mandate out of that market. Trying to figure out how to think about it. It's fair. Then another one. This one is maybe a bit more, you know, nitty-gritty or technical, but you know, I totally understand the sort of industrial logic of the fact that the gains that you guys took. That was time bankers had to work on, you know, these efforts and therefore moving them up the revenue line. That all is logical. The piece that I'm curious about, and I'm curious about the logic around it, is wouldn't those revenues be subject to a lower comp ratio than the 60?
'Cause the 60% is, like, fully loaded. It's got salaries, it's got deferreds. On the gains, that's a different sort of dynamic. I just had assumed that might be a lower ratio, but maybe you could help me with the thought process around that.
Look, let me just take a. Let's talk about the Atlas Crest SPAC. You know, we're not an investor. We didn't put the money up. You know, we're not looking around the world for the best investment we can make. We created this franchise to use our people to take great companies public. And the amount. By the way, there's a fairly large debate as to whether MC should even. You know, we're capital light. We don't want capital. How much capital do we even want in a transaction that is, you know, very. The risk reward seems pretty appropriate.
The creation of the capital gain, which really wasn't a capital gain, it really was a transaction creation by a team that had to go hunt down a deal, had to organize the raising of the money, the de-SPAC, the PIPE. You know, I can't I believe that's not an investment. You know, I probably have to watch it for tax purposes or something, but you know, that's much more of a personal service transaction that resulted in that gain because people worked on it. That's what I wanna say. We're not in the business. We're not looking to make investments. We're looking to work on deals. That one we just happened to originate ourselves. We happened to find a way to originate a transaction in which our people can work on it.
Okay. Fair enough. I guess, to me, the logic of using a lower comp ratio seems to make sense. In any event, maybe sneak in one last one. The capital return approach, enormous amounts of dividends returned. The cash is tremendous. Really, clearly a positive. Now, the liquidity profile, though, like initially you chose to go the Special route because the liquidity profile of the stock was thinner. Moelis trades $20 million a day. There's plenty of liquidity to help offset some of the dilution from share-based comp. I just looked and you know, since 2017, the fully diluted share count is like up nearly 20%. Why not start to allocate some money, greater amounts to the buyback in addition to the special steps?
What are our earnings per share up since that time? What was the compound growth per share?
Imagine how much it could be if the share count was flat, it'd be even more tremendous.
Well, as I said, since we went public, I believe we've returned the entire IPO price into cash dividends. We've tripled the revenues of the company. We've never incurred a dollar of debt, and we haven't done one M&A deal. I think that's fairly unique. I'm not sure a company's been able to generate cash and grow. Brennan, the short answer to that is, look, we're sitting with Joe, what are we sitting with at the quarter end? $500 million in cash?
Yeah, that's right.
I mean, we could then try to go in the market and chase the stock. To me, it's just efficient. We have a lot of shareholders. They, you know, should all get the capital back. We can give it to them. I think we're declaring a dividend in 10 days or something and paying it in three weeks. It just seems so much more efficient to me to give it back to your shareholders. Some of them, by the way, may be worried about taxes next year, and getting a dividend in this year could be a positive. It just seems very efficient, very democratic and very fair. Then we don't have to spend you know, chasing the stock in the market or doing whatever. We're just gonna give it back to you.
By the way, I think we've given for $9.18 this year in cash, and I don't think the earnings per share growth has been hurt that much.
Yeah. The dividends have been tremendous. There's no question. Thanks for taking my questions. Appreciate it, Ken.
Thanks.
The next question is from Jim Mitchell with Seaport Research. Please go ahead.
Hey, good afternoon, guys. Maybe just you guys have had a lot of growth in capital markets, and you added another MD there in the third quarter. Can you just discuss kind of what specific areas within that business are driving the most growth? How do you see that momentum continuing into next year? I guess maybe just overall, how do you think of what inning we're in terms of the evolution and growth or and size of that business?
I think we're pretty early 'cause we started. You know, we always had this and then really what triggered a lot of it was almost the beginning of COVID. We were involved in a lot of very significant mezzanine-type rescue financings that had to be done quickly. We did a great job on some of those. Right after that triggered us into seeing how rapidly we could raise, you know, billion-dollar tranches without a trading floor. It was interesting. After that came the SPAC phenomenon and PIPEs. The whole raising of the PIPEs became pretty significant.
I'll tell you what I think is happening now is you have 1,000 unicorns, and remember that means you probably have, you know, 2,000. You know, I don't even know how many, I'm taking a wild guess, that are worth, you know, between 500 and 1 billion. Many of these companies are gonna look to structured financing of some sort. Some financing that might look to you know, like a convertible or a mezz or a pref, and they're gonna be sizable. Remember, in the VC days of five, six, seven, eight years ago, those might have been $30 million, $50 million items. Today, they're you know, multi-hundred million dollar items. I think it's gonna keep going.
You have, again, the financial sponsor community and alternative asset managers organizing huge amounts of assets to put into exactly that asset class. Once again, I think you're gonna have capital. You know, they're gonna demand access to transactions like that. We wanna be the middleman between growth capital, SPACs, and there's still rescue financings. All those kinds of things that need rapid turnaround, structured product, and they really want the high touch of a senior banker in it. I think it could be very significant.
Okay. That's really helpful. Maybe a follow-up on something a little different. Maybe some of your peers have talked a lot about debt advisory. I don't think that's really part of how you think about the capital markets business, but, you know, that's been a business I think you've talked about in the past. How do you see that developing? It seems like it's also been pretty active. Is that sort of married with your restructuring business? You know, what do you think of the opportunity set there?
When you describe debt advisory, are you're not talking about the restructuring of debt? You're talking about p- I may be mistaken.
Yeah, just advice on raising debt. You know, some of your peers have talked a lot about that. I mean, is that sort of how you think of part of what you think of the capital markets business and wrap that all up with that?
Yes. We do that. Yes. I'd say that's part of our offering. Oftentimes, somebody's in the middle of a transaction. They want our help negotiating a bridge or some terms on a security in an M&A deal. I don't think that's as fast-growing as the one I said before, which is the true pairing a company that needs capital with the amount of capital that I think is amassing to provide that kind of mezz structured high growth return. I think that's where the real positive. Now, when you say debt advisory too, you know, we do a lot of IPO advisory as well. That's probably a faster-growing business than even debt advisory.
Right. Okay. That's all helpful. Thanks a lot.
Thank you.
The next question is from Michael Brown with KBW. Please go ahead.
Hi, Ken, Joe. How are you guys?
Hi.
Hello.
I just wanted to follow up on some of the 2022-focused questions. Clearly we're in a very strong M&A market here and I was hoping to maybe get a little bit of thoughts about next year. After a quarter like this, you're already at a record year with one more quarter to go. As you think about 2022 and I guess assuming a similarly strong operating environment, is it possible for Moelis to actually produce revenue growth next year?
Again, we don't guide, but I don't understand why it wouldn't be. We have our strongest class coming up. I think we'll have 8%-10% more managing directors. Let's just use that as a number. I think that the private equity firms will have 5%-10% more capital under management. In a normal world, I'm not a stock market, you know, markets go up 5%-10%. And by the way, our revenues are based on market values. And strategics are still out there, and I believe our brand in the strategic boardroom is stronger than it's ever been. I know I speak a lot about the private equity and the sponsors, but you could be the derivative. Our strategic business is on fire.
I mean, if even a third, I know I said 2/3 of it touches a sponsor, but it leaves a lot of room for a pretty big strategic revenue quarter as well. I could tell that we're doing well there too. Look, I again don't wanna guide, but you know, I expect to have 8%-10% more MDs. I expect our clients to have 8%-10% more capital, and I expect the general stock market and the economy to grow. I just think you put all those together and I believe we're taking market share pretty consistently. I don't know why we wouldn't, but again, I don't wanna guide. You know, it's too
Okay. Yeah.
I couldn't guide. You know, you know, in October of 2021, I can't guide. I really don't have. You know, I look at it and I say we're an amazingly positioned firm with a great network. We're in the right places, servicing the right clients at the right time, with the right model, by the way. With the right model that, you know, I think people underestimate that it's very hard to replicate the model we put together.
Understood. Yeah, thanks for all the thoughts there, Ken. Maybe just one more. It's a little bit convoluted, so bear with me here. Just looking at the quarter here and the strength of this third quarter, $550 million or so of revenue. Could you just kinda parse that out a little bit here for us? You know, how much was restructuring capital markets? I know restructuring is typically 20%-25%. I assume it's, you know, understandably probably a little lower this quarter. And then was there any pull forward that we should be aware of? Anything outside of kind of a normal puts and takes there?
I think it was normal. Joe, what was the pull forward?
It was about $32 million spread across probably four or five deals.
I think as a ratio that's close to normal. You know, look, restructuring was lower, and it you know really wasn't restructuring's fault. They had an okay quarter. Restructuring is definitely not as vibrant as it was, but I think it was more a denominator problem. They had a decent quarter, but they were lower and below that range you just said, only because M&A and capital raise and all the other businesses were so strong.
Okay, great. Great. I will leave it there. Thank you, guys.
The next question is from Steven Chubak with Wolfe Research. Please go ahead.
Hi, good evening.
Hi.
Thanks for fitting me in here. I just wanted to ask a question, Ken, just given some of the earlier discussion about some of the more the higher production coming from more VP and ED level bankers. You made a passing comment just noting that this dynamic has contributed to the stronger operating margins that you've been experiencing of late. You know, and that maybe at the risk of leading the witness, so to speak, is it reasonable to infer from that comment that the 30%+ operating margin shouldn't be viewed as anomalous, that this may be more representative of some sort of new normal given how the business is evolving?
Look, I'll lead by saying that's a good question. I looked at, you know, I mean, we're at 33 for nine months now, so you know, 35 might feel a little high, but 33 for nine months. If the system we put together can leverage younger people in our system, vice president, and make them productive and create. If we create content and then, you know, a stronger. Like, everybody always measures what's your revenue for MD.
If we're getting revenue generation from instead of 125 MDs, 225 MDs, VPs, and EDs by putting together exclusive content, I continue to believe that, having this good content, which is, you know, acquisition, ideas, and deal flow for a very hungry audience, which is the private equity guys, and being able to deliver it at a more junior level, I think you should be right. You know, we're in the early innings of what I think is a very different change in the model of M&A. I think M&A is changing much more than people are talking about. I'll just spend one second to say that I think I have enough time.
'Cause again, I go back really 10, 20 years ago, M&A was a tactic that a company could use. You could have the best relationship with the world, with the largest company in the world's CEO, and they could choose not to use that tactic for five years. You spend all this, you know, and by the way, that has happened. I've seen that just because they feel like their own product line doesn't need it or the economy is in a different place. These new entities that carry out M&A, these alternative asset managers, they don't use it as a tactic. It is a primary business. They are in the business of doing transactions.
We believe that we can build around that, you know, much more confidently, that we're not gonna go through a two or three-year period. Look, you tell me the company, the private equity firm out there that can sit it out two or three years and still have, you know, I think they'd have their own issues. I believe the shape of the business is changing, and our model is really well-positioned to take advantage of the shape of how M&A is changing. It might be. There may be a new margin. The only reason, Steven, I'm not saying that is, you know, you have these crosscurrents of COVID. You know, it's hard to make a definitive statement right now, but I will say this, I don't think you're wrong.
Okay. That's certainly encouraging to hear. Just for my follow-up, you know, it's relating to antitrust risk and the Biden executive order. You know, if I think about it from a timing perspective, last quarter, I think you had to opine on it when it had been published maybe just a few days prior to your reporting. You know, now that it's been outstanding for a few more months, I was just hoping you can provide some insights on whether the executive order is impacting behavior among large cap strategics. What's their willingness to pursue deals, and what's your outlook for large cap strategic M&A just in general?
Yeah, I believe it is. I always say it's the dog that doesn't bark. It's very hard to say what deal didn't happen because somebody said, "I'm not gonna even try it." It just doesn't happen. I think those are a smaller number of very large deals. They're probably, you know, might have been attempted or might have started and people are gonna be shy about some of those. I think in the great mix of M&A that's going on, I don't think it'll affect. You know, I think it'll affect the larger transactions and the consolidation transactions, but there's almost less and less of those. You know, again, there'll be some effect.
Understood. Thanks for that perspective, Ken. Appreciate you taking my questions.
The next question is from Jeff Harte with Piper Sandler. Please go ahead.
Good afternoon, guys. A couple cleanups for me. Joe, you mentioned some items as having depressed non-comp expenses in the quarter. What were those?
It was a series of very small things, but that aggregated to, like, $1.5 million, something on that order, and that's what gave rise to the lower reported numbers. I'm guiding that, or I'm suggesting that the run rate is probably closer to $33.
Should we be thinking any differently about share count creep now with that we have a price, you know, pushing $70?
Well, each time, obviously, the average price goes up, that obviously pulls more of the unvested into the share count. I think that, you know, barring any change in price from this point, you know, I think the average per quarter creep, absent share buybacks and dividends, et cetera, is probably about 1 million.
Okay. Thank you. That's all I got.
This concludes our question and answer session. I would like to turn the conference back over to Ken Moelis for any closing remarks.
Thank you. I appreciate all the good questions and your time, and we'll see you after the end of the fourth. Thanks.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.