Good morning, and welcome to the Piper Sandler Companies conference call to discuss the financial results for the third quarter of 2021. During the question and answer session, securities industry professionals may ask questions of management. The company has asked that I remind you that statements on this call that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements that involve inherent risks and uncertainties. Factors that could cause actual results to differ materially from those anticipated are identified in the company's earnings release and reports on file with the SEC, which are available on the company's website at www.pipersandler.com, and on the SEC website at www.sec.gov. This call will also include statements regarding certain non-GAAP financial measures.
The non-GAAP measures should be considered in addition to, and not a substitute for, measures of financial performance prepared in accordance with GAAP. Please refer to the company's earnings release issued today for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure. The earnings release is available on the investor relations page of the company's website and at the SEC website. As a reminder, this call is being recorded. Now I would like to turn the call over to Mr. Chad Abraham. Sir, you may begin your call.
Good morning, everyone. Thank you for joining our call to review our results for the third quarter of 2021. I am here with Deb Schoneman, our President, and Tim Carter, our CFO. We will go through our prepared remarks and then open up the call for questions. We recorded the fourth consecutive quarter with net revenues at or above $400 million, as we're experiencing strong demand for our services across the platform. We generated adjusted net revenues of $440 million for the third quarter, a 26.3% operating margin, and adjusted EPS of $4.55. For the first nine months of 2021, we recorded adjusted net revenues of $1.3 billion, a 26.4% operating margin, and adjusted EPS of $14.08, all record-setting activity.
Our success in the marketplace and the strength of our platform continue to present opportunities for us to add high-quality teams. We were very pleased to announce our combination with Cornerstone Macro earlier in October. Deb will provide more details on the acquisition in her remarks. Turning to our corporate investment banking business, we generated total corporate investment banking revenues of $293 million in the third quarter of 2021, representing our fourth consecutive quarter with revenues in excess of $250 million. Performance during the quarter was strong across industry verticals and product offerings, highlighting the strength of our platform, the benefits from the economic recovery, and demand from market participants across industries. Our financial services, healthcare, consumer, chemicals, and technology teams all had good results in the quarter.
Highlights for the quarter included our financial services group posted strong results across multiple sub-sectors, including banks, asset management, real estate, and insurance. Bank M&A has been very strong in 2021, and we rank as the number one advisor to banks based on number of announced deals, and have worked on six of the 10 largest bank mergers announced in 2021. Our market-leading healthcare team continues to put up consistently strong results, with balanced contributions from both advisory and financing activity. Our chemicals team closed on a couple of high-profile M&A engagements in the third quarter, and the pipeline remains robust, with transactions slated to close later this year or early next year.
Thus far in 2021, this team has advised on deals with an aggregate announced value of $22 billion and has solidified their position as a global leader in chemicals M&A. The team is also building a pipeline of financing transactions. When we acquired Valence last year, we were optimistic of capitalizing on the team's sector expertise with our broader suite of product offerings, and we are starting to see these synergies play out. We are pleased that the Valence team is exceeding our expectations. Within corporate investment banking, our advisory services business generated another strong quarter, with revenues of $214 million. While this number is down 14% from an exceptionally strong second quarter, it is up 177% from the slow third quarter of last year.
M&A activity was strong across industry verticals, with high volumes and increased transaction sizes. During the third quarter, we completed 68 M&A and restructuring transactions and 31 capital advisory deals. On a year-to-date basis, advisory services generated $616 million, up 125% over the prior year. During the first nine months of the year, we have either closed or announced more than 200 M&A deals with an aggregate transaction value of over $72 billion. The demand for advisory services has been robust throughout 2021 as we assist clients to navigate a changing landscape. We continue a trend of advising on larger and larger transactions, and our top ten announced or closed M&A transactions for the first nine months of 2021 averaged $3.5 billion in deal value.
We believe the M&A market is experiencing strong secular growth, and with the diversity of our platform, we are well-positioned to benefit. A segment of our business that continues to be a growth driver for us is our advisory work with private equity firms. Private equity firms are responsible for a significant portion of middle-market M&A activity. The PE firms hold near record amounts of capital and have a tremendous backlog of portfolio companies that require exits to generate liquidity. We expect that private equity firms will continue to account for a meaningful portion of M&A activity for the foreseeable future. This trend is evident in our M&A business as well. Private equity firms or private equity portfolio companies have been either a client, a counterparty, or both on over two-thirds of our M&A activity during the last 12-month period.
The increase to our PE advisory activity has largely been driven by the investments we have made to expand our industry expertise and product capabilities. In 2015, our investment banking business consisted of 65 managing directors, primarily covering four industry segments, healthcare, consumer, diversified industrials and services, and technology. Today, we have 146 managing directors across seven industry segments, having added best-in-breed practices in energy and power, chemicals and materials, and financial services. In addition, we have increased our restructuring capabilities, we have continued to enhance our debt capital markets capabilities, and we have expanded our financial sponsors coverage team during this time period. As a result of this strategy, our deal flow, relevance, and reach into the private equity community has grown significantly.
As for an outlook, our advisory pipeline of deals is very strong, with a number of larger fee deals announced and expected to close in Q4. Turning to corporate financing. During the third quarter of 2021, we generated $79 million of revenues and completed 66 equity, debt, and preferred financings, raising $30 billion in new capital for our clients. Corporate financing revenues moderated some in the third quarter from the robust level seen over the past several quarters. However, the market remained strong on a relative historical basis. Our healthcare team led the quarter, followed by financial services, technology, and consumer. In healthcare, we continue to be a market leader. We ran the books on 14 of the 15 deals we completed during the quarter. Healthcare remains a very large and growing fee pool in equity capital markets.
Year to date, we have participated in 83 equity offerings, raising over $18 billion for our clients. Healthcare clients, especially those in the biopharma space, are serial capital raisers in the equity markets, and we have experienced excellent client retention. For example, since the beginning of 2020, we have been hired on 100% of follow-on activity for biopharma clients where we were a lead manager on the IPO financing. The strength of our platform across banking, research, and distribution make us a premier service provider for the entire life cycle of our clients. In financial services, we continue to be active in debt and preferred financings, pricing 15 deals, raising $6 billion for clients during the quarter. Our superior execution and strong distribution remain a key differentiator for us in the marketplace. We were also active in the technology and consumer sectors.
During the quarter, we priced 19 deals for technology companies and 9 deals for consumer companies, raising a combined $17 billion in capital. We are focused on growing both sectors and have made significant progress in 2021, not only participating in more deals, but increasingly winning book run mandates. Lastly, we finished the quarter with 146 MDs in investment banking and capital markets, representing the 8th consecutive quarter of net MD growth, which includes the addition of 1 new managing director to strengthen our financial sponsors coverage in Europe. Now, I will turn the call over to Deb.
Thanks, Chad. Before I review our quarterly performance, let me provide some background on our recently announced acquisition of Cornerstone Macro, an independent research firm that offers best-in-class macro research and equity derivatives trading to institutional investors. Cornerstone brings over 50 professionals, including 21 research analysts, to Piper Sandler. They specialize in producing high quality, thought leading, macro, thematic, and quantitative research on global economics, fiscal and tax policy, monetary policy, and global asset allocation, portfolio strategy, energy and renewables, and technology.
In addition, Cornerstone Macro's options strategy team provides derivative strategy advice and trading capabilities. We believe this research product and option trading strategy will fit perfectly within our broader platform, featuring industry-leading deep company and sector-focused research coverage, broad trading capabilities, and an experienced distribution team.
Together, we will have approximately 1,700 clients, of which nearly 1,300 have no overlap, highlighting the opportunity to cross-sell each other's products. The acquisition further strengthens our position as a top institutional equities platform and represents a significant step towards building a durable $200 million institutional equities business. The transaction is expected to close in the first quarter of 2022. Now turning to equities operating performance. For the third quarter of 2021, we generated equity brokerage revenues of $34 million, down 2% sequentially and up 2% from the third quarter of last year. Equity markets saw reduced volumes during the first half of the third quarter. However, the tone of the equity markets has shifted toward the end of the quarter with increased volatility and volumes in September. We believe volatility and volumes will remain elevated heading into year-end.
We typically see an uptick in activity in the fourth quarter, and there are a number of catalysts that could elevate client activity, including higher energy prices, inflationary labor and supply chain constraints impacting company earnings, and the enactment of significant new spending and tax legislation. Turning to municipal financing. For the third quarter of 2021, our public finance business generated an all-time record of $42 million of financing revenues, up 17% from the second quarter and 60% compared to the third quarter of last year. We underwrote 221 municipal negotiated issuances during the quarter, raising $5.2 billion for our clients. We're recording great results from both our governmental and specialty sector clients. As we've noted on prior calls, we've been building our specialty sector client base, which includes special districts, senior living, healthcare, project finance, education, hospitality, housing, and transportation.
The breadth of our high-yield platform within public finance, centered around these specialty sectors, differentiates us in the marketplace and provides diversification from our governmental business. An illustration of this high-yield expansion is our recently added special district group. We entered this space in late 2020 with six senior hires and have added more than 20 dedicated professionals over the last year. The team currently has market leadership in Colorado and has served as lead manager on $1.5 billion of par value through the first nine months of 2021. We see opportunity to expand this expertise to more states and leverage our geographic reach and local relationships. On a year-to-date basis, municipal financing revenues of $106 million represent our strongest first nine months on record.
Our performance relative to peers was also strong, with revenues up 32% from the first nine months of 2020, as compared to a 4% decline in the overall market based on par value of municipal negotiated issuances. With low interest rates and a positive credit outlook, municipal market issuance continues to remain healthy. Looking forward, we expect another strong quarter to finish the year. Turning to fixed income. For the third quarter of 2021, we generated fixed income revenues of $56 million, down 8% on a sequential basis and up 5% compared to the third quarter of last year. The reduction in yields early in the quarter drove some market participants to the sidelines, awaiting more clarity in the direction of rates.
As rates bottomed and then headed higher, we experienced increased activity within our financial services clients as banks flush with excess liquidity put money to work. Our deep expertise has enabled us to advise these clients on repositioning their balance sheets and investing in a changing rate environment. Our fixed income platform benefits from some built-in synergies with our financial services banking clients. We are adept at helping bank clients reposition loan portfolios and balance sheets following a merger combination. These post-business combination assignments can generate significant revenue opportunities as we advise clients on optimizing balance sheets following a merger. With increased bank M&A activity, we have seen an increase in these assignments.
Activity among many of our public entity and municipal-focused clients has been softer as tight spreads and low yields, combined with a decline in refunding activity, has led clients to remain on the sidelines, resulting in a decline in secondary trading, particularly in tax-exempt municipals. We continue to build our fixed income sales team, focused on hiring highly productive individuals who have deep relationships and product expertise, and who can leverage our platform capabilities to grow their book of business.
As part of that initiative, we have a deliberate effort focused on credit unions, and we recently hired a senior salesperson to join that team. We're looking to continue growing this team and leveraging our Financial Strategies Group to provide differentiated analysis and advice. From an outlook perspective, we expect the fourth quarter to be similar to our prior strong quarters this year. Now I will turn the call over to Tim to review our financial results and provide an update on capital use.
Thanks, Deb. Before reviewing our non-GAAP financial results, let me highlight an item impacting our GAAP results this quarter related to the acquisition of Valence. Consistent with all prior periods, our GAAP results include compensation expense from acquisition-related agreements consisting of restricted consideration and retention awards that contain service conditions. Our GAAP results for the third quarter of 2021 include a cumulative adjustment related to our expectations of Valence achieving their earnout revenue threshold over the three-year measurement period.
As Chad mentioned, the team closed on a couple of high-profile engagements in the third quarter and have additional transactions slated to close in the fourth quarter or first quarter of next year. Given their positive momentum and our belief that they will exceed our revenue expectations, we are estimating they will achieve the earnout and therefore recorded a cumulative adjustment within acquisition-related compensation expense.
Now let me turn to our adjusted non-GAAP financial results. We generated net revenues of $440 million for the third quarter of 2021, a decrease of 11% from the second quarter and an increase of 48% from the third quarter of last year. This quarter represents the fourth consecutive quarter with net revenues at or above $400 million. Compared to the record second quarter of 2021, we experienced a moderation in some of our businesses, including some M&A closings slipping from the third quarter into the fourth quarter. This moderation was offset in part by record municipal financing revenues and higher investment income.
Net revenues for the first 9 months of 2021 totaled $1.3 billion, an increase of 61% over the prior year period, as we benefited from the significant recovery of M&A activity, strong execution in our corporate and municipal financing, and robust brokerage activity. Our net revenues also reflect strong relative performance across most businesses. Turning to operating expenses and margin. Our compensation ratio was 60.2% for the third quarter of 2021, down from 60.7% for the second quarter this year. The ratio was lower on a sequential basis, driven by business mix and our continued strong performance for the quarter and year-to-date period. For the first 9 months of 2021, our compensation ratio was 60.8%. Our philosophy to managing compensation levels continues to be a balance of investment considerations, employee retention, and business outlook.
Non-compensation expenses, excluding reimbursed deal expenses, were $48 million for the third quarter of 2021, essentially flat compared to the second quarter of this year. For the third quarter of 2021, we generated operating income of $116 million and an operating margin of 26.3%. These strong results represent the fourth consecutive quarter with over $100 million of operating income and the fifth consecutive quarter with an operating margin in excess of 20%. On a year-to-date basis, we generated operating income of $355 million, an increase of 151% over the prior year. Our margin for the first nine months of 2021 was 26.4%. We continue to demonstrate our ability to drive operating margin expansion while growing revenues and generating significant levels of excess cash from operations.
Our adjusted tax rate for the third quarter of 2021 was 27.2% and 26.3% for the first nine months of the year, both within our guided range. We continue to expect our full year adjusted tax rate will be within our targeted range of 26%-28%. Turning to earnings. For the third quarter of 2021, we generated net income of $83 million and diluted EPS of $4.55, both down from the record second quarter as a result of lower net revenues and a slightly lower margin. For the first nine months of 2021, net income totaled $257 million and diluted EPS was $14.08.
Compared to the first nine months of 2020, we more than doubled our net income and diluted EPS, driven by the significant improvement in markets and our strong execution. Let me finish with an update on capital. We remain committed to returning capital to our shareholders to drive total returns. With our capital-light business model and strong earnings, we continue to build excess cash. Given our level of earnings, strong capital position, and positive outlook, the board approved a special cash dividend of $3 per share related to our year-to-date results. In addition, the board approved a quarterly dividend of $0.55 per share to be paid alongside the special dividend on December 10th to shareholders of record as of the close of business on November 23rd.
Our dividend policy is to return 30%-50% of adjusted net income to shareholders, and we expect on a full year basis to be near the midpoint of the payout range. We expect this to result in payment of another special dividend related to fiscal year 2021, which would be declared in conjunction with our fourth quarter earnings release. During the first nine months of 2021, we paid an aggregate of $49 million to our shareholders through our quarterly and special dividends and repurchased approximately 564,000 shares or $68 million of common stock, which more than offset dilution from annual stock grants. This includes a more active third quarter during which we repurchased 243,000 shares. Lastly, we recently repaid our $50 million of Class A notes upon maturity on October fifteenth.
The remaining $125 million of Class B notes mature on October 15th, 2023. Overall, we are pleased with our third quarter and first nine-month results. Our business continues to be well-positioned for growth against a strong market backdrop, and we are confident in our ability to grow and deliver shareholder value by executing on our long-term strategic objectives. Thanks, and we can now open up the call for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star then one on your telephone keypad. Once again, that's star one to come into the question queue. To withdraw your question, press the pound key. Our first question is going to come from the line of Devin Ryan with JMP Securities.
Okay, great. Good morning, everyone.
Hey, Devin.
Good morning.
Morning, Devin.
Maybe just start with just some of the comments, Chad, you made about kind of larger deal sizes. I think that's interesting just because obviously that implies larger fees per deal and you're doing effectively the same amount of work or similar amount of work. And just wanna dig in a little bit whether you know some of that's gonna be driven by just higher market values overall. And so you know deal values are going higher. At the same time, like, are sponsors feeling more comfortable with Piper on kind of larger transactions that maybe would otherwise have gone to larger banks? Or I'm just trying to understand like the dynamic there and the ability to continue to win larger mandates on the advisory side.
is it just, you know, you've worked with companies for a long time, and they've maybe traded a couple times, and so now as they get larger, you're still working with them? 'Cause it feels like that's something that's changing here that's slightly different, but could be meaningful to, you know, the ability to generate larger fees per deal over time.
Yeah, Devin, I think it's a combination of all of those things. You know, it's you know not many years ago when you know we had in a particular year you know just a handful of deals north of $1 billion, and now we certainly are having more and more of those and even larger. I would say you know the biggest reason is in our strongest franchises, healthcare, financial services, obviously we added chemicals, you know we are doing some larger strategic and private equity deals. Yeah, I think just given the strength of the franchise you know our ability to go upmarket in our strongest franchises is pretty evident. I would also say you know we have plenty of examples now in our diversified and industrials business.
You know, that's a heavily sponsor-related business. Yeah, there are examples this year where we're now selling companies for a second and third time, and the deal values are getting larger. You know, across the board, that has pushed our average fee up. You know, we're still very focused in the middle market. We still do volume across our sectors. I do think it's just evidence of some of the stronger franchises and our ability to do large deals in those sectors.
Got it. Okay, thanks, Chad. A follow-up. I appreciate this is a little bit of a crystal ball question here, but you know, looking at consensus expectations for 2022, you know, they suggest revenues will decline. I know Tim said at the end of the call, you know, kind of positioned for growth, and I know that's a longer term comment. As you guys just think about kind of the individual businesses, where do you feel like maybe the bar is high for growth into 2022, and then where does it feel like based on what you're seeing today that you know, that there should be revenue growth, all else equal?
I appreciate you know the environment can shift from here, but given that you're in a number of different areas that are kind of being affected by different crosscurrents, I'd love some color there. Then also I appreciate that you've you know added to the footprint quite a bit over the past year, so that does position some areas for growth as well. Any additional color there would be helpful.
Yeah, I'll take that, and Tim can certainly add. I mean, I think you're right. This is a you know difficult crystal ball question. I mean, I think six of our seven industry teams are all you know gonna have you know you know really great years with you know pretty big records in terms of just revenue results. I think you know we're also participating in a few segments of the market. You know our debt capital markets business for financial services is operating at a very high level. Obviously, our public finance results are at a high level. We talked about advisory. You know healthcare ECM is at the highest level.
It's just one of those questions where, you know, it's very tough to predict market conditions in all of those segments. I don't, you know, I don't think we're gonna sit here and say, "Yeah, we can grow all of those segments every quarter, every year." We certainly continue to see, you know, I would say, especially in the advisory business, a good building, you know, of backlog and really just the breadth across those products. You know, we're really feeling good about, you know, the momentum in the business.
Okay, terrific. I guess maybe outside of kind of capital markets and advisory, you know, and municipal financing or public finance, just how brokerage, how those businesses are positioned here heading out of year-end. You know, I know some of the positive drivers remain in place. Just trying to think about, you know, the footprints in those businesses and how they're positioned as well.
Devin, I'll take that one here. This is Deb. On the municipal side, as Chad said, we have really strong results. We have added the special district team primarily focused in Colorado to date. And when you look at the year-over-year improvement in the business, a meaningful part of that is coming from that group. And we look to continue to expand that over time into other states. We're starting with Utah. There needs to be the right legislative environment in states to do that type of business, but that hopefully gives you some color. At the same time, you know, issuance is very high. Was at a peak last year. We may hit that same level this year, a little dependent on fourth quarter. Market environment is good.
On the equity brokerage side, our focus had been on having the Piper and Weeden and Sandler come together and have this one plus one plus one equals three. I'm happy to say we are very close to retaining the full market share of all three of those. That feels good. Now it's about, you know, making sure that our volumes continue to improve, which we're seeing, and then monetizing that through our trading desk. Of course, Cornerstone now being added in the first quarter of next year. Fixed income is gonna be the last business to talk about.
We've seen a lot of strength coming from the bank client base and our ability to help those clients, especially in somewhat dynamic interest rate environments, position their portfolios, as well as when we mentioned this earlier on the call, leveraging where we see bank consolidations happen and being able to help with the combination of those balance sheets and any restructuring that needs to happen. When I think about fixed income, we're spending a lot of time on developing the other client verticals and the expertise and advisory services we can provide to those.
Now credit unions being another one that we are starting. It might seem like there would have been more business from credit unions given the strength in banks, but it hasn't been an area that either Piper previously or Sandler had focused a lot on. That's an area where we have started hiring and will continue to grow. We can leverage a lot of the analytics, but need somewhat of a unique team to be able to go after that client base. Maybe I'll stop there, see if you have any additional questions.
Yeah. No, that I appreciate, you know, it's hard to predict the future here, but great context just around the evolution of the business. Appreciate it. I'll leave it there.
Thanks, Devin.
Thank you. Our next question will come from the line of James Yaro with Goldman Sachs.
Good morning.
Good morning.
You have one of the premier biotech franchises out there. I just wanted to touch on how much of your ECM and perhaps M&A results were driven by this sector. Then longer term, your views for the subsector. We've obviously seen a bit of a slowdown for parts of this year, and I think the reasons for the slowdown are known, but I guess sort of the longer term outlook for that business.
Yeah. I'll take that. I mean, yeah, obviously our strongest by far, you know, in revenue mix of ECM is healthcare. Within healthcare, biotech and biopharma is the biggest business. It's frankly been, you know, fairly strong all year. We will have these, you know, pockets of time where deals might get more difficult or there's not as much business. You know, those pockets of slowdown haven't lasted that long. I would say, you know, in general, obviously Q3 was a little slower than the first couple quarters. We're definitely seeing, you know, a good but, you know, more difficult ECM market in healthcare here in Q4. I think all of that said, you know, we're still in this, you know, heavy innovation period.
Lots of interest, you know, in healthcare, in general. This is a business that's very hard to predict out 2, 3 quarters. I also think, you know, sometimes people like to look back at, you know, what were levels 4 and 5 years ago. I think that leaves out just how much new capital, how much innovation is out there, how many new biotech companies have been created through IPOs. Regardless of where market conditions go, you know, lots of those companies need to raise money.
Okay, that makes a lot of sense. You've talked about robust activity across the investment bank, but the, you know, sort of what's been top of mind in the market over the past few months has been the impact of supply chain disruption, inflation, and potentially higher rates. Could you just speak to whether this has been part of your dialogue with your clients and whether you expect those to have any sort of impact on activity going forward?
Yeah. I would say, I mean, look, we have certain clients that, you know, have been impacted by supply chain. We have other clients that are, you know, impacted by certain inputs on pricing. I would say, you know, it's hard for us with these results to sort of point to any of those sort of having, you know, a huge impact on, you know, large number of deals. I think we recognize those three factors. They're certainly things our clients are talking about, but none of those, you know, by itself has, you know, really slowed down deal activity.
Okay, that makes sense. Then my last one is just, you know, regarding the hiring environment. You know, it's obviously become extremely competitive. What are your expectations for hiring, especially heading into next year?
Yeah, it has. I think it has become, you know, more competitive for hiring. I mean, frankly, it's been that way the last few years. You know, what I would say is, you know, in that vein, though, our platform, I think, is getting, you know, more appealing. I think people are seeing us do larger deals. You know, more and more franchises, I think, are becoming market leading. You know, that offsets, obviously, the competitive environment. The other thing I would say is, you know, we have many more bankers, you know, doing, you know, significantly more revenue. I think on certain platforms, I mean, obviously that increases your ability to pay more for the right kind of talent.
I think we would expect the environment to be difficult, but I also think, you know, our approach has really been to add talent three ways. You know, we're first and foremost focused on, you know, developing our own managing directors. For the last five or six years, we've been focused on adding five to seven sort of net MDs through hiring. Then we've also, you know, we get some big chunks when we do a team lift out or an acquisition. I think even in the sort of more difficult hiring environment, we've shown we can continue to grow that MD headcount, and we anticipate, you know, being able to do that again next year.
Okay. Thanks a lot.
Your next question will come from the line of Michael Brown with Keefe, Bruyette & Woods.
Hi, Chad, Deb, Tim. How is everyone? [Crosstalk] This quarter, I noticed the investment income line had a nice performance, and it sounds like there were some gains in your merchant banking portfolio. Can you just touch on that a little bit? What were the key drivers there? Can you just talk about the longer-term strategy here? I see that you made an MD hire during the quarter, and I just wanted to kind of better understand what's the ultimate strategy here for that merchant banking business.
Yeah. Chad, maybe I can take that. You know me, right, Mike. You know, the marks that we had during the quarter actually were the result of a couple of liquidity events that occurred within the portfolio. You know, typically, you know, when we see something come through and have a liquidity event, we'll have some mark up, you know, based on that, and that's really what, you know, what occurred in, you know, in the third quarter. We did add, you know, an additional partner in that group. You know, I think for us, you know, it's a nice business. It's complementary to our banking business.
You know, it's a business, though, actually, where you know, we've continued to bring down the amount of our capital in that business, and it's much more, you know, driven by you know, by capital that comes from outside. You know, my overall take is, you know, again, nice business, complementary to banking. I don't think there's any, you know, any big shift in that as we go forward. It's pretty consistent with where we've been over the last several years.
Okay. Our next
Okay.
Sorry, go ahead.
Go ahead.
Sorry.
Any follow-up on that, Mike? Or did that answer the question?
Yes. Thanks, Chad. Yeah, I was on mute there. So appreciate that, Tim. The business development expenses, they didn't pick up all that much this quarter relative to last quarter. Have you started to see that rise in the fourth quarter? Like, I guess, have you seen travel picking up here? I guess, what are your expectations there as to where that could go to and what level that may reach longer term?
Yeah. You know, you're right here. I mean, in the third quarter, it was still pretty modest. I would say, you know, there's been a slight pickup in that going into Q4. Still, you know, for this year, it certainly doesn't look like it's gonna be back to what we would think is the more normalized levels. The last couple of quarters now, excluding reimbursed deal expenses, we've run right around $48 million. I still think, and we've talked sort of about a quarterly run rate on this in the past, what I think is a more normalized level is probably something that's closer to $52 or $53. You know, at what point does that come in next year? You know, based on what we're seeing to start the fourth quarter, maybe it's picking up here a little bit. Yeah, I think that's the more normal run rate on a longer-term basis when travel does get back to more normal levels.
Okay, thanks. Appreciate that. Just one last one from me. You referenced the goal for the equities brokerage revenues to reach $200 million longer term. You did $161 million last year. It doesn't sound like there's really major revenue dissynergies from Cornerstone Macro. How much do you anticipate Cornerstone adding to your full-year equities revenue if we think about next year?
Yeah. Now, obviously, it won't be an entire yield will come in during the first quarter, so a little bit will be timing based on when we have that closed. We've been looking at this a little bit. You look at an LTM basis, we're slightly over $150 million, and we think that Cornerstone brings in about a 30% growth in revenues, which gets us pretty darn close to that goal, again, on a full year basis. We just have to make that adjustment. You're correct, the revenue dyssynergy. I mean, we had definitely a gap, which is why this made a ton of sense to us relative to macro research and frankly their derivatives platform as well, which combines both strategy with trading, and as you rightly pointed out, not a lot of dyssynergies do we see there.
Great. Thank you, Deb. Appreciate the call.
Yep.
Thanks. Saving my questions.
Thank you.
Our next question will come from the line of Mike Grondahl with Northland Securities.
Hey, good morning, everyone.
Morning.
Chad, it sounds like the pipeline, the backlog is pretty robust if not very robust, kind of across the board for the businesses. Your visibility into 4Q is great. Can you go as far as to say you have, you know, really good visibility into 1Q? You know, can you extend that another quarter? How do you feel as we're kind of gonna be looking at 1Q 2022 pretty quick?
Thanks, Mike. I mean, what I would say, obviously this is always the toughest time of year to sort of predict out two and three quarters. Everybody's charging hard. There's lots of clients that wanna close transactions for Q4. You know, how the mix of revenue between Q4 and Q1, you know, depends on some of those closings. We're certainly seeing in certain business segments, you know, some of the regulatory review taking a little bit longer.
But again, the backlog's very good. You know, we expect and have good visibility in what we see to close for Q4. I would say, you know, the other thing for us that's a little more complicated is just, you know, Q1 is over the years our softer quarter. You know, what happens will depend on, you know, how much business slides into Q1. Right now we are starting to build that backlog. We are starting to identify the deals that are gonna close in Q1, and so certainly feel good about, you know, relative to other years, how early next year is shaping up.
Got it. Anything to call out with the SPAC transactions or kinda your appetite for, you know, continuing to kinda push in that area?
Yeah. I would say our answer has sort of been consistent the last year on this. We weren't overweighted on our SPAC activity relative to capital raising. Obviously, you know, much of that has dried up. All of that being said, you know, they're very active in our advisory business. You know, I think our levels in the back half of the year relative to SPAC work are probably even greater than the beginning. But for us, that's still a relatively small segment. It's not what's driving, you know, either our ECM business or our advisory business, but it's become an important component.
Got it. Just lastly, on the acquisition front, are you still, you know, looking at a few things, considering a few things, kinda how's that pipeline look or just activity in general?
Yeah. I would say, Mike, we're always looking. We had, you know, a number of conversations this year. You know, there's a couple of transactions that, you know, we looked at closely that, you know, got, in our opinion, you know, too pricey for us. All of that being said, you know, our strategic priorities in areas that we've identified, we're still very interested in, you know, doing more in technology. We think, you know, some of our European expansion could come through team lift outs or acquisitions. Even in some of our best franchises, you know, there's small teams and boutiques. We continue to be very active and, you know, that. I think just with our track record, we've proven we can drive returns from those, so we would expect to continue there.
Okay. Hey, great, and congrats again.
Thanks, Mike.
Thank you.
Thank you. I would now like to turn the call to Mr. Chad Abraham for his closing comments.
Okay. Thank you, operator, and thanks to everyone that joined. We look forward to updating you on our fourth quarter and full year results. Have a great day, everyone.
Once again, we'd like to thank you for participating in today's Piper Sandler conference call. You may now disconnect.