Q2 2020 Lazard Ltd Earnings Call
Ladies and gentlemen, yokota entry on hold for the responses. That's gone at this time get us something to be Oh, yes, I'd like to be under be shortly thank you for you for your patience I'm pleased to remain on the line.
[music].
Good morning, and welcome to Lazard second quarter, and first half Twentytwenty earnings confidence caused this call is being recorded currently all participants audience I listen only mode. Following the remarks, we will conduct a question answer session is still.
Actions would be provided at that time.
If anyone should be quite assistance during the call lease that's the Starkey followed by the zero on your Touchtone phone.
At this time I'll, just turn the call overtime I like Santosh Degnan, that's that's I don't I don't see Investor Relations. Please go ahead.
Good morning, Thank you Anita welcome to <unk> call for the second quarter and first topic Twentytwenty.
Alexandra Deignan, the company's head of Investor Relations.
In addition to today's audio comics, we posted our earnings release, an investor presentation, which you can access our website I'd be quad play at this call will also be available on our website later today.
Let me begin let me remind you that we may make forward looking statements about our business.
There are important factors that could cause our actual results level of activity performance or achievements to differ materially from those expressed or implied by the forward looking statements, including but not limited to those doctors disgusting companies Vicki filings, which you can access on our website.
Arching no responsibility for the accuracy or completeness of these forward looking statements undertakes no duty to update each forward looking statements.
Today's discussion also includes certain non-GAAP financial measures that we believe a meaningful when evaluating the company's performance a reconciliation of these non-GAAP financial measures to the comparable GAAP measures is provided in our earnings release Investor presentation.
Oh, no call today, I'll kind of Jacobs, Besides chairman and Chief Executive Officer, and Evan Russo Chief Financial Officer local by opening remarks, and then we'll open the call to questions I'll now turn the call over to Ken.
Thank you Ali good morning, our second quarter in first half results reflects steady operating performance across your business.
Uncertain environment financial advisor results for the second quarter highlighted the breadth of our advisory services as we expected the pace of M&A completions in announcements declined in line with the market.
The strategic discussions with clients are increasingly constructive, especially in Europe, this country's easier locked down restrictions.
Strong quarter with restructuring in capital markets advisory largely offset slower M&A activity as we serve clients with immediate liquidity issues caused by the Pandemics economic shock, we advised on a number of the largest assignments in the U.S. energy and retail sectors. We've also completed the successful restructuring of PGT the largest utility.
Crushing and U.S. history.
For the first half of the year, Lazard, which the global leader in announced restructuring assignments by dollar volume.
Serving clients with expertise built over decades and through cycles and capital structure capital raising debt negotiations restructuring and exchange offers all supported by our global platform and industry sector teams or sovereign advisory practice has also seen a significant increase in activity advising countries in Latin America Africa.
And the middle East on debt restructuring and we continue advice governments in developed economies on programs to support the private sector.
In asset management, our platforms benefited from the rebound in global capital markets during the second quarter or assets under management increased 11% from the first quarter, while we experienced net outflows for the quarter gross inflows were strong our quantitative strategies continued to gain traction as did our convertible in international equity strategies, we can.
Do you need to invest into growth of asset management through the development and scaling up the new and existing platforms recently, we announced the launch of U.S. and global sustainable equity strategies, which are receiving strong demand.
Our sustainable equity strategies are built on the foundation of our longstanding efforts in U.S.G. integration, where we have a unique sector based approach to materiality assessment.
We see significant opportunity to Lazard in this space and are committed to further deepening of art U.S.G. research capability and investment solutions for clients.
Before I turn the call over to Evan I want to comment on the evolution of as Arts day to day operations. During the pandemic at the time of our last earnings call virtually all of our people were working from home in response to the global Health crisis. Since then many of our employees have returned to the office with guidelines to maintain social distancing we've adapted quickly.
A hybrid environment with a number of our people in the office and others at home.
Silver lining to this experience has been the improvements in efficiencies internal communications and other positive cultural changes that might otherwise have tick in years to accomplish as we move forward, we're taking steps steps to ensure that we lock in these improvements for the benefit of all our stakeholders. Once again I want to thank our people for their resiliency.
And commitment to upholding resorts standards of excellence, even in the most challenging conditions.
David will now provide more color on our second quarter and first half results then I will comment on our outlook.
Thank you Ken.
Our second quarter results reflect the breadth and diversity of our business in a challenging market environment.
Financial Advisory second quarter operating revenue of $293 million was down 11% from last year.
Without even with the first quarter of this year.
As we expected M&A revenue decrease compared to last year second quarter. However, restructuring revenue increased sharply based on new activity and the closing of several large assignments.
Asset management operating revenue of $245 million declined 9% from this year's first quarter.
Reflecting lower average assets under management in the second quarter following the broad market sell off in the first quarter.
Average you went for the second quarter was $208 billion, 6% lower than the first quarter of this year and 12% lower than a year ago.
We finished the second quarter with anyway, I'm at $215 billion, 11% higher than the start in the quarter.
The increase was primarily driven by market appreciation and positive foreign exchange movement with $6 billion of net outflows.
The quarter's net outflows were driven primarily by emerging markets and multi regional equities. These were partly offset by net inflows in our global and multi regional fixed income strategies.
As of July 29.
And with approximately $224 billion, reflecting market appreciation of six and a half billion dollars during the month.
Positive foreign exchange movement of $4.3 billion, and net outflows of approximately $1 billion.
Looking ahead across our franchise.
And financial Advisory we continue to expect a subdued third quarter based on the pause in M&A activity. During the first half a year with more normalized levels of activity expected in the fourth quarter and into 2021.
In asset management, we're seeing a high level of investor interest and winning significant mandates across our multi regional global and emerging markets platforms.
We are seeing demand for both our quantitative and fundamental products across our platforms.
Turning to expenses in the second quarter, we accrued compensation expense at a 60% adjusted compensation ratio compared to 57.5% in the second quarter of last year.
Our full year compensation expectations will develop through the year based on revenues and business mix.
Noncompensation expenses of $100 million were 22% lower than the same period last year.
Primarily reflecting lower travel and business development costs.
Our adjusted non compensation ratio for the second quarter was 18.3% compared to 20.3% in the second quarter of last year.
Our effective tax rate in the second quarter as adjusted was 23.9%.
Our effective tax rate for the first half of the year was 26.3%.
We expect an annual effective tax rate for this year in the low to mid 20% range.
In regards to capital allocation.
Our business continues to generate significant free cash flow, which supports our objective or returning capital to shareholders.
In the second quarter, we returned $53 million of capital to investors primarily through dividends.
This week, we declared a quarterly dividend on our common stock a 47 cents per share.
His arts financial position remained strong with ample liquidity and balance sheet flexibility.
As of June Thirtyth, our cash and cash equivalents were $897 million up from $793 million at the start of the quarter.
Ken will now conclude our remarks.
Thank you Evan will provide some perspective on our outlook and then well open the call to questions. The global mapping on the global macroeconomic environment has improved since our last earnings call, but remains uncertain Central bank interventions have helped to stabilize capital markets fiscal measures in the U.S. in Europe, and partly offset an add.
It ended drop in aggregate demand.
However, the shape and pace of the recovery depend in large part on the course of the pandemic and on additional governmental stimulus which remains unpredictable.
In financial Advisory, we expect to see increasing M&A activity as a year progresses client dialogues are improving in both the U.S. in Europe. We also expect to see increased restructuring activity in Europe is central banks in government scale back their economic support programs.
Asset management Central banks support is help stabilize asset prices. The volatility is likely to remain elevated we expect that the massive dislocations in markets and dispersion of returns, resulting from the pandemic should create stronger demand for active management.
This combined with stronger investor emphasis on sustainability positions us well for the long term.
Regardless of the pace of economic recovery Lazard is well positioned to whether this period of uncertainty with a diversified business model, a global client base and unrivaled expertise and strategic advisory restructuring.
And asset management solutions, our business model is highly cash generative and has proven its strength and resilience across numerous business cycles. We made spoke we remain focused on serving our clients well, while we manage the from propofol profitable growth and shareholder value over the long term now let's open the call to questions. Thank you.
Thank you Sir if he would like to ask your question. Please signal by pressing star long on your telephone keypad, if you're using the speaker phone things makes all of your mute function eastern Gulf to allow your thinking that that he sort of fits and.
Again, good sod one to ask a question.
We'll take the first question from Levine, Ryan Some T M Pesa communities.
Please go ahead agreed to great. Thanks, good morning, everyone.
Hey, Dominic that maybe start reporting maybe start of the question just on the restructuring strength. So you've seen you know obviously very strong ramp deals we contract some of that from the outside you're trying to get a little bit better sense I'm prepared to sizing and the timing perspective, and how you guys are thinking about the opportunity there.
If we look back you used to provide some good detail around the revenues I think the prior hired was about 375 million back in 2009 from the outside it does seem like you're tracking.
That's why I, just love to get more perspective around kind of how you're thinking about the upside case, where we're just even what you're seeing and that gives us today and then also just from a timing perspective, you know the view of it does take longer to close restructuring typically but we are seeing I think some deals closing this year. So just trying to think about their big why pockets.
2020 in 2021.
Sure what does that give you the overall teams in the restructuring and have Evan talk a little bit about the scale and timing of some of the closings. Okay I'm. So.
Look first Oh.
Our our franchise and restructuring is really quite powerful it's been through several cycles integrates not only a very Ah Ah Ah I mean, I think market leading team in restructuring, but it also is able to draw from the rest of the from both the industry groups and and geography used to complement a activities and there were.
Structuring group and that's been one of the secrets to our success and our ability to ramp up in this area over over the course of time or in terms of this cycle. We saw very strong activity in the first part of this year largely driven by companies, which already we're facing challenged liquidity.
He positions in balance sheets prior to the pandemic.
Network celebrated by the pandemic Ah theres a bit of a low right now, but our sense is that given the withdrawal of some of the stimulus activities you unevenness of the recovery, particularly in the U.S. because of the breadth of the pandemic in the south and west and now into the Midwest and the likely pullback on some economic activity.
That was generated in those states as well when they reopened we're likely to see a pickup in a pick up into the fall and winter. This year. So overall the activity levels. We think are going to be a historic in that regard.
And probably continue through next year, Evan you want to just go into some of the more detail there sure happy to Devon. So when we think about the restructuring.
<unk> pipeline out for the rest of the year. So as we said we are very strong Q2. Some of that was closings restructurings. We're working on from the beginning of the year that closed in the second quarter of this year I think the significant activity that we picked up new mandates.
At the end of Q1 into Q2 really play out over the course of the next three quarters. So it's really Q3 Q4, and then Q1 of next year I think that's generally the timeline that you'd have to look at I'd say predominantly you'd probably have a bigger skew towards Q4 than Q3 and that business at this point in time, but this is all very very fluid these trends.
Trends as you as you alluded to can move very very quickly.
And in many cases, they've they've moved faster even through the bankruptcy processes and when might have done historically, so timing is a little bit different I think this time around than it was last time around you're seeing active restructuring assignments close quickly in the context of liability management and other side types of financing solutions that are going on and then the sort of bankruptcy.
Longer term restructuring cycle some of them are going a little bit quick or something that will go a little bit slower. So I think you're going to see it play out over the next two to three quarters. I think every transaction is kind of different there isn't much of the same I'd say in terms of the scale in the size I think he's you talked about.
You know the last as Ken mentioned this could be a very big cycle I mean, it's still in the early phases of knowing how that's kind of play out I think we certainly have a very strong belief in the business right. Now is certainly what we saw and the level of activity that start at the end of Q1 into Q2 of this year as we've said for our business historically restructuring revenues.
As a percentage of the of the total financial advisory you could range anywhere from 10% to 40 plus percent in some of the real deep recession, and a heavy type of restructuring scenarios and I think we're certainly gearing more at least this year and little too early to know for next year, but certainly it looks like it could build into that sort of higher end of those rain.
As for the.
For the next year year and a half.
Terrific. Thank you guys and then just a follow up there given a little bit more on some of the M&A commentary and really the question is around just the code and and what you guys are seeing and I. Appreciate your there's a lot of uncertainty so it's hard to be.
Yeah, maybe completely confident with the future holds here, but they were hearing a little bit different commentary or across earnings calls here via the season, where I think some companies are maybe a little more cautious summer feeling better and it does seem like your first with global platforms and can maybe either Robert to some of the larger.
Companies.
A little bit more positive outlook, then U.S. middle markets or smaller deals, which I'm curious.
The the out looking how you would frame kind of maybe between whether its global Europe, U.S. I'm kind of large transactions small transactions financial sponsors are little more flavor there because it does feel like what we're hearing maybe some different.
Yeah, Alex <unk> from companies.
Sure. So first I mean, there are a lot of cross wins here and consistency across geographies industries or size of transaction. So as you said, it's a little hard to to get a grip on.
Overall trend here that said it feels to us like dialogues have clearly picked up from the first the ended the first quarter I'm. The dialogues are more constructive meaning that there's more likelihood of activity taking place.
Financing.
For deals has improved particularly for sponsored deals it's not anywhere back to where it was but there is financing that's becoming more available and some of the terms are actually becoming a resembling more like what we've seen in the past.
And you know clearly the sectors that are gonna be most active in our judgment or the ones that have been leased affected by that pandemic directly. So technology Biopharma. As examples are you know least affected may even benefit to some extend from.
Conditions associated with a pandemic in in those sectors, we've seen dialogue pick up a the sectors that have been most impacted travel leisure retail not much M&A dialogue that my guess is is that your progress as we may see a little distress M&A dialogue, there, but typical dial up no.
Onshore activity sell side activity I should I should qualified called sell side activity, which is usually a measure. It one thing we look at to measure whether the market is picking up on the smaller mid size transactions is starting to feel a little bit that's better for us in both Europe that in and in U.S. in Europe, It's a little bit more across the board, it's not segmented into.
To one sector, but that also reflects a little bit more of the consistency in terms of the opening on the continent and in particular in the U.S. It seems like cell sites, which had been postponed at the time of the pandemic, particularly in the sectors. I described earlier seem to have restarted some of those or even hearing.
Inclusion and there seem to be a you know not I wouldn't say an enormous number but a group of transaction starting up now that that or starting from scratch. So overall. It is there a lot of cross winds it's complicated.
But it seems more constructive than it was a quarter ago on the larger transactions intermittent again, but I think again, it will probably be more segmented any industries, which are our let had been less impacted by the pandemic.
Okay terrific. Thanks for taking my questions I'll hop back in the Q.
No.
Thank you, let's take one next question from Brennan Hawkins from you'll be yes.
Please go ahead.
Good morning, Thanks for taking my questions.
I'd actually like a follow up on some of those.
<unk> comments from Debbie's question can you give a little color on some of the differences between the Europe and the U.S. them in the small.
Steel market.
But when we look at the at the broad market, which is much more impacted by big deals.
We've seen and I think you made some reference to it in your opening remarks and recall.
Can pay less AD trends on announcements right I mean [laughter].
Market is definitely down.
And soft pardon me.
But but it looks like Europe is hanging in better can you. Please talk about.
The.
What you're seeing there what's sort of early trends, you're seeing how sustainable you think that divergence might be and how we should think about it in the medium term based on what you're seeing so far.
Sure So look.
This is early it's as I said earlier, it's hard to it's hard to generalize trends from you know a couple of weeks months of activity here.
But generally speaking the.
Outlook in Europe feels a little bit more consistent to us at the moment then the U.S. Europe is continental Europe. In particular is just on a better job of dealing with a 10 deneke.
And coming out of confinement in the U.S. has and so the recovery from coming out of the pandemic has not been interrupted.
The way it has been in the U.S.
And as a result of that if you're sitting there as a CEO or in a board room, you have a little bit better ability at least within Europe to be able to predict or you feel you may feel a little bit more confidence about your ability to predict or economic conditions going forward that said, there's still a lot of uncertainty everywhere.
So that's probably be incremental difference I think economically again, while both Europe and the U.S. had been hit very hard by the pandemic and the and the confinement Europe is experiencing lower levels of unemployment and Ah for the most part.
Workers consumers came out of the confinement with their savings are relatively intact. So the ability to spark economic activity. After that was greater in the U.S., we booked a different picture because of unemployment and we also the different picture because if you got unevenness independent across the U.S. and as a result of that we thing.
There was going to be a more uneven economic activity as we go into the fall and perhaps the winter and again, it's you can't declare victory anywhere right now I mean could easily backsliding Europe like we've seen happening parts of Asia.
As far as economic deal activity is concerned you know a lot of deal activity just comes down to three fundamental factors. I mean is we say equity valuations, which are rich budding consistent again in technology and bio pharma very things have gotten expensive in other parts of the economy. There that you haven't seen there kind of rebound and.
Financing conditions, improving you know for deals obviously financing conditions for companies seeking.
Longer term financing for their own businesses have been quite good because of the central bank interventions.
But the deal markets, improving but not not anywhere back to where they were before and then with regard to what we call confidence that which is a key factor there. It really comes down to your ability to have some confidence with the economic outlook. It doesn't have to be great. You have to have some degree of confidence about what's going to have.
And in some estimate you know some sense of narrowness around what the potential outcomes could be and that's still a challenge in some industries and others. It's improved and I think where do you see it improved or an economies are environments, where it has improved deal is going to see a pickup in deal activity.
Okay. Thanks for all that can really appreciate it.
For my follow up I would ask you know we've seen the French government put on a dividend restriction.
For companies did because I have any impact on your subsidiary Dividending up to the parent or is that restriction just for public shareholders and if it's if it is a restriction do you think it's gonna have any impact or is it manageable.
It has no impact on us.
Thank you that's simple enough.
Thank you and nobody could next question from going from seven from credit Suisse.
Please go ahead.
Hey, good morning.
I want to know how has the economic backdrop and pressure on M&A revenues impacted competition in the marketplace for talent are you seeing additional opportunities or acute senior bankers and are there any specific industries that you're focused on.
So I think actually second quarter was a pretty quarter good quarter for us for a hiring I think we added some of the sticky either five or six hires during that quarter.
But it's too early to tell I think that was just that those are things that are either were opportunistic at that moment in time and things that we had in the works.
It's too early to tell usually you don't have reveal fuel for what's going to happen with the.
Market for talent until you get closer to year end or after year end and I think we're frankly speaking given the ups and downs that this market I think everybody's pretty far away from that at the moment.
But I would expect that when we do get to year end, you know depending on performance relative performance of different firms big firms little firms, you'll start to get a much better feel for for that move in talent.
Thank you.
Thank you and they'll be Pico next question from Jeff Hi from Piper some nice.
Please go ahead.
Hi, Jeff Good morning, guys.
A couple from me one.
On the kind of capital markets Advisory can you remind us how big a business that is for you guys that gives us some kinda.
Indication of how strong the quarter was in that business I guess I'm kinda if they can get it from the perspective. It was a really good quarter for public debt and equity underwriting does that kind of fall flow over in the capital markets Advisory.
Having you want to take that.
Yeah sure <unk> capital markets Advisory you know as we put it all together, it's sort of one advisory.
Business as you say, we don't call out the specific components and the reason for that I have to do with the fact that capital markets advisory in many cases can be linked to restructuring type work. It can be linked to regular M&A type work and others and so this was a corner, where we were helping lots of companies.
Think about their financing strategy thinking about their financial strategy in conjunction with their strategic activity or strategic ambitions.
As well as helping them with liquidity in many cases as part of a restructuring mandate or and thinking about it in the context of overall capital structure advisory. So it's a hard sort of thing to pinpoint, but certainly there was a lot of activity relating to advising companies. This corner around their financing needs and the ability for them to take advantage of what was certainly a.
On a global basis.
Very active very active underwriting very active capital markets primary issuance across all different types of products and so a lot of our time to spend with clients on those things I would say, it's not we don't break it out specifically because it's really part of so many different types of discussions that we're having so many different types of situations.
Okay, and then a in a work from home kind of travel restriction environment.
How is kind of a lack of face to face activity impacting viewability epic and warrant strategic advisory.
Moved from conversations to actual announcement, sorry, kinda in general, but I'd be interested in.
North America versus outside of North America for its any differences.
Sure well, what's kind of interesting is on the continent for the most part activity is or at.
Behavior is back to where it was prior to the.
Confinement that is people are largely back in the office meetings are taking place in person.
In a lot of geography.
So so that so so it so that's first in the U.S. and UK or for the most part people are still in confinement.
And Ah most activity is still conducted over video at least in our case almost everything is conducted over video and to just given indications you know we haven't had you know an enormous amount of M&A activity in the market is not only us, but the market as a whole since the since since that pandemic unfolded.
But you've seen deals take place.
We have process is underway, which are effectively virtual and we expected that will become not maybe completely normal but it may be come the new normal for the better part of the next year or so you know what was kind of intriguing to US was we were actually kind of skeptical about.
The ability to undertake these vast restructurings, which are in fact quite complex. Both in terms of the pressure around time number of people that are involved in due diligence to court proceedings when they get into core and these went along without a hitch.
Using video so I expect that people or just I mean, it there maybe things which are more difficult to do this way, but there seems to be an adjustment taking place.
Okay, and finally with a nearly 7% common dividend yield we get asked a lot about the sustainability of that dividend I'm looking at cash on balance sheet in operating cash flows I mean, they remain quite strong so as I try to sit on the outside.
How bad on today.
If I remember we have to get into realistically before you would expect maybe to dividend kinda payments to come into question.
Evan.
Yeah sure. So as you say look we have a significant or cash build this quarter was fairly significant a little over $100 million from the end of last quarter were sitting with approximately $900 million a cash at quarter end. So as you're right I think we from from a cash perspective on balance sheet perspective, I think we're pretty strong at this point in time.
We said last quarter dividend is an important part of our capital management strategy.
Consistent with our capital management policy to return all of our excess cash to shareholders, which I think we expect to continue to do of course, where you know we're going to be mindful of the environment and the volatility in the uncertainty in our forward outlook for the business, but currently I think we're very comfortable with the dividends as we announced this week.
Okay. Thank you.
Thank you well now take our next question from that he tried to them stem from Goldman Sachs. Please go ahead.
Hi, Good morning, everyone, I guess, what work a little bit about the non comp expenses and alone comp ratio. Obviously appreciate.
TV is probably down to close to zero, but in your opening comments. He talks about the fact that you do think that some of these improvements in terms of people working more efficiently and working from home. They stuck. So can you just talk a little bit about how you feel that could feed through into long term improvements in the non comp ratio over time.
The too soon or is it too soon to conclude.
Sure and once you take that since she spent yeah sure.
Yeah. So I mean look it's it's a great question and I would say, you're probably more right in the way you captured at the end, which is it's a little bit too soon to know the longer term impact on the and the short term as you say correctly travel this quarter was practically a front practically the stand still and so there was a significant benefit in this quarter relating to.
I meant and that comes through in our marketing and business development line items, you can see which led to a pretty low non comp in this quarter for the second half of the year. It as Ken was describing earlier with regards to picking up of activity levels. We expect to see some continued marketing and business development improvement and so a little bit higher on that line item as we continue to get more toward.
Normalized levels, I think thats, probably going to be more skewed to Q4 than Q3 as you can imagine given where a month and still have any uncertainty and the environment that we're living in and still pretty low or lower levels relative to where we've been historically and with regards to longer term I think look as as we should do is we're trying to figure out how we take the best of what we learn from the path.
Then I can all the ability to use technology the ability to change the patterns of behavior with clients the ability to interact more efficiently with clients in different ways.
Potentially have a lowering can impact on our non comp over a longer period of time, but I think it's it's a little bit early but we hope to sort of take take forward. Those learnings that we have from today and bring it with us as we define sort of though the post coated world and I think there's going to be more to come on that discussion in the <unk> in the coming quarters.
Okay. Thanks, and then as a pull up people took a little bit about financial sponsor activity, how about football difficult quarter.
How active you feel that could be as we as we head into the second half of the doesn't come to the driver right typically.
Sure so.
Clearly the activity level and financial sponsors is improving as your progress is as the financing markets improve for deals and for those kind of the sponsor deals or we should see an improvement activity there as the year progresses.
The.
You know frankly the area that we're we're really intrigued by is public to private is right now there just seems to be a increasing likelihood that we're going to see a pickup activity there both in the U.S. and in the UK and that's something we're keeping an eye on.
Okay. Thanks very much.
Thank you for now we think our next question from my Monica Sally <unk> from Morgan Stanley.
Please go ahead.
Hi, Good morning, I was wondering how can you talk a little bit about yards are gone the conversations you're having oh deals are already in the pipeline coming into this downtime.
What percentage of completions in the second quarter were related to deal with several already in the pipeline pretty cold wet and.
I was curious for deals are already in your pipelines that have been put our whole can you talk a little bit thought about how engaged outside sorry, I'm you know, they're pushing to get somebody got as soon as.
People can travel a little bit and we get some more sudden day the environment.
Basically I'm just trying to assess how much of acquired spring. It's ask you could have once oh not on deal closing satellites seats on the chapters.
Sure Yeah look second quarter any activity that closed in the second quarter was probably all related to things that that has that started last year I'm, a very new things happen that quickly in the M&A side restructuring actions are different in that regard.
So right now what we're seeing is a combination of two things one is there and it's not across the board and I wouldn't you know and again I say their letter as I've said consistently here, there's a lot of cross winds, but there are a number of processes, which were postponed.
Or with the onset of the pandemic that have started again and we would expect to reach completion now that's a function really first of the financing markets again opening up and also a people becoming a little more confident with the outlook I wouldn't say completely confident but little more confident and again, it's gonna be centered on industries, where.
Which have had less impact from the band at night, and then second which is I think I'm somewhat encouraging is.
You know there have been new processes that have started a over the course of the last several weeks or that we're not envisioned to pre pandemic. I mean these are literally new new assignments that are picking up and starting right now I'm. So you know what's gonna be interesting to see is you know Judy verses.
Turning to accelerate and then the pace at which new conversations begin.
I don't think come is worried about the virtual due diligence.
As a as much as I am about that just to the potential for dispersion of outcomes on the equity on the economy, it's more around the certainty or the ability to project or predict what the outlook is gonna be for your business or for your industry that is going to drive conversations here at less has to do with the whether you're going to be actually able to travel or have a virtue real.
Why in a virtual conversation here I really think it's the substance of once confidence in the outlook.
Got it.
Then on the asset management side last quarter, you mentioned that youre surprised by the level of ice be activity they are saying.
He also said earlier on the call that you're seeing some strong gross charge out can you talk a little bit about how you think that should have backed out net sales for the rest are there.
Well, okay, so little unpredictable in the institutional side because of the actual funding of mandates, but below the level of unfunded mandates right now is running very high I'm on a historical basis for us that's encouraging or how when when exactly they fund is a little bit less certain the demand.
And particularly for some of our products.
Our newer products in the sustainable areas encouraging as well as I'm in the quantum some of the a global products. So overall it feels.
Pretty constructive we still have some pressure on the end product in terms of outflows, which is you know.
Been with us for some period of time here, but on the other side of it are there seems to be a increasing demand for a lot of the things that.
That we've got to offer right now.
Thank you.
It appears that I know for the questions. At this time. This now concludes the loss that confidence going.
Okay. Thank you.