Q4 2021 P10, Inc. Earnings Call
If you would like to ask a question during the presentation you may registered to do so by pressing star followed by one on your telephone keypad I will now hand, you over to hoist market director of Investor Relations Mark. Please go ahead.
Good morning, and welcome to the <unk> fourth quarter and year end 2021 Conference call. This is Mark Hood director of Investor Relations today, we'll be joined by Robert <unk>, Chairman and co CEO .
Web co CEO fruit Souder, Chief operating officer, and Amanda Cousins, Chief Financial Officer.
Before we begin I'd like to remind everyone that this conference call as well as the presentation slides may constitute forward looking statements within the meaning of section 27 of the Securities Act of 1933.
Section 21 E of the Securities Exchange Act of 1934, and the private Securities Litigation Reform Act of 1095.
Forward looking statements reflect management's current plans estimates and expectations and are inherently uncertain.
Actual results for future periods may differ materially from those expressed or implied by these forward looking statements due to a number of risks or other factors that are described in greater detail under risk factors of the company's prospectus dated October 22021 filed with the U S Securities and Exchange Commission on October two.
22, 2021, and our quarterly reports on Form 10-Q filed with the SEC and our annual report on Form 10-K to be filed with the SEC and in our subsequent reports filed from time to time with the SEC.
The forward looking statements included are made only as of the date hereof, we undertake no obligation to update or revise any forward looking statement as a result of new information or future events, except as otherwise required by law I will now turn the call over to Robert.
Good morning, I'm, Robert Alpert, Chairman and co CEO today, we will reflect on 2021, the positive trends continuing in our business discussed expansion opportunities and review fourth quarter and year end financial results I am pleased to report that we concluded 2021 was $17 3 billion.
And fee paying AUM, that's a 36% increase from where we started the year of the $4 6 billion increase.
Only $952 million is attributable to acquisitions.
That is a 29% annual organic growth rate.
Other key operational metrics also highlight this transformational year.
Revenue increased from $67 4 million in 2020.
Two.
$155 million in 2021, four or 123% increase.
Adjusted EBITDA increased year over year from $34 8 million to $83 1 million.
And adjusted net income or Eni increased year over year from $23 9 million to $62 8 million.
And is an important operational metric and we believe it is the best profit measure for our business and comparable to after tax fee related earnings for our peers.
Besides record financial performance 2021 is notable because we raised $240 million as part of our October initial public offering on the New York stock exchange.
Being an NYSE company elevates, our marketplace profile and provides us with the opportunity to attract a premier set of institutional investors, who value our long term vision for middle and lower middle market leadership and in December we closed on a $250 million credit facility, which allowed us to retire.
Our old credit facility, Amanda will speak more about this in a few minutes.
At its core 2021 was all about strengthening our position as the premier specialized private market.
Solution provider, we deepened our market presence by expanding product offerings, and adding two leading investment strategies to our lineup NAD lending with Hart capital.
And GP Stakes with Bon Accord capital partners in a moment Clarke will provide an update on these acquisitions.
We believe we have best in class solutions with sustainable competitive advantage driven by long term track records.
Superior fund performance trusted relationships and a proven investment process. We are excited about the year ahead, and well positioned for continued growth Fritz outer Chief operating officer will now discuss some of the factors continuing to support the strength of our business.
Thank you Robert.
The momentum that drove last year's growth continues to support our go to market strategy.
Three factors are noteworthy our concentrated focus on middle and lower middle market.
Outstanding investment fund returns and cross selling opportunities.
First we focus on the middle and lower middle market, where there are nearly 10 times as many opportunities when compared to our large cap investment opportunities.
Our targeted approach means we have the opportunity to find better deals.
<unk> favorable pricing and leverage our deal flow, we believe that no. One has a better understanding of our marketplace than we do and specialization contributes to outsize fund performance our market space can also be an attractive environment for larger fund sponsors looking for platform expansion sort of ACA.
Acquisitions as they sit on considerable unemployed capital.
Secondly, our historically strong fund performance continued in the latest reporting period review, our reach and returns and consider how this feeds a virtuous cycle for <unk> 10.
As we deliver superior investment performance, our Lp's Trust us with more capital, which drives follow on funds and new strategies.
Performance also attracts new global capital searching for exposure to private markets, especially in our market.
Capital inflows continue we broadened our relationship with the GPS with whom we invest they.
They recognize us as a financially strong preferred partner, who can scale up to co invest transact secondary interest make loans to their portfolio companies structure, NAV loans, and even take a stake in the GP.
We know that past performance is no guarantee of future results, but we have confidence in our investment teams and their data driven time tested process.
Finally in 2021 cross selling helped us deliver meaningful incremental fee paying.
AUM across P 10 affiliates in Q4, we assigned three veteran RCP marketing professionals to focus on offering <unk> products from a top down approach.
With an expanding portfolio of distinct products, we have an excellent opportunity present large clients, a holistic set of middle and lower middle market centric investment choices.
With structural macro tailwind excellent track records and ample cross selling opportunities we remain focused on expanding our marketplace leadership.
Clarke will now provide some thoughts on growth opportunities in 2022.
Thank you Fritz I'd like to provide a framework of how we think about capital raising in 2022 and 2023.
Because <unk> is a true solutions provider, providing diversified solutions across multiple asset classes, we consistently have many funds in the market.
We are not overly reliant on any one fund.
In 2021 for example, we raised capital across 19 different funds.
We expect a similar number of funds to be in the market in 2022 with all of our verticals pursuing new capital.
Because of the large number of funds it is impossible to predict specific closings on specific funds that being said, we expect to raise approximately $5 billion over the course of 2022 and 2023 the.
The cadence of capital raising will likely be more back end loaded in 2022 with momentum extending into 2023 as well.
Part of our upcoming slate of offerings includes follow on funds from our newest members of the <unk> family Heart and Bon accord.
Since joining P 10, both strategies have accelerated capital deployment and as a result are coming to market with follow on funds sooner than anticipated we.
We believe both NAV lending and GP stakes fit perfectly within the <unk> ecosystem of providing middle and lower market GPS with value added products and services and both Harkett Bon accord can attest that the virtuous cycle of raising and deploying capital has been accelerated since joining the <unk> family.
As our shareholders know, we believe we are a premier home for investment strategies with a great track record defensive mode and a team that wants to accelerate growth at.
At the same time with nearly two dozen funds continually in the market raising capital across private equity venture capital private credit and impact we do not need M&A to achieve our long term goals of sustainable double digit growth alongside extraordinary returns on capital.
As a result, while we are always engaged in dialogue with potential partners, we can afford to be patient waiting for the perfect win win transaction for all parties involved.
With that let me turn it over to Amanda to walk through Q4 results.
Thank you Clark will walk us through some of the key financial results for the fourth quarter and full year 2021.
Assets under management were $17 3 billion at year end at 36% increase on a year over year basis.
Revenue in the fourth quarter was $45 $6 million and 85% increase over the fourth quarter of 2020 year over year revenue increased from $67 4 million to $150 5 million for 123% increase.
Average day rates for the fourth quarter were 108 basis points, which is eight points higher than our historical average driven primarily by $3 $2 million and catch up fees earned during the quarter.
As a reminder, catch up fees earned from investors that committed at the end of the fundraising period for funds originally launched in prior periods and as such the investors are required to pay a catch up fee as if they had committed to the fund at the first closing well catch up fees are not a significant component of our overall revenue stream. They may result in a temporary increase in our revenue.
In the period in which they are recognized that being said when you look out across the cycle for a quarter you should see our fee paying AUM deliver approximately 100 basis points of revenue and for 2021 revenue did in fact average 100 basis points of <unk> compared to 99 basis points in 2020.
As Clark mentioned earlier, we expect to have a similar number in 2022.
Operating expenses in the fourth quarter were $33 3 million, a 34% increase over the same period, a year ago, primarily driven by an increase in compensation and benefits expense.
As a result of our acquisitions have enhanced at the end of the fourth quarter of 2020, and a full quarter of expenses for <unk> in 2021.
The remainder of the increase is largely due to the additional amortization of intangibles also associated with our acquisition.
On a year over year basis operating expenses were $110 million, an increase of 88% GAAP net income in the fourth quarter with $1 5 million a decrease when compared to $20 6 million in the same period a year ago.
The difference is primarily attributable to noncash expenses, we incurred during the fourth quarter for our debt refinance.
Angela consideration costs associated with our acquisition of park, and Bon accord and additional intangible asset amortization expense from acquisition.
During the first quarter, we incurred $15 $3 million of expenses associated with the early retirement of our debt.
This included the payoff of that of our prior debt facility and notes payable to sellers associated with our acquisition GAAP net income was lower on a year over year basis by $13 million.
There are two additional costs during 2021 associated with the IPO debt refinance and acquisition.
Offset by a full year of operating income from our 2020 acquisition.
Adjusted EBITDA in the fourth quarter was $26 4 million a significant increase over the $12 3 million, we reported in the fourth quarter of 2020 for the year. Our adjusted EBITDA margin was 55% in line with our target we expect margins to vary during 2022, depending on the timing of fund closings and revenue.
Associated with capital deployment, and some of our impact products, which are typically backend loaded, but we generally expect to maintain a 55% adjusted EBITDA margin for the full year.
For the fourth quarter adjusted net income was $21 9 million a significant increase over the $8 5 million reported in the fourth quarter of 2020.
For the year was $62 8 million, a 162% increase over the prior year.
And is calculated by reducing adjusted EBITDA or cash interest expense and cash income taxes are efficient conversion of adjusted EBITDA to Eni, but substantially increase by the refinancing of our debt lowering interest rates from 7% to 210 basis points above sofa or approximately 2.25% at the end of.
2021, with an expected range of two in a quarter to two 5% in 2022, depending on the separate that is variable.
We expect to use our substantial operating cash flow generated by our high fee related earnings to invest in the business pay down debt and fund acquisition as our leverage profile has materially improved in the last year, we may consider instituting a quarterly dividend or a stock buyback overtime given the strong returns of cash.
We achieved in our business.
Also want to revisit our two tax asset.
First as a net operating loss that at year end was $220 million.
The second is $321 million in tax amortization.
Tax amortization is created when we acquire a company usually an LLC that has no basis, and then have a full step up in value.
Amortize our tax goodwill over a 15 year period and the remaining federal taxable income is reduced by the remaining NOL balance.
While we expect to utilize an exhaust the NOL over future years.
Do expect tax amortization to increase when we make additional acquisitions.
As tax amortization increases from acquisition and has utilized first to reduce taxable income. The NOL balance has been available to continue offsetting future period taxable income effectively extending the period by which the Nols can be utilized.
Turning to our balance sheet as previously mentioned, we refinanced our debt at the end of the fourth quarter on December 23rd we closed and announced a $250 million credit facility with a syndicate of banks led by Jpmorgan, Texas Capital Bank and 12, other financial institutions, including a minority depository.
Patients and a community development financial institution.
The new credit facility has two parts and $125 million term loan and a $125 million revolving commitment each with a four year term.
The interest rate is variable and based on what is known as a sofa or the secured overnight funding rate plus 210 basis points, which was approximately 2.25% at the end of 2021.
Proceeds of the refinancings were used to pay off the prior credit facility pay transaction related expenses and payoff sellers' notes related to the RCP acquisition.
As of December 31, 2021, we drew down all of the $125 million term facility and $91 million of the revolver.
At the end of the quarter, we had $213 million of net debt and $41 million in cash and cash equivalents.
On February 24th we made an additional $25 million that payment further reducing our debt balance and subsequently our interest expense.
With our strong balance sheet, new credit facility and anticipated operating cash flows we are well positioned for continued growth in 2022.
Thank you Amanda <unk> has terrific opportunity to expand our market leadership as we expand our product offerings with a wide range of funds in 2022, we're proud of what we've achieved in 2021 and appreciate the contributions of our talented team now lets turn the call over for a few questions.
If you would like to ask a question. Please press star followed by one on your telephone keypad now if you change your mind.
<unk> followed by <unk> when.
When preparing to ask your question. Please limit yourself to one question and one follow up.
Please also ensure you are on mute.
Our first question comes from Ken Worthington of Jpmorgan. Your line is open. Please go ahead.
Hi, good morning, Thanks for taking the question.
So I understand the nearly two dozen funds that were in market. This year, but could you help us better understand and fourth quarter, what were the bigger funds or the bigger bigger contributors to the $900 million.
Of fee paying AUM raised this quarter.
And then how much of that.
AUM or fee paying AUM were in funds versus say separate accounts.
And then I'll throw the follow up question here as well how do we think about step downs in catch up fees as we look at calendar 2022.
Yes, Hey, Tim Thanks for the question. If you look at Q4 in particular, it really was in three buckets. It was in our private equity vertical our venture capital vertical and our <unk>.
Divot credit vertical I would say it was all in funds very little in SMA and.
And private credit, we really saw a nice benefit for park, which was an acquisition we made in the third quarter. That's based on deployed capital and they had a very nice quarter and deploy capital.
The most of the follow up Ken.
And the follow up is how should we think about.
Catch up fees I know you guys guided to.
100 basis point fee rate, but how do we think about.
Catch up fees and.
The step downs.
The assets that sort of have fees that step down in.
In calendar 2022.
Yes, so Ken when you think about step.
There is a small amount of shutdowns and the nice thing about having a growing business. When you raised capital with funds that have a 10 year life is the funds that are rolling off are funds that were raised in the 2011 2012 timeframe those were smaller funds and there were fewer of them. So I do not expect a big.
Impact from step down in terms of catch up fees, we talked about while we don't give guidance.
Properly, we do talk about kind of gross AUM. We think we can raise over a period of time, depending on when that comes in that will dictate whether or not we have catch up fees in the quarter. So we do think that we can raise $5 billion plus in terms of capital over the next two years, while we think it should be relatively ratable.
Starting really in the second half of 2022 to the extent it extends further than that you would expect more catch up fees. If you raise it later in the fund period.
Okay that sounds like less catch up fees. This year because of the backend loading of fund raising than what we would expect in 2023 is that sort of there or is that.
Okay.
I think thats correct great.
Thank you.
The next question comes from Gena Wang of Morgan Stanley . Your line is open. Please go ahead.
Hi, good morning, Thanks for taking the question congrats on the quarter, just wondering if I could since M&A very quickly.
Excuse me a few deals successfully as you built company. So I'm just wondering how you're thinking about the opportunity from here what do you think.
What do you think you'd like to have what do you think's outbound.
How do you think about <unk>.
Getting getting it through the web.
Yes.
Thanks for the question.
M&A is episodic and opportunistic for US one of the key key things about our M&A strategy is given that we're not buying Carrie and.
Our all our transactions.
A large component of ownership in <unk> 10 for alignment.
It really takes not only the right.
Management team and investment team in terms of they've got to have a long term view they want to stay in their business they want to accelerate the growth of their business.
They want to carry because we don't buy the Kerry. So if somebody is just interested in getting the highest price and being left alone.
They will go to a van or core dial Peter's Hill or if they if they want to sell out and go to the beach and just have whatever they are.
<unk> lockup is they will do they will sell to.
Some large financial institution.
It takes a unique opportunity not only for the right.
We want to buy the best in class in terms of performance.
Managers, but also they have to have the right attitude. So theres lots of folks out there there's so but it is not a.
It is not a programmatic Emma.
M&A.
Operation, where we're just out buying just to buy.
Got it that makes lot of sense, but I just looked.
The business today, what do you think.
<unk> would be most.
Beneficial to the business in terms of expanding the opportunity set for you.
You've obviously now got not lending, but GP Stakes.
And your equivalents I just look at the business what do you think is missing.
Yes.
We're very fortunate and then when we look across the different strategies. We offer we don't have a hole in that offering.
So it really does feel like we can go to market with these funds and grow organically for a long time to come. So this is not something we feel like we must do if you think about how we approach M&A. It's really in three buckets. The first bucket is infill strategies that fit within our existing platform.
We don't offer currently.
If you think about <unk> those are strategies that fit perfectly within our private equity and private credit verticals, but they are in North America. That's not it's more of a bolt on if you will we see plenty of opportunity there.
Real bucket of M&A is taking what we do and then taking it internationally. So finding the RCP of Europe or the true bridge of Asia, and moving internationally within our existing verticals and then the last one is adding a new vertical obviously there aren't that many that were not in.
If you look at something like real estate or infrastructure. We are always looking to try to find the right partner, but I would not.
Wouldn't hold your breath I feel like we want to find the right partner, we don't need to we always have conversations but there is nothing imminent.
Thank you very much for taking my questions.
The next question comes from Adam Beatty of UBS. Your line is open. Please go ahead.
Thank you and good morning.
I just wanted to get some thoughts around operating leverage I appreciate him in his commentary and outlook around the margin for this year.
Obviously, a couple of acquisitions towards the end of last year or so.
Some a little bit of noise in that but longer term just wanted to get your thoughts around potential for margin expansion.
There is anything wrong with them with a 55% margin but.
Just how youre thinking about it beyond 2022, thank you.
Thank you for your question.
Bank we.
We're still planning to navigate to a 55% adjusted EBITDA margin for the year.
We do expect expenses at a rate and a range to deliver the target over the 12 months period.
Margins may fluctuate during the year, but in aggregate, we're still expecting about 55% as we continue to invest in the business.
Thank you very much.
Okay.
Yes.
Long term when you're converting a dollar of revenue into 55 of free cash flow, which is what we're doing given our low interest expense and tax asset. We are very focused on accelerating the revenue growth. So we think it adds more value to add 708 nine years of additional revenue.
That 55, a follow through margin as opposed to trying to maximize margin in the short term.
We think over long term higher revenue is going to be helpful.
That's great context appreciate that.
And then just turning to kind of the acquisitions and the broader platform, where as you say.
Some of the gaps are filled and it's really a very nice diverse offering at this point, what's been the reaction so far in some some of them may not be in the market quite yet, but just anecdotally from your Lps in terms of the broader offering and maybe the outlook on how that help might gain some wallet share among them.
Thank you.
Yes, it's been terrific.
As we've come together.
We brought on as we.
We mentioned in the.
The opening statements moves a number of Peter sorry RCP.
Reps up to Pee tend to go out to the marketplace as a P 10 offerings, whether it is going to.
Large pension sovereign wealth or endowments that heretofore.
They needed they needed to allocate.
$100 million to $200 million allocation in any one of the strategies was too small to.
Except that we now can offer a P 10, offering to go down and to offer them down into the middle market and lower middle market and give them higher returns.
And so that and we've begun those conversations and as you know it's never easy to raise money and there is a long sales cycle around it but it's been quite receptive. So we're excited about the opportunity.
Excellent. Thank you.
State your taking my questions. This morning.
Yeah.
The next question comes from Robert Lee of <unk>. Your line is open. Please go ahead.
Great. Good morning, Thanks for taking my questions. This morning.
Maybe the first question would be on just capital going back to capital usage may be Amanda if you could just update us on the tax shield.
Does the current.
Tax amortization benefit each quarter for trying to kind of think about the.
Pattern of using.
The Nols in the next couple of years. So and then maybe also understanding that in the absence of transactions.
The first priority is to pay down debt reinvest in the business, but.
Since most of the <unk>.
And commitments are funded by employees.
Don't know if there is other kind of internal.
Uses of cash were not were not thinking about or maybe there will be some capital commitments from the holding company just trying to get a sense of kind of incremental use of cash next year or two.
Sure.
The tax amortization that we expected going to be about $15 million a year.
And so I think that answers your question on the tax amortization and for the second part of the question in terms of uses of cash.
I think we have multiple.
And we will have some cash flow continued debt paydown.
As well as any M&A activity that comes up and we mentioned a potential dividend or stock buyback as well.
In terms of.
Yes in terms of balance sheet.
We haven't.
As you noted Robert all the all the.
Team members from the GP commitments and.
And so for the most part that will continue if we have the opportunity to launch a new a new fund or a new a new strategy.
Within pizza, and we would consider using capital off the balance sheet, but that isn't.
It is in a priority if you will.
You could see it but it's not.
It's not a.
It isn't a high priority because we all want to.
Invest and fund and the opportunities that we are.
We're generating great returns.
But Rob I think you bring up a great point.
I think you bring up a great point, which is our business model to date.
The free cash flow was truly free cash flow so not only is it.
Relatively infinite returns on capital with that free cash is not being reinvested in the business to help it grow organically, we have a lot of investment professionals that analyze investments for a living they love Backstopping. The GP commit we think thats great alignment with our team as Robert said to the extent, we come across a new type of.
Funds that may require more of a GP commitment that's certainly an option but to date, what <unk> seen is a 100% of our free cash flow has gone into deleveraging and doing M&A.
And we're now at the point with our debt, where we are potentially under Levered and so we do have more <unk>.
There's a free cash flow going forward than perhaps we had historically.
And if I can maybe do a quick follow up on the dividend I mean is there.
At a certain run rate of EBITDA, you have kind of have in mind that you'd want to be at where you can kind of do all those other things and still fund the dividend and just kind of what is the the flag are you Rob.
Robert Robert are you looking for guidance on this I think we're going to do that.
Right.
We're going to we're going to do it.
For the business as large insight owners.
We are we are of course focused on.
On driving value to all shareholders, and so but I wouldn't want to put us in a box in terms of giving guidance on when we pay a dividend and at what level.
It really will depend on what the market opportunities are presented in front of US for instance, if we had a large acquisition come along.
We would.
Lever up.
Take on some more leverage and use the free cash to pay down debt and not have it allocated to a dividend, but I understand where youre going we do not have obviously with a $25 million Paydown in February we did not have a.
And acquisition Shorted hand, now it was part of the revolver and we could.
We can expand that accordion that back up.
No we haven't reduced any flexibility at all.
And I know I keep saying this is one more question, but just a real quick one.
Was the <unk>.
Your fee paying AUM included some capital deployment.
Was there could you maybe update us on kind of the dry powder you may have that's not yet been drawn down earning fees and if there was some incremental capital raising that may have supported that in the quarter as well, but it's not in the fee paying AUM number.
Yes, Rob it's a great question, we did as you know we don't specifically break that number out because we think it may be misleading. It is a very small piece of our business. The funds that are actually paid on deployed capital as opposed to committed capital.
One of those businesses is heart and they just happen to have a very busy Q4.
We'd like to think that the synergies would be tent, but time will tell.
It's not something we're going to break out only because it's such a small number and we think it's misleading that data episodically, we may have quarters, where one or two of our funds that are paid on deployed capital had a good quarter and we're thrilled with our recent acquisition comes in and.
And they come in <unk> printing.
Great. Thanks for taking my questions.
The next question comes from Chris Kotowski of Oppenheimer. Your line is open. Please go ahead, yes.
Good morning, and thanks for taking my questions.
I wanted to come back to my my very favorite charts on pages eight and nine.
And what I.
Think of the money table.
And it seems to me like this is kind of the key to understanding your fee paying AUM. So.
Just kind of wanted to get a sense of the cadence going or how we should look at it. So I'm comparing this table to last quarters and I see for example, RCP.
16 going from $52 million to 187, and then IC sof for going from zero to $2 81.
Is that what.
That's.
If I have a big spreadsheet going.
How I can kind of judge where the where your increase in AUM is coming for them and going from your prior comments. It sounds like that's all going straight into fee paying AUM as opposed to just.
Non non fee paying AAM.
Is that alright.
Yes that is all correct. There are some when we do raise a separate account that is not going to show up on the money table as you say.
But that will go into fee paying AUM. So there are some.
Additional dollars that we raised were not showing up in that table. This table is our core fund series.
And then Youll also show that I think on some of our tables. It's a question of when the fund actually gets put on the table, but this is the best way to track our core funds, which encompass the vast majority of our fee paying AUM. So I think what youre doing is the right way to do it.
Okay, and then but you mentioned in your comments that.
Adventure and <unk> was one of the sources of the growth in this quarter, but.
There when I look at the fund tables I didn't see it.
The jump in the AUM. So does that mean that that was all of them.
Separately managed accounts or is that a fund of funds, we don't yet see ore.
Yes, so that's what I would just correct you released the witness.
But that's what I was referencing there is a question of when the fund goes on the table.
Adventure because these are 15 year life funds.
There are.
Fund seven which we had a final close in December that fund will go on the table.
Is going to be with standard practice, what they've done for years, we can check with the team and get back to you when that becomes posted but again that is a 15 year fund and so while it did contribute to fee paying AUM.
It's going to be a few years before that performance becomes meaningful.
Okay.
When you said December December 'twenty two.
Yeah December 'twenty two so they are absolutely they had to close on slide seven.
Raise a fund seven.
At the hard cap and that will show up on the table going forward. The question is what quarter. It drops in because the table and that can show performance and on a 15 year fund.
In the adventure, especially the early years are not very meaningful with respect to performance.
Yeah, Okay. If I can just say it would be helpful. Then.
Even have the fund size without them, even if the performance isn't there.
No thats, great listen that makes sense, we will.
With our second earnings call.
Taking good notes.
We'll get back to you on that.
Okay, Great and then lastly.
On page 18 on the P&L.
Roughly $5 million.
Nonrecurring expense.
That was all related to.
Harkin, Bon accord, and and the IPO or where those nonrecurring items.
Yes, that's correct Brian about.
About $3 5 million.
Beside it related to the contingent consideration adjustment for <unk> as well as IPO and additional acquisition costs.
Okay, great. Thank you that's it for me.
Yeah.
The final question comes from John Campbell of Stephens, Inc. Your line is open. Please go ahead.
Hey, guys. Good morning, and congrats on the quarter. This is James Hardie stepping on for John Campbell.
So first question here on the cross sell opportunities you have more than $2 4000 clients working with P. 10 can you kind of walk through the boots on the ground strategy. There that you are deploying to meet those existing clients and any additional products. There and then if you can also size up that opportunity. What you think it could be over time that would be really helpful.
Yeah.
Yes, so when you think about cross selling I would think about it in two different buckets, obviously in the investment management business, it's raising capital and deploying capital those are the two drivers of the business.
On the raising capital side, you're right. We've got 24 2500 Lps from around the world.
And one of the Questioners asked earlier about our performance. The great News is the vast majority of our Lps are allocators to alternatives more than just the strategy. They are allocating to today and we believe that we're introducing when we bring these new strategies to market, we're introducing not only great performance over 20 years.
But also asset classes that are involved there are not many pension funds not talking about impact for example, same thing in venture capital. So on the front end in terms of sales reps. It really is introducing new funds new strategies to our existing LP base and asking them what problems, we can solve for them if they want to be.
In venture capital, we believe we have all of the best solutions, if they want to be an impact. We think we have the right solutions et cetera et cetera.
Robert mentioned that we did move some people from RCP over to peak in the fourth quarter to really spearheaded the cross sell.
We referenced in the script it has been material so far in terms of bringing in cross selling on the LTE front and we expect with this new slate of fund offerings, that's only going to accelerate.
I would say so far so good and we think there's a long runway there on the capital deployment side.
What our business, especially in private equity and venture capital we are surrounding the GP.
Every product and service that they may need and so if you're a private equity GP in the lower middle market you have long looked to RCP for your primary capital your secondary transactions co invest capital and your data. When we then introduce something like Nab lending from park that as an additional tool that we can.
Offer to the GP to help solve their problems and so it really is not a a pushed cross sell the GP is welcoming this additional tool because just like lp's out their GPS or try to consolidate the number of relationships that they have and so we think in both cases, we are adding value.
At.
On the cross sell side.
Yeah. Thanks, Thanks, a lot that's really helpful. And then maybe one more just kind of a quick one here. So <unk> kind of a unique advantage of being in the lower middle markets with less eyeballs on the space is there any notable callouts around its performance as a whole and through a rising rate environment versus the higher end of the market anything to call out there.
Yes.
Net.
Actually not James actually sure what Youre asking there I mean, our managers have 20 year track records that have been performing through.
Great markets in very tough markets and continue to deliver excellent results throughout we don't get to invest in the markets. We want we get to invest in the markets that are in front of us and so in a rising rate environment or an inflationary environment.
They've continued to do well so I don't know I don't know that I'd call out any one in particular to say Oh. This is going to shine or this is this is going to fall apart.
They all have done.
Exceptional over the years.
Okay. No. That's helpful. I appreciate the time guys. Thank you.
There are no further questions at this time. This therefore concludes today's call. Thank you for joining you may now disconnect your lines.