One of the ways that we are able to come together with a new partnership in getting transactions done is to structure really for multiple outcomes, so that if there is substantial growth in a business that we give that credit to the potential share partner, and simultaneously, we are protecting ourselves with structures that allow for a level of cash flow in down scenarios. So, we do think, again, we have a particular expertise in structuring for multiple outcomes, which allows us to bring our sort of unique model to the table and get transactions done. I guess, the last thing I would say, and I enjoy saying this, is that when you partner for businesses and you are not buying 100%, because as you know in all cases, we leave a substantial amount of equity in the hands of our partners, then really what you’re saying is the vast majority of my growth is ahead of me and therefore the emphasis on upfront valuations are a little bit lower in our transaction.
So, we don’t see that as an impediment in getting new investments done in this environment. I think the key question is what are the long-term demand trends and where are we going to make those, because that ultimately is going to be the indicator of success of those new investments over time. And as I’ve mentioned in my prepared remarks, we do think that a trend is emerging where portfolio allocations are going to need of change as they really got wrong sided with these changing geopolitical and Fed tightening. When we think about our own affiliates and their ability to deliver differentiated returns streams, we do think that this rotation to liquid alternatives, in particular absolute return, and differentiated strategies bode well for our current affiliates, but it also reflects on what we have in the pipeline today.
We are looking at firms that have — that very much could benefit from changing allocations in this environment. So, when we zoom way out, what I would say is we are looking for secular growth trends that our affiliates and new prospects can take advantage of. We do think that the time is right for us, because we have a committed strategy to supporting independent firms throughout their life cycle. And the needs of those firms are not — have become more acute even in this environment. So, we do think that transaction volume could go up from here.
Operator: Thank you. Our next question comes from the line of Bill Katz with Credit Suisse. Please proceed with your question.
Bill Katz: Okay. Thank you very much for taking the questions. So, just maybe migrating on to maybe a flow discussion at this point. So, Jay and Tom, you both have spoken about this sort of ongoing rotation now, sort of rates normalized, what have you. Can you talk a little bit about what’s been driving the alternative flows? And if you think that liquid alternatives will accelerate, where do you think that that volume will come from? Thank you.
Jay Horgen: Yes, thanks. Bill. Thanks for your question. I’m going to have Tom start here on that.
Tom Wojcik: So, thanks Bill. Let me just kind of walk through flows overall. But maybe even before I go there, just to remind everyone, flows, obviously, are a very important driver of growth in our business over time. But AMG’s model is unique. And really flows are just one of the important drivers in our business. And really in 2022, if you think about the performance that we delivered, it was driven by a number of the other areas that tend to drive growth in our business, excellent performance driving performance fee earnings, really strong capital allocation and new investments driving growth, and then also significant return of capital. So, flows, obviously, are going to be an important output of our strategy, but they really are only one of the components that’s important.
