So, there’s a greater interest on their part in using debt capital as an alternative to diluted equity. I think that we see a lot of opportunity in this segment prospectively. If you recall, we were very early, we were arguably the inventor of this segment in the 2014, 2015 time period. We’ve done very well with it over time. In the couple of years before maybe April, May of this year, we actually had pulled back some from this segment because we thought that competition had gotten too fierce and pricing had gotten too low. So, we’re pleased to see that some of that’s reversed over the course of the last couple of months.
Paul Johnson: Got it. Thanks. That’s very interesting. And I’m just wondering my last question, sort of on that. If you could give us a sense of these companies or the type of prospective companies, you know Golub software companies that Golub looks to finance in that market, are these companies that have, I guess, already achieved some level of desirable level of cash flow generation or would you kind of characterize these companies as still, kind of transitioning on some sort of pathway to some sort of cash flow generation target or even, kind of adding on to that, is this focus less on those two items and more just, kind of on the revenue growth line?
David Golub: The emphasis in our recurring revenue loan segment is on strategic value if things don’t work out as planned. So, it’s a second way out analysis that’s primary. If we’re wrong and this company’s efforts to grow rapidly and invest very heavily in growth, turn €“ if those efforts turn out to be a bad decision, is there still a base business here that’s large enough, that’s meaningful enough, that’s protected enough so that it will be valuable to a strategic acquirer? And that strategic acquirer will pay a price adequate to make us not lose money. So, typically, these loans are at a relatively low loan-to-value, but they’re high if you look at traditional credit metrics like loan-to-EBITDA or loan-to-cash flow measures.
And underlying this is, these companies have made an affirmative decision that they want to seek rapid growth. They want to invest heavily in sales and marketing in order to foster rapid growth at the expense of profitability. And that’s why the credit evaluation of these companies is so critical because we are not counting on the capacity of these companies to generate cash to pay interest in principle. So, we need to be very confident in their strategic value.
Paul Johnson: Got it. Appreciate the answer. Very helpful. That’s all from me.
Operator: Your next question will come from the line of David Miyazaki with Confluence Investment Management. Please go ahead. Your line may be on mute, David.
David Miyazaki: I’m sorry. Thank you for taking my question. I wanted to revisit some of the comments that you made at the opening, David, with regard to some of the countervailing vectors that are out there. I think in the BDC industries we’ve come through earnings for the last couple of quarters, we’ve seen €“ this is about everybody benefit from higher base rates. And we haven’t really seen defaults rise a whole lot. So, on the surface, it would look like, in general, the return risk profile of middle market lending has gotten better. But I think everybody kind of is expecting the non-accruals are going to rise. So, against the backdrop of better yields, better yield spreads, higher interest rates, better covenants, and a potential recession, do you think that the return risk profile of what you’re doing in lending is getting better or is it worse relative to what we’ve seen in the recent years?
