Brennan Hawking: Yeah, let’s not let the truth get in the way of a good story here Ken like — okay, that’s fair. So, when I look back at the last year, 2021 was a remarkable one. Right? Which was, which were your, you were at the 12.5. But like 2022, typical on a trailing basis, eight, 7.5 in 2026, in 2019, 7.5, 6.7. So like, if we use the upper end of the X, 2021 range, and we say 7.5 and multiply it. That’s about one and a quarter billion. So, are you saying that basically, at that level, you could get back to the 60% comp ratio?
Ken Moelis: Yes, I think that’s — I would hope we do better than that. I think we’ve — I think we’ve addressed better fee pools, we substantially improve the brand of the firm, and our go-to-market. I think but if we did that, I think we’d be at 60% comp ratio. Yes.
Joe Simon: Yeah, we have. Mind you, though, I think that’s true broadly, but there is elevated fixed costs that are going to go into next year as well. So, it might be a couple of points different. But material, you’re on the right track, and certainly 25 for sure.
Brennan Hawking: Yep. Got it. And then when we think about the kind of the impact of the additional commitments via this very active recruiting. We just sort of think tactically about the various costs on the cash. I was just doing a little quick math, is it reasonable to think that the commitments from all of this recruiting could effectively double what your cash incentive pool would be — would have looked like, absent this remarkable opportunity?
Ken Moelis: No, we are pretty disciplined. We want partners, we hire partners. If you’re asking did, we guarantee we are calm. We hold pretty closely to making sure that the people entering our system are getting comp, the same way as our existing group. We like to have equity partners, people who want to see the value of the firm go up, so we’re pretty disciplined on that.
Brennan Hawking: Okay, but it is right on — it’s not like I’m off in thinking that the recruiting would put upward pressure on what the cash incentive pool would look like absent of recruiting right there. There is —
Ken Moelis: Yes, whatever the incentive pool would look like we’ve hired 27 more of them. And yeah –
Joe Simon: Why we’re at 83.
Ken Moelis: And that’s what yeah and that is why we’re – one of the main reasons we’re at 83?
Brennan Hawking: Yeah. Okay. And then just last one on that point like, given that you’re going to have some liquidity drain, as typically happens in the beginning of next year as the incentive gets better. Should we continue? You had a nice liquidity building in this quarter. Should we continue to expect liquidity to build in the year-end, so that you’re in a position to cover those demands?
Ken Moelis: Yeah, well, yeah, we’ve looked at it closely. We have no concerns about we have $300 million in cash going into the end of the year, we’ve looked at it a dozen ways we stress tested. And we’re fine on the dividend, we’re fine on the bonus pool. We have multiple levers we could pull and we’re — we think we’re in great shape. I mean, the last — the low point of our liquidity will be the day we pay bonuses, and we think we’re in very good shape to do that.
Brennan Hawking: All right, thank you for taking my questions.
Operator: Our final question comes from the line of Ryan Kenny with Morgan Stanley. Ryan, your line is open.
Connell Schmitz: Hi, this is Connell Schmitz filling in for Ryan Kenny. So, I guess we just want to go back to the sponsor question. We’ve heard a lot on the narrative on why sponsors will ultimately go back to transacting and come off the sidelines. But can you just give an update on how sponsors are feeling in this environment? And what like, what the next catalyst is to see sponsors transact and what kind of pressure they’re seeing from LPs at the moment? And just any color you can give, that would be helpful.
