Luke Sarsfield: Hey John, Luke here. So I’ll start and then again, others can chime in. I wouldn’t say we’ve seen anything that I would call a deviation from anything else. Look, I think you got to start with the macro economy and the broader environment. And clearly, the broader environment has created pressure in all segments of the market, upper market, middle market, lower middle market, everywhere. What I think is interesting and has actually come to the fore, though, is the relative resilience, as I will call it, of the middle and lower middle market. And so what’s interesting is, and I think there’s a lot of reasons for this, but we actually think the middle and lower middle market has held up better in many ways than the upper market.
Now this may sound like a contrarian view because I know that there is kind of the conventional wisdom might suggest that actually the upper parts of the market are more robust. But we’ve seen the opposite dynamics. There’s I think, a number of reasons for this. Probably one is the fact that in the upper part of the market, there is a lot more capital against a smaller opportunity set of actionable assets and companies, whereas in the middle market, lower middle market, there’s less capital against the much larger opportunity set. And so that obviously has an impact on the competitive dynamics. I would say, we’ve done a lot of longitudinal studies and looks and some of our strategies do deep data and analytics around this, and we can tell you conclusively a couple of things are true.
Generally, multiples paid in the middle and lower middle market are lower than multiples paid in the upper market. And generally, leverage levels in the lower and middle market are less than in the upper market. And so I think many of the dynamics, availability of credit, impact of public market valuations that probably have real read-through in the upper part of the market, just have not had the same quantum of effect in the middle and lower middle market. And we have a lot of data that we’ve looked at longitudinally that supports this, and you see that dynamic in transaction volumes, which while down from the levels they were in 2021 in all parts of the market are by no means down as much in the middle and lower middle market. And so we actually think, on a relative basis, this is a great place to be.
It’s a testament to the strength of the platform, and we’re happy to be in this part of the market.
John Campbell: Okay. That’s very helpful. You’ve been in the seat for three weeks, a pretty good answer. I want to touch maybe on the catch-up fees. If my notes are right here, I think you’ve seen about $10 million year-to-date. Last year at this point, it was about $2.5 million. So maybe can you talk to whether that’s been playing out as you expected? And then for next year, any kind of indication on – any kind of visibility you guys have into that?
Amanda Coussens: Yes, I would say that, generally speaking, the catch-up fees are playing out as we expected. Last quarter, we had higher than average, I would say, catch-up fees due to one of the RCP fundraises that we spoke about. But in general, I believe that is the case. And we still believe that our average fee rate will be 105 basis points.
John Campbell: Okay, thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Adam Beatty of UBS.
Adam Beatty: Thank you and good afternoon. I want to ask about venture capital, where P10 and TrueBridge really deal with a lot of the key players on the GP side. You mentioned in prepared how the banks have pulled back, that certainly persists. But just on kind of the demand and capital formation side, markets have kind of given mixed signals. There have been some headlines about some other key players out there, some of them negative. But just wondering how you’re seeing P10 and some of its key venture capital partners kind of leaning in or leaning back right now? And I guess, this is our first opportunity to hear Luke’s thoughts about venture capital and growth equity. So that would be great also. Thank you.
Luke Sarsfield: Well, thanks, Adam, and I will give you my first thoughts here, and I’m sure we’ll have ample opportunities to talk about this on the forward. But look, again, as I said, we live in the world, right. And the world has changed from where it was in 2021. And so all of our strategies have seen impacts based on the macroeconomic environment. And to your point, I would say the broader kind of venture community is no different. Exits have taken longer. Valuations have gotten reset. And so there have been certainly macro impacts. But I would say this. One of the real powers of the TrueBridge platform, of which there are many, is the fact that they are literally investing in the elite of the elite of the venture capital universe, right.
These are the greatest firms. These are the market leaders. These are the folks that others follow. And so they have access to the absolute best companies, the absolute best deal flow that’s out there. And I would say they are also, by the way, very thoughtful, very prudent, dare I say, quite conservative in how they market their portfolios. And so we think that anything that has changed in the market is amply reflected in the marks at which they’re carrying it. And so while no doubt there have been dynamics in the venture environment, and my guess is, given where we sit today, those dynamics are likely to persist for some period of time. We feel incredibly good about where we sit. We feel incredibly good about the TrueBridge portfolio and the underlying managers that TrueBridge has access to.
Adam Beatty: Excellent. Appreciate it. That’s all for me today. Thanks a lot.
Luke Sarsfield: Thank you.
Operator: Thank you. As there are no questions in queue, this does conclude today’s conference call. Thank you for participating. You may now disconnect.
