And assuming that turns on in ’24, that would raise the average fee rate. Again, I think it’s really instructive that we did talk about 2 components of our long-term model. One is our fee rate, and we talked about how, given the fact that we did bring on WTI and given the fact that our direct strategies are growing faster than our fund of funds, we are having upward pressure on our fee rate, which is a wonderful thing. At the same time, our EBITDA margins will come down a bit because our direct businesses typically have a slightly lower margin profile. I think you can glean that from the guidance we gave when we did the WTI acquisition. And so given we do have things like NAV lending, impact credit, GP stakes and venture credits that are growing faster than P10 as a whole, it’s that balance where we certainly are getting paid more on every fee-paying dollar, but we also are giving up a little bit of margin.
And we feel like as we look at 2023, we talked about the AUM growth with reiterating our guidance. We’ve talked about in that 105 basis point range on fee rate and then that 51% to 52% on EBITDA margin. The good news is it produces double-digit growth in revenue, adjusted EPS and adjusted EBITDA. And we feel like that’s going to stack up well against pretty much everyone.
Operator: The next question comes from Mike Brown of KBW.
Michael Brown: So in your prepared remarks you talked about the share buybacks. And given the stock’s cheap valuation here, it does sound like the share repurchases will be perhaps a preferred capital allocation avenue here. But M&A is really core to P10’s growth DNA. So how are you really balancing the two? What goes into that decision? And then in terms of acquisitions, how is that pipeline looking currently?
Robert Alpert: Well, I want to make sure the stock buyback is not necessarily our preferred capital allocation. It was — the market gave us an opportunity to take advantage of very cheap — what we perceived is a very cheap and good use of our capital. And in buying us and buying ourselves back, we made a great return on incremental capital investment. That being said, we have plenty of capacity and appetite for further partnerships with anyone out there. We have lots of conversations all the time. It takes a unique manager or strategy. One, we are focused on, as you well know, the lower middle market and middle market managers. They need to have superior long-term track records, and they need to not just be interested in taking money off the table — they do that, they — or selling out completely and going to the beach.
So they really need to buy into and want to partner with us. And so that takes a unique — we kiss a lot of frogs. And as you can see by our stable of strategies, we’ve been able to marry a lot of great folks.
Michael Brown: I guess just a follow-up on that point. You certainly now have a really full suite of capabilities across middle market private equity, lower middle market private credit, venture equity, GP stakes, now venture debt. So what should we think about as perhaps the next step for inorganic growth? Are there certain capabilities that fit your unique niche focus that you kind of think could be attractive on the P10 platform here? Anything that you could kind of point us to?
Robert Alpert: Well, there’s always opportunity given the ability to scale credit and lots of unique niche ways in credit to deploy capital that wouldn’t compete with what we already have today. So we’re always looking at opportunities there. Clearly, there’s geographic expansion, whether to Europe or Asia or Latin America around any of the strategies that we have existing. And then probably, then there’s — it’s clear we don’t have real estate or infrastructure. Real estate if we were going to move into real estate, that strategy would probably — a real estate type strategy would probably make the most sense or be able to fit in well, the easiest if it was a credit-related real estate strategy, but we are open and have lots of dialogues with lots of folks. So — but it has to be great long-term track records with a great opportunity to continue to grow and bolt on to and partner with us, and we can help them just like they will help all of us.
