Piper Sandler Companies (NYSE:PIPR) Q4 2022 Earnings Call Transcript

Chad Abraham: Yes, I would say relative to our investment banking industry teams, financials was by far and away the biggest, had a really good year. Healthcare was the second biggest, and usually is there, but in general, it was a pretty difficult year for healthcare, which is always one of our strengths. A lot of that – we did well in advisory, but a lot of that was just the drop in ECM really impacts healthcare. And then frankly, like you said, energy was really strong for us, a record. I think we acquired Simmons seven or eight years ago, and just obviously the energy market and after a couple of really tough years, energy was strong. But then our other two real scale businesses there are consumer and industrials. And even though they were off the €˜21 paces, they’re still much larger than they were four or five years ago, and help that diversification.

And then I would say, the other business that we would like to become significantly bigger and contribute in the same way those other industry teams do is technology. And having done our DBO acquisition towards the end of the year, we expect over time and over cycles, our tech wear and software practice to be much, much bigger. We acknowledge that the – one of the toughest markets in M&A right now is technology. So, obviously, we’ll need a recovery there, but we believe over time that business should rival our top three businesses in terms of size.

Mike Grondahl: Got it. And then did DBO have much of a contribution in the fourth quarter? And then maybe, what’s your appetite and what does the pipeline look for continued tuck-in acquisitions?

Chad Abraham: Yes. So, we closed DBO in October, and no, there wasn’t a lot of contribution from new transactions in Q4. And then, what was the second question, Mike?

Mike Grondahl: Oh, just your appetite and what the pipeline looks like for your continued tuck-in acquisitions.

Chad Abraham: Yes, I would say, if you just look at the track record the last five or six years, it’s really helped us drive scale. And obviously, it gets harder and harder the larger we get, to find sort of white space and good fits. But frankly, some of the best deals we’ve done have been over time in more challenged markets. So, I would say, we have a good appetite. We are seeing things, obviously in this market, we’ve got to be careful. You’ve got to look at pipelines. If pipelines are back half-weighted, you’ve really kind of got to understand where we’re headed there. But yes, we’re going to continue to be active as that’s a major source of capital use for us.

Mike Grondahl: Got it. And then maybe lastly, just for Deb. Deb, fixed income trading seemed to have a really strong 4Q. And I think you called out some of the trading from depository institutions. What do you think is like a quarterly run rate? How should we think of that for the business?