It’s going to be a function of the rate environment, importantly rate volatility, shape of the yield curve. And then that bank and credit – union liquidity, which as you’ve noted here has improved. So, I guess a cautiously optimistic viewpoint on fixed income in ’24.
Devin Ryan: Okay. Great. Thanks Deb. One on the M&A environment for Chad here, just on the breakdown, between sponsor activity and corporate activity. Obviously you guys have connectivity to kind of both subgroups, and sponsors are really absent from the market last year. But we have been hearing that, they’re starting to come back. Technology is the largest sector and hearing some more positive commentary there, where I know you guys participate as well. So, we’ll have to just get a little flavor, between your sponsors versus corporates. And then also just I hear the comments around kind of the cadence of 2024, and the acceleration through the year. But what are some of the key things you’re looking for, when you talk to clients, to get the sense that things are improving. And then, the order of magnitude that it feels like, is it a coiled spring, or is this just a really kind of long, slow kind of going out, grind higher? Thanks.
Chad Abraham: Yes, I would say Devin, obviously we had really good Q4 advisory results. Frankly, the sponsor business had a lot to do with that. Obviously, I’ve heard the commentary from others. So, I think you just – you look at this year in Q4, and we certainly gained some share. We sort of highlighted our sponsor activity, depending on how you look at it was up somewhat, in a market where the fees were down. I would say the first few quarters when we were looking at, sort of what transactions were going to close. The close rates were just incredibly low leading into that. And so, we were obviously cautious going into Q4. I would say that flipped for us quite a bit in Q4. Just looking at, the potential deals we could close with private equity.
We had a very high close rate and I do think, financing has picked up. It’s certainly not perfect. I do think the bid between buyers and sellers, these sort of new valuation levels, have settled in for most. Pitch activity is good. So yes, we definitely expect 2024 to be spent a better sponsor year. I don’t think it’s going to be a coiled spring and then, I would just remind people that sponsor activity is always, more back half weighted than, other M&A activity. So, by its very nature it’s a heavy pitch cycle February, March, April, May and heavy deal execution. And frankly, one of the highlights of our Q4 business, was we did a lot in our diversified industrial services business, and that’s primarily 100% sponsored business, just as an example.
Devin Ryan: Okay. Great. If I could squeeze just one more quick one in here. Just on the equity capital markets, side of the business, you guys have such a big healthcare book and that’s an area we’re – just looking at some of the industry data. It was up roughly 2x from – in January ’24 over January ’23. So seeing some improvement obviously early days there, but just – I think the recovery in equity capital markets, is going to be sector-by-sector. And so, just love to get a sense of, kind of the order of magnitude you guys are expecting. And then, within some of the verticals, because you guys are active in some of the maybe the more active areas, kind of what that could mean for Piper maybe even relative to broader industry trends? Thanks.
Chad Abraham: Yes, so, for us in Q4, ECM actually was a bit of a disappointment after we started with a strong October deal activity, really slowed the last five, six weeks. I would say January has started pretty strong for us in ECM and it’s exactly the data, you’re seeing and it is driven by yes, by primarily healthcare. I think, we would expect sort of with the overall markets and volatility in client conversations that 2024, should be a measured, continued improvement for ECM. A lot of our, we actually outperformed ECM, if you look at all of 2023, but a lot of that was just market share gains in healthcare. We do expect that entire ECM fee pool, to get better in ’24. So, we don’t even need market share gains to drive some of that, as what will make it great would obviously be broadening, into some other sectors, very limited IPOs and obviously tech’s a big part of that.
But if we started to see the tech IPO cycle pick up, we started to see some of the capital markets and energy pick up, that’s what would broaden out at least for us. And then, I do think there’s a chance, I mean, we saw really low capital markets activity in financial services, just given all the turmoil. And you’re starting to see you know, many institutions just sort of take the medicine on capital and other books. So, we do think you’ll see more capital raising in that sector as well.
Operator: Thank you. We’ll go next to James Yaro from Goldman Sachs.
James Yaro: Hi. Good morning and thanks for taking my question. So Chad, starting with advisor, I thought these were excellent results, but I do think the overarching question in investors’ minds, is whether advisory transactions came forward into the fourth quarter and whether this sets up for a slightly more challenging first quarter. I think you sort of alluded to the seasonality for 2024. So, I think the question is, how you think about the starting point for ’24. And then, when do you think you can get back to fourth quarter levels in ’24 and start to build from there?
Chad Abraham: Yes, I would say look especially given our sponsor mix, first quarter is always the toughest seasonal quarter for us. Like I said with our close rate being high in Q4, it’s hard to imagine we didn’t have some pull forward there. All that being said, a lot of our sponsor business, like I said is driven from pitching in the first half that, closes in the back half, which is why we sort of said, we think we’ll have the similar seasonality. So it’s not like in 2023 our first quarter was fantastic from an M&A result either. So as the year progresses, it didn’t really pick up for us until Q4. I do think as this year progresses we might see a little more of that in Q2 and Q3, and not just Q4, but we’ll have to see how that plays out.
James Yaro: Okay. That makes sense. And then just maybe quickly on financials, DCM and M&A, which you touched on a little bit before, does the stress on the regional banks over the past few days as a result of commercial real estate in particular push out, the timeline for these businesses to re-accelerate? Just curious what you’re hearing from your bankers and then just more generally – is that, are those two businesses expected to pick up in 2024? Is that a longer term trajectory?
Chad Abraham: Yes, I mean I’ve been obviously reading all the various bank earnings reports and obviously, we cover a lot of the smaller and midsize banks as well. And there’s been – certainly some tougher reports. I do think that, does set up for eventual improvement. I would say relative to our corporate financing results last year the DCM, ECM financing part of financials was a really low number for us. Look back many, many years certainly one of the lowest. So, while we think it will be a slow recovery, we do think there will be more capital raising. And we certainly don’t think there’s a way it can go much lower. So, I think we would say it would be an improvement, but a slow improvement in financial’s capital raising this year.
James Yaro: Okay. Great. Thank you so much.
Operator: Thank you. We’ll go next to Steve Chubak from Wolfe Research.
Brendan O’Brien: Good morning. This is Brendan O’Brien filling in for Steven. I guess to start, I just want to touch on the advisory business. The improvements in the environment are encouraging. But just want to get a sense as to whether the election could have any dampening effect on activity levels. And would be specifically interested in the potential impact on activity in the financials and healthcare sectors, which can be in or out of the regulatory crosshairs, depending on the administration?
