Richard Hough: No, I think, it’s more mix. As the institutional business grows and accelerated, including OCIO, which had a big — which has increased nicely. You’re going to have lower fees on discretionary assets. But that business, as you know, has a lot more leverage in it. So, just looking at the fee basis, you’ve sort of missed the enhanced EBITDA margin that you get with those wins. The high net worth side of the business has been very, very steady from a fee basis. I pointed out in the past that the very largest high net worth clients have always asked for institutional pricing plus full service and have aggressively negotiated fees for years at the very top end, they don’t look that different from the institutional business.
So, as we’ve won more of the really large families, that has lowered the fee basis a bit as well. That’s a high class problem. I’d rather have that the aura and reputation of the firm really benefits from associating from that level of wealth. The institutional side, I would say, has been about the same pressure on fees that we’ve experienced in the past decade. Nothing changing dramatically one way or the other. So, there’s noise in there, of course, depending where people allocate and when we get cash flows in and then where they go with their funds. But I don’t discern a significant trend or I haven’t noticed anything across the firm that’s going to move around, but it’s been pretty stable.
Christopher Marinac: Understood. Thank you very much for that background. I appreciate it.
Richard Hough: Yeah. You’re welcome. Thanks Chris.
Operator: The next question comes from Chris Sakai with Singular Research. Please go ahead.
Chris Sakai: Yes. Hi. Good morning.
Richard Hough: Good morning.
Chris Sakai: Can you talk about the acquisition environment? How are you seeing valuations out there?
Richard Hough: Yeah. So, valuations have definitely come down a bit. I’ve observed a couple of things. Obviously, with the higher interest rate environment for those who had to reset debt and have highly levered balance sheets unlike Silvercrest, it’s constrained their ability to continue rolling up and participating in very high — in my view, very high pricing in the industry for some mediocre businesses and the higher interest rate is just going to be a hurdle of that. So, it’s coming down a bit. What I’m seeing more is much more careful scrutiny of deals in the terms of those deals and much more emphasis on how much AUM comes over with the deal and projecting that, much more emphasis on earnouts, et cetera. So, you could view the restrictions in terms of the deal getting tighter as a form of price reduction as well.
So yes, it’s coming down a bit. And I’ve also seen some players who had been very active kind of stepping out of the market. So that’s an indicator potentially where it’s going. The number of deals has definitely come down substantially as well. So that’s about all the color I can give. I haven’t seen a lot else.
Chris Sakai: Okay. Thanks for that. And then, can you talk about what were the main drivers for client outflows this quarter?
