Title

Presentation

Victory Capital Holdings, Inc. beats earnings expectations. Reported EPS is $1.35, expectations were $1.3.

Operator: Good morning and welcome to the Victory Capital Third Quarter 2024 Earnings Conference Call. All callers are in a listen-only mode. Following the company’s prepared remarks, there will be a question-and-answer session. I will now turn the call over to Mr. Matthew Dennis, Chief of Staff and Director of Investor Relations. Please go ahead, Mr. Dennis.

Matthew Dennis : Thank you. Before I turn the call over to David Brown, I would like to remind you that during today’s conference call, we may make a number of forward-looking statements. Victory Capital’s actual results may differ materially from these statements. Furthermore, please note that the ultimate completion of a transaction with the Amundi remains subject to certain closing conditions, as well as regulatory approvals. Please refer to our SEC filings for a list of some of the risk factors that may cause actual results to differ materially from those expressed on today’s call. Victory Capital assumes no duty and does not undertake any obligation to update any forward-looking statements. Our press release that was issued after the market closed yesterday disclosed both GAAP and non-GAAP financial results.

We believe the non-GAAP measures enhance the understanding of our business and our performance. Reconciliation between these non-GAAP measures and the most comparable GAAP measures are included in tables that can be found in our earnings press release and in the slides accompanying this call, both of which are available on the Investor Relations section of our website at ir.vcm.com. It’s now my pleasure to turn the call over to David Brown, Chairman and CEO. David?

David Brown : Thanks, Matt. Good morning and welcome to Victory Capital’s third quarter 2024 earnings call. I am joined today by Michael Policarpo, our President, Chief Financial and Administrative Officer; as well as Matt Dennis, our Chief of Staff and Director of Investor Relations. I will start today by providing an overview of the quarter. After that, I will turn the call over to Mike to review the financial results in greater detail. Following our prepared remarks, Mike, Matt, and I will be available to take your questions. Quarterly business overview begins on slide 5. Continuing with the momentum we had in the first half of the year, our business performed very well during the third quarter. We ended the quarter with total client assets of more than $181 billion, which is the second highest quarter end level in our history.

This helped propel revenue and earnings in the period, resulting in new quarterly records for earnings per share, adjusted EBITDA and margin, which expanded to 53.7% in the quarter. In addition to strong business performance, we made excellent progress toward closing the strategic and multifaceted transaction with Amundi. We signed the definitive agreement in July and immediately began working toward closing, which is anticipated to occur in the first quarter of 2025. We filed a proxy in early September for a special meeting of stockholders where shareholders were asked to approve several proposals related to the transaction. All the proposals were supported by a majority of our shareholders in past. We greatly appreciate the support as we continue to execute on our growth strategy for the long term.

The Amundi US Business, which will become our 12th investment franchise upon close, is having a very strong year as well. Based on publicly available data, their mutual fund business has achieved approximately $2 billion of positive net long-term flows in 2024 as of the end of the third quarter. Keep in mind, this does not include their US institutional business, nor does it include their international institutional and retail businesses. Another point of distinction for them is their investment performance, which remains very strong year-to-date. The growth in AUM is tracking ahead of what we originally projected due to both better than expected organic growth and market action. On Slide 6, I would like to take a step back to highlight some key milestones and strategic transactions in our history since our management buyout in July of 2013.

Victory Capital has positively evolved from these transactions with enhanced scale and greater diversification of both investment capabilities and distribution channels. Every acquisition we made included several significant strategic elements with the goal of making our company better. When it comes to successful acquisitions in the investment management industry, we have a distinct corporate capability that we feel is advanced, and coupled with our proven track record to execute, sets us up well for the consolidation that we believe is just starting in the industry. For investment professionals who are passionate about what they do and want to own their outcome, our ownership culture provides a platform where they can succeed over the long-term.

Our platform is the ideal permanent home where we create an optimal environment for investment professionals to deliver investment excellence to our clients. While our company has evolved over the years, our core principles and the long-term strategy for profitable growth have remained unchanged. The necessity for industry consolidation is even more apparent now than when we originally developed our strategy and operating platform, combining boutique style-focused investment management with a centralized scaled and effective operating and distribution platform. Our 15 year exclusive distribution agreement with Amundi will make us an even more attractive acquirer of choice for high-quality investment firms seeking all that we have to offer plus strong distribution both domestically, as well as outside of the US.

With nearly $300 billion of assets under management and a stronger balance sheet post-closing, we’ll be exceptionally well-positioned to make additional strategic accretive acquisitions. As I mentioned during our last call in August, I firmly believe we are entering into a period of acceleration when it comes to industry consolidation. We purposefully and specifically designed and built our platform to thrive in this environment. Today, I am more optimistic about our prospects to continue to execute on our proven strategy and continue to move our organization forward in a very positive way. On Slide 7, you can see that we have achieved significant operating leverage due to our increasing scale over the years. This has compounded our earnings growth and free cash flow while also being a meaningful driver of value creation for shareholders.

Since we became a public company in 2018, we’ve grown annualized adjusted EBITDA by $320 million and expanded our adjusted EBITDA margin by more than 1,500 basis points. You can also see from this graphic that our platform is resilient with margins remaining consistently strong in different market environments. A good example of this was during the COVID pandemic, the market struggled and it turned out to be one of the more volatile market periods historically speaking. Even with that as a backdrop, we did not experience margin degradation like many in the industry did. Turning to Slide 8. An important metric to many current and prospective shareholders is adjusted earnings per share. You can see that we have more than tripled our adjusted earnings per share with tax benefit over the past six years.

This is more than a 20% compound annual growth rate over that period. The growth has been a significant driver of total shareholder returns. This plus our free cash flow provides the capital to fuel our growth strategy while also increasing capital returns to shareholders. On Slide 9, we have updated our capital allocation details, which remain skewed towards strategic inorganic growth initiatives designed to grow earnings and cash flow and ultimately, shareholder value. We ended the quarter with $188 million of cash on the balance sheet which is up $69 million from the end of June. Due to our proxy process, we were again prohibited from repurchasing shares during the quarter. Now that the proxy process is over, we will evaluate our ability to resume open market share repurchase activity and perform the appropriate analysis around this activity.

Moving to Slide 11. Our investment performance remains strong with 67% of our AUM in mutual funds and ETFs, earning overall 4 or 5-star ratings. This is broadly diversified, encompassing 43 different products. Over the key three and five year periods, 60% and 73% of our total AUM outperformed their respective benchmarks. 14 of the 16 fixed income funds managed by Victory Income Investors Investment Franchise are rated either 4 or 5 stars overall by Morningstar, which represents 93% of their total AUM. We are very pleased to see this franchise have positive net flows for the year-to-date period and expect continued organic growth given the outlook for interest rates and investors allocating the fixed income asset classes. With that, I will turn the call over to Mike to go through the quarter’s financial results in greater detail.

Mike?

Michael Policarpo: Thanks, Dave, and good morning everyone. The financial results review begins on Slide 13. Average assets under management for the quarter rose 3% from the second quarter to $172 billion. Revenue also rose 3% to $225.6 million, up from $219.6 million in the second quarter. Revenue realization was 52.1 basis points in the quarter. For the year-to-date period, average assets under management were up 10% compared with the same period in 2023. Third quarter GAAP operating income rose 9% from the second quarter and reached a record $120.4 million. This is up more than 50% from the same quarter in 2023, and GAAP operating margin widened to 53.3%. Earnings per share reached a record high on both a GAAP basis at $1.24 per diluted share, as well as on an adjusted basis at $1.35 per diluted share.

Adjusted EBITDA was $121.3 million in the third quarter, which was 4% higher than in the second quarter, and adjusted EBITDA margin widened to 53.7%. Turning to the balance sheet. We accumulated $69 million in cash during the quarter, bringing the cash balance to $188 million at the end of the quarter. As mentioned, we are prohibited from repurchasing shares during the quarter, which contributed to the cash buildup. Our net leverage ratio improved to 1.7 times, and we returned $32 million to shareholders in the form of quarterly cash dividends and a small amount of share repurchase activity associated with net settlements of employee equity awards. Our Board authorized a 7% dividend increase, bringing the quarterly dividend to $0.44 per share for the final quarter of this year.

The dividend will be paid on December 23 to shareholders of record at the close of business on December 9. Turning to Slide 14. You can see that total client assets rose more than 4% or by $7.3 billion from $173.8 billion at the end of June to $181.1 billion at the end of September. Our AUM continues to be diversified from both a channel perspective as well as by client in the various channels and by asset class and investment vehicle. On Slide 15, we cover long-term asset flows. Several of our investment franchises and our ETF platform, VictoryShares continue to generate positive long-term net flows in the quarter. Victory Income Investors posted its third consecutive quarter of positive net flows and has made a significant contribution to net flows for the year-to-date period.

We are encouraged by the outlook for this franchise given very strong investment performance and the current selling environment for fixed income products. For the year-to-date period RS Global, Sophus, Integrity, VictoryShares and NEC have also achieved positive net long-term flows. Net flows in July and August were pressured by portfolio rebalancing activity, some with existing clients who remain clients post the rebalancing activity. We saw an improvement in net flows for the month of September. Lastly, our one but not yet funded pipeline is larger than it has been in over three years and is well diversified from a franchise and channel perspective. We expect most of these mandates to be funded in the fourth quarter of this year with some funding in the first part of next year.

Slide 16 shows steady increase in sequential revenue for the past several quarters. Our average fee rate was 52.1 basis points in the third quarter, which is down 0.5 basis point from the second quarter due to product, asset class and channel mix shift, but within our expected range. As a reminder, we are focused on the profit margin of our products first than the fee rate, given our unique operating platform. Slide 17 highlights expenses recorded during the quarter. Total expenses declined by 5% to $118.1 million compared with $123.8 million in the second quarter. A portion of the decline is attributable to the reversal of non-cash earnout related compensation accruals taken in prior periods that led to reported compensation expenses declining by 22%.

You can see from the graph on this slide that our cash compensation was relatively steady as a percentage of revenue. On Slide 18, we highlight our non-GAAP metrics. Our reported $1.35 adjusted net income with tax benefit per diluted share is the highest level in our history and is up 3% from the prior record of $1.31 per diluted share reported for the second quarter. Adjusted EBITDA and adjusted EBITDA margin were also company records at $121.3 million and 53.7%, respectively. Despite exceeding the 49% margin goal we have guided to, we are not changing our long-term guidance. Finally, turning to Slide 19, we generated $99.8 million in cash from operations during the quarter, and for the third consecutive quarter, our leverage ratio improved to 1.7 times, down from 1.9 times at the end of June.

This is down from 2.1 times at the beginning of the year. Our $100 million credit facility was extended in the first half of this year and remains undrawn. I want to reiterate our $100 million of expense synergies we expect to realize from the Amundi transaction. The synergies will be fully realized within two years of close, with the majority of them being realized in the first year. Lastly, when it comes to revenue synergies from the exclusive distribution agreement with Amundi, we will give guidance in the future as we move towards closing. That concludes our prepared remarks. I will now turn it back over to the operator for questions.

Operator: [Operator Instructions] And your first question comes from Ben Budish with Barclays. Please go ahead.

Ben Budish: Hi, guys. Good morning and thanks for taking my question. Maybe just starting on fixed income flows. You highlighted Victory Income Investors has been positive every quarter this year so far. So can you maybe talk about what’s perhaps not going as well that’s driving sort of the net outflows in that franchise? And how do you think that may fare going into next year?

David Brown: Hi. It’s Dave. Thanks for the question. We’re really happy with the fixed income flows and what we’re seeing. We’ve had a few one-off things occur that has impacted the flows. But when we look forward and we look at the macro environment for fixed income, we look at the investment performance of Victory Income Investors, which is our fixed income franchise. And I think we referenced it in the prepared remarks, excellent investment performance, really good distribution access and really consistent. In addition we also have mutual fund offerings, institutional separate accounts and then also ETFs. So we are pretty bullish on the franchise. We’re pretty bullish on the opportunity for us to participate in what’s happening in fixed income. So really no concern and a pretty positive outlook when we look forward.

Ben Budish: Got it. Maybe another kind of like a higher-level strategic question. David, in your prepared remarks, you talked about the industry sort of still being in early stages of consolidation. I was wondering if you could unpack that a little bit, it seems like there has been some consolidation over the past several years. How do you think industry-wide that looks over, say, like the next 5? And then specific for Victory, you’re not paying cash or debt for this — for the Amundi acquisition. How do you think about your readiness to do another acquisition in 2025 from an operational perspective? Thank you.

David Brown: So from an environmental perspective for the industry, I’m extremely constructive. We’ve had an election, which I think will give people certainty on the future. I think also the challenges in the industry which is driving the need for consolidation are only accelerating. And I think a rate environment where people have some more transparency and potentially lower rates. You put all of that together, I really believe that we are entering into a phase that is going to have more consolidation than the industry has ever seen. I’ve been pretty consistent on that. There have been some transactions, but I think there are going to be a lot more as we look forward. As far as specific to Victory, I think we are superiorly positioned to take advantage of the consolidation.

We have a really, really good track record of executing on these kinds of acquisitions that I think will be very common going forward. We have a great offering as we laid out in our prepared remarks for investment professionals, and we have great distribution access, and we’ll have scale. And we’re ready. From a balance sheet perspective, post-close, we’re going to be in a much better position than we are today, and we’re in a really good position today. And then operationally, we’ll be ready as well. We have a really unique platform that is really conducive to acquisitions and onboarding acquisitions. And Amundi is just the latest one. We have a long track record of doing this, and we have a great team. So I couldn’t be more encouraged about the future from an acquisition standpoint.

And we’ve been able to really create shareholder value. We’ve been able to create value for our clients and additional offerings. We’ve been able to create operating leverage. So I and our team are just unbelievably excited about the opportunity and how we’re positioned looking forward.

Ben Budish: All right, I appreciate the thoughts and thanks for taking my questions.

Operator: Your next question comes from Etienne Ricard of BMO Capital Markets. Please go ahead.

Etienne Ricard: Thank you and good morning. On the topic of the distribution partnership, Dave you’ve raised in the past that Amundi has a significant presence in emerging economies via some of its joint ventures. So how are you and Amundi thinking about distributing Victory’s products in these economies relative to Amundi’s presence in developed markets?

David Brown: So the distribution agreement doesn’t distinguish between different geographies. As you’ve stated, Amundi has a pretty large distribution offering in Europe. I believe close to 75% of their assets are in Europe and the other 20% is in Asia and surrounding areas. We will plan to go at all of the countries and areas really the same way. We are working with their teams today on structuring, on what products make sense for which regions. And then from there, we’ll just work with them to get our products into the different structures, if it’s a JV or if it’s not a JV. So there is really no distinguishing actions that we are taking to do something different in one region versus another. I think what’s most important is they have really, really good distribution access and their infrastructure is set up in all of these areas and especially in these emerging areas.

I believe the emerging areas are going to take some time as those countries allow US investment into the country. So I think it’s going to take a little bit of time. But long-term, I think we’re going to do really well in Europe and then in the other emerging areas that they have joint ventures in China and in India.

Etienne Ricard: Okay. Interesting. Switching topics, VictoryShares, a couple of your free cash flow ETFs have had really strong inflows. What has worked well in terms of distribution for these products? And how do you plan to replicate it with future product launches?

David Brown: So we’re really in the early stages, and I think you are referring to our VFLO, which is V-F-L-O ETF, and then our SFLO, which is S-F-L-O ETF. These are newer ETFs that have gained traction based on our distribution and based on the performance and the style of the investment style of the ETF. But I think we are — like I said, we’re in early stages. And I think one thing that’s unique about our business is, we have a distribution force, our intermediary sales force, all of our salespeople sell ETFs. And so they are really sitting down with advisors and — financial advisors and RIAs, and really trying to understand what the issues, that the advisors face and really trying to come up with solutions and part of those solutions are these kinds of products.

And so I think by doing that, it allows us to penetrate these advisors pretty quickly. And I think you can see it with some of the results of those products. We have plans to launch more, and we have also launched a number of new ETFs that are really just getting started. It is an exciting part of our platform. It’s a part that’s growing. It’s a part that’s growing at an accelerated pace. And as we look forward, I believe that we are going to see that be a bigger part of our business. And it’s an area that we have — we date back to 2015 from an acquisition. So we’ve been in the ETF business for over eight years now.

Etienne Ricard: Thank you very much.

Operator: Your next question comes from Alex Blostein with Goldman Sachs. Please go ahead.

Alex Blostein: Hi, good morning. Thanks for the question. I was hoping you guys could expand on the institutional pipeline commentary you made that it’s, I think you said one of the strongest in several years. Maybe just a little color on the composition by the type of strategy, the type of channel and the fee rate associated would be helpful. And then I guess when you zoom out a little more broadly, do you think closing and getting these mandates in the door will be sort of enough to finally get Victory as a whole into positive organic growth in 2025?

David Brown: So on the institutional pipeline, it really spans across a number of different franchises. It’s not just one, it’s probably three or four. And a lot of the pipeline — and we have a large one but not yet funded book. I’m referring to our pipeline, which isn’t one yet. But our one but not yet funded is pretty wide and deep as well. But on our pipeline, it’s a number of different franchises, it isn’t one specific institutional type of client. They are larger mandates. The fee rates are in-line with what we typically charge on the institutional side. I think as you know, we are concerned with the fee rate, but we are very focused on the margin. And that’s how we look at our business and we look at the platform and all of the opportunities adhere to our margin requirements.

So it isn’t going to erode our margins and it isn’t going to erode our fee rate either. As far as looking forward, very hard to predict quarter-by-quarter flows. But I think with the activity that we see, coupled with the Amundi distribution agreement outside the US, coupled with the Amundi US business closing in the first quarter and enlarging our intermediary sales force, our institutional sales force, I think it puts us in an unbelievable position to grow our business organically. It puts us in the best position we’ve ever been as an organization because we’ll have more salespeople, more distribution access here in the US than we’ve ever had. And then outside of the US, we are opening up a totally new world, a new channel for us that we have not had on the size and scale that we’ll have after we close.

And that is one of the best parts about the Amundi transaction is the growth of the size and scale of our intermediary sales force in the US and then what’s going to happen outside the US. So I think it will put us in a great position. I don’t like to predict flows because I don’t know what’s going to happen with the market and the industry, but it puts us in a great position to be successful.

Alex Blostein: Got it. Okay. Makes sense. And the second question, I was hoping you guys could just update on where Amundi’s revenues and expenses stand currently. Obviously, the markets have been very constructive and their flows have been pretty good. So an update on what that looks like today would be helpful.

Michael Policarpo: Yes. Thanks, Alex. It’s Mike. Yes, the total AUM for Amundi US is not publicly disclosed. But I think in Dave’s comments, he shared that we believe we’ll be approaching $300 billion in AUM, post-close. Obviously, the market and organic growth has provided tailwinds for the Amundi US business as well as Victory’s business. And I think the guidance we’ve provided in the past is that the fee rates at the Amundi US business are probably in the high-40s. So slightly lower than the fee rates at Victory. And then we’ve also guided to the long-term 49% margins which we feel very confident with achieving post the extraction of the $100 million of expense synergies. So a lot of tailwind in both businesses. As Dave mentioned in his prepared remarks, the public data on the Amundi US mutual fund businesses organic growth for the year-to-date period, and they’ve had very strong performance as well.

Alex Blostein: Yes. I got you. Great.

David Brown: And I would add to that, just one other comment is, when we evaluated the business, when we were doing our diligence to where it is today, it has outperformed our expectations to the positive on a number of different areas from an organic growth perspective, from an investment performance perspective. So we’re really, really happy and we are really impressed with the team, and we’re really impressed with the results and excited to have them part of our organization.

Alex Blostein: All right. Thank you both.

Operator: Your next question comes from Brennan Hawken with UBS. Please go ahead.

Brennan Hawken : Follow-up on that last point. You spoke — in speaking to Amundi outperforming your expectation. Is it possible to give us maybe an update on — does that mean that accretion you would expect from the deal would be greater? And maybe could you give a little color or perspective on order of magnitude that we should expect?

Michael Policarpo: Thanks, Brennan. It’s Mike. Yes, I think we’d still kind of stick with the guidance that we provided, which was low double-digit accretion post the first full-year of ownership. We’ve kind of confirmed the guidance with respect to the expense synergies. And then we’ve provided that we will provide some more clarity on revenue synergies as we get closer to the transaction. But we’re really focused on kind of the execution phase, getting to closing. And as Dave mentioned, kind of making sure that the business is ready to operate day one, which we’re fully confident that we’ll be able to execute based on the playbook that we have. And as Dave mentioned, they have outperformed both in an investment performance flow and AUM perspective, which will provide some tailwinds. But I think at this point, with the close coming in Q1, I don’t think we are ready to lock in anything different than the guidance we’ve provided in the past.

Brennan Hawken: Okay. I’ll just let my imagination run away with it. You also spoke to the opportunity to consolidate. I’m not asking you to tip your hand here, but like are there any particular parts of the market or from either a capability perspective or geographic or whatnot that you find interesting or you think are particularly compelling or maybe mispriced?

David Brown: We don’t approach acquisitions that way. We start-off with dozen acquisitions to make our company better. And there are a lot of ways to answer that question through an acquisition. Amundi gave us size and scale, gave us additional investment capabilities, gave us distribution access and it is going to make our company better. And so we’ll approach the future acquisitions like that. We are not looking for a specific asset class. We’re not looking for a specific type of company, we’re looking to make our company better. We’re looking to make sure that there’s a cultural match. We’re looking for investment excellence over long periods of time. That’s how we’ll approach it. I do think size and scale is going to matter in the future as you think about the industry maturing.

So I think anything that we will do, we will definitely have — be looking through a lens of wanting to get larger and wanting to continue to get — to have our size and scale grow, because I think that’s going to be really important to be competitive longer-term. But outside of that, I don’t think that there is anything unique or specific. There are of course, areas in the market that are growing faster than other areas. We’re well aware of that. We want to be in areas of growth, but that isn’t going exactly to be the driving factor of exactly what we’re going to do.

Brennan Hawken : Got it. Thanks for taking my questions.

Operator: Your next question comes from Michael Cyprys with Morgan Stanley. Please go ahead.

Michael Cyprys: Great. Thanks so much for the question. Maybe just continuing on that M&A topic there. [Technical Difficulty] over the years, I guess, where is their scope to make Victory better today? Where do you want to have greater scale? What is the appetite to extend into some of those growthier areas like private markets? And maybe you could give us a sense of the types of deals that are coming across your desk that you guys are evaluating?

David Brown: Thanks, Mike. First, we — like I said before, we want to get larger. I think there is going to be a need for firms to have size and scale. And post the Amundi close at $300 billion, we will be sized and scaled today. But five years forward, that probably isn’t going to be big enough to be competitive the way that we want to be competitive. So size and scale will matter. It will matter on the US intermediary distribution. It will matter as you think about the product set that you have — that you’re able to offer to that distribution channel. And the investments you are going to have to make with your partners around marketing, training, collateral, data, technology and just having people out selling. So you have to be larger to accomplish all of those things.

So that matters to us. We’re going to want to have a larger product set than we have today to be able to partner with our potential clients and our existing clients. So going deeper on traditional asset management, yes private markets in certain areas, we will want to expand there. We’ll do that creatively. We have been working very hard behind the scenes strategically on how we want to do that. Some firms have gone out and done acquisitions. Some have partnered. We’ve observed the results of all of those and have a strategy for that. And so we want to expand our product set around just getting closer with our clients, and we will do that through acquisition and product launches. And then lastly, we are going to still stick with our operating model and our business model.

And I think it is unique. What we won’t do is pivot away from who we are and what’s made us successful, but we’ll accomplish all of those things with the same model and the same mindset that we’ve done in the past.

Michael Cyprys: Great. And then just as a follow-up question, as you’re moving toward close here with the Amundi transaction. Maybe you could speak to any sort of lessons learned over the years from the prior transactions that you’ve done? What sort of — how does that inform your sort of go-forward here in terms of key actions to take or not to take and key actions to avoid perhaps that others do — that you do a bit differently? And then perhaps related to that, you mentioned private markets as an area maybe of [interest] (ph) looking at others that have done acquisitions and partnerships. Just curious what lessons you take away from approaches that others have gone [Technical Difficulty] with those private market approaches.

David Brown: So the lessons — I’d say lessons learned on our previous acquisitions. We are conservative and patient, we are — we do our diligence, we do our work, and we are patient and deliberate in putting these businesses onto our platform, and we’re also open-minded. And I think that comes through in our approach, and I think it comes through in all of our work, and ultimately, the execution. And those are things that we’ve refined over 11 years of being an independent company and all of the acquisitions we’ve done. We have the same team working on the acquisitions for the most part that we had a decade ago. And that’s pretty important to have really experienced people working on the integration and the execution, and that’s a key element of our model.

And all of the lessons we’ve learned, we are applying to this transaction. And when we complete this transaction, we’ll apply the lessons we’ve learned on this one to the next one. As far as private markets, I mentioned that we’ve observed partnerships. We’ve observed some of the acquisitions. And I’m happy that we’ve had the ability to observe the success or lack of success in certain areas. I think each company is unique. And so how a private markets type product acquisition or partnership would work with our company will be unique to our company. And so it is hard to look at another company not having all the information and it not being our exact company to come up with lessons. But I would tell you that we’re very happy with where we are with it and the ability to observe, the ability to build other parts of our business to make potentially an acquisition, a partnership, a product launch more successful.

The private market investing is important. It is an area of growth. It’s an area that a lot of people are talking about. And I think that we’ll — when we look in the future, we’ll participate in that part of the market in a way that’s very similar to what we’ve done with our traditional business. And like I said, I think our ability to observe and go back and look at things strategically will benefit us in the future.

Michael Cyprys: Great. Thanks so much.

Operator: Your next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.

Kenneth Lee : Hi, good morning. Thanks for taking my question. Just one more on M&A. Broadly speaking, I wonder if you could just talk about how bid/ask spreads are looking like among your discussions? And also wondering relatedly, if you could just frame what the motivation is like from potential sellers in getting a transaction done. Thanks.

David Brown: Yes. I think the bid/ask is coming together. I think, people are ready to transact. Market is strong. You can look at the future and you can game plan somewhat the next four years from a government administration perspective now. You can look at the Fed and rates and have a pretty strong opinion. I think that’s an environment where people want to transact. So like I said earlier, I think that there is going to be a lot of consolidation. I think the motivation is going to be an environment that is conducive to that from rates, from policy and all of the reasons why an organization, depending on the type of organization would transact, they are not — those issues are not going away, in fact, they are probably becoming more intense.

And so you put all that together, and I think it’s going to be a time where there’s going to be a lot of consolidation. And I go back to — I think we are really well positioned for it. And I think people are realistic on pricing.

Kenneth Lee : Great. Very helpful there. And just one follow-up, if I may. In terms of recent conversations you may have had with institutional investors, I wonder if you could just provide a little bit more color around sentiment activity and perhaps whether you expect the post-election uncertainty could help drive more allocations or net flows there. Thanks.

David Brown: Yes. We haven’t had the — given the election was just a couple of days ago, we haven’t had too many conversations. But I would imagine that there will be a desire to do more allocations and to kind of do the risk on trade. Although rates, even if they stay where they are today, I do think that the environment will be one of people can understand what the future might be. A lot of the uncertainty is taken out. And I think it’s going to be really good for our business and for the investment management industry in general to get rid of some of the uncertainty that was there before the election.

Kenneth Lee : Great very helpful. Thanks again. Operator Your last question comes from Ken Worthington with JPMorgan. Please go ahead.

Michael Cho: Hi, good morning guys. Thanks for squeezing me. This is Michael Cho in for Ken. I just wanted to follow-up quickly on the distribution with Amundi here. I realize [revenue] (ph) synergies are coming. But I guess just from an operational perspective, can you just update us where your initial priorities will be focused with respect to Victory products as you get the sales effort off the ground for this partnership?

Michael Policarpo: Michael, it’s Mike. Thanks for the question. I think as Dave said earlier, the infrastructure at Amundi with respect to this global distribution partnership is in place. The Amundi US product is being distributed throughout the Amundi global network. And so our efforts really have been around evaluating which Victory products should be a high priority or a focused product with respect to that global network, doing some work with respect to structuring. There are some commingled vehicles that will be part of the retail distribution. And then also starting to think about education on those products. So really, we’re lining ourselves up to be focused from an execution perspective post-closing, not just with new Victory products, but the current existing Amundi US products that are in the network and then leveraging those relationships, leveraging those contacts to bring forth Victory products from a prioritization perspective.

So it really has been around education structuring and product design.

Michael Cho: Great. Thanks Mike. And then just a quick follow-up on flows. You gave some monthly commentary for the quarter. I think you said July and August were a little soft, maybe September was a little better. You sounded pretty constructive on 4Q. Any comments on October?

Michael Policarpo: Nothing at this point that we’d highlight for October. I’d say, it is probably been closer to what we saw in September than the early part of Q3. But we don’t necessarily provide monthly flow information. But I think as Dave mentioned earlier, we’ve got a significant one not funded pipeline that we’re excited about here in the fourth quarter. And then we’ve got some additional opportunities that are lined up for us as we get into the early part of next year.

Michael Cho: Okay, thank you.

Operator: There are no more questions. I will now turn the conference back over to Dave Brown for closing remarks.

David Brown: Thank you for your interest in Victory Capital. We will be attending the Goldman Sachs Global Financials Conference in New York City next month, and we hope to see all of you there. Have a wonderful day, and thank you.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.