As you look ahead, which of those represents the largest opportunity? Just be good to get a little more detail after a really good quarter. Thanks.

You know, Brian, why don't you answer that question?

Devin, thanks for your question.

We're now valuing about 7,400 portfolio companies, which is up 19% from a year ago. I think the drivers of this really stand behind the retailization of the private capital markets. Through that, we're seeing a couple things transpire. There's more monthly valuation requirements. There's more daily valuation requirements. That's leading to increased valuation needs and then ultimately revenue opportunity for Lincoln. Additionally, as you called out, We're seeing an increasing share of names that are getting valued by third party now. There's additional pressure to do so as the retailization unfolds. And that's across an array of asset classes and throughout several different geographies. So there's diversification and retailization, I would say, are two key drivers. I'd expect those two key drivers to really continue.

Okay, great. Thanks for taking the questions, guys.

The next question comes from Steven Chubach of Wolf Research. Go ahead, please.

Hi, good morning, Rob and Ted, and thanks for taking my question. Congrats on the . So wanted to start just to dig into just the recruiting and M&A outlook. You know, certainly encouraging to see you buck the industry trend in terms of middle market sponsor activity, which has been relatively tepid. and want to get a sense as to whether you're seeing attractive opportunities emerge to poach talent among middle market sponsor bankers, just given the more subdued activity. And while you've been less active than some of your public peers, at least on the acquisition front, whether similarly you're seeing more opportunities to maybe expand inorganically and take advantage of some of the better momentum that maybe you're seeing relative to the broader space.

Thanks, Stephen. We don't like the word poach, so we'll think of a different verb. But it's a very good question. Historically, if you think about, and you noted this, we've had a very good organic growth story, and that's really been driven by both lateral MDs and internally developing MDs. And those are really important levers of our growth strategy that we see continuing. I do think the IPO and people maybe understanding the size and depth and breadth of our firm is It's actually helped us on that front with more people reaching out to us. We are very strategic about this. We always have a list of the sectors where we really feel going laterally is really going to help us, and we continue to have success there. As I mentioned, we've hired seven managing directors year to date with several more slated to come when they work through their garden leave. So I think that's going to continue. We had a very large strategic push on that that we implemented at the end of 23. We've always felt the best time to bring on senior talent is when markets are going sideways because the best people lift their heads up and it's a little less competitive. I think if markets continue to improve, it can become more difficult to have people leave their current firms because there's more friction, but we are having success. And then on the acquisition front, We've never had more opportunities in front of us. I think that the combination of the Marsh Berry transaction was a very sizable transaction in our market, one of the largest in years. And also as a result of going public, I think one of the reasons that really drove that is we wanted A more permanent capital base to make sure as our industry consolidates, we can make the right decisions in doing that.

So there are lots of opportunities in front of us.

We are down the path in a few discussions, but nothing really imminent at this time.

That's great, Keller. And for my follow-up, just on the non-comp outlook, given just the strong revenue momentum, the AI investments that you've earmarked, We're hoping you could speak to the non-com growth outlook for full year 26 and whether the $42 million that we saw this quarter, if that's a reasonable jumping off point, recognizing that included some elevated professional fees as well, likely tethered to the IPO.

Yeah, hi Stephen, thanks for the question. High single digits is what we're expecting for non-compensation growth over the course of the year. It's really been a focus of the firm, you know, as we've embarked upon the public company journey to ensure we're managing that as effectively as we can. I think what you're seeing is, you know, certainly leverage as the business grows, you know, we've built a platform to be a much larger business and you're starting to see that reflected and the results are ready. So, you know, much of the real estate investment is behind us, though you're never done. And I think technology is where you're going to see us continue to make those investments, but it is a real focus of the firm, something to put a lot of time on. Organizationally, I think high single digits is the best expectation.

That's great, Collar.

Thanks so much for taking my questions.

The next question comes from Brennan Hawkin. of BMO Capital Markets. Go ahead, please.

Good morning, Rob, Ted, Brian, and Allie. Thanks for taking my questions, and I'd also echo congrats on the IPO. It was a challenging market, so good job there. Brian, I'd like to start with one for you. So just a few days ago, we heard Mark Rowan give us an update on daily pricing. So they've applied daily pricing already to their IG and ABF assets, looking at October 1st for Target for their direct lending assets. What are you hearing about daily pricing from other valuation clients? What are the implications of daily pricing for your business? And maybe thinking about it a little bit more deeply, what do you think this means for the long run? It seems to suggest A path of daily liquidity in the secondary markets. How do you think this chess game several moves forward?

Thanks, Brennan. Great question and something that I think is going to be to a tailwind for our business overall. As I mentioned earlier, the retailization of the private markets is real and the democratization and moving downstream to the retail investor is happening. What we are hearing from GPs and LPs is really a need to increase transparency across the private capital markets. and having third-party valuation firms like Lincoln's and our portfolio valuation business provide valuations of those assets on a more frequent basis is only going to help lead to that transparency. What we're seeing across our client base is that it tends to be the case that as funds themselves have more redemption or subscription activity, that leads to the need for more reporting and then ultimately more marks being produced. Ultimately, this again results in us producing an incremental valuation, which is an incremental fee opportunity for our business. There may be opportunity as well for liquidity in these positions, and we have seen an increase in liquidity across some of the investments that are held in the private markets on a single asset basis. However, those are episodic. Currently, and to your point earlier, they're just driving a liquidity opportunity for specific investors. Yeah, I got a lot of questions in there, so hopefully I unpacked all of them. But if I missed anything, just let me know. I'm happy to address it.

No, no, that's really helpful. Thanks, Brian. What I'd like to follow up on is sort of similar to the retailization, actually, but from a different perspective. So financing is really important in middle market transactions. And this year, we've seen the liquidity gates in the non-traded BDCs. What kind of an impact is that having on the supply of financing as far as the deals you're advising on in the IBA business? And what are the implications that you see? It sounds like it's not hurting your outlook, but how is that working its way through the system? Thanks.

Brennan, it's something we continue to monitor, and we talk with all of our bankers, our capital advisors, we're just not seeing it affect the ability to finance transactions in any meaningful way.

I still think

There's more debt financing that wants to be put to work than there are opportunities to do it. And so even in the software world, we're seeing deals get done where there was a pullback pretty materially in the first quarter on that. And so the institutional capital is still there. Even if the retail pulls out, you're seeing institutional investors still want to go into this asset class. We have not seen it affect the transaction side of our business, despite the fact that it's still there, it's still increasing. And I think, and this is just my opinion, and Brian alluded to this, I think the retailization of the private capital markets is happening. It's going to continue to happen. There's going to be learnings. There's going to be speed bumps, roadblocks. I think one of them is these are long-term assets, and redemptions are always going to be limited in long-term assets. And I think there's a learning that has to happen there, but it has not The next question comes from Ryan Kenney of Morgan Stanley. Go ahead, please. Hi.

Congratulations on the first earnings call, first of many.

So I'll start off with an easy one. So you mentioned differentiated culture in the prepared remarks, and I'm wondering for investors who are new to the story, how do you define the culture at Lincoln, and then how do you protect the culture as you scale?

Yeah, I think, well, we define it at a very granular level. We actually have a culture document that is quite long. It's in excess of 50 pages, and it's a PowerPoint. Some of the pages We only have a few words on them, but we send that to every employee every year, and that's the cultural promise that we say we all need to hold each other to. So we define it at a granular level, we measure against it with our engagement survey, which we interchangeably call our culture survey, and then we manage to it. And we manage to it very, very granularly and institutionally. And so I think it's something important to you, and you can all agree this is the definition to measure against. And interestingly, we just got the results back from our engagement survey this week, and they were quite positive. So, you know, I think we're feeling good about that. And I think it's just something that, you know, I think there's always tension between maintaining your culture and growth. You could probably accelerate growth at the expense of culture, and you could limit your growth if you define your culture too narrowly. And I think as a management team, it's something we spend a lot of time on. And, you know, core elements of our culture is a culture of collaboration, It's a culture of excellence. It's a culture of growth. But I think the process in terms of how we've institutionalized it is a unique element of it.

And then you mentioned integrating employee comp into or integrating employee stock into comp. And so I'm wondering if you can walk us through the trajectory of how that impacts the compensation ratio over the next three years as that phases in.

Yeah, Brian, it was really important for us to, you know, grant all of our employees equity as part of the IPO. We just wanted to instill, you know, a culture of, you know, an ownership mentality. And so that was something that we made a priority. And so I think one of the things we've been focusing on in the transition to becoming a public company is, you know, certainly some things have changed, like this call, but also a lot of things that aren't changing, which is one of our compensation philosophy. And so I think as we're, you know, planning for the next couple of years in terms of the compensation ratio, really just replacing deferred cash with equity here. And we think that's going to be really good for retention, really good for value creation and shareholder alignment over the long term. We do expect a temporary benefit just as the stock comp amortizes a little bit longer, one more year, than the deferred cash. So this temporary benefit Peters, and we get that until we have comparable results. But also, again, as the business continues to grow, you'll see a little bit of a benefit there. So that's how we're thinking about the progression as we move forward.

Yeah, I think, Ryan, one way to look at it is I think an offset to that kind of temporary benefit is one of the things that we've seen even without this is our comp ratio coming down as we've just gotten more productivity out of our people through hiring the right people, developing the right people, investments in technology. So it is our expectation over the next several years while While that temporary benefit of moving to the RSUs and deferring them over a longer period goes away, that's going to be offset by continued improvements in our productivity. And our hope is that it doesn't have a meaningful effect on the compensation ratio that we are feeling today.

And just to clarify there, the temporary benefit, did that show up in the second quarter numbers or does that show up starting third quarter?

A little bit in the second quarter, but yeah, it'll flow in through the Republic, yes.

Ryan, did that answer your question?

Yes, got it.

Thank you.

Okay, the next question comes from Alex Bond of KBW.

Go ahead, please.

Hey, good morning, everyone. I want to echo the congratulations on the IPO. You noted that both the U.S. and European M&A activities improved as the year has progressed. I'm wondering if you can maybe compare and contrast your expectations for each of the two regions on the M&A side through the end of the year, and maybe if you're seeing more disruption to international deal timelines as a result of the geopolitical situation, and any additional color you can maybe just add on the U.S. versus international trends in the market that you're seeing today would be helpful also.

Yeah, I think some of its markets, some of its decisions we've made over the last several years that I think has put our European business on a very good trajectory. The answer to your first question is the European business is going to be a little more back. Good second quarter, good first half. But relative to kind of their budget for the year, that business has more as a percentage in the back half of the year than the U.S. business. So, you know, that's one element of it. The question on extended timelines is a good one. I mean, we saw timelines extend a bit over the last few years. They've kind of stabilized. We haven't seen an increase in timelines this year, either in the U.S. or in Europe. I mean, with Europe, there may just be so much going on, they've just kind of become known to everything, and where we're at today is the new normal. One of the few things we've done over the last several years, I think, has really resulted in and a growing backlog and a taking share in Europe. We really evolved from when we first went into Europe. It was very kind of regional and country focused. And we really evolved over the last five years to really be organized in Europe much more along areas of expertise, industry expertise, product expertise. We're growing our valuation business in that market. Europe's always different than the states. You can't have the United States and Europe. There are certain elements, and being deep in the right geographies is also really important. But making sure you're maximizing your global expertise across Europe, I think, has really helped our business there.

Got it. Okay. No, that's helpful. And then maybe wondering if you can also just spend a little bit more time on the non-M&A businesses within IB Advisory. Maybe just if you could speak to the growth of those units and just the overall non-M&A contribution to the IB Advisory line in the quarter. And then maybe taking a step back, just the growth potential that you see for each of those businesses would be great to kind of get your longer-term view there as well. Thank you.

I'll start with the second piece of that in that we see the growth potential in both of those businesses being really substantial. Our ability to come to our clients with a full suite of solutions, whether that's selling the company, whether that's recapitalizing, we have put a lot of time and effort to really improve on that element of cross-selling. The capital advisory business In particular, which is, as I said, it's debt advisory for both healthy companies and restructuring. They had a very good first half of the year compared to last year. And as I mentioned, both that business and our private fund advisory business had double-digit growth. So they're both growing at a very good rate. And I I think our expectation over the long term is that those businesses will become larger portions of our overall investment banking revenue.

Great, thanks for the call.

The next question comes from Ben Rubin of Evercore. Go ahead, please.

Great. Thanks for taking my questions. And just to echo everyone else, congrats on surviving the IPO process. I want to start off in your prepared remarks, you attributed some of the advisory strengths in the quarter to higher average fees and you even flagged a record event during the quarter. Some of your peers have flagged a bifurcation where some of these larger cap deals have held up better than the middle market and certainly the industry data does support that. So I guess my question is, Is the higher average deal size a sign that you're doing less middle market deals? And maybe relatedly, if you could contextualize your backlog in terms of average deal size, that would be very helpful as we think about the back half of your business. Thank you.

Yeah, I don't think it's only the large deals that are getting done. I do think just as a whole, our average deal size has gone up as we've grown with our clients. The fee we mentioned that was a record fee for this quarter, it was a business that we had actually sold to a private equity group. They were looking to sell it next year in 2028. We came to them with some ideas of, hey, your sector's good. There's a handful of really good buyers. Why don't we go see if something can get done? really wasn't even in our backlog and we were able to get it done. So I think that's going to continue to happen. And as I look at our backlog, we have deals in our backlog that are actually larger than this record fee. Over the last several years, our record fees have not lasted very long. They keep getting surpassed by a new record fee. But with all that said, we're still hitting a lot of singles and doubles and that's the key to our business. I mean, we want to work with companies throughout their life cycle. And as they continue to grow, we want to grow with them. So I don't think – I think clearly in the market as a whole, the mega deals have been at a better pace than the private capital markets. Our experience is that always the private capital markets always lag. It's probably lagged a little longer than everybody would have liked. But the short answer to your question is no, we don't think this is just the larger, better deals getting done. We're seeing growth across all of our sectors and all of the sizes.

Yeah, and then I would just add that the Marshberry, you know, platform also, you know, focuses on a little smaller average fees from what, you know, what Lincoln has historically focused on there. And so you're seeing that, you know, balance the portfolio as well. But I think you see growth in both volume and average fee.

And really, on Marshberry, it's really a function of their client base. It's mostly owner-occupied businesses that get to a certain growth phase where they need to start bringing in institutional capital. So... They also have large fees, but on average, their deal size and fee size is a little smaller.

Makes sense. Thanks, guys. I do have a question for Brian on the valuation business, maybe more so on the pricing dynamic versus the volumes. You've spoken to the tailwind from the retail push into private markets and the calls for more frequent marks. But AI does cut both ways. It can be an expense benefit, but also it risks commoditizing the market itself since more of your business is recurring valuations than transaction opinions. So I'm just trying to help me. Can you help me think through the different crosswinds impacting valuation business, just given some of your peers have flagged pricing pressure in the space in some of the prior remarks? Thank you.

Thanks so much, Ben. So on the B point, we're always monitoring this. but we really haven't seen a material change in the fee pressure. And I think what's really driving that is our differentiated data and specifically the insights that we're placing in the market. In 2026 alone, as you're aware, we announced the collaboration with S&P, launching the S&P Lincoln Senior Debt Index Series, which measures direct lending returns. We announced the client portal. We've added regional perspective and insight in the Middle East and India, and we've added new industry-specific insights in asset-backed finance and energy infrastructure. We believe all these things are areas for us to capitalize on and mitigate the fee pressure we're alluding to. As you talk about the technology, the way we feel about technology is we're at the forefront here of that. We've really been able to leverage it in our business. If you look what's happening, we're augmenting the way we're doing things focused on data ingestion, process enhancement, and allowing for deeper insight and analysis through the use of technology. And to your point, By leveraging the technology, it's allowing us to keep up with the speed in the ever-evolving retailization of the private capital markets, which is really important. And so those are kind of all the areas of focus for us on the technology side, and we feel we've been a winner in that area.

Amazing. Thanks for the call, Brian.

This concludes our question and answer session.

I would like to turn the conference back over to Rob Brown for any closing remarks.

Thank you guys for joining us today. We remain encouraged by the level of client engagement and activity we see across the business, and I think with the strength of our business leaders, the differentiation of platform we've talked about, and our pipeline, We do believe we're well positioned for continued growth both in the short term and in the long term, and we really look forward to updating you on our progress after Q3.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.