Moelis & Co 3Q16 Earnings Call Notes

Moelis & Company’s (MC) CEO Ken Moelis on Q3 2016 Results

M&A dialogue remains healthy

“My commentary on the market is similar to what we discussed last quarter. While there have been declines in M&A volumes across the board, our M&A dialogue remains healthy. Fundamentals remain in place for continued activity and the current study low growth environment is actually very conducive to M&A.”

restructuring business picking up nicely

“Our restructuring business is picking up nicely with continued momentum in new mandates leading to higher ongoing retainers. We expect the trends that we are seeing in U.S. M&A and restructuring in the third quarter to continue through the end of the year and we will continue to emphasize strict financial discipline.”

Restructuring has longer lead time but M&A harder to tell for 2017

“I’d say sitting here in a static environment, because we know what we have and restructuring is long lead times with lots of retainer, you know they have a lengthy time. So I’d have to say right now it would be in the restructuring market but I have to tell you that our relationships and our connectivity at the Board room is pretty good. So M&A just less predictable and less able for me to know what 2017 is going to look where restructuring – we have a serious of things that we know should conclude in 2017.”

Can’t say that Brexit changed much, but it was already slow before the vote

“I think Europe and the UK were slow going into the vote and they’re slow coming out of the vote. So I don’t know if there were slow going into the vote because of the vote. But it’s been a slow year. I don’t know how it will all play out. I actually think – there are people who think when they actually start to have negotiations that it will have more of an effect. But it’s not dominating any conversations. I don’t believe it’s – there’s nothing I can point to, to say that Brexit is keeping anything that would have happened. Let’s put it this way. I cannot discern that Brexit has changed the direction but it was slow before Brexit and it has continued.”

There’s plenty of dialogue everywhere else, just not in Europe

“I think the animal spirits of Europe trying to do what the United States – look, the United States is having a tremendous amount of conversation and dialogue and we had a tremendous amount of activity in India and in China, and yet there’s something in Europe, UK, Eurozone that just seems to be not exciting about M&A. And it could be Brexit related but it started a year ago, if it started.”

The slow growth is helping the M&A environment

” I believe the M&A dialogue and the desire to take action to that against what is a low growth economy, threating your top line, you cannot get the growth organically. And then secondly, there’s a big thing going on. I believe the change, the technology that each industry is facing and trying to figure out where their business is going to be three, five years from now and setting themselves up in a technology format to compete is really adding a tremendous amount to the dialogue”