PJTパートナーズ（PJT）2026年第3四半期決算説明会：9カ月累計売上高が過去最高

主なポイント

• 取引の完了件数が減少したことで主要3部門すべてが影響を受け、2026年第3四半期の売上高は前年同期比14%減の3億8,500万ドルとなりました。調整前税引前利益は23%減の7,200万ドル、調整後EPSは24%減の1.41ドルとなりました。
• 9カ月間の売上高は前年同期比9%増の12億9,000万ドルと過去最高を記録しました。調整前税引前利益は2億6,200万ドル、調整後EPSは11%増の4.92ドルと過去最高となりました。
• 経営陣は、戦略アドバイザリー、リストラ、PJTパークヒルの各部門がいずれも過去最高の業績に向けて順調に推移しており、PJTパートナーズ全体としても通期で過去最高の業績を達成する見通しであると述べました。
• リストラおよび負債管理のパイプラインは過去最高水準に達しました。金利上昇、借り換えコスト、技術的破壊、地政学的不確実性が企業を圧迫する中、経営陣は需要が引き続き高水準で推移すると見込んでいます。
• PJTパークヒルの9カ月間の成長はプライベート・キャピタル・ソリューションが牽引し、プライマリー・ファンドレイジングの緩やかな減少により一部相殺されました。経営陣は同部門が2026年に過去最高の売上高を計上すると見込んでいます。
• PJTパートナーズの当四半期末時点における現金・現金同等物および短期投資残高は過去最高の7億6,600万ドルとなり、有利子負債はなく、1株当たり0.25ドルの四半期配当を実施しました。

主要財務データ

PJTパートナーズは当四半期中、主に市場買い付けを通じて約20万株の自社株および株式相当物を買い戻しました。最初の9カ月間の自社株買いは合計約230万株および株式相当物に達しました。

事業および業績の動向

戦略アドバイザリー

戦略アドバイザリー売上高は当四半期に減少したものの、最初の9カ月間としては過去最高を記録しました。経営陣は同事業の通期売上高も過去最高を達成する見通しであると述べました。

PJTは、公表済み取引件数が比較的少ないものの公表前のパイプラインは堅調な状態で2026年をスタートしました。同社は年間を通じて、そのパイプラインの多くを公表および完了取引へと順調に移行させたと述べています。また、2027年を迎えるにあたり、完了待ちの公表済み取引パイプラインは2026年初めと比べて大幅に拡大する見込みです。

経営陣はM&A環境について、活動は活発であるものの成約への移行が難しい状況と説明しました。戦略的関心、受託案件、初期段階の検討件数は増加しているものの、金利の高止まり、市場の変動性、地政学的リスク、AI関連の不確実性、規制の複雑化が引き続き案件の完了を難しくしています。経営陣は、公表ベースのグローバルM&A案件総額について、2026年は過去2番目の高水準を維持する見通しであると述べました。

リストラ

リストラ部門は最初の9カ月間で過去最高の売上高を記録し、複数の産業にわたって過去最高の取引パイプラインを抱えています。リストラおよび負債管理助言の両面で需要が高水準を維持しました。

経営陣は、企業が借り換え金利やスプレッドの上昇、破壊的技術、商品価格の圧力、課題を抱えるビジネスモデルに直面する中で、財務ストレスが徐々に蓄積していると述べています。同社は活動の急加速を予想していないものの、債務の償還期限や借り換え圧力がより強い転換点をもたらした場合、利益を享受できる体制が整っているとしています。

案件の構成は引き続き予防的な負債管理が中心となっていますが、一部の企業が事業への影響が少ない選択肢を使い果たしたことで、法的整理手続への緩やかな移行が見られると経営陣は指摘しました。

PJTパークヒル

PJTパークヒルの9カ月間の業績は、プライベート・キャピタル・ソリューションの大幅な成長とプライマリー・ファンドレイジングの緩やかな減少を反映しています。第3四半期の業績は弱含んだものの、プライベート・キャピタル・ソリューションの過去最高業績に牽引され、経営陣は2026年の売上高が過去最高になると見込んでいます。

同社は、ジェネラル・パートナーおよびリミテッド・パートナーからの構造化流動性、セカンダリー取引、アクティブなポートフォリオ管理に対する需要の高まりを挙げました。プライマリー・ファンドレイジングは引き続き厳しい状況ですが、経営陣はファンドレイジングと流動性ソリューションの両面にわたるパークヒルの関係性を競合上の優位性と捉えています。

人材と投資

経営陣は、2026年がPJTパートナーズにとって過去最大のパートナー採用の年になる見込みであり、追加された人材の大部分は2027年初頭までにパートナー数に反映されると述べました。同社は対応可能市場（TAM）の拡大と顧客浸透度の向上のため、対象地域、業界の専門知識、テクノロジー、シニア人材への投資を続けています。

経営陣の見通し

• 経営陣は、主要3部門すべてが過去最高の業績に向けて推移しており、PJTパートナーズ全体としても2026年通期で過去最高の業績を達成すると見込んでいます。
• 通期の予想調整後人件費比率は売上高の66.5%で据え置かれています。
• 通期の予想実効税率は、主に州、地方、海外の管轄区域間における所得配分見積もりの更新により、20.5%から19.5%に引き下げられました。
• 2027年について、経営陣は第162条(m)項の適用延長の影響を含め、初期の実効税率前提として約25%が適切であると述べました。詳細な見積もりは第4四半期決算時に発表される予定です。
• 同社は、戦略アドバイザリーおよびPJTパークヒルが2026年に過去最高の売上高を達成すると見込んでいます。リストラ部門も通期で過去最高の業績に向けて推移しています。

リスクおよび注視項目

• 第3四半期に全事業で案件完了が減少したことが示すように、取引の実施時期は四半期売上高および収益性に重大な影響を与える可能性があります。
• 金利上昇や信用コストの高騰は、M&A完了の遅延、プライベート・エクイティにおける売り手と買い手の希望価格差の拡大、借り換え活動への圧迫をもたらす可能性があります。
• 市場の変動性、地政学的不確実性、AI関連の設備投資を巡る懸念は、案件の成約移行率を低下させる可能性があります。
• プライベート・エクイティの活動は、特に最高水準以下の資産において買主と売主の評価額格差により引き続き抑制されています。
• セカンダリーおよび構造化流動性ソリューションへの需要が高まっているものの、プライマリーでのプライベート・キャピタル募集は引き続き困難な状況です。
• 大型のクロスボーダー取引は規制上の不確実性に直面しており、経営陣は中国をより大きな不確定要素として挙げています。

アナリスト質疑応答の要点

M&Aパイプラインと成約移行： 経営陣は、買収、事業売却、スピンオフ、その他の戦略的代替案を検討する企業が増加し、案件ファネルの裾野が大幅に拡大したと述べました。しかし、金融引き締め環境や市場の変動性により成約移行率は低下しています。一般的に、規模の小さな未公開企業の取引は、大型の上場企業案件よりも障害が少ない傾向にあります。

プライベート・エクイティの活動再開： 高品質な資産への需要は旺盛ですが、スポンサー活動全般の再開は緩やかです。経営陣は、評価額の設定、資金調達コスト、売り手と買い手の希望価格差の拡大が、差別化されていない資産の取引を引き続き制限していると述べました。

既存顧客内での成長： PJTは、機能の拡大とブランド認知度の向上により、リピート受託、リード・アドバイザー案件、受託率、および報酬実現率が時間の経過とともに向上すると見込んでいます。経営陣は、これらの効果が長期的な関係構築に依存していることを強調しました。

リストラ事業の機会： PJTは地域、企業、プライベート・エクイティのカバー範囲を広げることで、対応可能市場（TAM）の拡大に注力しています。より厳しい借り換え環境は追加の成長要因になり得ますが、経営陣は現在の計画に急速な環境悪化を織り込んでいません。

営業レバレッジ： 経営陣は税引前利益率を主要な収益性指標と位置付けていると述べました。異例の低費用環境であった2020年と2021年を除けば、現在の税引前利益率は過去最高水準にあるかそれに近い水準であるとしつつ、さらなる拡大について具体的な時期を設定することには慎重な姿勢を示しました。

非連続的成長： 経営陣は、フランチャイズの価値向上に大きく貢献し、統合リスクが限られている規模は小ぶりながら重要な買収を好む姿勢を示しました。プロフェッショナル・サービス企業の大型統合については、人材の維持や統合への依存度が高いため、はるかに複雑であると考えています。

決算説明会文字起こし全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and welcome to the PJT Partners Third Quarter 2026 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Sharon Pearson, Head of Investor Relations. Please go ahead, ma'am.

Sharon Pearson

Thank you very much. Good morning, and welcome to the PJT Partners Third Quarter and 9 Month 2026 Earnings Conference Call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners. And joining me today is Paul Taubman, our Chairman and Chief Executive Officer; and Arun Kalra, our Chief Financial Officer.

Before I turn the call over to Paul, I want to point out that during the course of this conference call, we may make a number of forward-looking statements. These forward-looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from those indicated in these statements. We believe that these factors are described in the Risk Factors section contained in PJT Partners' 2025 Form 10-K, which is available on our website at pjtpartners.com. I want to remind you that the company assumes no duty to update any forward-looking statements and that the presentation we make today contains non-GAAP financial measures, which we believe are meaningful in evaluating the company's performance. For detailed disclosures on these non-GAAP metrics and their GAAP reconciliations, you should refer to the financial data contained within the press release we issued this morning, also available on our website.

And with that, I'll turn the call over to Paul.

Paul Taubman

Thank you, Sharon. Good morning, and thank you all for joining today's call to review our third quarter and 9-month results. For the third quarter, revenues were $385 million, down 14%, adjusted pretax income was $72 million, down 23%, and adjusted EPS was $1.41, down 24%, and as fewer completions across all businesses weighed on our results. The 9-month period stands in sharp contrast with record revenues, record pretax income, record EPS and led by record performance in Strategic Advisory and Restructuring.

Results in [ any 1 ] quarter can be greatly influenced by the vagaries of transaction completion dates which is one of the many reasons why we choose to measure our progress in years, not quarters. For the year, we remain on track to deliver record results with all 3 principal businesses tracking to record performance.

Before I turn the call over to Arun, please allow me to say a few words about our CFO transition. I am deeply grateful for Helen's innumerable contributions to our firm, and I have the utmost confidence that Arun will build upon the strong finance foundation, Helen, has established. After Arun takes you through our financial results, I will review our business performance and outlook in greater detail.

Arun, welcome.

Arun Kalra

Thank you, Paul. Beginning with revenues. Total revenues for the third quarter were $385 million, down 14% year-over-year. For the first 9 months, total revenues were $1.29 billion, up 9% year-over-year. And as Paul mentioned, a record for the 9-month period. Revenues in Strategic Advisory, Restructuring and PJT Park Hill decreased for the third quarter. And in contrast, revenues in these businesses increased for the 9-month period with record [ on ] revenues in both Strategic Advisory and Restructuring. We had a number of transactions that met the criteria to be pulled forward in the third quarter, totaling $35 million across 8 transactions which is identical to the pull forwards in the second quarter.

Turning to expenses. Consistent with prior quarters, we have presented the expenses with certain non-GAAP adjustments, which are more fully described in our 8-K. We accrued adjusted compensation expense at 66.5% of revenues for the first 9 months of the year compared to 67.5% for the same period last year. This ratio continues to represent our best estimate for full year 2026. Total adjusted noncompensation expense was $57 million in the third quarter, up 10% year-over-year and $117 million for the first 9 months, up 11% year-over-year. As a percentage of revenues, 14.7% in the third quarter and 13.2% in the first 9 months. The main drivers of the noncomplex increase for the first 9 months of the year were higher occupancy and depreciation expense relating to the expansion of our global office footprint, higher travel and business-related expenses and higher communications and technology expenses. Our full year guide for our noncompensation expense remains unchanged from last quarter.

Turning to adjusted pretax income. We reported third quarter and first 9 months adjusted pretax income of $72 million and $262 million, respectively. Our adjusted pretax margin was 18.8% for the third quarter compared with 21% for the same period last year. And for the first 9 months, 20.3% compared with 19.5% for the same period last year. The provision for taxes, we present our results as if all partnership units have been converted to shares, and that all of our income is taxed at the corporate tax rate. Our effective tax rate for the first 9 months of the year was [ 19.5% ] which represents our revised expectation for the full year. This rate is below our previous full year estimate of 20.5%. And as a result, the effective tax rate for the third quarter was 16.9%. The reduction in the full year rate is primarily due to an updated estimate of our income allocation across state, local and foreign jurisdictions.

Earnings per share. Our adjusted if-converted earnings per share was $1.41 for the quarter, down 24% year-over-year. For the 9 months, our adjusted [ net income, earnings ] per share was a record $4.92, up 11% for the same period last year. On share count. For the quarter, our weighted average share out was 42.7 million shares, down 2% versus a year ago. And during the quarter, we repurchased approximately 200,000 shares in share equivalents primarily through open market repurchases. Our [ adverse ] for the first 9 months of the year totaled approximately 2.3 million shares and share equivalents.

On the balance sheet, we ended the quarter with a record $766 million in cash, cash equivalents and short-term investments, and we have no funded debt outstanding. We have also extended our existing $100 million credit facility for 3 years on substantially the same towns with Bank of America, [ Truist ] and [ P&C ] as lenders. Finally, the Board has approved a quarterly dividend of $0.25 per share.

And with that, I will turn the call back to Paul.

Paul Taubman

Thank you, Arun. Beginning with Restructuring. We continue to see elevated levels of demand for liability management and restructuring advice around the globe. We expect these higher activity levels to continue as companies across a wide array of industries [ contend ] with significantly higher interest rates, challenged business models, accelerating technological change and an increasingly fought geopolitical environment.

Our Restructuring and liability management team continues to be very active with a record pipeline of transactions across a broad array of industries. We continue to expand our restructuring and liability management teams, market-leading presence as we benefit from an enhanced geographic footprint and an expanded coverage universe of financial sponsors and corporates.

Turning to PJT Park Hill. The overall private capital solutions market continues to grow, as GPs and LPs pursue alternative liquidity solutions and the investor base and secondary products continues to expand. At the same time, the environment for primary fundraising remains challenging. Our 9-month results for PJT Park Hill reflects significant growth in private capital solutions and modest declines in primary fundraising. Notwithstanding declines in third quarter performance, PJT Park Hill remains on track to deliver record 2026 revenues driven by record-setting results in our private capital solutions business. Turning to Strategic Advisory. While market sentiment regarding overall M&A activity has bounced around quite a bit throughout the year, our take on the M&A environment has remained essentially unchanged.

Our perspective on global M&A activity are relatively simple and straightforward. On the one hand, the strategic importance of M&A has never been greater, and for companies contemplating strategic combinations, the regulatory backdrop has arguably never been more favorable. At the same time, there are many factors which have made getting deals over the finish line more challenging, whether they be elevated interest rates, heightened geopolitical risk greater market volatility, concerns about the sustainability of capital expenditures linked to AI or concerns regarding the disruptive impact of AI development.

Consistent with our prior prognostications, annualized global announced M&A activity is trending up modestly from year ago levels and 2026 remains on track to be the second best year ever for M&A as measured by announced volumes. In our Strategic Advisory business, we entered the year with a relatively low level of announced transactions, but a relatively high level of preannounced transactions. As the year has progressed, we have had strong success in converting our preannounced pipeline into announcements and close transactions.

Importantly, we expect to begin next year with a meaningfully improved pipeline of announced pending close transactions compared to what we had entering this year. As we continue to add senior talent to our platform as more of our investment gets to critical mass and as the platform continues to mature, we are in an ever more powerful position to gain share in our Strategic Advisory business, independent of market conditions. For full year 2026, our Strategic Advisory business remains on track to deliver another year of record revenues.

Turning to recruiting. We remain highly successful in recruiting talent to our firm across industries, geographies and disciplines. Of note, 2026 is shaping up to likely be our biggest partner recruiting year ever, with most of these partner additions showing up in our partner count by early next year. As we look ahead, we remain focused on ending the year strongly and with the greatest possible momentum heading into 2027. We continue to invest in our businesses, to enhance our footprint, our capabilities and our brand with the goal of better serving our clients and continuing to expand our market share. As before, we remain confident in our near, intermediate and long-term growth prospects.

And with that, we will now take your questions.

Operator

[Operator Instructions] We'll take our first question from Devin Ryan with Citizens Bank.

質疑応答

Devin Ryan

Okay. Appreciate some of the color on kind of the broader M&A outlook, Paul. And obviously, some of the indicators that you're watching. But could you drill down a bit more into what you're seeing right now in the backdrop, it feels like kind of mixed environment large cap, a lot of maybe catalysts to do deals over the next year.

At the same time, our sponsors have been slower to come back. So can you just put a finer point on what you're seeing among kind of large deals the [ ben ] expectations for sponsors reengaging? Are you seeing signs of that's happening? Has that been improving even in recent months? Just some additional color there would be helpful.

Paul Taubman

Sure. So look, I think the urge to pursue inorganic opportunities has never been greater. And we've been on this team for a very long time. And I think the cost of standing still, the cost of in action, the cost of not reimagining one supply chain, creating more onshoring, creating capabilities through acquisition, discarding or finding homes for businesses that are subscale where you can't create the right management attention, capital allocation, they need to have a highly competitive cost of capital, which might mean rethinking whether a company should remain as one or separate or spinoff businesses, the fact that companies the traded significant discounts, find themselves with active board members, active shareholders active private equity firms who want to deploy capital.

All of those things are more present today than they've ever been. And then when you throw on top of that, an inviting regulatory backdrop, not a perfect backdrop but an inviting backdrop, you're going to see a lot more investigation, and we see that. We see that in terms of mandates. We see that in terms of files being open. We think about serious conversations, investigations. And that's only speeding up.

At the same time, this is a choppy environment, and therefore, getting deals through the finish line or ensuring that deals that are presented are well received by share owners, that's still challenging, which just means there's a lot of discussion, there's a lot of discourse. There's a lot that gets to be presented, but it's almost as if at the top of the funnel, the number of situations that are being tracked down investigated, evaluated has expanded dramatically the filter has tightened. But yet what's coming out the other end is still greater than it was before, and it's still near record levels, but the conversion rates are just lower.

On the private equity side, we've also been consistent. But what everyone loves to talk about all the dry powder, all of the ability to go out and do deals that it's the core business of these alternative asset managers that is just not that simple because it's great to have buyers who are prepared to put capital to work, but you need to have willing sellers and most private equity acquisitions or acquisitions from existing owners, and those owners are also private equity firms.

So you need to create that supply. And I do think that you have a challenge right now because a lot of assets are marked at levels, which make clearing that hurdle by a comfortable margin challenging. And as rates tick up, I think it becomes more challenging.

Now what you're seeing is really a bifurcation, which is for the best assets. But the best assets are put on the block, whether it's from a strategic or from a private equity firm, you are seeing real engagement, real engagement from private equity firms for high-quality strategic assets and real appetite from private equity firms when other private equity firms are prepared to part with -- or partner with their most valuable and attractive assets. It's when you go down a level or 2, where they are nice to have, but not must have long-term investments where it's much more about price and financing conditions and with prices creating big bid-ask spreads given how assets are marked. I don't think we've really seen sort of those states open up. I think we've seen a little bit of the frost come off the windshield, but we're still not where we'd like it to be.

And the hope is that over time, as more portfolio companies either grow their way into some of these marks or find a way to rethink levels at which they're prepared to transact or liquidity pressures build or interest rates come down a bit, something in there is going to open up the system. But right now, I think it's very much a slow and steady opening of that part of the market.

Devin Ryan

Really appreciate all the color there, Paul.

And as a follow-up, if you look at the presentation that you guys put out some nice presentation going back at the end of the year, you show that the client base has increased from [ 209 ] in 2015, I know a different firm at that point to [ 445 ] today, revenues have grown from roughly $400 million to around $1.8 billion today. So that implies revenue per client has more than doubled.

As we think about the growth opportunity for PJT moving forward, I'm sure you'll continue to add more partners and new relationships. Can you just talk about the effort an outlook around continuing to earn a larger share of your existing clients activity, just did you add more capabilities and more expertise, because it seems like that's been a really good story. But assuming out, I would just love to hear kind of what you guys are doing there and how much more you can do with existing clients?

Paul Taubman

Yes. Look, I think that's a great question. And look, we've always said that it's not just the bankers that you have on the platform but it's also the brand awareness and whether or not it's repeat business, and that just takes time. So if you just think about it, in the early days, when we're trying to break into a client that has heretofore not work with our firm, we're doing what we can to really showcase our firm, and it may be that we're giving a smaller assignment to work on out of that comes better appreciation for what we offer.

And from there, we end up with the next large assignment. What we may be brought in just as a second set of eyes on an existing project. And by the time that concludes, there's a sense that on the next project, they'd like us to lead it. So all of these things are happening over time as we continue to expand our field presence with clients. And what we've always said is we have spent a disproportionate amount of our to building out our capabilities first as opposed to the sales force.

And from our perspective, that's the only way to build out a world-class part is you have to have a truly differentiated best-in-class capabilities and need to have highly satisfied clients who once they see us in action, just want more of our firm, they want more access to our firm and have a greater appreciation for our firm. And we're now getting to the point where because we've made such a heavy investment in all of those capabilities that we now can continue to expand the reach of the firm.

And at the same time, the brand awareness and all of the other constituents in the ecosystem, whether they be legal Board members who've seen us in action in other situations, whatever it is, that should dramatically increase our win rates it should dramatically increase those situations where we're brought in without a competitive process. It should dramatically increase our fee realizations, all of the above but it sort of takes time, and we've been on this journey. And I think we're going to continue to benefit from all of the investments that we've made.

Operator

We'll take our next question from James Yaro with Goldman Sachs.

James Yaro

Paul, I wanted to touch on the Restructuring backdrop. Could you comment on the ability for this business to accelerate into rising debt maturity walls over the coming years and combined with higher interest rates, and if possible, could you perhaps differentiate between the liability management part of the business versus the inside and out of court bankruptcy part of the business?

Paul Taubman

Sure. I mean I don't know what the inflection points are going to be. But I've said this for a long time, which is people were overly grounded in an environment which was anomalous, which was near 0 interest rate environment, where a lot of debt has recently been raised with various in covenants. And as a result, there were no real choke points. Companies had long runways, long maturity runways and we had benign economic conditions and 0 interest rates -- renew 0 interest rates. And as a result, the default rates were so far off of historic levels.

And now what has happened is with every turn of the screw we're starting to see that while there are many industries that have a lot of tailwind to them, there are also a lot of industries that are really finding it quite challenging because of either AI disruption spike in commodity prices, the refinancing rates and spreads that are barely recognizable to the cost of capital when the original loan was financed. And as a result, stress is slowly building in the system, and it's affecting different industries in different ways and even in industries where the industry overall is thriving. You have second, third, fourth tier players who are finding them in the scale game, they're being squeezed and they're being left behind.

So we continue to think that overall Restructuring and liability mandates should remain at these levels for a while or build. We're not assuming that they're going to build, but it's a distinct possibility that they will build. And if they do, you could see, to your point, a sharp inflection in activity levels. That's not what we're budgeting for. That's not what we're forecasting, but I think we're exceedingly well positioned for that to occur.

At the same time, we're focused on meaningfully increasing our addressable market. And as you think about that, it's the interplay of geographic presence is having more strategic advisory coverage bankers who have relationships on the corporate side and is further penetration in the private equity ecosystem. And I think on all 3 of them, we've been able to achieve a leadership position in Restructuring and liability management for, we've fully built out our geographic footprint before we've fully built down our industry footprint, our corporate coverage footprint for coverage of private equity firms. And as we continue to put in that white space, we have a greater and greater addressable market.

So we're focused on what we can do in a static macro environment. But if we also see that the world becomes more challenging and more companies are struggling to deal with looming maturities that's just another leg of growth. So it's out there, but it's not what we're assuming until we see those conditions deteriorate. And they may, they may not. That's not what we're focused on. We're focused on how do we do more in this environment. And we think this environment is kind of the new normal environment, even though it's quite different than the environment of 5 or 10 years ago.

And as it relates to whether it's proactive liability management or it's in port, I think you're starting to see maybe some move towards more in core, but it's not dramatic. I just think that's probably the balance is moving a little bit that way. And some of that is after all of the proactive liability management exercises [indiscernible] companies a main every opportunities and the flexibility to sort of rightsize their businesses and to as to chip away the debt at some point, there needs to be a more dramatic resolution. So you're starting to see that direction, that will move a little bit in that way.

James Yaro

That's really helpful. And just a quick follow-up here. We've seen recently rising debt costs for AI financing from both higher rates but also a more challenging market backdrop. How do you think about the impacts of further indigestion in the space for a more prolonged period? And could this be an opportunity for your Restructuring business as well over time?

Paul Taubman

I think everything ultimately is sort of the addressable market, which is as the quantum of debt that issue just grows by leaps and bounds, inevitably, not all of it is going to end successfully. That's just the reality. And when you think about the TAM, you have to think about it not just default rate, but you need to take a value what are you applying that too and the quantum of debt informatically greater.

At the same time, when you have such voracious users of debt capital, what you're going to see is crowding out [ Penon ], and you're going to see spreads widen out and the multiplicative effect of spreads starting to widen and base rates remain elevated, that puts a lot of pressure on refinancing. And clearly, all of the exotic financings that are being employed and all of the vast quantum of capital, I think it's safe to say that there will be situations that will not go as they were initially expected and those will present opportunities. But that's true across all industries. But I think the bigger theme is that as so much capital needs to get raised.

And if there are -- if there are legs down and if there are credit losses and credit funds begin to feel the pressure, then what they're going to require to commit to the next deal, you're just going to see spreads potentially gap out. So that's something which we're ever watchful for. And that made for that itself, it may not. As I said, we can only focus on what we can control. So we assume that the market remains pretty much as is. And the question is, can we do more in the current environment? Because we don't control the environment, we just control our ability to capitalize on any market environment that's presented to us.

Operator

We'll take our next question from Brennan Hawken with BMO Capital Markets.

Unknown Analyst

This is [ Josh Breckel ] filling in for Brennan Hawken.

Our first question is going to be on Park Hill and just kind of the competition and consolidation you're seeing in that market. That's competition for mandates and talent. Just if you could be more broadly, I know your outlook for this year is pretty strong. Just wanted to hear what you're seeing in the market.

Paul Taubman

Look, I think what we're seeing in the market is that for all the reasons we've talked about with a lack of portfolio remaining challenged for midsized companies with all of the challenges in the ecosystem in creating a real DPI that asset managers are increasingly looking for alternative needs to create liquidity and you're seeing more structured solutions you're seeing more LPs want to proactively manage their portfolio of relatively illiquid assets.

And we're at the forefront of all of that, we continue to grow our footprint, we continue to grow our share in the market. We think we have tremendous opportunity in front of us. And while everyone would like to grow their businesses, I think we have the benefit of having an established platform with a lot of momentum. We continue to grow the business, and we continue to find that is a very attractive destination for talent. And there are a number of dedicated professionals that we have continue to grow, and we're quite comfortable in putting more resources against this opportunity.

At the same time, the primary fundraising world is challenged for all the reasons we just talked about is sort of the other side of that same point, but it creates opportunities for us to take relationships that we have where there is a real interest in Park Hill leading a primary fund raise and being able to think more holistically about how we can work with asset managers to help them create liquidity through structured solutions.

At the same time, we work with them on new fundraises. And because we have such deep relationships with all of the [ purveyors ] of capital, all of these relationships that then puts us in an attractive position as it relates to proactive LP ratings of their portfolio. So we're -- we've been on this for years, and we have a very clear opposed to the business, which we think differentiates us and it's starting to show up in our numbers and in our results, and we're quite proud of the effort.

Unknown Analyst

Got it. Got it. Definitely appreciate color there. And then our next question will be kind of on the really strong year-to-date revenue. I know this quarter was a bit softer, but year-to-date results have been impressive in the outlook seem to remain constructive. So we just wanted to know what that meant for 4Q comp leverage as it typically comes through there?

And then we're a couple of years into the cycle -- and a couple of years into the cycle. I'm just curious on your expectations in the medium term of operating leverage as we move to progress.

Paul Taubman

Well, there's a lot in all of that. Let's just start with your last question first, operating leverage. So if you look at our pretax margin, which is what we focus on the most because at the end of the day, that's would create shareholder value as pretax margin. And we think that as managers, we should have the lag as to where we make investments and not go down each component line of expenses. The question is, in a holistic manner.

And all of this is interrelated to because if you're going to make big technology investments, then you're going to see an IT budget to balloons, but that may create productivity with human capital. So everything relates to everything else. And it's not just that you can just pull on one string. You need to look at the entire lead on the expense base. And if you just take down the two anomalous years of COVID of 2020 and 2021 when there was no travel, there was no entertainment and there was not a realistic expense base.

I think we're sitting here today at our best -- or near best pretax margins that we've experienced history and the hope is that over time, you'll see more. But we don't want to be slaves to how much how soon. But as you think about the direction of travel, the reality is, excluding those two anomalous years we're sitting here today with, notwithstanding all the competitive pressures and all the expense inflation, we're sitting here with some pretty impressive pretax margins.

And then I appreciate your other point about being 2 years out of the cycle because it gives me an opportunity to talk about something that's near dear to my heart, which is if you go back [ 5 years ], we get to 2001. If you look at 2001, that is the record for M&A activity. If you fast forward to 2026, this is going to be the second best year, and if you look at how much our revenues have grown in the last 5 years, any benchmark it to large firms, small firms, midsized firms, it's a very impressive track record. And that's why when we talk about measuring in years not quarters, we're really in this for the long term. We really want to measure this in decades and beyond.

And this is a business where we have incredible confidence in our ability to execute. We have our -- we have incredible confidence in our ability to succeed but it just doesn't work on a quarter-to-quarter basis and even look with a longer lens. And the longer the lens, I think a clear it is as to how strong our results have been. So in some ways, we're 2 years into the cycle, but I kind of think point to point. The last time we saw an environment like this was pretty much 5 years ago, and we're quite proud of what we've accomplished.

Operator

We'll take our next question from Steven Chubak with Wolfe Research.

Unknown Analyst

This is Andy on for Stephen. I wanted to just start with a question on the impact from midterm. And can you speak to how you anticipate the midterm will affect deal activity across different sectors? And any particular sectors you expect will be more or less impacted?

Paul Taubman

Well, I think it would be fair to answer that question actually to see what happens in the midterm because it's unclear exactly what is going to happen and what the shape of the new congress is going to be. I'd like to think that a week from now, we'll have a much better sense as to what specifically is going to require a pivot.

I maybe in a related matter, give me the following opportunity. which is I do think that there are companies that very much think that they're on the shot clock. And the way they think about it is, regardless of the midterms, to some extent, if you wait 6 months from today to invest again in large consequential strategic combination. If you just assume that from approach to engagement to back and forth to paring it over. It takes another 6 months. They're going to find yourself a year away from presidential election.

And I do think for a lot of companies, if they have a view on what the regulatory framework is today and they wait more than 6 months, they're really subjecting themselves to an unknown environment and an unknown framework.

So my sense is that you may see a little bit on some of the largest, most consequential deals where there could be a robust regulatory discussion and debate, you could see a little bit of a pull forward where the next 6 months might well be an attractive window. And then after that, there might be a desire to sort of put things to the side on very large audacious proposed combinations to then wait to see if there's greater clarity on what the next administration looks like.

So I just think that that's a factor to consider. But as far as the shape of the midterms, let's give us all an opportunity to see what happens and to digest that, and then we'll give you our best view on how that's likely to affect the world. But I think it's fair to say that we haven't seen any of our clients sort of slow things down, leading results from today's election day.

Unknown Analyst

Okay. Great. And then just for my follow-up, we had a question regarding tax code [ Section 162(m) ]. And it appears this tax change, which goes into effect next year could limit tax reductions by increasing the number of covered employees and recognizing this is not just a PJT specific issue.

Can you provide any preliminary guidance as to how impactful this could be to your go-forward tax rate beginning in 2027 versus the current baseline?

Arun Kalra

Yes. Thank you for the question. And you're right. This isn't unique to PJT and we are thinking about the impact and modeling it. As we sit here today, it's still early, and we'll come back with our fourth quarter to give you a better estimate of our effective tax rate but we think an appropriate starting point is around 25% for 2027, and that includes the impacts that we believe the 162(m) extension will have on tax rate.

Operator

We'll take our next question from Alex Bond with KBW.

Alexander Bond

Paul, you mentioned a little earlier, getting deals over the finish line is still challenging given the macro and geopolitical backdrop, which makes sense but wanted to drill down a little bit and see if a, if this is delaying maybe early-stage deal activity, more so than more putting a temporary pause to deals that are already maybe well in the works or at a later stage. And then also if you're seeing more of an impact in certain deal size cohorts than others maybe if the $1 billion to $5 billion or $5 billion to $10 billion range are more or less impacted than the mega cap side? Just any further point you could put around that topic would be helpful.

Paul Taubman

Yes, I think my general comment, which is that I think you think about it as a deal funnel, I think we've never seen more situations, more opportunities that are starting out on the top of the funnel where everyone is trying to investigate what are the strategic options, whether they're buyers or sellers or the like.

So and that's reflected a mandate engagement in activity. I just think that this is not a one-way market where if you go back to 2021, that was a one-way market. It was a one-way market where it was just clearly risk on where very few processes went to final bids, there were preemptions. Companies were getting real interest. They had a very good sense of the market. and those that wanted to preempt the process, we're able to do so by leaning in and everybody was comfortable and they didn't need to see and play it all the way out.

I think this is not a one-way market. It's not a [ Riston ] only market, and there are a lot of puts and takes and a lot of these deals are finally calibrated. And when you see big swings in sentiment in market prices, the ability in a public company deal to land on a price that works for buyer and seller and can be well received going forward. It just becomes more challenging. And as rates keep being pressured in financing conditions and credit availability while it's still quite available. It's become pricier and pricier. And finally calibrated deals, it's just more difficult. And then on the regulatory front for large deals, while I think there's a much greater mapping as to how the U.S. will react in European regulators. I think China is probably more of a wildcard today, than they've been for a very long time. So that injects some uncertainty into deals where they otherwise might be a regulatory line of sight.

And as a general matter, smaller deals that are under the radar that are private, you have you have fewer interveners, you have fewer constituencies to the [ all ] else equal, those probably even are less subject to some of the factors I've been talking to. But the basic trend is if this was a retail store, there are more people that are in the store that are browsing that are looking to purchase. But while the cash register is increasing, it's not increasing to the degree that the foot traffic has increased.

And I think that's what you're seeing. You're seeing more companies looking at situations for probably conversion rates are down, but if you take it all in totality, activity level is still up. And let's not lose sight of the fact that this year, while it may be disappointing, for some folks who had unrealistic expectations last January. It's still tracking to be the second best year on record. I think it's disappointing only relative to what was some unrealistic at the beginning of the year expectations. But in absolute, it's one impacted market, and we're happy to be part of it.

Alexander Bond

Got it. No, that makes sense. And then I wanted to ask a follow-up just around industry consolidation and inorganic growth. There's been some press reports around potential consolidation within the M&A industry. So I just wanted to double-click there and see how you think about inorganic growth for PJT as use of capital? And then just any color or commentary that you would have on industry consolidation at the M&A level also would be helpful.

Paul Taubman

I thought I'd get away without having to answer that question. Look, just when I think about M&A as a general manner, M&A is all about risk reward. And I think in professional service organizations, the risk is greater than in industries or businesses that are not as people sensitive. So the risk is meaningfully higher.

And if the risk is meaningfully higher, the reward shares heck there a lot higher. Otherwise, it's hard to imagine and making sense. Where we spent our time have been on smaller transactions where it's big enough to be worth the time of the effort. But clearly, on the risk-reward spectrum, is highly accretive to our franchise and very low risk, and that is our clear preference. And I think the lesson all of this is the larger the target, the larger the number of people you're trying to deal with the risks of the successful integration in lay out, and you need to be very, very comfortable that you can manage those risks.

And you need to be extraordinarily comfortable that the rewards are meaningfully greater than the risk you're assuming. And that's why, that's why when we've done this, we've focused on smaller but consequential transaction.

Operator

This concludes our question-and-answer period. I would now like to turn the call back over to Mr. Taubman for closing remarks.

Paul Taubman

I guess my closing remark is I'm going to make a public service announcement, which is if you haven't voted, vote. And we will look forward to seeing you when we report fourth quarter results early next year. So until then, be well and we appreciate your support and your interest in our company. Thank you.