Good morning and welcome to Lazard’s Third Quarter 2015 Earnings Conference Call. This call is being recorded. At this time, all participants are in a listen-only mode. Following the remarks, we will conduct a question-and-answer session. Instructions will be provided at that time. [Operator Instructions] At this time, I would like to turn the call over to Judi Frost Mackey, Lazard’s Director of Global Communications. Please go ahead.

Good morning, and thank you for joining our conference call to review Lazard’s results for the third quarter and first nine months of 2015. Hosting the call today are Ken Jacobs, Lazard’s Chairman and Chief Executive Officer; and Matthieu Bucaille, Chief Financial Officer. A replay of this call will be available on the Lazard website beginning today by 10:00 a.m. Today’s call may contain forward-looking statements. These statements are based on our current expectations about future events and are subject to known and unknown risks, uncertainties and assumptions. There are important factors that could cause our actual results, level of activities, performance or achievements to differ materially from those expressed or implied by the forward-looking statements. These factors include, but are not limited to those discussed in Lazard’s filings with the SEC, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Lazard assumes no responsibility for the accuracy or completeness of any of these forward-looking statements. Investors should not rely upon forward-looking statements, predictions of future events. Lazard is under no duty to update any of these forward-looking statements after the date, on which they are made. Today’s discussion may also include certain non-GAAP financial measures. A description of these non-GAAP financial measures and their reconciliation to the comparable GAAP measures are contained in our earnings release, which has been issued this morning. For today’s call, we will focus on highlights of our performance, the details of our earnings can be found in our press release issued this morning and in our investor presentation, both of which are posted on our website lazard.com. Following the review of our results, we'll be happy to answer your questions. I’ll now turn the call over to our Chairman and Chief Executive, Ken Jacobs.

Good morning. Lazard achieved record operating revenue for both the third quarter and the first nine months of the year despite the uneven macroeconomic environment. Our adjusted results continue to display the operating leverage in our model. Operating revenue rose 2% over last year's record third quarter. Earnings from operations increased 24% and pretax income rose 33%. M&A activity remained healthy. Among advisory focused firms Lazard is best positioned for the large, strategic, complex and cross border assignments that characterize this M&A cycle. Year-to-date, we're advising on three of the 10 largest global announcements. Approximately 40% of our announced transactions are cross border and we've significant market share in the most active sectors for M&A. In restructuring we continue to gain energy related assignments. Lazard remains the global leader in announced restructurings year-to-date. Our Sovereign Advisory business is active worldwide with assignments in Eastern Europe, Africa and the Americas. And our Capital Advisory business is seeing increased activity in both Europe and the U.S. as we advise clients on capital raising and balance sheet structure. The European IPO market has had a strong start in the fourth quarter and Lazard is advising on a number of the largest offerings. In Asset Management, late summer market volatility challenged investment managers across asset classes and our business achieved net inflows for the third quarter. The inflows were driven by strategies in global and multi-regional equities as well as emerging market debt. The resiliency of our asset management business reflects fundamental strengths including a primarily institutional, global client base, broadly diversified investment platforms and a hazardous long-term performance. We continue to see investor demand across all of our platforms -- across our platforms. Matthieu will now provide color on our financial results and capital management.

Thank you, Ken. Operating revenue increased 2% for the third quarter and 5% for the first nine months of 2015, compared to the 2014 period. Pretax income increased 33% for the third quarter, reflecting the operating leverage in our business model. Financial advisory operating revenue increased 14% for the third quarter and 12% for the first nine months of 2015 compared to the 2014 period. The increases were driven primarily by M&A and other advisory, which was 19% for the third quarter and 15% for the first nine months. Asset management operating revenue decreased 9% for the third quarter and 2% for the first nine months of 2015 compared to the 2014 period. On a sequential basis, Management fees decreased 4% from the second quarter of 2015 in line with average AUM, which decreased 5%. As discussed in our last call, incentive fees were down versus last year and we expect them to continue to be muted in the fourth quarter similar to last year. AUM ended the third quarter at $183 billion, down 8% from the 2014 period, driven primarily by market depreciation of $16 billion, foreign exchange movements of approximately $5 billion and net inflows of $201 million. Recent improving market conditions in global capital markets have had positive impact on our AUM. As of October 16, AUM was $193 billion an $11 billion increase till September 30. The increase was driven by market appreciation of $8 billion and foreign exchange movement of $3 billion with slight net outflows of $14 million. Turning to expenses, we continue to accrue compensation at 55.6% adjusted compensation ratio, consistent with the first two quarters of this year and our full year of 2014 ratio. Our adjusted non-compensation ratio of the third quarter was 17.2% compared to 18.8% in last year's third…

Thank you, Matthieu. To summarize our third quarter highlights, record operating revenue for both the quarter and first nine months, continued strong activity in M&A globally, resilience in asset management despite a challenging market, strong earnings growth, significant cash generation and continued return of capital to shareholders. Regarding our outlook, the environment remains conducive to M&A, companies are hard pressed for organic earnings growth while the cost of financing acquisitions is low and valuations are reasonable. Boards and CEOs are generally confident in the future despite recent market volatility. Active management faces the headwinds of lower AUM in the short term, but has solid fundamentals as institutions around the world continue to expand their investments beyond local markets, demand growth for sophisticated multi-asset solutions and defined contribution plans increasingly seek institutional quality investment managers such as Lazard. Long-term trends remain favorable for both our businesses and we’re in an excellent position going forward. Lazard has a global advisory business that competes at the highest level and world-class asset management franchise, operating leverage and high productivity, capacity for increased activity and organic growth and we're maintaining our cost discipline. We continue to focus on building value for our clients and our shareholders. Let's open the call to questions.

Thank you. [Operator Instructions] Our first question will come from Brennan Hawken, UBS.

Hi, good morning. Thanks for taking the question. So on the buybacks, it was a bit lighter than I was looking for, which I actually thought given some of the action in your stock this quarter, you might surprise the upside. Are there any other cause on capital that we should be aware of? Should I be moderating my expectation for buyback? Was there any reason why you didn’t choose to capitalize on the market weakness to buy back stock?

Sure, first there are no other capital costs. Second, a lot of the volatility took place during the blackout period and so it’s a little difficult to be aggressive during blackout periods.

Okay. And just so I know the blackout period is at the two weeks leading into the end of the quarter and then up until you report.

The blackout really with respect to us repurchasing stock starts in the first month of the last month in the quarter. So that will be September 1.

Okay. Got it. That helps. Thanks. And then just to clarify a couple of the numbers that I heard from you Matthieu on asset management, the $3 billion or FX headwind, was that in 3Q or was that 4Q to date?

Okay. So let me repeat and make be very clear. In the third quarter, the foreign exchange impact was approximately $5 billion and since September 30, the impact of the foreign exchange was $3 billion. Positive both case, negative in the third quarter and positive since September.

Okay. Great.

Brennan is that clear.

Yes, thank you for that. And there is a decent amount of investor anxiety around EM and focus on your asset management business. So it would be interesting to hear how your conversations are going with you asset management clients? Can you may be give us an update on alpha generation for your largest strategies and a look into the RFP pipeline?

Ashish, you want to take this.

Yes. Brennan, I think the important thing to keep in mind for institutional client; EM is a strategic allocation not a tactical allocation. So if anything hurts activity and EM activity and debt continues and as EM has underperformed over the last few years, even if they're not increasing their allocation just by rebalancing you have more demand for EM. So that’s point one. In terms of EM strategies, we have an EM platform that has fixed main strategies. Our large value fund like most value funds has underperformed in the short run, but long-term, the performance is good and the demand is there. And then more growth funds have outperformed because markets have been very kind and friendly to the growth guys and the momentum guys and most of the value has lacked in the recent couple of quarters. Does that gets you to your answer?

Yes. It does. And then if you could give an update on the RFP pipeline? How things are looking? Is it stable? Is it picking up given the need to rebalance or is it declining given some of the concern over volatility?

I think in the third quarter it would be fair to say, RFP slowed down a little bit, but since then, you're starting to see a slight pickup. When the markets are extremely vulnerable, people tend to just sort of sit back and watch a little bit. But since then, we've seen a pick up. But EM as an asset class as we have not seen any marked shift in terms of new RFPs coming in and in fact my guess is you will probably see some pick up in EM RFPs over time.

Great. Thanks for that color Ashish. And then last one from me non-comp looks really good this quarter. I am sure FX was at least somewhat of an impact, but could you maybe unpack a little bit what the drivers were of the decline sequentially or year-over-year and whether or not there were any one-time benefits we should be aware of in that line item? Thank you.

Right. So as I said in my comments, generally the decline in non-comp is due to our overall good cost discipline across the firm. As you said, there was a little bit of a benefit from foreign exchange. Remember that Q3 is generally a seasonally low quarter versus Q2. So when comparing to Q2, you should take this into account. Also you're seeing that we continue to have certain cost saving initiatives in particular in the line outsourcing services. You'll see that the non-comp has reduced there and part of it is due to a new initiative and there is a little bit of a one-time off there.

Okay. Any chance to quantify that one time?

No, it’s just really just less than that assuming $1.5 million.

Thanks so much.

And the next question comes from Dan Paris, Goldman Sachs.

Hey, Good morning guys.

Good morning.

Last quarter you spoke about needing some kind of discontinuity in the financing market is a key driver for restructuring activity. I am curious if the moves that we've seen in spreads and the other decreased activity that we've seen in equity raising markets has been enough to spur restructuring mandates outside the energy sector?

So far I think most of the restructuring activity pick up that we're seeing is in the energy sector. It may -- you may see some flow over its commodities generally over time, but primarily the impact of any discontinuities in the financing markets has been limited to the energy sector for us at least as we see it right now.

Okay. Fair enough and then I guess king of along the same lines of thinking, any parts of the M&A market that you've seen dry up a little bit relative to past couple of quarters given some of the moves that we've seen in the macro space.

Look whenever there is volatility, there tends to be a little bit of a pause in M&A because it’s a business, which tends to be driven by financing valuations, sentiments. Financing during that -- for the most of the summer was still readily available and relatively inexpensive, particularly in the investment grade part of the market, which is the real driver of large M&A. In the valuations, given the volatility you have some tendency towards uncertainty just until things settle down a little bit, which they seem to so far and on sentiments, that’s the thing that gets rocked the most in a volatile period. That said, the trends, long-term trends around M&A appear to us as strong as they've been in a long time. The factors driving the long-term trends around M&A are probably amongst the most important of the following. One is the drive for top line growth. The second is to drive for operating leverage in your business. The period away to '12, '13, was the period where the premier companies around the world focused on a lot of productivity improvements and driving operating leverage because there was little growth on the top line. Today even though the macroeconomic cycle has picked up we're in a fairly low inflation, deflationary environment. So it’s hard to come by top line growth. So M&A serves two purposes right now. One, it drives additional topline growth and second, it allows for additional operating leverage through cost reductions and productivity improvements and that seems to be the long-term driver now, the key driver on big M&A at the moment and that’s going to last for a while it feels like to us.

Is there anything that you would call out in terms of composition shifting i.e. have sponsors become more active with some of the recent sell-off or are you seeing any obviously large cap dealers continue to dominate, but anything in kind of the middle market space?

This stuff can change week by week, a big deal capture people’s attention, I think what they're seeing is that most important companies around the world are viewing M&A probably as a much more important tool for them than they have in recent macro-economic recoveries just because of the nature of this recovery, which is some growth particularly in the developed world, uncertainty in the developing world and the deflationary low inflation, deflationary environment is driving this. So wherever -- whatever sectors are affected by that is probably most at this point. I think you're going to see pick up in M&A. It will be uneven just because M&A in not a straight line business.

All right. Thanks very much for taking my questions.

And the next question comes from Ashley Serrao with Credit Suisse

Good morning. I was just curious if you could elaborate on your commentary around restructuring and energy. What are you hearing from -- when you talk to companies and give us a flavor for some environment? It looks like the banks are reevaluating the loan collateral as we speak. Do you expect the pipeline to build? And color there would be appreciated.

Sure. I think we're seeing the M&A, the restructuring pipeline in the energy sector build. We didn't get too excited about restructuring because we're still in a reasonably good macro environment world and we also are in a very attractive financing environment still. So I don't think you're going to see this spread out to other sectors, but the energy sector is going through a tough time. People are starting to adjust to what it means to have a lower oil price natural gas price commodity cycle at levels we're seeing it for a long period of time. And with that comes lots of stress on balance sheet and that's what people are adjusting to right now and that's going to continue for a while and so I think we're going to continue to see the pipeline in the energy sector build unless you see a recovery in price.

Okay. And then a second question just following up on Brennan's question around capital management, I heard your comments on being precluded from buying back stock due to blackout period, but just curious how just more broadly and philosophically how do you -- how you are thinking about a special versus buying back some more stock in 4Q? Just any thoughts around that will be appreciated.

Well look we're pretty consistent in terms of our segments around this. We generate a lot of cash kind of 110%, 115% and an income aside from where we get our debt management, the rest of it we have historically returned to shareholders. We view two ways to do that, one is share repurchases, second is dividend in the third or three ways to do it. Share repurchase dividends, regular dividend and special dividend. On share repurchase the goal is to offset any dilution associated with any of the compensation over -- different compensation over the course of the year. We've already done that this year. We look at share repurchases on an opportunistic basis, the share price looks attractive to us and at the same time we're free to buy. We may do that. On the other hand, we've also been very clear that if you don't know your cash and your exact position until you get to yearend and returning capital through a special dividend is an especially effective way to get cash in the hands of our long-term shareholders.

Okay. And I guess final question, it looks like Europe's on the verge for yet another wave of QE, curious what CEO sentiment is like in the region and what kind of trends you're seeing there, just deflation. So applied to the European region, is it more of a challenge in pursuit of growth. Any high level color will be great.

Sure. So look Europe is probably better off now as a whole not economically the decline since the crises. It's still a very difficult environment. The banking sector is more stable. You've got a real commitment to a lose or monitory policy and therefore some ubitous for stabilizing the macroeconomic environment comes out of that. But it's still a challenging environment with low growth and when you look at European companies they tend to be highly global. They obviously have the exposures to Europe and they also have big exposures to the U.S., which are probably positive right now and yet they also probably have big jurisdiction into some of the developing markets, China and the like, which are a little more uncertain today than they were over the past. So I would say it's hard to generalize unambiguously what the confidence levels are in Europe with centimeters across all industries and all CEOs, but generally speaking it's probably better than it was a few years ago. It probably isn’t quite as strong as is the case in the United States and you have to go sector by sector to really have a good feel for it. M&A activity in Europe is a little more muted than it is in the U.S., but it's not bad and our own position has been pretty good this year. It was good last year. It's I think same this year. When you adjust for currency I think we're pretty happy for how we've done relative to market. So I think it continues to be a pillar of our business.

All right. Great, thanks for taking the questions.

Sure.

And the next question is from Devin Ryan, JMP Securities

Hey thanks, Good morning, just had a question on healthcare. It's been such a big sector in the M&A market and we've seen some pretty extreme volatility there recently. So just want to get a sense of if you're seeing any change in sentiment at the Board level? There is lot of factors I think that's driving the volatility, but anything that you think may slow the deal pace in that important sector specifically?

Yes, I think things are a little bit all over the map and in healthcare M&A and frankly the backdrop is a highly inflationary environment for the healthcare markets. If you think about it, what’s really been driving M&A and healthcare is this tremendous pressure on price as a result of healthcare changes in the U.S. partly the ACA Act, partly the massive focus on productivity amongst the large employers in the U.S. post the crisis in '08. And the combination of both has just dramatically changed the healthcare pricing environment, cost environment in the U.S. That trend is going to go on at least in my opinion for a very long time and a lot of the M&A activity that's taken place in the service sector and in the life science sector is a result of trying to adjust to this new environment. You're going to see a lot of volatility because when people are under so much price pressure, business practices change and people experiment with new models and they try to do different things to preserve their market position and I think we're going through a period right now where that's taking place and you're going to see some -- you're seeing some of the outcome of that. So I think you're going to see a highly volatile environment for healthcare for the foreseeable future. You're going to continue to see a pattern of M&A. It maybe again have stops and starts, but in an industry which is under so much cost pressure, you have to have combinations to adjust.

Got it. Very helpful. Maybe moving on to the competitive environment, it’s been a lot of independent firms that have really expanded in recent years and I think a lot of the brands are more high profile today than they were five or 10 years ago. And so you guys as a firm are still growing share, but when you think about the environment, are you seeing more independent firms that bake off, the completive dynamic with them increasing or is it still just a function of the base competitors of the rackets and that too you're fighting with day after day.

So, look let me kind of approach this from a couple of different ways. First is competitive environment. Let’s go pre-crisis, post-crisis. Pre-crisis there were probably eight or 10 firms that could compete on intellectual capital globally. Today there are may be three or four and we're the only independent that can do that. So that’s number one. So in terms of market position if you think about what we do on the advisory side, if we compete on intellectual capital on the advisory side on a global basis, there are two or three firms other than us that can do that, large firms. There are no other independents that can do that yet today on a global basis So and pre-crisis there were eight to 10 firms that could do that. So I think I would rather take today's environment for the -- for our franchise to the one pre-crisis. As far as the independents are concerned, I think -- some of them well, some will do well over the future and some will probably have to adjust, but that’s like any marketplace. What we've really seen in the independents is a shift of talent out of some of the larger firms to some of the independents and so far some of these franchises have done well. They tend to be more domestically focused. They tend to be more focused around industry groups. No one has really broken out verbally yet and I think that’s where the real challenge is for everyone because that’s the hardest thing to do is to have a global franchise as an independent. And I think that’s our key competitive advantage. I am pretty confident someone will breakout at some point. But I still think the competitive landscape is more favorable for us regardless of whether one or two or three of the independents break out globally than it was pre-crises. And so we’re feeling pretty comfortable not taking it preventive but feeling pretty comfortable with the competitive environment we're in for the next few years.

All right, Got it, that’s very helpful and then I guess just maybe following-up on that theme, so you alluded to less firms today kind of having that global reach and you look at the European banks and clearly going through some pretty sweeping changes even today not sure that’s employee impacting the advisory pieces of the business. But do some of these kind of newer changes create opportunities or do you expect opportunities to come out where the moral maybe lower and so there is good talent that's available or even an opportunity to go after some clients that you haven’t done business with before?

Well, I think on the client side is the greatest opportunity because there again as I say, as I said before, the differentiating feature of our firm is to be a firm based on intellectual capital is global and you can really differentiate yourself in that regard and there is only a few people that can do that well amongst the larger firms today. And so from a client side it's the best and biggest opportunity; on the talent side, look the reality is you’ve already seen a large shift of talent away from some of these franchises to the boutiques. There is probably some still to go, but this is really been a slow steady grinding painful process since the prices for some of these firms, we’re probably the first act was the crises itself. The second act is probably the adjustments that are going on now. The third act is what it all looks like afterwards and I don’t think we know how it’s all going to play out yet, but I think you've seen a lot of movement to talent already probably.

Okay. Great. Thanks again, appreciate the color.

And the next question will come from Joel Jeffrey, KBW.

Hi, good morning guys.

Good morning, Joel.

Just thinking about the operating leverage in the business, your comp ratio is running in line with where you were for the full year last year and if we think that we have a traditionally strong fourth quarter, should we expect to see another true down in the comp ratio in the fourth quarter?

Becoming with the revenues in the fourth quarter, we'll be and I'll tell you what the comp ratio will be. There are two things is that as you guys know, we accrue comp at the average of the previous year for the first three quarters. So we've done that for the last few years as well as the revenue environment is stable, which it's been. And the fourth quarter is obviously an important quarter for everyone in our business. It tends to be a stronger quarter for most people and so a lot depends on how the fourth quarter goes as to how we join revenue, how we join revenue and then what we ultimately do with compensation? What I would say is when we get revenue increases, we've been able to over time do a pretty good job of getting some operating leverage out of the comp ratio.

Great, and then just thinking more broader picture, in terms of the recent slowdown in the Chinese economy, if this is a more longer term trend and understanding that their regulatory environment is going to be a little bit different, but does that open up opportunities for increased M&A coming out of China in your opinion?

Yes, but in the end the big people for M&A is the U.S. and Europe and while the people in China and Asia is growing, the lion’s share of the people is in the developed market. So I think that's going to be the key driver of all of our businesses for the foreseeable future and what happens in Asia will help over time, but I think it's not going to be the key driver.

Okay. And then just lastly for me, the emerging market debt just continue to see and both of you guys continue to sort of talk positively about it, just wondering with the equity markets and the emerging markets going through some turbulence there, why does the debt product seem to be that much more attractive to customers?

It's a differentiated product. It allows specific investments in sectors or products, which you've differentiated kind of returns and I think that's it in a nutshell.

Great, thanks for taking my questions.

Sure.

And the next question will come from Steven Chubak with Nomura.

Hi, good morning.

Good morning.

So I guess my next couple of questions are probably best to ask Ashish directly, first on the fee rate, however we saw it in the asset management side, one of the pleasant surprises in the quarter was that the realization rate not just based over resilient despite more pronounced AUM declines that we saw in some of your higher key AUM strategies. Now is it something that can speak to some of the factors or dynamics that are driving that resilience that we saw in the fee rate.

Ashish, do you want to answer the question.

On the fees, the fees, the impact on the fee is really not very significant from this quarter versus last quarter. So we were approximately at 52 Bps this quarter and we were approximately the same level the quarter before. There is versus last year a slight decline but it's just all really on the one bps. So I think it's just because of the nature of the flows offset some of the negative impact of the outflows.

Okay, thanks guys. It's really helpful.

So I think as the portfolio of businesses there are a lot of products that have higher fees beyond emerging markets and we have a pretty broad portfolio of investment strategies that reasonably vis-à-vis structures, so quarter-to-quarter the impact at length.

I understood and then Ashish maybe you just spending some more time on the RFP backlog and I do appreciate some of the color that you've given there, but what we have been hearing from some of your competitors is that they’ve experienced some outflows from the largest Southern wealth funds particularly those that have more gearing to or significant energy exposure and just giving institutional tails, have you seen any shift in risk appetite from those clients in particular?

I think people who are very levered to oil from Middle Eastern sovereign wealth funds in some cases have taken assets out and particularly trying to run their budgets, but overall we have not seen that. In fact if anything people are still looking at and adding more money to certain areas, I think from the normal channels, RFPs slow down during highly volatile periods, but additional contributions from existing clients without RFPs continue with their deals but if there is an opportunity to keep adding an asset. So there is no discernible pattern other than the month of August and September things slow down and then it picks up a little bit.

And also I would probably add to that. I don’t think we got as much exposure from Southern wealth funds as some of the others institutions that you're probably referring to.

In the Middle East.

Yeah Middle Eastern ones.

Okay, thanks for that color and then just one more on the capital management side and not to beat the dead horse Ken, but I do just wanted to look at it from a different angle where given some of the strong capital build that we've seen as it relates to some of your recent tactical actions on the tax side of the equation, is that going to drive some increase capital return capacity as we think about capital management and potentially a higher special end to your end?

The short answer is we’re going to do essentially what we’ve done in previous years till we get to year end, which is what cash we have. we'll sweep it and return it. We’ve done this now for a couple of years unless something surprises just in the fourth quarter. We would expect to do the same thing. Our investment is through the P&L and therefore -- and we've done what we need to around the debt management for the foreseeable future therefore the rest of the case, we want to get back to shareholders as efficiently as we can.

All right. Thanks for that color as well Ken and congrats on a strong quarter.

Thank you.

And the next question will come from Jeff Harte with Sandler O'Neill.

Good morning, guys. Couple wrap-ups from me, one you've alluded to this, but I want to make sure I’m getting it right. We're getting still a lot of questions about spreads widening, some headwinds in debt capital markets. Does that have any impact on M&A? It sounds like you’re seeing that kind of that debt capital market had in the third quarter really haven’t had an impact on the M&A pipeline in your mind?

Look, the large cap M&A is primarily driven. There are exceptions there may be one, but is generally driven by the investment grade markets which have remained very strong. We’ve done a couple of things recently where it's just stunning the appetite in the investment grade market at the movement. So that’s the core driver of the large cap M&A that is taking place. I know the spreads are widening in the higher markets. Don't see if it's impacting that. I think where you're seeing the impact is in sectors that are more vulnerable to energy. I think the private equity sector obviously was muted this time around in the last cycle. So it hasn’t had as much impact and so that would be I think our observations on that.

Okay. And you talked a little bit about the competitive environment, how much more or less competitive is the environments for advisory mandates in Europe relative to the U.S.?

They’re probably more local competitors in Europe by country that you compete against than there are in the U.S., but we tend to do pretty well in Europe just given our historical roots there and franchise and connectivity locally and such. There is probably still more capacity in Europe than there should be overall and fees in Europe are not at the same level as U.S. They've improved since the crisis, but there is some factor where they're not as the level of U.S.

Okay, thank you.

And the next question will come from Patrick O'Shaughnessy, Raymond James.

Hey good morning. So my first question on asset management side of things, how long does it typically take institutional clients to rebalance after there is a significant underperformance by an asset class? So if EM is particularly weak for a quarter, are they rebalancing the next quarter? Does it take them a few quarters to figure out where they want to go? What's that time lag typically look like?

It varies dramatically client by client. Certain clients particularly large European pensions do it much quicker because they make those decisions in-house. A lot of domestic clients take a little bit longer and make a couple of quarters or they look at their -- they analyze over a couple of quarters. So it is really married all over the place. Some of them are -- ones are very, very quick actually. They're at it and those who are not obvious UN RFP activities because any contribution don’t go through an RFP process. So that's a part that's harder for you guys.

Got it. Appreciate it. And then a quick question on the M&A side of things and I think we could characterize the M&A environment as being very top or a lot of very big deals and not a lot of the smaller kind of mid market deals. So you talked about kind of the favorable environment and companies needing to turn to M&A for growth and get that leverage. And at what point do you think that starts bleeding down to the middle market and are you positioned to really capture that or do you think you're just going to stay primarily focused on those large cap deals?

Well a couple of things, one is that our middle market business MM business is actually having a pretty strong year so far. So I am not sure I characterize the middle market at least the way we define it for the MM business as being not a very buoyant market at the moment, it's pretty good actually it feels like to us. I think what you're referring probably to is $1 billion to $5 billion to $10 billion deals, it's been a pretty decent market there. We have our fair share of those and at the same time I think this cycle is really so far dominated by the larger companies doing the most important things for themselves. I think we will see some spread over time and it's going to be more sector by sector. You've seen actually a fair amount of new middle market what you would define at $1 billion to $10 billion or $20 billion M&A market. It's actually been very active in healthcare. I think you'll see a little bit of pause in some of the turmoil right now, but it probably picks up again and you're seeing a fair amount of activity in that sector in tech. You haven’t seen as much in general industrial. Probably see some pick up there over time. But I wouldn’t say it's been a bad period for M&A there.

All right. Great, thank you.

And the final question will come from Vincent Hung, Autonomous.

Hi good morning, how is it going?

Good.

I'll keep it to one question. So I've got a bigger picture question here. So it's been quite a spectacular year for the mega deals and more of the positive effects on that is unity sales spin off etcetera besides all the antitrust requirements. But given that we've seen so many transformational deals, how much more room is there for mega consolidation because it seems like some industries can’t become even more concentrated, so I just want to get update on that?

Well there is probably a mega deal or two by industry, but then you have to remember that there is still lot of other players in the industry and therefore there tend to be a lot of other moves that take place to accommodate that and then oftentimes where there is something in one industry, it has a fruitful impact on the second industry and the same thing happens. I think M&A or strategic M&A is a little bit like a chessboard. You're trying -- you make one move and then it has an impact on the next two or three moves for other people and everybody's chessboard is a little bit different, but everybody has to sort of adjust to other people's moves and strategies. And so I think every time you see one of these big moves, you're going to see counter moves somewhere else. They may not be as big and visible, but they certainly happen.

Great. Thanks a lot.

And there are no further questions.

Great. Thank you.