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PJT Partners Inc. (NYSE:PJT)
Q2 2020 Earnings Call
Jul 28, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the PJT Partners Second Quarter 2020 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 proceed.

Sharon Pearson -- Managing Director and Head of Investor and External Relations

Good morning, and thank you very much, Jake, and welcome to the PJT Partners second quarter 2020 earnings conference call. I'm Sharon Pearson, Head of Investor Relations at PJT Partners. Joining me today is Paul Taubman, our Chairman and Chief Executive Officer; and Helen Meates, 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 is described in the Risk Factors section contained in PJT Partners' 2019 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 J. Taubman -- Chairman and Chief Executive Officer

Thank you, Sharon. Good morning, and thank you all for joining us today. Since the start of our firm, we have consistently spoken about an unwavering commitment to building our business through sustained, strategic and value-added investment. This quarter's strong financial performance resulted, in part, from this continuous investment.

In the second quarter, firm-wide revenues grew 40% to $233 million, while adjusted pre-tax income grew 97% and adjusted earnings per share grew 96% compared to a year ago. Our strong results were propelled by standout performance in our strategic advisory business, coupled with continued strong performance in restructuring. Year-to-date, firm-wide revenues grew 47% to $433 million, adjusted pre-tax income grew 119%, and adjusted earnings per share grew 118% from a year ago.

We have responded to these extraordinary times by seamlessly reorienting the way we conduct our business. The transition to a remote work environment has been greatly facilitated by our culture of teamwork, collaboration and creativity, as well as a shared sense of purpose. And we have worked diligently to enhance this environment through extensive employee engagement, ongoing training and wellness initiatives. During this remote period, we have also continued to recruit and onboard talented individuals at all levels, including a new full-time class of analysts and associates, and have welcomed summer interns from undergraduate and graduate programs around the world.

On the business front, while M&A activity has slowed considerably, we have used this time to broaden and deepen our relationships with both existing and new clients, ensuring they continue to receive the highest quality advice and insights. While none of us can predict the depth, breadth and duration of this crisis, we are confident that when this period passes, we will emerge a stronger firm.

Now, turning to each of our businesses in a bit more detail. Turning to restructuring. Our world-class restructuring franchise maintained its leadership position in the first six months of 2020, ranking number one globally in completed restructuring volumes and number two in announced restructuring volumes. The pandemic and the corresponding economic shutdown have caused a dramatic spike in global restructuring activity. As a result, our market-leading restructuring team has seen a significant increase in the level of its restructuring activity. While our restructuring results reflect some financial uplift from these higher levels of distress across industries, the second quarter financial performance principally reflects the momentum in our restructuring business heading into the year. We expect elevated restructuring activity to persist for a considerable period of time as the economic dislocations caused by this global health crisis impact an increasing number of companies.

Turning to PJT Park Hill. While the macroeconomic backdrop has benefited our restructuring business, it has also caused a significant slowdown in PJT Park Hill's fundraising activity. In PJT Park Hill, revenues declined meaningfully in the quarter versus year-ago levels. Notwithstanding the dislocated fundraising environment, PJT Park Hill was able to successfully close a number of fundraises in the quarter. Similar to our April comments, we continue to expect PJT Park Hill's revenues to be down significantly in 2020. However, we expect the business to return to its pre-COVID growth trajectory when market valuations stabilize and on-site due diligence between managers and investors is able to resume.

Turning to strategic advisory. In strategic advisory, we enjoyed record results for the quarter and the six-month period. Our financial results increasingly reflect the investments we have made to increase our footprint and capabilities. The strength in our business this quarter was broad-based across M&A, capital markets, liability management, shareholder engagement and strategic IR. Our number of active mandates continues to grow substantially. However, given we are operating in a challenging environment for transaction activity, it is uncertain how many of these mandates will lead to announced transactions, and if and when these transactions will be completed and reflected in our financial results.

Before I turn the call over to Helen to review our results, please allow me to welcome our newest Board member, Grace Reksten Skaugen. Grace has been a leader in the international business community for many years, and has served on the boards of some of the largest and most consequential European companies. She has extensive public company experience, deep corporate governance expertise, and we are honored to have her join our Board.

Helen?

Helen T. Meates -- Chief Financial Officer

Thank you, Paul. Good morning. Beginning with revenues. Total revenues for the quarter were $233 million, up 40% year-over-year. The breakdown of revenues: advisory revenues were $193 million, up 45% year-over-year, driven by a significant increase in strategic advisory revenues; placement revenues were $35 million, up 23% year-over-year, driven by an increase in corporate private placement activity.

For the six months ended June 30, total revenues were $433 million, up 47% year-over-year. The breakdown of six-month revenues: advisory revenues were $349 million, up 47% year-over-year, driven by growth in both strategic advisory and restructuring; and placement revenues were $74 million, up 43% year-over-year, driven by an increase in corporate private placement activity.

Now, turning to expenses. Consistent with prior quarters, we've presented the expenses with certain non-GAAP adjustments. These adjustments are more fully described in our 8-K. First, adjusted compensation expense. Adjusted compensation expense continues to be accrued at 65%. This ratio represents our current best estimate for the compensation ratio for the full-year.

Turning to adjusted compensation expense. Total adjusted non-compensation expense decreased 18% to $26 million for the second quarter, compared to $32 million for the prior year. The decrease in costs was due to significantly reduced travel and entertainment expense in the quarter as a consequence of the global pandemic. As a percentage of revenues, our non-compensation expense was 11.3% for the quarter, compared with 19.2% in the same period last year.

For the six months, total adjusted non-compensation expense decreased 10% to $57 million, compared with $63 million for the prior year. As with the second quarter, the year-over-year decrease was driven by a significant reduction in travel and entertainment activity due to the global pandemic. This decline was partially offset by an increase in occupancy costs relating to the additional space we took in London last year, as well as some rent overlap in the first half as we moved offices in San Francisco. As a percentage of revenues, our non-compensation expense was 13.1% for the six months, compared with 21.3% in the same period last year.

Turning to adjusted pre-tax income. We reported adjusted pre-tax income of $55 million for the second quarter, up significantly compared with $28 million for the same period last year. And for the first six months, we reported adjusted pre-tax income of $95 million, compared with $43 million last year. Our adjusted pre-tax margin was 23.7% for the second quarter, up from 16.9% for the same period last year and 21.9% for the six months, up from 14.7% for the same period last year.

The provision for taxes. As with prior quarters, we presented our results as if all Partnership Units had been converted to shares, and that all of our income was taxed at a corporate tax rate. We've also annualized the benefit related to the delivery of vested shares during the first quarter. Our resulting effective tax rate for the full-year is expected to be 25.8%. We had applied a slightly higher effective tax rate of 26% in the first quarter, so we have adjusted the second quarter tax rate to reflect the refreshed view of a 25.8% rate for the year.

In earnings per share, our adjusted if-converted earnings were $1 per share for the second quarter, up significantly compared with $0.51 in the second quarter last year. And for the first six months, $1.72 per share, up significantly compared with $0.79 in the same period last year.

For the quarter, our weighted average share count was 41 million shares. During the second quarter, we repurchased the equivalent of approximately 177,000 shares, primarily through the exchange of Partnership Units for cash. Our total repurchases in the first six months totaled approximately 1.2 million, including the exchange of approximately 404,000 Partnership Units for cash. We're currently in receipt of exchange notices for approximately 202,000 Partnership Units. And as we have done in the past, we will exchange these units for cash.

On the balance sheet, we ended the quarter with our highest cash balance ever of $247 million in cash, cash equivalents and short-term investments and $279 million in net working capital. We have no funded debt outstanding, and our full line of credit remains available to us.

Finally, the Board has approved a dividend of $0.05 per share. The dividend will be paid on September 16, 2020 to Class A common shareholders of record as of September 2.

I'll now turn it back to Paul.

Paul J. Taubman -- Chairman and Chief Executive Officer

Thank you, Helen. Please allow me now to look ahead. This unprecedented period has provided new opportunities to leverage the experience and expertise of our team. Now, more than ever, clients are seeking and relying on seasoned advice to navigate financial markets, execute strategies and better understand their own particular industry dynamics. These imperatives play to our strengths as a firm. We have always been unwavering in our commitment to invest in our businesses. And this uncertain environment notwithstanding, we will continue to stay the course. We view this as a unique time to invest in our clients, our people, our partnerships, our capabilities, our infrastructure and our communities.

We continue to connect with new clients, build trusted advisor relationships and secure new mandates. We continue to expand the global reach of our franchise with our recent announcement of a strategic alliance in the Middle East. We continue to recruit senior partners to our strategic advisory platform with four partner hires year-to-date, bringing our strategic advisory partner count to 50. We continue to expand our capabilities and establish competencies of the firm, like shareholder activism, and further develop new capabilities in areas such as ESG. We continue to invest in our infrastructure through the support of important IT and data analytics initiatives, and we are also investing in our local communities. Our firm has donated $1 million to COVID-related relief and social justice causes, and our partners and employees have committed to more than match that amount.

We continue to make all of these important investments while accumulating record cash balances, incurring no debt and maintaining a consistent level of share repurchase activity. We have a unique combination of highly synergistic and complementary businesses, each with its own particular growth drivers and correlations to the macro environment. We remain in the early stages of our Company's evolution, and we are more optimistic about our long-term prospects than ever before.

And with that, Helen and I will be pleased to take your questions.

Questions and Answers:

Operator

[Operator Instructions] We will hear first from Devin Ryan with JMP Securities.

Devin Ryan -- JMP Securities LLC -- Analyst

Great. Good morning, everyone.

Paul J. Taubman -- Chairman and Chief Executive Officer

Good morning, Devin.

Helen T. Meates -- Chief Financial Officer

Good morning.

Devin Ryan -- JMP Securities LLC -- Analyst

So, I guess, I want to start with the outlook. And maybe I didn't catch this, but I didn't hear any update around kind of expectations for revenue growth on the year. I apologize if I missed that, but I wanted to just make sure that's still the expectation here, I guess, first off.

And then, just more broadly on the M&A landscape. We've heard from several of the early earnings calls about some green shoots in activity just as the market -- if broader markets have recovered and financings started to stabilize a bit here but still a lot of uncertainty. So, I'm curious kind of what you guys are specifically seeing in the backdrop today and with the election coming and still some uncertainty, whether you think that could change.

Paul J. Taubman -- Chairman and Chief Executive Officer

Okay. Well, first of all, we do continue to expect to grow our revenues this year. I think these results just bear out everything that we have said about our prospects and our optimism. So, thank you for giving us that opportunity to clarify that point, Devin.

Second, with respect to the macro backdrop, I mean, clearly, we are in the early stages of fighting this global health crisis. And I think any initial hopes for just a very quick spring back to life as we knew it previously, increasingly looks more remote and more distant. And that really is consistent with what our view has been from day one, which is that this is, unfortunately, a long-term slog, and that there will be steps forward and steps back, and there will be all sorts of shifts and movements, where there will be companies who will benefit from the change in consumer and business behaviors, and others who will clearly be challenged for the long-term. And that has, I think, implications for restructuring activity.

We expect restructuring activity to persist at elevated levels for a considerable period of time. And I think at the same time, it will cause more and more companies to ask themselves whether or not they can continue to operate as independent stand-alone companies, those who have been weakened. I think those who have emerged stronger or with holes in their strategic core competencies will ask themselves whether or not there will be opportunities to strengthen their business through acquiring capabilities or creating efficiencies or economies of scale or scope.

And then I think most importantly, and to some extent, that's what we're seeing right now is the next wave, is companies are asking themselves whether or not they're appropriately capitalized for this new world order. And as a result, we continue to believe that as companies embark upon a deleveraging process, while they will certainly avail themselves of the public capital markets. We also believe that for many companies, they will continue to shed non-core assets, attempt to repair and restore their balance sheets. And we believe that that will be the next wave of M&A activity. And we do believe that financial sponsors are well positioned to step into that void and to provide some of that appetite for some of these businesses, which will inevitably be brought to market.

Devin Ryan -- JMP Securities LLC -- Analyst

Okay. Great. Thanks for that color. And then just to follow-up on the Park Hill business. So, revenue this quarter beat our model reasonably, and we caught the comment obviously last quarter, with the expectations for overall Park Hill to be down substantially and still heard that again this quarter. So it sounds like with placement revenues quite strong or I guess relative, the piece that flows through advisory was softer. So I don't know if it's possible to kind of parse through some of the advisory activities versus placement. And whether placement -- fundraising has been better than expected. It just ended up obviously better than we had expected. So I'm just curious kind of how you're seeing kind of the parts of Park Hill play out and whether expectations are changing at all just with the backdrop, maybe a bit better today than it was three months ago for capital raising.

Paul J. Taubman -- Chairman and Chief Executive Officer

I think we stand by what we've said before about the challenged environment to do fundraises in the Park Hill business in the near term. But perhaps, Helen, you can take everyone through exactly how we report and what elements are in both our placement and advisory components.

Helen T. Meates -- Chief Financial Officer

Yeah. Sure. So Devin, just a reminder that in the Park Hill business, the fund placement business, which is in the real estate, private equity and hedge fund areas, there is placement, so there is a placement fee. And the secondary advisory piece of that business is typically booked in advisory. The one piece that -- of the more Advisory business that flows through placement is corporate private placements. And that's the area that increased year-over-year, and that was a significant contributor to the placement fee growth.

Devin Ryan -- JMP Securities LLC -- Analyst

Okay. Terrific. And just in terms of the overall outlook then. What I guess, suggest that the back half would be on the placement side, quite a bit softer. I apologize, I'm just trying to kind of put it all together, I understand that -- the moving parts of the model, but just want to make sure that I fully understand the outlook within the various parts of Park Hill.

Paul J. Taubman -- Chairman and Chief Executive Officer

I think the placement activity that is derived from the Park Hill business, we expect to continue to be soft. Clearly, our strategic advisory business is constantly having conversations and trying to provide capital through private placements for corporate clients. And that business, at least year-to-date, has proven to be robust and resilient. And how that all flows through the placement line, I'm not 100% certain, I don't have a crystal ball. But when I think about the various business units, I expect the Park Hill fundraising processes to be challenged through the remainder of the year.

Devin Ryan -- JMP Securities LLC -- Analyst

Okay. Terrific. I'll leave it there. And thanks for taking my questions.

Paul J. Taubman -- Chairman and Chief Executive Officer

Thank you, Devin.

Operator

We will now move to our next question, and it will come from Richard Ramsden with Goldman Sachs.

Richard Ramsden -- Goldman Sachs -- Analyst

Hey, guys. So I had a couple of questions. Maybe I could just follow up on the revenue expectations. So you're talking about revenue growth for the full year. I think if I'm right in my calculations to get to flat revenue, you'd see -- you'd need to see a 33% decline in revenues in the second half of the year. I appreciate, look, there's a lot of uncertainty. There's a lot of moving pieces. But Paul, at this stage, would you be willing to commit to a revenue growth band for 2020? Or do you just feel that there's just too much uncertainty at this point?

Paul J. Taubman -- Chairman and Chief Executive Officer

It's funny, Richard. I deliberately left off the remarks that we continue to expect our revenues to be up for the year, because I thought that was damning with faint praise. So I left that out. Yet, I can also understand that by leaving it out, it creates some uncertainties. I do not want to continue to provide financial guidance for the rest of the year and certainly do it on a quarter-by-quarter basis. But I tried in every way possible to express my confidence, our optimism about our business and how we're positioned. And my hope is that as we've gone through the business commentaries, that, that has rung true.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. All right. That's fine. Let me ask you a couple of questions on the business. So can we talk a little bit more about the restructuring business? There's obviously -- there's a lot of discussion earlier on in the quarter about the fact that financial markets reopened, liquidity became broadly available to corporates, including ones that were distressed. How did that end up playing out in terms of the cadence of new mandates in the restructuring business over the course of the quarter? And relative to where we were, let's say, in April or May, has your view in terms of revenue generation in that business changed either for this year or for 2021 as a result of that?

Paul J. Taubman -- Chairman and Chief Executive Officer

It has -- our perspectives haven't changed. I think maybe the outside consensus has changed. We always thought that there would be a very quick focus on companies that were extraordinarily challenged, as a result of the shutdown caused by this global pandemic. And that they were businesses who came into this crisis with balance sheets and business models that simply could not withstand the cessation of all revenue and all business activities for any extended period of time. And that was where the early mandates came from.

Now we have seen the capital markets open up. We have seen a lot of fiscal and monetary stimulus. But to quote Joe Louis, and for those of you who don't know Joe Louis, the boxer from the 1930s, the heavyweight champion. His famous quote was, "You can run, but you can't hide." The reality is that for some of these businesses, they are so severely challenged for the long-term that, yes, there may be ways to create more runway and to kick the can down the road. But inevitably, there will be more dislocation and more distress, because the economic ripples here are going to continue for an extended period of time.

And I think as more and more folks understand that there's not just a very quick dramatic snapback, and that some of these businesses have been fundamentally altered that, that will create restructuring opportunities. And then I think you will also find that some companies were able to go to the capital markets just to extend their runway. But as this environment persists, you will see more activity. That's always been our view.

And I don't think you can assume that the restructuring mandates just like a metronome keep accumulating week-by-week, month-by-month and everything is up and to the right. It tends to be in clumps. And we've certainly hit the first wave. I think we've seen some slowdown in that first wave, but we see all of the foundation for -- unfortunately, a second wave of companies who will find that their prospects are quite challenged.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. And then the last question I just wanted to ask was just on the margin more broadly. I mean, it was great to see the improvement in the margin. Obviously a lot of it's coming from the non-comp side. How should we think about that improvement? As things start to normalize, should we assume that, that's going to bounce back to what it was in terms of the expenses? Or do you think there's some permanent changes as a result of working from home that you think will be adopted, even as the pandemic subsides that should result in a higher operating margin going forward?

Paul J. Taubman -- Chairman and Chief Executive Officer

It's a great question, and I'll let Helen add to it. I think the reality is we don't know enough to know exactly what the new normal is. I have to believe that a world where there's virtually no travel is not the sustainable base case long-term. I do think that our firm is particularly well-positioned to work remotely for an extended period of time because it really does relate to the culture and the way in which people have grown up working with one another.

I do think that there are a number of one-off expenses that we've incurred as a result of this to retrofit our offices to make them safer and to deal with the new normal. And I suspect that when we get back to a world that hopefully, we can describe as more normal that will have the benefit of a lot of experience, and we'll find ways to streamline our operating model. But I just think it's too early to tell, Richard, how all of that cuts one way or the other.

And I try not to focus too much on margin certainly in any quarter or any two quarters, because at the end of the day, we've always said that margin is an output not an input. And if our revenues grow, you'll certainly see margin improvement. And I think Helen and team have done a terrific job in making sure that we're always very diligent and focused on costs that we're spending money where we need to spend and invest, but that there's no wasteful spending. And then I think over the longer term, you should see, and you're beginning to see the benefits of operating leverage as the investments that were made translate into higher revenues. But fundamentally, it's driven by higher revenues.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. Thank you very much.

Helen T. Meates -- Chief Financial Officer

I would just add -- I would just add, Richard, that if you look at our second quarter non-comp expense, it really reflects a quarter with virtually no travel and entertainment. And that expense historically has run at about $2 million a month. So it's not clear whether it will ever get back to that level, but we certainly don't assume that it will stay as low as it did in Q2 for an extended period. But we have also maintained, as Paul said, that we expect our revenues to grow faster than our non-comp expense. And so that's the way we would deliver our operating leverage.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. Thank you very much.

Paul J. Taubman -- Chairman and Chief Executive Officer

Thank you, Richard.

Operator

And we have -- we'll take our final question from Steven Chubak with Wolfe Research.

Steven Chubak -- Wolfe Research -- Analyst

Hi, good morning.

Paul J. Taubman -- Chairman and Chief Executive Officer

Good morning.

Steven Chubak -- Wolfe Research -- Analyst

Paul, I was pretty certain, you were going to actually quote, everyone has a plan until they've been hit, but still appreciate you, Joe Louis referenced nonetheless. I wanted to start off with just a question on financial sponsor activity. Your remarks regarding potential pickup was relatively constructive. If I think back to last quarter, Paul, you know that your expectation for the pace of sponsor deployment of dry powder was maybe a bit less sanguine than others and could disappoint just simply given relatively frothy valuations in the market. Just wondering how your thinking has evolved regarding the space -- the pace of sponsor activity, whether there's been any material change there.

Paul J. Taubman -- Chairman and Chief Executive Officer

I think we've been pretty consistent. Pre-pandemic, we always said that we were not falling in love with the concept of all of this financial sponsor dry powder because sponsors, like everyone in the investing world, needs to earn a return on their investment and that they were highly sensitive to valuations and that we saw financial sponsors as much more of a shock absorber to the extent there were dislocations.

And I think what you're seeing is they are becoming the shock absorber and there have been dislocations. So we would have always expected financial sponsor activity to increase in difficult periods as opposed to just adding more fuel to the fire when M&A activity was going through the roof. We also said that in the early days of the crisis, financial sponsors, first and foremost, had to figure out their own portfolio of companies and which ones were imperiled and which ones needed tending to and care.

And then we said that they would focus on opportunities, which would be actionable, which would then require the companies that they were dealing with to have a more sober view of the new valuation paradigm and that would take time. And I think now as we're getting into, unfortunately, The fifth month of this experience, I think there are probably more companies that now have been able to survey the implications to their businesses and now are not in extremist mode where they're just trying to keep the business afloat.

They're now being more -- they have more time and they're thinking about what the longer-term future for their businesses are and which business unit should be kept and how to get to target leverage levels, etc. And that's why we started to see and we expect to see more financial sponsor activity. I also believe that in a world where everyone is trying to conserve capital and be prudent with their balance sheets, it seems to us that the first pocket of liquidity should come from dedicated investment pools rather than strategics using their own balance sheet. So while there will be strategic activity, our expectation is that the next wave of balance sheet repair will be led more by financial sponsors than any other asset class.

Steven Chubak -- Wolfe Research -- Analyst

All right. And just one question for me on the recruitment backdrop. I was hoping you could speak to your outlook for recruitment. How are discussions evolving post-COVID? Are you seeing any of the bulge brackets get a little bit more aggressive just to ensure that they retain [Phonetic] their talent given some of the strength that they're seeing on the trading side, might better position them to limit senior banker attrition in this type of environment?

Paul J. Taubman -- Chairman and Chief Executive Officer

I can't really speak to what individual financial institutions are or are not doing, but I do believe that our recruitment philosophy has been based on two things. Number one, that we can provide an experience and an opportunity to be a difference maker in a more entrepreneurial, fast-growing, thriving business than they can elsewhere. And I don't think anything related to this pandemic has changed that relative comparison.

And the second is, we've always said that senior bankers would want to come to a platform where they could better serve their clients. And I think all evidence continues to suggest that joining our platform is a way to better serve their clients. So when we think about what are the principal recruiting drivers, we view them as much an evidence today, if not more so than previously.

Steven Chubak -- Wolfe Research -- Analyst

Thanks, Paul. And just one more for me on the upcoming election. I was hoping you could speak to how election risk might be impacting deal activity, just given the uncertainty around potential change in administration and just uncertainty regarding the future tax policy as well.

Paul J. Taubman -- Chairman and Chief Executive Officer

I think the elections clearly have a freezing effect on transactions, but only a subset of transactions. And they start with whether or not they're in politically sensitive industries, whether they involve really pushing the existing antitrust dock trend to the edge where it's unclear and the pivot will be which DOJ team is in office to review. Whether it involves significant consolidation benefits and job cuts, which run the risk of being campaign issues.

So I think the reality is you do see large, somewhat controversial transactions, all else equal being put on hold because no one wants to make their deal-making a campaign issue. But that's a small subset, but they tend to be the largest deals, which is one of the reasons why size of deal tends to fall appreciably in an election year.

Now size of deal has fallen this year, but we're also in a global economic slowdown and a global health crisis. So it's always hard to tell what's causing what. But what we've seen is entirely consistent with that. I do think that depending upon which party is in office, certain industries potentially will be -- will benefit and others, maybe not as much, just given the policy positions of both major candidates, and I think that probably at the margin, has some implications. But our sense is it has contributed to the slowdown, but I think we have to be realistic and acknowledge that other factors probably have primacy this year than in a more traditional election year because this is anything but a traditional election year.

And then I suspect that once there is clarity about who occupies the White House and what their public policy initiatives are, the markets will rapidly adjust as they always do. And then once there's a new public policy roadmap, then those deals will be put back under the microscope and some will be greenlighted and some won't. So I suspect that like everything else in the M&A world, clarity will be helpful. And when there is clarity, that will probably provide some modest tailwind.

Steven Chubak -- Wolfe Research -- Analyst

That's right. Thanks so much of taking my questions.

Paul J. Taubman -- Chairman and Chief Executive Officer

Thank you very much.

Operator

Ladies and gentlemen, this will conclude your question-and-answer session. I'll turn the call back over to Paul Taubman for closing remarks.

Paul J. Taubman -- Chairman and Chief Executive Officer

Well, again, we appreciate everyone joining the call today and their interest in our Company. We do welcome the time when we can be back in our offices conducting this call under more normal circumstances. And we wish everyone that they stay safe, that they remain well, and that we can do this in a more normal way sooner rather than later. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Sharon Pearson -- Managing Director and Head of Investor and External Relations

Paul J. Taubman -- Chairman and Chief Executive Officer

Helen T. Meates -- Chief Financial Officer

Devin Ryan -- JMP Securities LLC -- Analyst

Richard Ramsden -- Goldman Sachs -- Analyst

Steven Chubak -- Wolfe Research -- Analyst

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