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Good afternoon, and welcome to the P10 Third Quarter 2023 Conference Call. This is Mark Hood, EVP of Operations and Investor Relations. Today, we will be joined by Luke Sarsfield, Chief Executive Officer; Robert Alpert, Executive Chairman; Clark Webb, Executive Vice Chairman; Fritz Souder, Chief Operating Officer; and Amanda Coussens, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call as well as the presentation slides may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect management's current plans, estimates and expectations and are inherently uncertain. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors that are described in greater detail under Risk Factors in our annual report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 27, 2023, and in our subsequent reports filed from time to time with the SEC. The forward-looking statements included are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements as a result of new information or future events, except as otherwise required by law. I will now turn the call over to Robert.

Good afternoon, and thank you for joining the call. In the third quarter, P10 continued to demonstrate the power of our differentiated financial model as we delivered another quarter of strong financial performance. Before we talk about the quarterly results, I want to welcome Luke Sarsfield, P10's new CEO, to his first earnings call. As many of you listening to this call know, 2 weeks ago, Clark and I passed Luke the CEO Baton. And we could not be more excited about the transition. The decision to transition leadership at this time reflects the strength of our business, our commitment to driving shareholder value and the confidence we have in Luke's ability to take P10 to new heights. All the pieces are in place to continue strong organic growth, leverage inorganic opportunities and elevate the P10 brand globally. We have built a best-in-class investment platform tailored to the needs of our global clients, and Clark and I have exceeded every goal we set for ourselves. We are confident Luke is the right choice for P10 and he has our full support. Over 23 years, Luke was a key contributor at Goldman Sachs. He held important leadership roles across the organization, including serving as Co-Head of Goldman Sachs Asset Management, which managed over $2.5 trillion in assets. Luke brings proven leadership skills that he honed over decades. At its core, P10 is a people business, and it was important that we find a leader with the character to lead people effectively while making the interest of clients paramount. We also wanted an individual that had distinct experience building asset management businesses as well as thoughtfully identifying and executing value-additive transactions. We're confident that Luke will effectively lead P10 and capitalize on a myriad of opportunity for value creation. Clark and I remain large shareholders and look forward to remaining involved in key parts of the business. I remain Chairman of the Board. And as part of the transition, I was elected as Executive Chairman, where I will focus on corporate matters. Clark will also remain on the Board, and he was elected Executive Vice Chairman and will direct his attention towards strategic opportunities and assist Luke in potential corporate transactions. Welcome, Luke. We're excited you're at P10. In a few moments, you'll hear from Luke, but before that, I want to hand it off to Clark for a few comments.

Thank you, Robert. I agree that Luke joins P10 at the perfect time and inherit a strong foundation for continued growth. This earnings call represents our 2-year anniversary as a public company. Shortly after we went public, we laid out ambitious fundraising and financial targets. I'm pleased to report that we not only exceeded our 2-year $5 billion organic fundraising goal, but we have now exceeded $6 billion of fundraising, more than $1 billion in excess of our original plan with 1 quarter still to go. Moreover, our accomplishments have not been confined to AUM growth. Since going public in October 2021, P10 has delivered impressive financial results, compounding intrinsic value for our stakeholders at attractive rates. From the third quarter of 2021 to the third quarter of 2023, we have grown revenue, adjusted EBITDA and ANI by 55%, 36% and 50%, respectively. We believe that performance puts us in a unique position relative to our peer group, and our growth has been achieved despite a macroeconomic backdrop that has proven the most difficult in a generation with rising interest rates, market volatility, a global pestilence and war. When we went public, we positioned P10 as a long-term compounding bond. I believe the last 2 years has proven the merits of our financial model. As we pass the baton of leadership to Luke, we believe P10 has never been stronger, and we believe our best days are ahead. With that, it's a privilege to introduce Luke to the investor community. Luke, over to you.

Robert and Clark, thank you for the kind words. I am truly energized to be here today speaking with all of you, and I look forward to our interactions moving forward. As the new CEO of P10 and as a shareholder, I am grateful for your support, and we will work hard to earn it every day. First, I'd like to start by recognizing Robert and Clark and acknowledging their vision for creating a truly differentiated private market solutions provider. The platform of leading investing franchises that they have assembled is extraordinary, and it provides a superb foundation for future organic and inorganic growth. I also appreciate their leadership and support to date and look forward to working closely with them to create exceptional value for P10 stakeholders. I was fortunate to spend over 23 years at Goldman Sachs, where I held a numerous senior leadership roles and honed the skills necessary to create value for clients and shareholders. My experiences gained as a leader of the firm's financial institution investment banking team, running the asset management client and distribution team then ultimately heading the overall asset management business will be directed to broadening P10's global footprint and elevating its brand. When I reflect on why I chose to join P10, I really think about the outstanding people and the compelling platform. From a human capital perspective, each of P10 strategies are made up of world-class, long-tenured investment teams with durable track records. Each strategy is a leader in its respective market with a demonstrated ability to produce consistent alpha on behalf of clients. Our ongoing success in raising precious capital from our LPs and then deploying that capital to generate very strong returns is a testament to the strength of the platform. And the operating infrastructure is robust, thanks to the foundational work done by the P10 management team. Personally, I see rich opportunities to drive organic growth in multiple ways. First, given the strength of our individual franchises, the ongoing organic capital raising opportunity is extremely meaningful as is evidenced by our exceeding of our initial 2-year $5 billion gross fundraising goal 2 quarters early. There are attractive opportunities to expand and deepen our fundraising capabilities across the whole of the P10 platform as we introduce existing LPs of one of our strategies to our broader offering set. Furthermore, there are vast numbers of prospective LPs who are not yet aware of P10, where we can introduce the platform and its robust capabilities. Next, there is the prospect of distribution arrangements with a wide range of potential partners from retail platforms to insurance companies, which can accelerate our capital raising plans. Finally, I see a real opportunity for P10 to create broader brand awareness. When I was initially approached about the CEO job, I had never even heard of P10. But as I got to know the company better, I was incredibly impressed and I believe we have an opportunity to increase the profile of P10 with global pools of capital. I also see tremendous potential inorganic growth opportunities. Our disciplined focus in the middle and lower middle market results in us being a true partner of choice for numerous firms, and there are many potential areas for expansion that fit strategically and synergistically with our existing franchises. Of course, we will be thoughtful and disciplined in how we prosecute these opportunities, but the universe is broad. One thing that I believe is critical for any new leader is to gain a deep understanding of how their organization works. To that end, I am spending my first several months on an in-person listening tour with the broadest range of voices, including my P10 colleagues across our strategies, our clients and prospective clients, our current investors, prospective investors, research analysts, potential partners and others. Importantly, we want to ensure that we're clearly articulating the P10 story to investors. To that end, we plan to hold our first Investor Day sometime in 2024, where we will share greater insights around our leading franchises and our growth framework. I will close by again saying how excited and humbled I am to have the incredible opportunity to lead P10 and how much opportunity I believe there to be here. With that, I will turn it over to Fritz.

Thank you, Luke. We continued to see steady contributions of fundraising and deployment across the platform in the third quarter. We are frequently asked about what we're seeing in the market and what we're hearing from LPs. From our vantage point in the middle and lower middle market, we don't see much change over the last couple of quarters. As we've said on previous calls, in times of uncertainty, investors may take longer to make decisions and that is certainly understandable when an LP is evaluating a fund commitment that could last a decade or more. We're confident that we will continue to benefit from strong relationships of delivering durable alpha over long periods of time in all sorts of markets. At other times, we see LPs make a fund commitment sooner than expected as they did in the second quarter where we pulled forward about $300 million of fee-paying AUM. In Q3, we had a dozen funds in the market. Our private equity strategies raised and deployed $309 million with our primary fund of funds driving most of the fund raisings. Later next year, we expect to launch RCP Direct V and RCP Secondary V. We think the current macro environment we find ourselves in will bolster demand. The same can be said for our GP stake strategy, which benefits and conditions where GPs find fundraising more challenging than normal. Our venture equity strategy, TrueBridge, had another impressive quarter and raised $180 million and continued to demonstrate institutional demand for elite investment opportunities. The majority of the LP commitments to TrueBridge were to the flagship fund of funds in our inaugural secondaries fund. The credit size of the house raised and deployed $56 million with our NAV lending strategy, Hark, contributing to fee-paying AUM. WTI continues to work on Fund XI, and we expect it to launch in mid-2024. With 42 years invested in venture lending, we're seeing strong deal flow and attractive deployment opportunities. Historically, WTI has produced excellent returns, and we think the exit of certain market participants expands our opportunity set. In the third quarter, our impact strategy, Enhanced Capital, drove $154 million of fee-paying AUM. Enhanced Capital continues to deploy capital into impact investments to achieve both investment and impact objectives of a wide range of investors. Enhanced has a long history of customizing funds to effectuate a particular investor's goal, such as helping a bank achieve their Community Reinvestment Act requirements. In the third quarter, an existing bank client increased their commitment by additional $91 million to invest in that bank's footprint. Additionally, Enhanced Capital deployed $28 million on behalf of a third party whose balance sheet Enhanced manages among other funds deployed. In conclusion, our diversified all-weather strategies continue to demonstrate the power and potential of our platform. I will now hand the call over to Amanda.

Thank you, Fritz. Fee-paying assets under management were $22.7 billion, a 20% increase on a year-over-year basis. In the third quarter, $699 million of fundraising and capital deployment was offset by $168 million in stepdowns and expirations. For the remainder of 2023, we expect $120 million in additional stepdowns and expiration. Revenue in the third quarter was $58.9 million, an 18% increase over the third quarter of 2022. Average fee rate in the quarter was 104 basis points, driven by continued expansion of our direct strategies, such as WTI, Bonaccord and Hark. Catch-up fees in the quarter were $2 million. Operating expenses in the third quarter were $58.6 million, a 47% increase over the same period a year ago. The increase is primarily attributable to additional compensation, benefits and noncash stock-based compensation expenses related to the acquisitions of WTI, Bonaccord and Hark. GAAP net loss in the quarter was $8.8 million compared to $5.6 million of net income in the third quarter of 2022. The GAAP loss is primarily attributable to higher compensation expense related to the executive transition, acquisition-related noncash stock-based compensation and earn-out expenses related to the WTI acquisition. Adjusted EBITDA in the third quarter was $29.6 million, a 7% increase over what we reported in the third quarter of 2022. Adjusted EBITDA margin was 50%. For the full year, we continue to expect margins to be in the range of 51% to 52%. For the third quarter, adjusted net income, or ANI, was $24.3 million, a 3% decrease over the third quarter of 2022. I would note that while adjusted EBITDA grew 7%, the historic increase in interest rates added approximately $2 million to our interest cost this quarter, reducing ANI. Fortunately, with our cash-generative business model, we would expect below-the-line headwinds to turn into tailwinds in 2024 and beyond as all 3 potential uses of our free cash flow, acquisitions, share buyback and debt paydown, are currently all accretive to our bottom line. Cash taxes for the full year should be approximately $3 million as we continue to benefit from our tax assets. As a reminder, they are composed of 2 distinct assets, a $158 million net operating loss and $368 million in tax amortization. Cash and cash equivalents at the end of the third quarter were $20 million. As of today, we have an outstanding debt balance of $274 million and $69.5 million drawn on the revolver. There is $93 million available on the credit facility. No shares were repurchased in the quarter, and we have $18.9 million available on the share buyback program. We also continue to pay our quarterly dividend. We declared a dividend of $0.0325 per share on November 9, 2023 to stockholders of record as of the close of business on November 30, 2023, and payable on December 20, 2023. Finally, on September 30, 2023, our Class A shares outstanding were 44,932,190 shares and Class B shares outstanding were 71,343,739 shares. Thank you. Now let's turn it over to the operator for a few questions.

[Operator Instructions] Our first question comes from the line of Kenneth Worthington of JPMorgan.

Maybe first, 2023 was a big year for P10 fundraising, as you guys highlighted. I think the year alone had like more than $3.5 billion of capital raised and deployed. As we look forward to 2024, what are the key funds that you expect will come to market? And I think Fritz mentioned 2. I guess, are there others outside of WTI, which we should kind of consider? And then if things go according to plan, how does next year compare to 2023 in terms of net new assets raised? Is it going to be a bigger year? Is it expected to be a smaller year? Somewhere around the same? Help us frame what next year should look like if everything comes together right.

Ken, it's Luke Sarsfield. First of all, thanks for the question, and great to be with you taking the question. And obviously, thanks for your observation. We continue to believe, as you've noted, that the fundraising attributes that we drive here and the platform that obviously results in these great fundraising results are really a testament to the faith and confidence that LPs have put and continue to put into us. And as we've noted, we've had multiple strategies in the market. I think as we go into 2024, we're going to continue to have a [ dozen to the plus ] of our strategies in the market. We've mentioned a few on the call. I will tell you, we think 2024 has the opportunity to have new strategies, including many of our flagship strategies raised. And so I think we continue to be really excited and optimistic about the opportunity. As we've said in the past, we're going to -- and when we do the first quarter call, we're going to talk about the fundraising outlook -- the fourth quarter call, we're going to talk about the fundraising outlook, and we'll give you more guidance then. But I would say, generally, we're really optimistic and enthusiastic about the fundraising backdrop.

Okay. Great. And Luke, while we have you, I believe, before GSAM, you were a FIG banker. So how do you see M&A fitting into the strategy to kind of build shareholder value of P10? And sort of along those lines, as you look at product and distribution capabilities of P10, where do you see the most meaningful opportunities and themes that resonate most with you when thinking about inorganic growth?

First of all, thanks for your question. And you're exactly right. I ran the FIG group at Goldman in the investment banking team. And so I had the opportunity to work in and around the alternative asset management space, including with many of our peer institutions around their M&A plans, around their capital plans and the like. And so I would say a few things. One is, as I think I've mentioned in the past, and I know the team has mentioned that we will continue to talk about, we see robust opportunities for both organic and inorganic growth. Inorganic growth has been and will continue to be an important component of the P10 growth story. And I think we really, really look forward to driving shareholder value through using all the levers at our disposal. But certainly, inorganic growth will be a part of that. We're always going to be thoughtful. We're always going to be disciplined. We're always going to do things that are on strategy and really play to our strengths and leverage the power of our platform, our brand, while sticking true to our areas of focus, the middle and lower middle market, where we think we have a differentiated competitive advantage. I think there are a number of opportunities that we've already seen emerge. I got to tell you, I've only been here 3 weeks, and I've already had inbounds and interactions with a number of potential opportunities and folks who would be interested in obviously partnering with us. We think the power of the platform is incredibly attractive. And clearly, we're seeing that in the inbounds that we're getting. As I said, we're going to be thoughtful. We're going to be disciplined about this. But M&A is going to be a piece of it. There's a lot of opportunities we see while we have a great stable of strategies, there's still a lot of white space in North America, and there's still unbelievable white space internationally, and we're going to look in a very thoughtful and comprehensive way of things that will create shareholder value.

Our next question comes from the line of Mike Brown of KBW.

Maybe if I just start on the margin side. So it sounds like no change to the expectations for the year here. But any thoughts on how we should think about that margin heading into 2024? And I guess, Luke, you talked about a number of interesting initiatives that already coming across your desk, and it's only 2 weeks in, but some of those do sound like they could require some investment spend to get started. So how do you kind of balance those initiatives relative to where the margin is today?

Well, look, I'll say a few things. First of all, as was noted by Amanda on the call, we're continuing to underscore that we think we'll be in the 51% to 52% range for full year 2023, and we stand by that. As kind of -- I think as you're aware, we're not yet in the post where we're giving 2024 guidance. We will get there. We'll get there on the next call. And I know folks will eagerly await that, and we're excited to talk to you about it when we get there. I would say this, like anything, there is a balance. And there is a balance between investing for growth and maintaining margin. Both have been historically an important part of the P10 story. We think the robust margin profile of the business is one of the things that's incredibly valuable and hopefully valuable from an analyst and investor perspective, and it's something that we're really focused on. On the other hand, we also think about investing, but we're going to be very, as I said, disciplined and thoughtful about how we do it, and we're going to do it in the context of the broader value proposition that we've elucidated to investors and the broader economic model that we know that people have thought about when they think about P10. And so I don't -- I can't speak to any particular deal and what the impact of any particular deal may or may not be. That will remain to be seen. But in the aggregate, we're really focused on maintaining the investment characteristics that you've come to know and understand about P10.

Okay. Great. I want to ask about the Bonaccord business. There was a recent headline that Blue Owl will be maybe moving kind of down market and launching a $2 billion middle market GP stakes fund. So could you just talk about the Bonaccord business and touch on the moat around that particular franchise? And are you seeing any increasing competitive pressures in that market? And is there a potential for maybe others to kind of come down market?

Well, look, I would say the following. First of all, we think our Bonaccord business is an extraordinary platform. They are the first-to-market mover in the middle market GP stakes business, and they have built and are continuing to build every day an extraordinary track record and network of relationships and folks in the portfolio. We see nothing changing that. In fact, I would say, from our perspective, we actually view this as a very positive development. We think it's actually quite validating of the size and scope of the opportunity in the middle market. And we will tell you, by our count, we see over 900 firms just in the North American middle market. And so the reality is when you look at the scale of that opportunity, we welcome another entrant. And obviously, we welcome Dyal to be a part of this market, but we think our investing strategy and our track record can move forward undeterred.

Our next question comes from the line of Ben Budish of Barclays.

Luke, you mentioned in your prepared remarks some organic opportunities around both cross-selling and sort of the -- approaching the vast numbers of prospective LPs that are sort of unaware of P10. So I wonder if you could maybe speak to that latter point a bit. It feels like we've sort of heard a little bit about the cross-sell opportunity and it's obviously there with the sort of the various platforms. But how do you think about approaching that opportunity of the LPs that sort of haven't engaged with P10 in the past? Is it a matter of just kind of coming through the Rolodex and making more phone calls? Or what would that entail? Would it entail more sales force investment? Or how do you think about that part of the opportunity?

Look, I think there's a lot of ways to prosecute that opportunity. I think it's a huge, huge opportunity. And I think even if we only get to it in a cursory way, we will meaningfully address kind of the TAM of the prospective LP base. But I would say the following, right, which is that we think that when you look at our strategies, when we're in the room, when we have a chance to present our capabilities, when we have a chance to talk about our track record, we win. We win way more than we lose. That's kind of a testament to the strength of our platform. The problem is, historically, I think in some instances, we haven't been in the room. And so really, the art for us, I think, unlike some others who are in the room and then may not get selected for whatever reason, the real art for us is getting in more rooms. And the more rooms we get into, the more shots on goal we have, we think the more successful we're going to be, given the strength of our track records. And so I do think that is no doubt using the Rolodex. I think I've had -- because of my background, the privilege to have some relationships in places that maybe previously P10 did not. I also think there's a real branding component to it, right? I will be frank with you. I think I've mentioned this in different forms in the past. When I was called about the P10 opportunity, I didn't actually know what P10 was. And my guess is many prospective LPs out there probably would have a similar reaction if you asked them about P10. And so we've got to find ways in a cost-effective way to continue to build our brand, to continue to work through channels, whether it's media channels, whether it's social media channels, whether it's using some of our intellectual capital, our content, our convening power to really continue to highlight the power of the P10 platform. And I think if we do that, we are going to get more shots on goal. And given our track record, that's going to translate into more assets under management.

Great. That's all very helpful. And then as a follow-up, maybe one for Amanda. You mentioned next year some kind of below-the-line headwinds turning to tailwinds. All things equal, absent M&A, I think, I guess we've seen you sort of the levels at which you bought back shares in the past. But I guess your -- how are you thinking about -- or how should we think about sort of your expected pace of debt paydown and how you're thinking about prioritizing, again, absent M&A, the sort of buyback versus paydown kind of pace going through the year?

Yes. I think you may see a little bit more on stock buyback in the future or near future than what we had been doing in just sort of the recent past. We still have $18.9 million available on the buyback program. And then otherwise, if not for M&A, we, of course, have our dividend. But if not for M&A, we would use our capital for debt paydown.

Our next question comes from the line of Michael Cyprys of Morgan Stanley.

Just a question on private credit with new bank capital rules that have been proposed and broader banking sector challenges. Just curious how you see the opportunity set unfolding on the private credit side. What areas would you view as most attractive for P10 versus less attractive? Maybe you could talk about some of the steps you guys are taking or may need to take in order to best capture the opportunity set? And any particular gaps that you see at this point as you look across the platform on the private credit side?

Thanks, Michael. It's Luke. I'll jump in and then others can jump in as well as they see fit. So point one, we think you're right, and we agree with the thesis of your question, right, or the premise of your question around the fact that there has clearly been promulgated a set of rules that are going to make it more challenging for many of the banks and the regional banks, in particular, to participate in that. We think that, that has real benefit by imposing barriers to entry around many of our businesses, certainly notably for our WTI venture debt business, where we think that, that will really help even further expand the moat around that business. And certainly, to your point, though, when you look more broadly in private credit, it's increasingly becoming a place that's moving out of the traditional banks and moving into nonbank institutions. And for us, we think that, that potentially creates an opportunity. We think we already have a great collection of private credit assets, many focused and very defensible, very protected niches where we are the market leader or among the market leaders. But to your point, we do think there is white space in the broader private credit opportunity. It's something that over the coming period of time, we're going to continue to look at. We've already, as you can imagine, started to look at it. We're going to continue to dig deep. And to the extent that we find something that we think is additive, value-enhancing, accretive and synergistic with our portfolio, private credit could be one of those spaces where we very well engage in some inorganic activity.

Great. And then just maybe a follow-up question, if I could, coming back to some of your commentary on M&A. Maybe you could help elaborate on what opportunities you think could make the most sense at this point for P10? Maybe talk about how you think about prioritizing that at this point.

Well, it's a really good question. One of the things that I'm doing in concert with Clark and our team here is a really kind of deep, I would say, market mapping exercise to really think about where does our current portfolio sit? Where are the opportunities in the outside world? How do those things potentially come together? And so that market mapping exercise will be an important component to it. The next component to M&A as a former practitioner, I would tell you, is a willingness to transact, right? And so it doesn't matter if you've identified the perfect asset, if they're unwilling to transact, nothing is going to happen. And so clearly, you need to find places where there is a willingness and a desire to transact. I would say the good news is, given our footprint in the middle and lower middle market and the lack of other options for many independent firms, the prospect of partnering with P10 is a really, really attractive one. And so we think we see a lot of flows. Certainly, the other place that I would identify is we are -- have been historically exclusively, at least from an investing perspective than a physical footprint perspective, in North America, though, obviously, we do have a number of LPs around the world, but our investing footprint is exclusively North America. There are a number of firms that we are aware of in many different geographies that have a very similar strategic approach in their market. And some of those markets have really interesting and compelling dynamics that are not unlike the dynamics we see in the U.S. middle and lower middle market. And so there would probably be natural opportunities there to expand our footprint. We're obviously going to be really thoughtful about this. As I said, we're going to be incredibly disciplined about it. But we think that there's a robust opportunity set, and we're really going to build on the work that's already been done here to really refine and optimize our M&A engine so that we're really world-class in this endeavor.

Our next question comes from the line of John Campbell of Stephens Inc.

This is kind of a bigger picture question, but I'm hoping you guys can maybe talk to the main differences that you've been seeing, I guess, maybe of late versus over the past couple of years, just in the lower middle market, so your core markets versus just the kind of higher end. I don't know how you want to talk to that, maybe just the broader [ flow ] of capital or just investor appetite for various strategies, but are you seeing any kind of deviations that you haven't seen maybe in the past?

John, Luke here. So I'll start and then again, others can chime in. I wouldn't say we've seen anything that I would call a deviation from anything else. Look, I think you got to start with the macro economy and the broader environment. And clearly, the broader environment has created pressure in all segments of the market, upper market, middle market, lower middle market, everywhere. What I think is interesting and has actually come to the fore, though, is the relative resilience, as I will call it, of the middle and lower middle market. And so what's interesting is, and I think there's a lot of reasons for this, but we actually think the middle and lower middle market has held up better in many ways than the upper market. Now this may sound like a contrarian view because I know that there is kind of the conventional wisdom might suggest that actually the upper parts of the market are more robust. But we've seen the opposite dynamics. There's, I think, a number of reasons for this. Probably one is the fact that in the upper part of the market, there is a lot more capital against a smaller opportunity set of actionable assets and companies, whereas in the middle market, lower middle market, there's less capital against the much larger opportunity set. And so that obviously has an impact on the competitive dynamics. I would say we've done a lot of longitudinal studies and looks and some of our strategies do deep data and analytics around this, and we can tell you conclusively a couple of things are true. Generally, multiples paid in the middle and lower middle market are lower than multiples paid in the upper market. And generally, leverage levels in the lower and middle market are less than in the upper market. And so I think many of the dynamics, availability of credit, impact of public market valuations that probably have real read-through in the upper part of the market, just have not had the same quantum of effect in the middle and lower middle market. And we have a lot of data that we've looked at longitudinally that supports this, and you see that dynamic in transaction volumes, which while down from the levels they were in 2021 in all parts of the market are by no means down as much in the middle and lower middle market. And so we actually think, on a relative basis, this is a great place to be. It's a testament to the strength of the platform, and we're happy to be in this part of the market.

Okay. That's very helpful. You've been in the seat for 3 weeks, a pretty good answer. I want to touch maybe on the catch-up fees. If my notes are right here, I think you've seen about $10 million year-to-date. Last year at this point, it was about $2.5 million. So maybe can you talk to whether that's been playing out as you expected? And then for next year, any kind of indication on -- any kind of visibility you guys have into that?

Yes, I would say that, generally speaking, the catch-up fees are playing out as we expected. Last quarter, we had higher than average, I would say, catch-up fees due to one of the RCP fundraises that we spoke about. But in general, I believe that is the case. And we still believe that our average fee rate will be 105 basis points.

[Operator Instructions] Our next question comes from the line of Adam Beatty of UBS.

I want to ask about venture capital, where P10 and TrueBridge really deal with a lot of the key players on the GP side. You mentioned in prepared how the banks have pulled back, that certainly persists. But just on kind of the demand and capital formation side, markets have kind of given mixed signals. There have been some headlines about some other key players out there, some of them negative. But just wondering how you're seeing P10 and some of its key venture capital partners kind of leaning in or leaning back right now? And I guess, this is our first opportunity to hear Luke's thoughts about venture capital and growth equity. So that would be great also.

Well, thanks, Adam, and I will give you my first thoughts here, and I'm sure we'll have ample opportunities to talk about this on the forward. But look, again, as I said, we live in the world, right? And the world has changed from where it was in 2021. And so all of our strategies have seen impacts based on the macroeconomic environment. And to your point, I would say the broader kind of venture community is no different. Exits have taken longer. Valuations have gotten reset. And so there have been certainly macro impacts. But I would say this. One of the real powers of the TrueBridge platform, of which there are many, is the fact that they are literally investing in the elite of the elite of the venture capital universe, right? These are the greatest firms. These are the market leaders. These are the folks that others follow. And so they have access to the absolute best companies, the absolute best deal flow that's out there. And I would say they are also, by the way, very thoughtful, very prudent, daresay, quite conservative in how they market their portfolios. And so we think that anything that has changed in the market is amply reflected in the marks at which they're carrying it. And so while no doubt there have been dynamics in the venture environment, and my guess is, given where we sit today, those dynamics are likely to persist for some period of time. We feel incredibly good about where we sit. We feel incredibly good about the TrueBridge portfolio and the underlying managers that TrueBridge has access to.