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Hello, and welcome to the P10 Second Quarter 2025 Conference Call. My name is Latif, and I will be coordinating your call today. [Operator Instructions] As a reminder, today's conference call is being recorded. I will now hand the call over to your host, Mark Hood, Executive Vice President and Chief Administrative Officer. Mark, please go ahead.

Thank you, operator, and thank you all for joining us today. On today's call, we'll be joined by Luke Sarsfield, Chairman and Chief Executive Officer; Sarita Jairath, EVP, Global Head of Client Solutions; Arjay Jensen, EVP, Head of Strategy and M&A; and Amanda Coussens, EVP and 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 the federal securities laws, including 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 the forward-looking statements due to a number of risks and uncertainties that are described in greater detail in our earnings release and in our periodic 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. During the call, we will also discuss certain non-GAAP measures that we believe can be useful in evaluating the company's performance. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and our filings with the SEC. I will now turn the call over to Luke.

Thank you, Mark. Good morning, everyone, and thank you for joining our second quarter 2025 earnings call. Before we begin today's call, I want to take a moment to acknowledge the tragic events that took place in Midtown Manhattan last week, just a few short blocks from our office in New York. We extend our deepest condolences to the families and loved ones of the victims and to our friends and colleagues at Blackstone, KPMG, the NFL, Rudin and others who work at 345 Park Avenue. We also want to thank the brave members of the New York Police Department who lost a fellow officer. Our thoughts are with you all, and we remain in firm solidarity as a community as we seek to support one another. P10 has continued to execute on all cylinders in Q2, advancing the growth plan we laid out last year at our Investor Day. In the second quarter, we raised and deployed $1.9 billion in organic gross new fee-paying AUM, marking our second consecutive quarter of record organic growth. When combined with the $1 billion in fee-paying AUM from the Qualitas Funds transaction and moderate FX tailwinds, our gross fee-paying AUM increased by $3 billion in the quarter. Our overall fundraising pace continues to be strong. The products we have in the market are examples of resilient, durable investments that have enduring track records of alpha generation. Further, we're meeting LP demand head on, particularly in areas like co-investments and secondaries. Fundraising results in this quarter were also positively impacted by approximately $300 million of commitments recognized earlier than expected, which we view as a real testament to the accelerating pace of our capital formation efforts. This happens from time to time as LPs evaluate their investment allocations. Additionally, we had some operating expenses that were delayed in the second quarter, which we expect to be recognized in the second half of the year. We ended the second quarter with $28.9 billion of total fee-paying assets under management, a 21% increase year-over-year. Our fundraising momentum points to the demand for P10 strategies in the key market segments we target. And while we do not necessarily expect the same volume of fundraising in the third quarter, we are encouraged by our continued progress on the fundraising front to date. With the benefit of our Q2 fundraising efforts, we've achieved over 80% of our annual organic gross fundraising target of $4 billion with half the year remaining. Now we want to take a moment to share some of the highlights across the P10 platform this quarter. Noteworthy accomplishments in the second quarter include: first, the strong momentum on RCP's Secondary Fund V with almost $1 billion raised as of June 30. This is a fantastic demonstration of our commitment to the secondary space and RCP's market leadership. Secondaries continue to be a terrific growth opportunity, both for RCP and also across the broader P10 platform. Secondly, and continuing with the theme of secondaries, TrueBridge launched its Secondaries Fund II in the second quarter. We're seeing interesting deal flow, and we're excited to see TrueBridge continue to broaden and expand its product offerings. Additionally, RCP closed on its 19th primary fund with $314 million. Our fund-to-funds business continues to be strong, and it feeds the platform with complementary investment opportunities such as direct and secondary deal flow. We're also making great strides in credit. Our credit business contributed $568 million to fee-paying AUM. Our enhanced capital strategy launched its first ever evergreen fund. We're starting with just over $100 million, and we have big aspirations to grow that asset base over time. And finally, we drove measurable progress in enhancing collaboration and coordination across the platform, particularly regarding fundraising and deal flow. These highlights are enabled and underpinned by our focus on the middle and lower middle markets. Now I want to discuss some of the compelling underlying market dynamics propelling our success and why we firmly believe that long-term shareholders will be rewarded. Then I'll turn the call over to Sarita, who will provide an update on the progress we're making as we expand and deepen our already strong client franchise, followed by Arjay, who will share an M&A update. And finally, Amanda will run us through the Q2 financials. With that, let's dive in. As we've continued to see news flow around the so-called challenging private equity fundraising and liquidity environment, I thought we should take a moment to remind ourselves of the structural benefits and secular tailwinds that we continue to observe in our target segments of the market and how those benefits manifest themselves in the current environment. As a reminder, our strategies operate in specialized and fragmented markets with a particular focus on the middle and lower middle market segments. So let me take you through the long-term structural advantages that we see in our target markets. Please note that we've added some pages on this topic to our earnings materials posted on our website. First, we firmly believe that our market opportunity is both larger and less competitive than the large sponsor market segment, and the data we've provided in our earnings presentation clearly supports this assertion. When you consider the data, you'll clearly see why we are confident in our ability to grow and strengthen our market position. Two key points drive this home. One, our opportunity set has approximately 1,000 GPs managing approximately $3 trillion, more than 5x the number of GPs at the upper end of the market. Two, if you drill down into the opportunity set for the smaller managers, those in the middle and lower middle market have more than 10x the number of companies on which to focus relative to managers in the larger part of the market. So with more than 5x the GPs and more than 10x the number of companies, you can see why we think our segment of the market is especially attractive and why investors should have confidence in our strategic focus. Additionally, I would like to highlight a few key financial characteristics we see in our market. Consistently, over the past 15 years, we have observed lower upfront valuations in the middle and lower middle market by about 1 to 3 turns compared to the broader private equity ecosystem. The chart we've provided on EBITDA multiples by deal size clearly demonstrates this favorable dynamic. Lower levels of financial leverage are also a defining characteristic of our market segment, and this has been true for many years and through several economic cycles. You'll see in our slides the advantages our market space has with respect to leverage with middle market and lower middle market transactions generally having approximately 2 turns less leverage. Another structural advantage of our target markets is the rich opportunity to create value and drive growth. We see this demonstrated in higher revenue and EBITDA growth rates, which combined with multiple expansion from investment to exit drive outperformance. When you look at the fund performance in the market, what we see is stronger overall performance at the median, but also a greater potential for outperformance. And importantly, in this current environment, these smaller funds continue to outperform while delivering superior liquidity. We point you to supplementary slides we included in our earnings deck, which highlight the attractive fundamentals that I've just mentioned and make the case that we're operating in the best part of the market. We believe that this all culminates in durable alpha generation over long periods of time, but with greater dispersion, highlighting the importance of manager selection. You've heard us say over the past few years that we offer access to access-constrained opportunities. By doing so, we've created sustainable franchises that continue to thrive even in less than ideal macro environments. In terms of how we're seeing all these positive dynamics play out in our market today, the main point I would make is that fundraising in our part of the market is healthier than in the larger part of the market. That's driven by smaller fund sizes where LPs can make smaller commitments. Further, the M&A market in the middle and lower middle market has not slowed to the degree we see in the larger part of the market. Earlier, I mentioned dispersion. What we are seeing with the best managers is that they continue to be oversubscribed and are able to have one-and-done closes. And much of what we invest in is oversubscribed as investors continue to turn to us for elite access-constrained investment opportunities. To close, the main point I want shareholders to understand is that we continue to see terrific opportunities in our market space. Our opportunity set is massive and supported by secular tailwinds, impressive investment performance, long-tenured and trusted relationships and a large and growing global LP base. We remain confident in our ability to grow the business and see a lot of opportunity ahead. With that, I will hand the call off to Sarita.

Thank you, Luke. I'm excited to be here with you today. As you know, my role was a new one at P10 when I joined in the fall of 2024, and it's been so rewarding to build out the infrastructure for our platform. I have now had the pleasure of working with my partners for nearly a year. And as I approach my first work anniversary, I'm excited about what we have accomplished so far and especially for what's ahead. Broadly, my mandate consists of the following: first, increasing our distribution capabilities and growing our existing investor base. We are cultivating and engaging with larger global pools of capital in the vein of creating strategic partnerships that can allocate across the P10 platform. Second, utilizing our proprietary data and analytics to encourage collaboration and introducing our investors to the entire investment platform to deepen and broaden our existing client franchise. And finally, expanding our product offerings in vehicles, both domestically and abroad. Our goal is to increase the breadth of our products outside of traditional commingled funds and better serve our investors. We have some exciting growth initiatives that I want to share with you. First, as you heard from Luke earlier, we experienced another phenomenal quarter of record organic fundraising. We leveraged this momentum and led an effort to streamline how P10 categorizes LPs making it easier to engage them with compelling opportunities across our broad platform. With the integration of Qualitas Funds, P10 now has over 4,900 investors globally with a particularly strong presence in the wealth manager and high net worth segments. Over time, we expect our institutional presence to grow as we build on these strategic relationships and develop a wider scope of product offerings. Additionally, our efforts to collaborate across the platform are already bearing fruit. During Investor Day last September, we noted that fewer than 5% of our LPs were invested in more than one strategy. Since then, we've had success helping clients gain exposure to other parts of the platform. For example, we had a Bonaccord Capital Partners LP, a Middle Eastern family office, invest in RCP advisers during the second quarter, highlighting their conviction across our private equity strategies. Additionally, we have a prominent RIA investing across both our private credit solutions and private equity solutions verticals. From our vantage point, we see myriad opportunities to introduce our investors to attractive investment opportunities across the breadth of the P10 platform. Lastly, our data insights and investor confidence helped us lean into areas where we can continue to be nimble. This allows us to offer more than just closed-end funds and be flexible when opportunities arise. For example, at Enhanced Capital, we recently launched an evergreen fund that finances projects eligible for tax credits or other incentives upon project completion. At Hark Capital, we are providing our investors access to NAV lending capabilities, both in the U.S. and Europe as part of our integration of Qualitas Fund. We will continue to flex our product management muscle as we seek to broaden and diversify our LP base across client types and geographies. As Luke mentioned, our market segment has structural advantages with secular tailwinds and LPs are generally underallocated to the middle and lower middle market. We have an appealing value proposition to investors, which is why we are now engaging with new and larger pools of capital, such as insurance companies, pension funds, endowments, foundations and sovereign wealth funds. We believe P10 is at a strategic inflection point in our organic growth, and the best is yet to come. With that, I will hand off the call to Arjay for an update on our M&A strategy.

Thank you, Sarita. As you know, we closed on the Qualitas Funds acquisition on April 4. Integration has been going well, and you will notice that we now have the Qualitas data included in our earnings presentation for key operating metrics such as our LP breakdown. I would like to specifically highlight an entirely new product that the Qualitas and RCP teams are working on together, which will allow Qualitas LPs to invest through Spanish investment vehicles in U.S. lower middle market private equity opportunities. The underlying assets will be sourced by RCP teams, but brought together using an asset mix designed by Qualitas, similar to their European funds. We are calling those Qualitas Funds US1 and it launched in early July. This is not a product or potential expansion opportunity that we had assumed in the transaction, but we think it's a great example of why our strategies are more powerful together and underscores the potential opportunities that our global private markets ecosystem helps to facilitate. We are also now better positioned on global RFPs to provide a more complete and integrated solution to clients. The RCP and Qualitas teams recently submitted proposals on several potential mandates looking for a manager who could make investments in the lower middle markets across the U.S. and Europe. These are mandates that prior to the transaction would have been difficult for each to compete for, and the teams have worked together to provide a complete and integrated solution covering the U.S. and Europe within P10, and we are excited about the opportunities we are seeing in that regard. In terms of additional inorganic growth opportunities, as we mentioned last quarter, despite the slower overall M&A environment, alternative asset management and private markets continues to be an active M&A area, and we continue to see that in terms of the flow of opportunities. We are in the market as an active participant, and we continue to prudently exercise our M&A muscle. As we've said consistently, we are going to remain disciplined and focused on situations that are on strategy, have great teams, are strong cultural fits and that create value for our shareholders. I will now hand the call back to Luke.

Thank you, Arjay. The growth initiatives we presented at Investor Day are gaining momentum, and I'm really pleased with the alignment and collaboration we see across the platform. During the second quarter, we saw the stock dislocate, and we took the opportunity to repurchase about 2.5 million shares at an average price of $10.49. For the year, we have repurchased over 3.7 million shares at an average price of $11.09 for a total of $41 million. The amount repurchased in the second quarter was more than we had anticipated, but with the stock trading at such depressed levels, we decided to pull forward some of our planned repurchases. We continue to see share buybacks as an important tool to return capital to shareholders. Since we ended the quarter with about $2.3 million on our current authorization, our Board of Directors authorized an additional $25 million on the repurchase plan. Now over to Amanda for a recap of our Q2 financials.

Thank you, Luke. At the end of the quarter, fee-paying assets under management were $28.9 billion, a 21% increase on a year-over- year basis. In the second quarter, a record $1.9 billion of organic fundraising and capital deployment was offset by $435 million in step-downs and expirations. In addition, due to the Qualitas acquisition closing last April, fee-paying assets under management increased by an additional $1 billion during the quarter. FRR in the second quarter was $72.7 million, a 6% increase over the second quarter of 2024 and a 12% increase, excluding direct and secondary catch-up fees. The average core fee rate in the second quarter was 104 basis points due to momentum in our tax credit business. We continue to expect the core fee rate this year to average 103 basis points. In the second quarter, we had 15 commingled funds in the market and saw broad participation across our investment platform. Our private equity strategies raised and deployed $1.25 billion, our venture capital solution raised and deployed $114 million, and our private credit strategies added $568 million to fee-paying assets under management. The quarter was bolstered by the growth in our secondaries products in private credit, including SBIC funds and a significant increase in deployment from Hark, our NAV lending business. To give you a sense of the momentum of the growth in Hark, we deployed twice as much in the first half of 2025 than last year. Total catch-up fees in the quarter were $1.7 million. The timing of fund closings drives catch-up fees. And in the second quarter, they were primarily attributable to our primary funds, which only impact our core fee rate. With many of our commingled funds slated to be early in their fundraising lives during 2025, we expect to see catch-up fees expand in 2026 and 2027. Operating expenses in the second quarter were $55 million, an increase of approximately 1% over the second quarter of last year. Additional costs related to the Qualitas Funds transaction primarily drove the increase in professional fees, offset by lower compensation costs. GAAP net income in the second quarter was $4.2 million, a decrease compared to $7.4 million for the prior year second quarter. For the second quarter, adjusted net income, or ANI, was $26.7 million, representing a decrease of 7% from the second quarter of 2024. The reduction in ANI is primarily attributable to increased interest expense driven by additional borrowing associated with the recent Qualitas Funds acquisition. For the quarter, fully diluted ANI EPS was $0.23 compared to $0.24 in the prior year. FRE was $35.4 million, an increase of 5% year-over-year. In addition, our FRE margin was 48.7% in the second quarter. The increase in margin this quarter was a combination of cost discipline and the delay of certain expenditures that we will incur in the back half of the year for compensation expense and G&A. We continue to expect peer-leading margins in the mid-40s for the year. Our Board of Directors approved a quarterly cash dividend of $0.075 per share payable on September 19, 2025, to stockholders of record as of the close of business on August 29, 2025. Cash and cash equivalents at the end of the second quarter were approximately $33 million. At the end of the quarter, we had an outstanding total debt balance of $377.5 million, $325 million on the term loan and $52.5 million drawn on the revolver. Following the end of the second quarter, we paid an $11.5 million down on the revolver. As of today, we have roughly $134 million available on our credit facilities. We are excited to report that WTI reached their first earnout hurdle. The earn-out payment was previously accrued and will be paid by the end of September in the amount of $35 million. As a reminder, we introduced a new KPI last quarter, AUM. Our AUM is calculated similarly to our peers and is the sum of NAV, drawn and undrawn debt, uncalled capital commitments and capital commitments made to the platform since the NAV record date. AUM was $41.9 billion across the platform as of June 30, 2025, now including Qualitas funds, which was officially integrated into our platform during the quarter. Again, historically, we have focused on fee-paying AUM and will continue to do so as this measure correlates directly to P10's economics. However, we believe adding AUM will show the breadth and scale of our business as a leading multi-asset class private market solutions provider as we continue to execute on our growth plan. Thank you for your time today. I'll now pass the call over to the operator to begin the Q&A session.

[Operator Instructions] Our first question comes from the line of Christoph Kotowski of Oppenheimer & Company.

I think it's kind of interesting that you had Arjay on the call, and he talked about that you're actively pursuing opportunities and that is consistent with everything you've said and makes a world of sense. But I'm trying to think about how you think of your financial capacity for doing additional acquisitions at this point. What kind of leverage multiples would you be comfortable taking the company up to achieve that? Because given that you've been so active on the buybacks, it doesn't seem like you'd be that keen on using a lot of stock to do an acquisition. Can you just kind of flesh out how you think about all those considerations?

Sure thing. Chris, it's Luke here. I'm happy to start, and then I'll turn it over to Arjay to jump in. But I'd just say a few things. One is we've always said as it relates to M&A, we're going to be disciplined, prudent on strategy and find things that have a strong strategic and cultural fit, and none of that changed. The second thing we've talked about is that we're in, as we called it, kind of a crawl, walk, run phase. And so I think we're really focused on what I would call appropriate M&A given sort of the size, given our financial capabilities, given the size of our franchise. And we're not going to stray from that. That's a focus for us right now. And obviously, as we continue to build that M&A engine, we'll be focused on that. As you mentioned, we obviously are always balancing how we think about uses of capital. And on the one hand, when we see dislocations in the stock as we did in the second quarter, we obviously want to support that share price. and be supportive of our shareholders as we think prudently they would want us to be. But on the other hand, maintain financial capacity. And so we think when you look at it, as we mentioned, we have ample financial capacity in the range of the M&A that we would look at, both from a perspective of our credit facilities and also from the perspective of the ability to use stock in the deal. And as we've always done, we have used stock in our deals to create that alignment, to create the focus on all of us being aligned together, both internally and with our public shareholders. And so without going into specific constraints, we think for the kind of M&A that we're focused on for the pond we're fishing in, so to speak, we think we have ample capacity to do it and to do it in a prudent way. And so I'll stop there, and I'll turn it over to Arjay just to amplify.

Yes, I would just amplify, look, we have capacity under the revolver. We have an accordion component of that. You look at our previous cash stock mix, and think about our leverage levels, I think we have ample capacity for the types of sizes of transactions that would be on the road map at this point.

Our next question comes from the line of Ken Worthington of JPMorgan.

I wanted to start on the Evergreen fund at enhanced. For many in the industry, maybe most of the industry, the Evergreen fund really means targeting the wealth channel. And sorry for like a sort of simple first question. Is this what it means to you as well? Is the Evergreen product really going after the wealth channel? Or is it going after some of the existing client base in just a different form?

Ken, this is Sarita. I'm happy to answer that question for you. So as Luke mentioned, Enhanced Capital launched its first evergreen fund, and this is something I'm actually super excited about. As I mentioned, as part of my mandate is building out the global client solutions effort, it's not only to increase our global distribution capabilities, but also to build out our product management capabilities and expanding our types of funds and offerings that we have. And I think this is actually emblematic of this specific type of offering. Enhanced Evergreen Fund is intended to offer our credit investors more of an open-ended format. And as you can imagine, this is something that we are seeing across the landscape and in response to a lot of our not only institutional investors, but also the high net worth segment as well. We are fortunate to have an institutional client as our anchor investor for this, and we are also continuing to look for other investors interested in a differentiated credit product. We are having active discussions across the landscape, and this does include the wealth manager and high net worth segment that we mentioned. And as now that we have over 4,900 investors in our investor base, as you can imagine, we have a dominant presence within the wealth manager and high net worth segment, and we'll look to capitalize and deepen those relationships there.

Okay. So this leads to a whole bunch of other questions. So what's next on the Evergreen product road map? How does your wealth internal distribution look like? And what sort of partnerships on the wealth side do you have now? And sort of what do you see building over the next, I don't know, call it, 12 to 24 months? And sorry if I'm putting the cart before the horse here, but it's a big deal for many of your peers, and it seems like you're building the -- or have the building blocks here to maybe make the same push.

So thanks, Ken. It's Luke here. I'll jump in and make a few comments and then see if Sarita wants to add anything. So first, we have the slide where we show the mix of our investor types and recall that something like 1/3 -- a little more than 1/3 actually of our investor base is already in the wealth management and high net worth channels. So this has been an area of focus for us. We've accessed it both directly in many cases, with the high net worth individuals, family offices, other groupings, but we've also accessed it through different platforms as well, right? And that's an increasing part of it. I'd make a few observations. Observation one, which is what Sarita said, is that we're very focused on sort of meeting clients where they are and where they want to go. And so if that includes things like evergreen funds, which obviously we think it does, that would be emblematic of that. And I suspect you'll see over a period of time, more things along this vein. We're obviously going to be very careful and disciplined and prudent. We're not out to proliferate products just for the sake of proliferating products, but we do want to be able to meet the market opportunity that we see. The next thing I would say is we're going to do this in many cases through partners, right? Those partners could be some of the platforms that we have relationships with, the RIA platforms or otherwise. It could be with others who have specific capabilities in this part of the market. It could be in fairness with consultants or others who are force enablers in this part of the market. What I don't think we're going to do, and we've talked about this, we're not going to build a broad-based kind of retail distribution force. That's not our focus. That's not our thrust. That's not where we're going. And so we're going to access this market either through the direct relationships that we already have formed over multiple decades through some of the platform relationships we already have and through partnered with others. And so we think that's going to be a force enabler for us as we think about it. So look, I think the answer is prudent product management, meeting the clients where they are, leveraging the existing base and using partners to help us kind of force multiply feet on the street and presence to really get that access to the client base in a more broad-based way. Sarita, I don't know if you'd add anything.

Yes. I would just echo that as we continue to engage with the larger pools of capital, they are probably going to have specific needs, and we're looking to help grow and tailor those needs with them. And so this is, I think, how we'll continue to grow and scale the business.

And just maybe one separate topic. Fee-paying AUM, you had about $500 million of capital deployed, 2.5x sort of your average over time. So a big deployment quarter, and you called out credit and sort of Hark. So I guess maybe the question here is, given the environment we're in, is this elevated level of capital deployment at Hark and credit more broadly likely to persist? Or was there something particularly unusual about the second quarter that led to that unusually high capital deployment number? And then what does Hark have in terms of dry powder if they're deploying so quickly, do we have to start to think that they're going to come back to market to raise more?

So all great questions. So I'll take a couple. I think the answer is a little bit of yes, and there are obviously some important nuances in the quarter. So nuance one is that's a combination of both capital deployed at Hark, and we'll remind ourselves at Hark we charge on deployed capital. And remember, in the first quarter, we actually saw some repayments at Hark, right? And so that business will naturally ebb and flow a little bit in terms of the capital. And then the second point I would make is in some of our other credit strategies, where we actually charge on committed capital, we had successful fundraises and growing fundraises in the second quarter, and that also contributed to some of that. So it's a mix of deployment at Hark plus committed capital raised in other places. I would say in terms of the Hark deployment, we obviously talked about the fact that last year, we raised our largest fund at Hark ever, our Hark IV fund. It was about $650 million. That's the fund we're primarily investing out of at this point. We still have the capacity to do some tack-ons in Hark III, but we're largely investing out of Hark IV at this point. And we do have, we think, ample capacity there, but we are seeing a real moment and a real opportunity in NAV lending, as I know many others are, but particularly in our part of the market, I think this has become much more broad-based. It's become much more accepted among the GP community generally. And I think LPs are much more comfortable with appropriate use cases to really play offense around attractive portfolios that are past their kind of investment period, whether it's to do bolt-ons, whether it's to lean into broader kind of tack-on M&A or otherwise. It's a real market opportunity, and there's a real time for it right now. And so as we've signaled, we will be back out in the market later this year with the successor Hark Fund, Hark V. We're really excited about that. We think it's going to be a great opportunity. And obviously, that will provide incremental capital for what we see as a very attractive market opportunity in NAV lending.

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

Maybe one for Amanda. You talked about a step-up in expenses in the back half of the year. Could you unpack that a little bit? I mean it looks like the expected margins in the back half should be quite a bit lower than the first half just to get you to kind of that mid-40s range. And I'm just curious on comp and benefits in particular, it looks like that line has been kind of flattish for the past 4 or 5 quarters, but you added Qualitas this quarter. Anything else going on there we should be aware of as we're thinking about modeling the next few quarters?

Yes. I would say, generally speaking, Ben, our run rate, excluding the impact of Qualitas, we expect to be similar to prior quarters, given our active monitoring of costs and reinvestment in the business to build out our marketing team, which we've been talking about. And so overall, we still expect margins to be in the mid-40s, including Qualitas.

Got it. Maybe just one more housekeeping question. Just stepdowns and expirations. I think previously, the guidance was 5% to 7% of fee-paying AUM with 2/3 happening in the first half. Is that still the case? I would assume so, but just confirming that what we saw in Q1 and Q2 represents about 2/3 just to, again, help kind of fine-tune things for Q3 and 4.

Yes. We still expect, I would say, the upper end of that range.

Our next question comes from the line of Stephanie Ma of Morgan Stanley.

Maybe with the closing of Qualitas now, could you touch on some of their flagship funds? Where are they in that process? What's the size of their predecessor? And how much can we expect from them this year? And then beyond the existing business, you talked about the new first-time fund. Just broadly curious, any other cross-sell opportunities or new revenue opportunities that you could explore with Qualitas in-house now?

Sure. This is Arjay. I'll start with that. So I think we have Qualitas now in the tables in the performance in the presentation. You'll see that their previous primary fund was Fund VI. That was at $250 million. So they've started on Fund VII that would be, I think, a natural step-up from where you see the $250 million relative to their previous primary fund. That would be, I think, the expectation. You also noticed, I think one of the things we talked about with them is their natural evolution into direct and other products similar to the evolution we've seen at RCP over the years. So you'll see there in the way of investing direct 2. They've also launched Continuation Finance One, which is a commercial arrangement with our Hark business in the U.S. And so that's actively launching where they're working together collaboratively and is going very well. So I think in terms of going forward, look, I think continued -- they focus on a very similar market to where we focus. If you look at our presentation on them, it's very much similar to the things we talked about in terms of our supplement and materials today. That impacts us in terms of their work with RCP, their work with Hark. They're very much down the middle of the GP ecosystem in which we're playing. So I think a lot of great collaboration to date, and we expect a lot more to come.

Great. Maybe one more for me on inorganic. That's an important strategic angle for you guys. But we're also seeing other asset managers pursue different forms of M&A through JVs, strategic partnerships, minority investments. Just curious if you would consider other structures or forms and what scenario may that make sense or not?

So Stephanie, great question. It's Luke again. I'll come back and say, look, I think we have a model. And so obviously, things we do have to work within our model, right? And one of the kind of premises of our model generally is that we want coordination and collaboration across the platform. As long as we can get that and get that in a place that's on strategy with the right cultural fit, I think we're very open to kind of form and structure. And so look, if somebody said, well, I might be interested in joining the platform in a staged fashion over a period of time, I think we'd be open to something like that. If somebody said there's a great strategic partnership that we could embark on initially, maybe that involves some initial cross investment. And then over time, we can see if we can broaden that. I think we'd be very open to that. If there were the ability to access some sort of capital formation effort through a partnership, right? I think we'd be very open to that. It obviously would have to be on strategy. It would have to fit with our kind of fundamental focus and how we're trying to operate the business. But if we could find those things, I think, obviously, the deals we've done historically have been more of the traditional kind of control deals, but we would be very open to other types of deals insofar as they were facilitating and helpful with what we're trying to accomplish strategically. I don't know, Arjay, if you'd add anything.

No, I totally agree with all that. I mean I think we talked about it a little bit at Investor Day. I mean Sarita and I are working together a lot on strategic distribution-related opportunities that aren't necessarily always M&A transactions, but there can be an element to that, but where there's interesting distribution angle that we might be able to leverage across the syndicate. So I think that's a key part of time. Those things are not easy to get done, but we're spending time there, and we think there's really interesting opportunities out there. Thank you. I would now like to turn the conference back to Luke Sarsfield for closing remarks. Sir?

Well, thank you, and thank you all for joining us today. I want to thank our entire P10 team, our strategies and you, our investors. We are focused on advancing our growth plan, and we look very much forward to updating you on our third quarter performance later this fall. Thank you, and good morning.