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Moelis & Company (MC) Q3 2021 Earnings Call Transcript

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Moelis & Company (NYSE: MC)
Q3 2021 Earnings Call
Oct 27, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Moelis & Company Earnings Conference Call for the Third Quarter of 2021. [Operator Instructions]

To begin, I'll turn the call over to Mr. Chett Mandel, Head of Investor Relations. Please go ahead.

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Chett Mandel -- Investor Relations

Good afternoon, and thank you for joining us for Moelis & Company's Third Quarter 2021 Financial Results Conference Call. On the phone today are Ken Moelis, Chairman and CEO, and Joe Simon, Chief Financial Officer. Before we begin, I'd like to note that the remarks made on this call may contain certain forward-looking statements, which are subject to various risks and uncertainties, including those identified from time to time in the Risk Factors section of Moelis & Company's filings with the SEC. Actual results could differ materially from those currently anticipated. The firm undertakes no obligation to update any forward-looking statements.

Our comments today include references to certain adjusted financial measures. We believe these measures, when presented together with comparable GAAP measures, are useful to investors to compare our results across several periods and to better understand our operating results. The reconciliation of these adjusted financial measures with the relevant GAAP financial information and other information required by Reg G is provided in the firm's earnings release, which can be found on our Investor Relations website at investors.moelis.com. I will now turn the call over to Joe to discuss our results. Joe?

Joseph Simon -- Chief Financial Officer

Thanks, Chett, and good afternoon, everyone. On today's call, I'll go through our financial results, and then Ken will comment further on the business. We achieved $516 million of adjusted revenues in the third quarter, an increase of nearly 150% over the prior year. This represents our largest quarter of revenues ever. Our robust growth during the third quarter was primarily attributable to high levels of transaction completions with particular strength coming from both our sell-side and buy-side M&A activity. In addition, our restructuring and capital markets were strong contributors as our model truly has three powerful revenue engines.

Our nine-month total revenues of $1.1 billion are up 119% from the prior year period. Our adjusted revenues include gains from the sale of Moelis Australia shares as well as gains on the firm's investment in our affiliated SPAC entity, Atlas Crest I. These revenues were reclassified from GAAP other income because our employees in the Moelis platform were instrumental in creating the related value. Moving to expenses. Our compensation expense was accrued at 59.3% consistent with prior periods. Our third quarter non-comp expenses were $31 million resulting in a non-comp ratio of 6%. Through focused expense discipline and an outstanding revenue quarter, we achieved a 35% pre-tax margin, which is our highest quarterly pre-tax margin in history.

Moving to taxes. Our underlying corporate tax rate was 26% for the third quarter. Regarding capital allocation, as always, we remain committed to returning 100% of our excess capital. Consistent with that philosophy, our Board declared a $2.50 per share special dividend in addition to the regular dividend of $0.60 per share. This is our third special dividend declared within the last 12-month period and highlights the business's powerful earnings and cash generation capabilities. And lastly, we continue to maintain a fortress balance sheet with no funded debt.

I'll now turn the call over to Ken.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Thanks, Joe, and thank all of you for joining the call. Since this time last year we've achieved our strongest four quarters of revenue ever, added 11 new managing directors, bought back 1.8 million shares of our stock and declared $9.18 per share in dividends while producing a trailing 12-months pre-tax margin of about 33%. We are generating a tremendous amount of leverage from our platform by building a fully integrated network with a focus on internal talent development and organizing around one incentive pool, we have created a collaborative franchise for the differentiated advisory offering.

The speed with which companies are adapting their business models is accelerating. These companies require an advisor that puts a premium on teamwork and holistic coverage across products, regions, and sectors. As a result, our ability to rapidly deliver innovative ideas and solutions to the highest level decision-makers around the world discreetly and without conflicts has made Moelis & Company the uniquely valuable platform. And with that,

I'll now welcome any questions.

Questions and Answers:

Operator

We will now begin the question and answer session. [Operator Instructions] Our first question comes from Devin Ryan with JMP Securities. Please go ahead.

Devin Ryan -- JMP Securities -- Analyst

Hey, great. Good afternoon, Ken and Joe. I guess first off, congratulations on first $500 million-plus quarter. Obviously, big accomplishment, big number. It would be great to maybe just unpack that a little bit. And Ken, I know you've spoken a lot about kind of the evolution of financial sponsors and how Moelis is creating a menu of services for those sponsors and just getting closer to that group. And so, can you maybe just give us a sense of like how relevant that was to this quarter and the backlog.

Just a little more flavor for the momentum with sponsors. And then also just outside of the U.S., how are you building out your sponsor teams, kind of where do you feel like you are? Obviously, we're seeing a lot of capital being deployed in Europe and increasingly so in Asia, and so how much more are you guys looking to do with sponsors outside the U.S.?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Well look, the portion of the M&A continues to accelerate. I think this year it's largest it's ever been. I would say when you look at our numbers sort of 2/3 of our revenues are M&A and 2/3 of M&A maybe 60% touches a sponsor. And we always say touches a sponsor because remember the decision-maker -- and this is why it's an interesting coverage model. The decision-maker of a company could be the CEO of that company. So it's very hard to define what touches a -- what is a sponsor deal.

By the way, I also want to say our strategic corporate M&A was strong too because even 1/3 of $500 million is a lot of non-sponsored business. If you go to Europe, we're doing very well in Europe. I think we started -- a couple of years ago we started to make sure that strategy was on track there, and we've done some phenomenal deals in Europe. We even did a sponsor transaction out of Asia this year. Can -- I would say, look, the U.S. is the center of deal volume, but Europe is pretty active, and we're going to continue to focus on that client base in Europe as well. Capital is accumulating there the same way just off a lower base.

Devin Ryan -- JMP Securities -- Analyst

Okay. Terrific. And then maybe just a one for Joe on expenses. Joe, if you can just maybe help us think about the trajectory of both on non-comps here as travel's starting to pick back up, do you have any sense of kind of, at least at this point in time, where that starts to normalize here as travel reaccelerates a bit? And then also just delivering kind of terrific margins here heading into the fourth quarter, it would seem like there may be some room on the compensation ratio to make an adjustment there, but any kind of early thoughts or frameworks to think about the puts and takes here and get it to competitive environment, but also revenues are coming in incredibly strong. So any kind of early thoughts around the moving parts in the comp ratio as well?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Joe, why don't you take expenses and I'll take comp after that?

Joseph Simon -- Chief Financial Officer

Yes, sure. So yes, the -- we pursued a number of one-time benefits, which we realized this quarter. So the true quarterly run rate assuming current travel level, which is probably 45% to 50% of pre-pandemic is about 33% to 34%. I'm assuming that -- I assume that that kind of 50% area is probably a good measure for the next quarter. And I just don't have enough of a feel for anything further out than that.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

And the leverage, I would just -- I just want to remind everybody, we made a 35% pre-tax margin. That means our shareholders are getting -- before paying the government are getting more than 1/3 out of every dollar of revenue. That's historically the highest split I can ever remember, the highest margin. I think I've tracked comparables for as long as I -- as long as we're public at least. And so we're getting tremendous leverage out of our personnel and the system. And my goal was to keep that pre-tax margin up. I know everybody -- you focus on comp, but my goal is we've had now 33% for nine months. That's a lot of leverage out of a system in which everybody's doing a great job. So that's the number I'd like you to continue to focus on.

Devin Ryan -- JMP Securities -- Analyst

Got it, fair enough. Well, congrats on a very successful quarter [Indecipherable] soon.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Thanks.

Operator

The next question is from Manan Gosalia with Morgan Stanley. Please go ahead.

Manan Gosalia -- Morgan Stanley -- Analyst

Hi. Good afternoon, Ken and Joe. Clearly, a very strong quarter here. Can you talk a little bit about how the pipeline is being replenished, and particularly for deals that will happen in 2022? So basically, if you can talk about any thoughts from your conversations with companies and sponsors, any deals that are in front of your new business review committee right now that sort of gives you an insight into activity levels for early 2022 specifically?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Well, our pipe is very near its all-time highs. And that you have to remember $500 million does empty out some of it. So it'd be very -- it's very close to all-time highs. It's up significantly from where we started this year from last year. So those deals will print a lot of our deals in the pipe. I mean we're now at October -- what are we at? October 27, so a lot of those have to print next year, I think. It feels like the run rate is very similar.

And I would tell you there is a moment at a company that when you're generating a quarter like we just generated I think with the same level of personnel, you sometimes worry that you're in such execution mode that are you generating new business fast enough? So to have our pipe very near it's all-time highest levels I think is a great achievement, and that is what it is. I don't know exactly what quarter they roll out into. But the year's almost over.

Manan Gosalia -- Morgan Stanley -- Analyst

Got it. And are you seeing any level of urgency from clients in terms of getting deals done ahead if any changes in tax policy next year?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

I think we saw that early in the year. If you were worried about a change in capital gains, I think you moved in the first half of the year and started the transaction in motion. It's almost -- it's getting late for that. I think there are some transactions people would prefer to close this year than next year if they could. But I don't think you're seeing anybody start things -- or let's say, very little would start at this point and hope to get done in an M&A transaction by year-end.

Manan Gosalia -- Morgan Stanley -- Analyst

Great. Thank you.

Operator

The next question is from Richard Ramsden with Goldman Sachs. Please go ahead.

Richard Ramsden -- Goldman Sachs -- Analyst

Hey. Hi, good evening, everyone. So, Ken, as we think about the financial sponsor business going forward, how do you think the evolution of churn in private markets is going to evolve from here? And I guess, specifically, we're seeing this growth in core products, we're also seeing this rapid growth in secondary businesses, do you think that's going to impact the velocity of private equity holding to the material ways you think out over the next one, two, three years?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

It's hard to judge. There are these secondary single deal extensions, but we have one of the leading bankers in the world on that and we did that purposely because we think that could become a product. Look, the world has continued to accelerate, Richard. I can't tell you how fast. Transactions that would be held for five years are now held for 3. That could be a function of how fast the stock market has appreciated. But I do -- it's not just the amount of capital that's going into private equity, it's how aggressive they're doing in extending their product lines. Almost everybody who's in a singular product line wants to be in multiple product lines, wants to be a larger alternative asset manager.

We have those relationships, we have trusted relationships, and that just means they're going to transact with capital somewhere across the capital spectrum. And again, I think it's a very limited amount of companies that really get the right attention. If you think about it, the amount of companies that actually service -- the number of private equity firms is getting larger every day and the number of investment banks that generate quality ideas for them is not. So we continue to service a larger and larger client base with sort of the same amount of banks.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. That's helpful. And then on the corporate side, there's obviously been a lot of focus on supply chain disruption, there's a lot of focus on inflation, higher rates. When you talk to Board, how concerned are they about these? And when you think about the impact on the M&A cycle in 2022, do you think these factors are going to be positive or negative in terms of driving activity levels?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

I think people are concerned about their own particular supply chain problems. And there is concern at the Board about their operations. I think the only thing that you have to worry about in a supply chain is if you're in a deal, and it seems like there's an ability for a company now to come up with a quarter that is an unpredictable event that can disrupt a deal. When you have volatility in the midst of a transaction, you could have that happen, but that would be very idiosyncratic. You would hope that you'd be talking about that during the deal conversations, it would be taken into account.

That's usually what happens is these conversations are discussed during the private due diligence part of it, and somebody adjusts price or tries to see through the supply chain situation. But I will say, there are issues at companies. I don't know -- I don't think it will be a big effect on M&A, but companies are having issues. I'm sure you've seen that.

Richard Ramsden -- Goldman Sachs -- Analyst

Okay. That's very helpful. Thanks a lot.

Operator

Your next question is from Ken Worthington with J.P. Morgan. Please go ahead.

Ken Worthington -- J.P. Morgan -- Analyst

Hi. Good afternoon. As we think about growing the ranks of senior bankers at Moelis, does the composition between experienced hires and promotions from outside the firm change from the current mix as you look forward over the next couple of years either due to environment, or the greater ability of Moelis to develop this talent internally? And it seems like the rapid rise of bank share prices could, in fact, alter the math for you as you make those decisions. So I wasn't sure what to think about that as we look forward.

And then, as we think about the senior banking talent at Moelis, the numbers, even though you continue to add new bankers, there's some attrition on the other side. That MD count has been reasonably over the last few years and growth has really come from increased banker productivity. And now it's been massive increases in banker productivity, but that's been the driver. And I guess my question as you think about your business and growing it, do we need to see the MD ranks actually start to grow at some point? Or is growth through productivity really an appropriate long-term growth strategy?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

[Speach Overlap] So I have to give you a wholesome answer on this because I think it's something that's happening in the industry that's changed the economics. It's probably why our margins are so high. Again, I hate to go back -- I'm an old guy, so I hate to go back. But when you did strategic M&A which drove a lot of the market 20 years ago, the CEO was usually a person closer to my age than 35, right? It was a person who climbed the ranks and then the Board was older. And so, you would tend to have these very senior superstar M&A bankers.

And the reason was it was -- that was what was required to go into a boardroom of 12 people and hold their attention and make a tactical, strategic M&A. Today, with the rise of I think the alternatives asset managers and the sponsors, you have a decision-making person who is significantly younger. Take any of the major -- the largest private equity firms in the world, there may be five to 10 people that are 40 years old or younger that have a larger checkbook than the biggest company in America had, the CEO had for all the years. You always wanted to be their banker. There's just -- there are sector Heads of Divisions of private equity that are writing five checks a year for $5 billion -- $3 billion, $4 billion, $5 billion deals.

Now -- so what's happening is that person, it's less -- it's much more about the numbers, much more about the analysis, much more about your sector expertise. And so very rapidly, we're finding our Vice Presidents, our Executive Directors, our first-year Managing Directors, and all of whom we've trained to be Managing Directors. We didn't put them in -- just say here, do some spreadsheets and then you'll leave and we'll hire some other superstar senior bankers. We've been training them to be productive bankers, and they are coming on very strong. When you say -- that's why I never like this revenue per MD number. You see it as all productivity of the MDs. I don't have a number, but I would tell you, there was significant revenue generation and deal origination from non-MDs who are experts in their sector.

The sectors are younger these days. There are sectors that are being created faster than we can even understand them. And I believe we're getting more leverage on the whole system, not just the MDs. Now that being said, yes, we want to grow our MDs. We think we have the best class we've ever had of internal promotions, and we'll add to that from outside. But I think -- I've said this before, without putting anybody down, I think we've done a good job of working on the workforce and optimizing the talent we have with the platform we have. And I think that's what you see in the margin. And you're right, the MD count hasn't grown as fast as it probably will in the coming years. I think we did some repositioning, let's just say.

Ken Worthington -- J.P. Morgan -- Analyst

Okay, great. That was a wholesome answer, really appreciate it. Thank you.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Thanks.

Operator

The next question is from Brennan Hawken with UBS. Please go ahead.

Brennan Hawken -- UBS -- Analyst

Good afternoon. Thanks for taking my questions. Ken, I'm curious, seen a very interesting development here on the restructuring side in China, you've won a large creditor side mandate in that market. And it seems as though there is a shift. The market seems to be embracing sort of more of a Chapter 11 style approach, what kind of opportunity do you think this can present? And how should we be thinking about this as far as potential for your restructuring bankers' here as we move forward?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

We don't want to talk -- we don't talk about any specific client, but I would say that it's interesting in the business that when you're in a region or a sector early and you are in the first two or three deals, and we have done several very prominent restructurings over the last five years in China and Asia, it is amazing. It creates some momentum around the project. Now, these markets are all much more difficult to do restructurings in than the Chapter 11 environment of the U.S. So the -- it is difficult. They're much more difficult environments to restructure companies.

But as the world becomes more global and everybody around the world now is taking on a little more debt and becoming a little more aggressive, you're right. I think the restructuring franchise is a global one. As I said, I think we've got the best restructuring team in the world, and they've globalized it. And Brennan, the short answer is I don't know how much in these more controlled economies, you want to say that in less Chapter 11-oriented economies, the business could get, but you never know. I mean, there's been a lot of companies created in the last five years, and some of them are going to need help.

Brennan Hawken -- UBS -- Analyst

Fair enough. Yes. I just wouldn't -- it was hard for me to have guessed this would have even happened, and you would have gotten a restructuring mandate out of that market. So trying to figure out how to think about it. But it's fair. And then another one, this one is maybe a bit more nitty-gritty or technical, but I totally understand the sort of industrial logic of the fact that the gains that you guys took were -- that was timed bankers had to work on these efforts and therefore, moving them up the revenue line, that all is logical.

But the piece that I'm curious about, and I'm curious about the logic around it is wouldn't those revenues be subject to a lower comp ratio than the 60% because the 60% is like fully loaded, it's got salaries, it's got deferreds, and on the gains, it's a different sort of dynamic. I just had assumed that might be a lower ratio, but maybe you could help me with the thought process around that.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Let me just take it. Let's talk about the Atlas Crest SPAC. There was -- we're not an investor. We didn't put the money up. We're not looking around the world for the best investment we can make. We created this franchise to use our people to take great companies public. And the amount -- and the -- by the way, there's a fairly large debate, by the way, as to whether MC should -- we're capital-light, we don't want capital. How much capital do we even want in a transaction that is very -- the risk-reward seems pretty appropriate.

But -- so the creation of the capital gain, which really wasn't a capital gain, it really was a transaction creation by a team that had to go hunt down a deal, had to organize the raising of the money, the de SPAC, the pipe. I expect -- I believe that's not an investment. I probably have to watch it for tax purposes or something. That's much more of a personal service transaction that resulted in that gain because people worked on it. That's what I want to say. We're not in the -- we're not looking to make investments. We're looking to work on deals. And that one we just happened to originate ourselves. We happen to find a way to originate a transaction in which our people can work on it.

Brennan Hawken -- UBS -- Analyst

Okay. Fair enough. I guess I just -- to me, the logic of using a lower comp ratio seems to make sense, but in any event, maybe sneak in one last one. The capital return approach, awesome amounts of dividends, return, the cash is tremendous, really -- clearly a positive. Now that the liquidity profile though -- like initially, you chose to go the special route because the liquidity profile of the stock was thinner. Moelis trades $20 million a day, there's plenty of liquidity to help offset some of the dilution from share-based comp. And I just looked and since 2017, the fully diluted share count's like up nearly 20%. So why not start to allocate some money -- greater amounts to the buyback in addition to the specialty?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

And what are our earnings per share up since that time? What was the compound growth?

Brennan Hawken -- UBS -- Analyst

I would imagine how much it could be if you didn't -- if the share count is flat, it'd be even more tremendous.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Well, as I said, since we went public, I believe we've returned the entire IPO pricing to cash dividends, we've tripled the revenues of the company, we've never incurred a dollar of debt, and we haven't done one M&A deal. And I don't think -- I think that's fairly unique. I'm not sure a company has been able to generate cash and grow. So Brennan, the short answer to that is, look, we're sitting with -- Joe, what are we sitting with at quarter-end, $500 million of cash?

Joseph Simon -- Chief Financial Officer

Yes, that's right.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

So I mean, we could then try to go in the market and chase the stock, but to me, it's just efficient. We have a lot of shareholders. They should all get the capital back. We can give it to them. I think we're declaring a dividend in 10 days or something and paying it in three weeks. It just seems so much more efficient to me to give it back to your shareholders. Some of them are -- by the way, some of them may be worried about taxes next year, and getting a dividend in this year could be a positive.

But it just seems very efficient, very democratic, and very fair. And then we don't have to spend chasing the stock in the market or doing whatever. I'm just going to give it back to you. By the way, I think we've given $9.18 this year in cash, and I don't think the earnings-per-share growth has been hurt that much.

Brennan Hawken -- UBS -- Analyst

Yes. The dividends have been tremendous. There's no question. Thanks for taking my questions, appreciate that.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Thanks.

Operator

Next question is from Jim Mitchell with Seaport Research. Please go ahead.

Jim Mitchell -- Seaport Research -- Analyst

Hey. Good afternoon, guys. Maybe just -- you guys have had a lot of growth in capital markets, and you added another MD there in the third quarter. Can you just discuss kind of what specific areas within that business are driving the most growth? How do you see that momentum continuing into next year? And I guess maybe just overall, how do you think of what inning we're in, in terms of the evolution and growth or in size of that business?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

I think we're pretty early because we started -- we really -- we always had this. And then really, what triggered a lot of it was almost the beginning of COVID we were involved in a lot of very significant mezzanine-type rescue financings that had to be done quickly, and we did a great job on some of those. And then right after that -- so that triggered us into seeing how rapidly we could raise $1 billion tranches without a trading floor. It was interesting, after that came in SPAC phenomenon and pipes. And the whole raising of the pipes became pretty significant. And I'll tell you what I think is happening now is you have 1,000 unicorns.

And remember, that means you probably have 2,000 -- I don't even know how many, I'm taking a wild guess that are worth between 500 and $1 billion. Many of these companies are going to look to structured financing of some sort. Some financing that might look to you like a convertible or a mezz or a pref, and they're going to be sizable. Remember, in the B.C. days of five, six, seven, eight years ago, those might have been $30 million, $50 million items. Today, they're multi-hundred million dollar items. And I think it's going to keep going.

And you have -- again, you have the financial sponsored community and alternative asset managers organizing huge amounts of assets to put into exactly that asset class. So once again, I think you're going to have capital, drive -- they're going to demand access to transactions like that. And we want to be the middleman between growth capital, SPACs, and still rescue financings. So all those kinds of things that need rapid turnaround, structured product, and they really want the high-touch of a senior banker in it. I think it could be very significant.

Jim Mitchell -- Seaport Research -- Analyst

Okay. That's really helpful. Maybe a follow-up on something a little different. Maybe some of your peers have talked a lot about debt advisory. I don't think that's really part of how you think about the capital markets business, but that's been a business I think you've talked about in the past. How do you see that developing? It seems like it's also been pretty active? And is that sort of married with your restructuring business? And what do you think of the opportunity set there?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

When you describe debt advisory, are -- you're not talking about the restructuring of debt, you're talking about...

Jim Mitchell -- Seaport Research -- Analyst

Yes, just advice on raising debt. Some of your peers have talked a lot about that. I mean, is that sort of how you think of -- part of what you think of the capital markets business and wrap that all up with that?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

We do do that. Yes. I'd say that's -- we do do that. That's part of our offering. Oftentimes, somebody is in the middle of a transaction. They want our help negotiating a bridge or some terms on the security in an M&A -- in a deal. I don't think that's as fast-growing as the one I said before, which is the true pairing of capital -- a company that needs capital with the amount of capital that I think is amassing to provide that kind of mezz structured, high-growth return. I think that's where the real positive. Now -- and when you say debt advisory too, we do a lot of IPO advisory as well. So that's probably a faster-growing business than even debt advisory.

Jim Mitchell -- Seaport Research -- Analyst

Great. Okay, that's all helpful. Thanks a lot.

Operator

The next question is from Michael Brown with KBW. Please go ahead.

Michael Brown -- KBW -- Analyst

Hi. Ken, Joe. Just wanted to follow up on some of the 2022 focused questions. So clearly, we're in a very strong M&A market here. And I was hoping to maybe get a little bit of thoughts about next year. After a quarter like this, you're already at a record year with one more quarter to go. So as you think about 2022 and I guess, assuming a similarly strong operating environment, is it possible for Moelis to actually produce revenue growth next year?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Again, we don't guide, but I don't understand why it wouldn't be. So we have our strongest class coming off. I think we'll have 8% to 10% more Managing Directors. Let's just use that as a number. I think that the private equity firms will have 5% to 10% more capital under management. In the normal world, not a stock market, markets go up 5% to 10%. And by the way, our revenues are based on market values. So -- and strategics are still out there, and I believe our brand in the strategic boardroom is stronger than it's ever been. I know I speak a lot about the private equity and the sponsors, but you can do the derivative. Our strategic business is on fire.

I mean, if even 1/3 of it is recognized, 2/3 of it touches a sponsor, but it leaves a lot of room for a pretty big strategic revenue quarter as well. And I could tell that we're doing well there too. So look, I -- again, I don't want to guide, but I expect to have 8% to 10% more MDs, I expect our clients to have 8% to 10% more capital, and I expect the general stock market and the economy to grow. And I just think you put all those together. And I believe we're taking market share pretty consistently. So I don't know why we wouldn't.

But again, I don't want to guide. It's to -- I couldn't guide. In October of 2021, I can't guide. I don't really don't have -- but I look at it and I say, we're an amazing positioned firm with a great network in the right -- we're in the right places, servicing the right clients at the right time with the right model, by the way, with the right model that I think people underestimate that it's very hard to replicate the model we put together.

Michael Brown -- KBW -- Analyst

Understood. Yes. Thanks for all the thoughts there, Ken. Maybe just one more. It's a little bit convoluted, so bear with me here. But just looking at the quarter here and the strength of this third quarter, $515 million or so of revenue, could you just kind of parse that out a little bit here for us? How much was restructuring capital markets? I know restructuring is typically 20%, 25%. I assume it's -- understand they're probably a little lower this quarter, and then was there any pull forward that we should be aware of anything outside of kind of a normal puts and takes there?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

I think it was normal. Joe, what was the pull forward?

Joseph Simon -- Chief Financial Officer

It was about $32 million spread across probably four or five deals.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

I think it was the ratio that's close to normal. And look, restructuring was lower, and it really wasn't restructuring's fault. They had an OK quarter. Restructuring is definitely not as vibrant as it was, but I think it was more a denominator problem. They had a decent quarter, but they were lower and below that range you just said only because M&A and capital raise and all the other businesses were so strong.

Michael Brown -- KBW -- Analyst

Okay. Great. I will [Indecipherable]. Thank you, guys.

Operator

The next question is from Steven Chubak with Wolfe Research. Please go ahead.

Steven Chubak -- Wolfe Research -- Analyst

Hi, good evening. Thanks for taking me in here. So I just wanted to ask a question, Ken. Just given some of the earlier discussion about some of the more -- the higher production coming from more VP and ED-level bankers, you made a passing comment, just noting that this dynamic has contributed to the stronger operating margins that you've been experiencing of late. And maybe at the risk of leading the witness, so to speak, is it reasonable to infer from that comment that the 30%-plus operating margin shouldn't be viewed as anomalous that this may be more representative of some sort of new normal, given how the business is evolving?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Well, I'll leave -- I say, that's a good question. I looked at -- I mean, we're at 33% for nine months now. So 35% might feel a little high but 33% for nine months. And if we can get -- if the system we put together can leverage younger people in our system, Vice President, and make them productive and create -- if we create content and then a stronger -- like everybody always measures what's your revenue per MD, but if we're getting revenue generation from instead of 125 MDs, 225 MDs, VPs, and EDs by putting together exclusive content, I continue to believe that having this good content, which is acquisition ideas and deal flow for a very hungry audience, which is the private equity guys.

And being able to deliver it at a more junior level, I think you should be right. But we're in the early innings of what I think is a very different change in the model of M&A. I think M&A is changing much more than people are talking about. And I'll just spend one second to say that, I think I have enough time because again, I go back really 10, 20 years ago, M&A was a tactic that a company could use. But they -- you could have the best relationship with the world, with the largest company in the world's CEO, and they could choose not to use that tactic for five years. So you spend all this -- by the way, that has happened. I've seen that. Just because they feel like their own product line doesn't need it or the economy is in a different place.

The -- these new entities that carry out M&A, these alternative asset managers, they don't use it as a tactic. It is a primary business. They are in the business of doing transactions. And so we believe that we can build around that much more confidently that we're not going to go through a two, three-year period. Look, you tell me the company -- the private equity firm out there that consider out two or three years and still have a biz, I think they'd have their own issues. So we are -- I believe the shape of the business is changing and our model is really well-positioned to take advantage of the shape of how M&A is changing. And it might be -- there may be a new margin. The only reason, Steven, I'm not saying that is you have these cross-currents of COVID. So it's hard to make a definitive statement right now. But let's say this, I don't think you're wrong.

Steven Chubak -- Wolfe Research -- Analyst

Okay. That's certainly encouraging to hear. And just for my follow-up, it's relating to antitrust risk and the Biden Executive Order. If I think about it from just from a timing perspective, last quarter, I think you had to opine on it when it had been published maybe just a few days prior to your reporting. Now that it's been outstanding for a few more months, I was just hoping you can provide some insights on whether the Executive Order is impacting behavior among large-cap strategics? What's their willingness to pursue deals, and what's your outlook for large-cap strategic M&A just in general?

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Yes. Yes, I believe it is. And again, I always say it's a dog that doesn't bark. It's very hard to say what deal didn't happen because somebody said I'm not going to even to try it. It just doesn't happen. I think those are a smaller number of very large deals. They're probably -- they probably might have been attempted or might have started and people are little -- are going to be shy about some of those. But I think in the great mix of M&A that's going on, I don't think it will effect -- I think it will affect the larger transactions and the consolidation transactions, but there's almost less and less of those. But again, there'll be some effect.

Steven Chubak -- Wolfe Research -- Analyst

Well said. Thanks for the prospective, Ken. Appreciate it, for taking my questions.

Operator

The next question is from Jeff Harte with Piper Sandler. Please go ahead.

Jeff Harte -- Piper Sandler -- Analyst

Hi. Good afternoon, guys. A couple of cleanups for me. Joe, you mentioned some items as having depressed non-comp expenses in the quarter. What were those?

Joseph Simon -- Chief Financial Officer

It was a series of very small things, but that aggregated to like $1.5 million, something on that order, and that's what gave rise to the lower reported number. So I'm guiding that -- or I'm suggesting that the run rate is probably closer to 33%.

Jeff Harte -- Piper Sandler -- Analyst

Okay. And should we be thinking any differently about share count creep, now that we have a price pushing $70?

Joseph Simon -- Chief Financial Officer

Well, each time, obviously, the average price goes up, that obviously pulls more of the unvested into the share count. So I think that barring any change in price from this point, I think the average per quarter creep absent share buybacks and dividends, et cetera, is probably about $1 million.

Jeff Harte -- Piper Sandler -- Analyst

Okay. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Ken Moelis for any closing remarks.

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Thank you. I appreciate all the good questions and your time, and we'll see you after the end of the fourth. Thanks.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Chett Mandel -- Investor Relations

Joseph Simon -- Chief Financial Officer

Kenneth Moelis -- Chairman Of Board Of Directors And Chief Executive Office

Devin Ryan -- JMP Securities -- Analyst

Manan Gosalia -- Morgan Stanley -- Analyst

Richard Ramsden -- Goldman Sachs -- Analyst

Ken Worthington -- J.P. Morgan -- Analyst

Brennan Hawken -- UBS -- Analyst

Jim Mitchell -- Seaport Research -- Analyst

Michael Brown -- KBW -- Analyst

Steven Chubak -- Wolfe Research -- Analyst

Jeff Harte -- Piper Sandler -- Analyst

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