Evercore Inc. Q4 FY2025 earnings call

• Market environment: Industry-wide global M&A activity rebounded in 2025 with announced transactions totaling approximately $4.5 trillion, up 49% from the prior year and just 19% below record levels of 2021.
• Company accomplishments: Ranked third largest investment bank globally in 2025 based on advisory fees across all public firms; nearly all businesses posted record results; 2025 was a year of continued talent investment with 171 investment banking senior management directors, 40% promoted internally; completed acquisition of Robey Warshaw and expanded in EMEA, sectors, and products.
• Business trends: M&A advisory businesses strong, EMEA advisory accelerated in the second half of 2025, private capital-related businesses remained a source of strength, equity capital markets activity gained momentum, and wealth management had a record year.

For the fourth quarter, adjusted advisory fees were over $1.1 billion, up 33% year over year, a record quarter. Full-year adjusted advisory fees were $3.3 billion, up 34% compared to 2024 and 19% above the prior record in 2021. Fourth quarter adjusted underwriting fees were $49 million, up 87% from a year ago. Full-year adjusted underwriting revenues were $180 million, up 14% versus 2024. Commissions and related revenue in the fourth quarter was $66 million, up 15% year over year. Full-year commissions and related revenue was $243 million, up 13% compared to 2024. Fourth quarter adjusted asset management and administration fees were $24 million, up 10% versus the fourth quarter of last year. Full-year adjusted asset management and administration fees were $91 million, up 8% versus 2024. Fourth quarter adjusted other revenue net was approximately $30 million, compared to $24 million a year ago. Full-year adjusted other revenue net was $103 million compared to $105 million last year.

• Expect 2026 to continue 2025's steady build of activity with backlogs at record levels.
• Constructive on the environment but mindful of geopolitical and macroeconomic risks and note that transaction timing can be uneven.

• Geopolitical and macroeconomic risks; transaction timing can be uneven.

Q: 2025 was a heavily mega-cap M&A driven market. So could you help us think through the outlook for the large deals to continue or even accelerate from here?

A: We think that we will continue to have a healthy environment. All of the things that have really existed to fuel the merger recovery still exist. Our backlogs are very strong. We are very optimistic about this year. We continue to believe that it's going to be a constant and steady build.

Q: In 2025, we had a bit of the Goldilocks environment with the strong performance from restructuring and also M&A. As we look to 2026, can both continue to remain elevated here? Can restructuring revenue actually grow in 2026 versus 2025? And if the restructuring market itself stays somewhat flat, how much additional share do you think you can get in liability management and restructuring?

A: We think that the environment where restructuring and M&A coexist both strong is highly likely to persist. Our backlogs in each of those areas are high and really, in most respects, at record levels. We think that with respect to restructuring, our backlog is very diversified. We feel really good about the restructuring environment for our business. On the M&A side, it's the same. We have very strong backlogs. We are in very serious and strong dialogues with corporations and management teams, and also boards. And we think that this is going to persist. In terms of market share, we are continuing to pick up market share in liability management and restructuring.

Q: Tim, you talked a little bit about investing, sort of making hay when the sun is shining on the tech side, which makes a lot of sense. Could you help us maybe understand is that going to be calibrated to revenue, right? So you're almost start to think about the non-comp ratio, not obviously, it's not going to be the same as comp ratio, inherently, but maybe think about the growth rate with an eye to that and then maybe help us think about guardrails about how you manage it? And also, are there any particular businesses that are tech-heavy? I know like the PCA business is a very data-driven business. So any color on that would be great.

A: The way to think about it is we feel like we've made significant strides with respect to growing the business and diversifying the business both with respect to lines of business and geographically. And in order to kind of build the first-rate corporation and then a foundation upon which to continue that kind of growth, we do need to invest in our infrastructure, and part of that is technology. PCA is certainly one of the businesses that is data-driven. We're using it in our standard and traditional M&A and restructuring businesses, as well as in corporate. It's really comprehensive.

Q: Just on kind of the broader outlook. Obviously, a lot of, I think, enthusiasm in there just around kind of the momentum into 2026. And I think we can see a lot of that even from the outside in terms of M&A backlogs and just kind of where the types of deals that Evercore Inc. is currently involved in. So great to see that. And then you hit on some of the momentum you're still seeing in restructuring. Great if you could just hit on some of the other non-M&A businesses, whether that's private capital or capital markets advisory. And just kind of where all these stack together. So I think people are trying to kind of put all together the non-M&A businesses have clearly grown and are a bigger contribution. You've got this M&A business that's on fire right now. Where are these other businesses kind of in that mix in terms of like growth expectations over the next twelve to eighteen months? Can they keep up at a similar pace? Or are they kind of a ballast in the market and maybe M&A grows but these other businesses can provide a little bit more stability?

A: We really continue to see strength throughout our system. Virtually all of our businesses are at or very close to record levels. Private capital advisory had a record year this year. Our fundraising businesses had a record year. Our debt advisory private capital markets businesses have actually performed at a very high level and are setting records also. Our real estate advisory businesses have really picked up dramatically. Even when M&A is running as hot as it is, we still have 45% of our businesses are non-M&A. And I think that's going to persist no matter really how strong M&A gets.

Q: Given the sell-off in software yesterday and as well as your stock's reaction, there seems to be some fears just about the potential impact AI may have on advisory businesses in 2026. I was wondering if you could talk to us about the potential disruption risks AI may pose to your pipelines and if you can provide any color on sector exposures in your backlogs, both on the public and private sides.

A: Obviously, we've taken a strong look at that certainly, especially over the last twenty-four hours. And honestly, we have in our backlogs and really our business activities, we are very diversified. There is no question that AI is influencing the world. As we look at our business in the near and medium term, we really don't see disruption. But right now, look at what we're working on our backlogs, really what we're seeing, as I said, near term and medium term. And given our diversification, really along products, geographies, and sectors, we actually feel quite good about where we stand and really the stability of our business.

Q: I have a question on the expectations for ECM in 2026. So the IPO sentiment continues to improve and seems like there could be a strong lineup of large deals coming to market sometime in the near future. Can you just give us an update on your backlog here and maybe high-level outlook for the year? And then also on the equities front, if this environment that we're in now in terms of heightened volatility becomes more entrenched or persists, can you just help us think about maybe what the right or what the revenue potential is for that area of the business?

A: In terms of our backlog, our backlogs are good and they're building. We really saw a really healthy build through the fourth quarter. And I think that has just continued. We will absolutely be involved in what I think is a very healthy IPO business going forward here. And I think we're feeling quite good about really our activity levels. The equity capital markets business is actually healthy and growing. We expect that it's going to continue along the lines of where it was in the fourth quarter and strengthening from there.

Q: Tim, I guess I'll ask the question that you probably don't want to answer, but you highlighted, I think, the last two years, comp ratio improvement of 340 basis points. Is that sort of your definition of gradual and a decent way to think about the next couple of years, assuming the environment continues to improve as we expect? Just any help on how you're thinking about the evolution of the comp ratio from here?

A: Yes. As you mentioned, we have made some progress these last couple of years, 340 basis points over the last two years. There are really a lot of things that go into determining the comp ratio. And it has to do with absolute revenues, revenue growth, market comp, and competitive environment, number of SMDs and non-SMDs hiring. We're striving to make continued progress. Whether we could continue to decrease it every year at the same kind of pace and magnitude that you've seen over the last couple of years might be a bit challenging. But we're striving to make continued improvement as we head into 2026.

Q: I just wanted to ask on the backdrop, and specifically just how you use characterize the conversations that you're having with your sponsor clients at the moment and whether there's been any notable shifts in the tenor of those discussions and how we should be thinking about the trajectory of sponsor activity throughout the remainder of this year?

A: As you have seen, we've had a very interesting set of circumstances with sponsors. We have a lot of dry powder, we have LPs that really want liquidity, and we have markets that seem to be recovering. And in many respects, the sponsor business has really started to gain momentum in terms of that activity level. On the M&A side, with size being a dictator, the bigger the more active you're seeing in the market. I think what we're seeing on the M&A side is that the market is starting to really start to diversify some. And that some of the middle market assets or even the B assets are becoming more liquid. And we're seeing in some respects a capitulation where sponsors are trying to really look carefully at their portfolios and start to move things out because they really want to create more movement. And so I think there will be a growing momentum in the sponsor business. Obviously, the big highest quality assets will continue. And then I think you're going to see assets throughout really the spectrum. Our businesses which service sponsors, whether PCA or PFG, or LP stake sales are very healthy. The dialogues are very strong. We're seeing that activity level continue.

Q: Large mega deals really fueled the deal-making recovery in 2025 and we're all monitoring the industry data to see when this could really start to widen out down market. Can you talk about the are you seeing an uptick in the core upper middle market transactions within your business lines?

A: We are definitely seeing more activity. We are definitely seeing more in our backlog. We do have diversification in our backlog. So we are seeing we have a significant number of what you classify as middle market. And frankly, you think about our investment as a firm, we are investing in coverage of the middle market. And so we're seeing more of those types of assignments coming into our backlog. As the people who we've hired over the last two or three years begin to mature and to hit their stride. So we're seeing it building out. In terms of the market itself, which I think is what your question is, is there really continued or increasing activity in the middle market? We think there is. We think that there is a very healthy build in that side. And we're seeing a lot of that. Our numbers of pitches, both sponsors in the middle market companies as well as non-sponsor, is up significantly. And so we're seeing a very strong level of pitch activity and dialogue activity in that middle market sector.

Q: On the private capital advisory side, you are a market leader in secondaries. We've seen some peers lean in recently. We've seen some of the money center banks doing more. So what's your sense of competition ramping up? Are you feeling that? And how do you protect your share?

A: There is definitely a lot of activity in people trying to build these businesses. And I'm certain that there's going to be very worthy competition and it's going to grow. We have a very good business, and we have a really, really well-established base. We have a group of clients who are very happy with the service that we've been providing them. And I think there's a level of advantage for having been in this business for a long time and done it well, whether it's data that we've been able to capture and it's very strong data, an experience level that people recognize, and I think in many respects, clients appreciate, a track record of success and the relationships themselves. And so, I think that we're going to be able to compete very adequately as new entrants come into the market. But as you know, on Wall Street, competition can be intense. The competitors are always very worthy and good. So we're going to have our hands full, but I think we're ready for it. And I think we're actually competing extremely well right now.

Q: Just when thinking about private, we've seen all struggle in terms of price action. Do you think LPs are recalibrating how they allocate to private markets? And on the non-M&A revenues, is there a high correlation between M&A activity? Or should we think of these two as entirely uncorrelated?

A: I don't think you can ever have something be entirely uncorrelated with the flow of funds going back and forth through asset classes. I don't think that we're going to see that, you know, what I would call as kind of a rethinking or maybe a somewhat of a discussion on all to be changing what's happening on the M&A side. So I think that what you'll see is you'll see flows of funds going back and forth. There always is. We don't see any major impact right now in our business. But obviously, we're watching it. Just like you are. But we don't anticipate it's going to have a big impact.

Q: I was hoping you'd provide additional color on the capital allocation strategy in 2026. You called out doing buybacks again this year. Net of the employee comp program. Is the 4Q repurchase level a good run rate for buybacks for the rest of the year? And just how are you thinking about capital allocation this year?

A: I would not take any particular quarter of buybacks that you see from us and annualize it. I think just to give you some color on it. First, I would note is that the $812 million that we returned last year was our second-highest return of capital ever, trailing only 2021 and trailing that number by not much. Second is each year we've indicated to the market that we strive to acquire at least a number of shares equivalent to the number of RSUs we grant as part of our bonus cycle. So that's probably the second point I would make. And then thirdly, we're sitting right now on a, as of year-end, about $3 billion of cash. And some of that, of course, is required for regulatory purposes and for underwriting capital and for operating capital, but there's still some excess there. And we intend to be repurchasing shares, not only for the last five years, not only have we repurchased a number equivalent to the RSUs issued as part of our comp cycle, but we've acquired a number in excess of that. And I think we'd certainly strive to do that this year as well.

Q: Maybe just, John, can you speak about the recruiting environment, whether or not getting tougher to get people to leave their seats in this environment? And is it getting more expensive? And just overall, what's your take on your recruiting pipeline?

A: The recruiting environment has heated up a lot. And it's very intense and it's very competitive. We feel good about the pipeline of people that we're talking to. There's no question that getting people to move is harder than it was two or three years ago. But I think what's happening is there's a lot of momentum at Evercore Inc. And we have a pretty compelling story for people. But I do think your the premise of your question, which is it's harder and it's going to take more work and it may even be more expensive, that premise is correct. There is definitely going to be more competition. It's probably going to be more expensive. We're going to be having to work harder to get people to make the move, especially if they're very busy in a recovering environment. So I do think it's going to be hard. We've spent a lot of effort and time finding the right people and going after A-plus candidates. I think one of the things that we're really happy about is that a lot of the people that we really have worked hard to get over the last three or four years, many of them have ramped, hit their stride, they're starting to really kick in. And some of the results that we're showing now is that group. So our incentive to continue to go even if the environment is harder, maybe more expensive, will still be there. We're going to continue our aggressive recruiting efforts throughout the cycle here.