James Mitchell

James Mitchell asked if M&A activity is broadening out to the middle market, given that 2025 was mega-cap driven with a declining deal count. He also sought an update on PJT's positioning for a potential middle market recovery among financial sponsors. Additionally, he asked Helen Meates for guidance on the Q1 tax rate.

Answer

Paul Taubman, Chairman and CEO of PJT Partners, noted that the reduction in deal count is primarily in sub-$1 billion transactions, which is not PJT's main focus. He anticipates increasing activity among private equity firms as they monetize investments, improving the capital deployed/returned ecosystem. PJT engages sponsors through Liability Management, its strong Private Capital Solutions business, and growing industry groups. Helen Meates, CFO of PJT Partners, explained that the effective tax rate is estimated and smoothed over the full year, so the 'high teens' estimate for 2026 already accounts for the Q1 benefit.

Inquired about the bank's actions to reduce asset sensitivity ahead of potential rate cuts and whether a reduction in the Supplementary Leverage Ratio (SLR) would create meaningful opportunities for balance sheet growth.

Answer

The bank has added some duration at the front end of the curve to balance its exposure to different rate scenarios but noted it's nearly impossible to get asset sensitivity to zero. Regarding the SLR, they see its reform as important for systemic resilience but noted JPMorgan is not currently constrained by it. The impact would be modest and is likely already priced into the market.