Victory Capital Holdings, Inc. (VCTR) Earnings Call Transcript & Summary

[Audio Gap] I'm the U.S. Asset Manager and Broker Analyst at UBS. I'm pleased to introduce David Brown, Chairman and CEO of Victory Capital. Victory had a very successful 2025 with record highs in gross sales revenue, EPS and AUM, which ended the year at $317 billion of AUM. So from one Brown to another, Dave, welcome.

Thank you. We [ are not related ]. Just...

Thanks for clarifying that.

Thank you for having me.

Of course, of course. Thank you for being here. So as I just mentioned, 2025 really marked a big step forward for Victory with the successful Pioneer transaction. When you look out over the next 12 to 24 months, what's the 2 or 3 biggest drivers for Victory? And kind of what's the biggest risk to that plan?

Sure. Well, so let me start off and say, when we look out 2 years, I mean, first, we really do want to complete Amundi Pioneer acquisition integration. So we're well into that. I think we had announced that we had $97 million of our planned $110 million of net expense synergies completed. That's probably a good guide on how far we are through the completion of it. So around 90% complete. So we want to complete that first of all. I think the second piece is we want to continue to build out our distribution platform from that perspective. We've integrated, we've trained. We've expanded our partnerships on the intermediary side. And so getting our distribution platform to the right level, and we're just about there. I think, is another really big step for us. I'd include the international side on that. I mean we're just in the beginning of really growing our international distribution channel. We've been net flow positive since we've bought the Pioneer business. But really, we have not sold the legacy Victory products through that channel yet. We've just launched 5 UCITS, 3 of them are legacy Victory. We're just getting ready. In '26, we just started selling our U.S.-listed ETFs through that channel. So there is a lot of excitement there. And I think getting that going is another important aspect to getting the distribution platform. I'd say the other big driver for us is going to be M&A. We're super active. The environment today is definitely conducive to doing acquisitions. For us, specific to Victory, our leverage is at a level where we can do acquisitions. It's part of our strategy and I think that's going to be an important part of who we are over the next 2 years. We lean more towards a sizable and scaled platform to buy something that was the same kind of concept as the Pioneer acquisition.

So maybe put a little -- if you can put a little more meat on the bone on that, that my last comment, Dave. So I think you kind of talked about it's $50 billion to $200 billion in AUM? Is that kind of what you're thinking about here? Okay. And then how do you determine the right size for these deals? I mean, Pioneer seems like it's been a great success so far. But what are the qualities that you look for? And what were the qualities that made this Pioneer such a good transaction?

So the sizing, I mean, we included -- I think it's the second quarter in a row, we included a pyramid that showed actually the available -- the number of available managers within the different sizes. And we kind of kind of boxed off the $50 billion to $200 billion size manager. It does not mean that we couldn't do something larger. And it doesn't mean we wouldn't do something smaller. But I think that $50 million to $200 million is an area where I'd say is, call it our sweet spot. When we look at what are the characteristics of a good acquisition, I think Pioneer is a great one to kind of take a step back and tick through. So when we thought about Pioneer, we thought about, can we make our platform better, can we make our business better. And part of that was the global distribution agreement with Amundi. So we globalized our business. We really globalized with our client base, but also the opportunity to sell outside the U.S., which benefited all of our franchises. So when I think about doing an acquisition, I think about the strategic side of it is, can we make our company better? And then on the Pioneer one, you have this ability to go sell your products outside the U.S. So I'd say, strategically, can you make the platform better. And then the other side of it is for Pioneer, we expanded our product set. So from an investment capability perspective, we've got a lot of new fixed income products. We got some active equity products, some different vehicles. And so when I think about, we now have more products to go and square off with our clients and new clients. Again, strategically, that's what we're looking for. And that's worked out really well. And then obviously, there's a financial element to it. We had 110 -- we announced $100 million of synergies. We increased it to $110 million. So there's a real accretive kind of concept to the acquisition. We guided towards low double digit, and we're probably closer to around 20% already from an accretion standpoint. We're not even completed on all of the net expense synergies. And then for Pioneer, it's been net flow positive. And so we've been net flow positive since the acquisition every single quarter. So you think about organic growth, very accretive, expand your distribution, expand your product set, that is -- those are the things we're looking to do. You're not going to find that in every single acquisition, all of those elements. And then the other thing I'd say the last thing, which is kind of in the background is it's given us size and scale. So the ability to be larger to be more important to the distribution platforms, to be more important to the institutional consultants, that matters. And it matters as you go and make these investments in these platforms that you're able to spread those expenses over a larger asset and revenue base.

Maybe 2 follow-ups there. As you look at that $50 billion to $200 billion sized asset manager, how -- what is kind of the sentiment in the space these days, when you're looking at some of these potential targets and you're looking at meeting with these managers? Are they finding it challenging to stay as an independent player in the space? And are they really looking for that opportunity to be part of a bigger platform that can help them on a distribution standpoint and have more capabilities?

Yes. I think most -- and I think it's an evolving kind of sentiment. As time has progressed, I think firms that are of that size are challenged on the distribution side. Can they be relevant at the platforms? Can they be relevant with their product set? Do they have a deep enough product set? Can they make those investments? Those things are only getting harder. I think there's a realization of that. The investment required for operations, technology, AI, all of these things you need to do to be efficient. And the industry is changing. Obviously, ETF is a share class. ETFs, all of these things require mass investment from an operational perspective, from a product development perspective. I think those things become challenged for a manager in that size. And then I think when you look out a couple of years. And I think most people that are running these businesses understand this. I think there's just a common kind of thought that I'm going to need to be a lot bigger because there's going to be more investments to come. And what will I do? And so I think when you put all that together, most firms are either thinking about doing the acquisition or being acquired. I mean if you go back 5 years ago, I don't think those were the discussions in the boardroom, but I think now that's happening. And then a lot of the larger firms like a firm like Amundi, who had a U.S. presence that said, we have a really good business. I want to invest in other parts of the world. So I maybe want to contribute this business to another business and focus somewhere else but still be present. I think that a lot of the larger firms are looking at their strategic plans and saying, how does asset management fit? Be that if I'm -- do I want to invest? Can I invest? Or I want to spend -- does this where I want to have my strategic chips down? And so I think a lot of those discussions are happening.

And then if we go back to kind of the initial part of your answer on the aspects of what you'd be looking at as a deal? What you want to gain for the platform, maybe just narrow in on the client segmentation side. And you talked about how being bigger has made you a lot more relevant through different channels. But is there anywhere that you would want to be bigger, maybe an acquisition can help you, whether it's with institutions, intermediaries or on the retail side, maybe what's the best opportunity for you?

I don't think we have a specific client segment. I'd tell you the areas that we like. Obviously, we like the retirement side. On the institutional side, we like the insurance space. That's an area actually on the institutional side that's growing, selling products to insurance companies. The RIAs are a great channel for us, and it's an area where we'd like to be bigger. And then you think about the large platforms, the Morgans, the Merrills, the UBS', and even the second tiers, you need to be there. You need to be invested there. There is just so much volume go through the and there's a lot that goes into there. So of course, going into those channels matter. And then outside the U.S., we have invested a lot in our infrastructure in the U.S. to support outside the U.S. or international. But that's an area we'd like to -- when we think about client segmentation. We love -- and it's all white space. We love the opportunity of now being able to sell our products outside the U.S. because we didn't have that access before.

Maybe if we double click a little on that, Dave. And you just talked about at the beginning, you launched -- it was 5 UCITS in Europe, and you've brought some of your listed ETFs there as well. Maybe just expand on that a little bit and give me a little bit of a color about how quickly can some of those products start to ramp, do you need some sort of kind of performance track record? Or do they already have some of that built in?

So What's -- let me start off saying we have probably, I think, 22 UCITS today that are being sold throughout Europe and really throughout the world. And those UCITS are primarily kind of the legacy Pioneer strategies, equities, fixed income, multi-asset, well distributed, well established on a lot of different kind of platforms. Our strategy there is we are bringing the legacy Victory on to those same channels, same platforms, kind of same sales forces are selling those. Those will take some time. We've launched those at the end of '25. They will take some time to kind of get into the system to be kind of educated, put on platforms. We'll start to see the benefit of that piece through the end of '26. And then the U.S.-listed ETFs really have the track record, they have the scale. That's really just a product of is how quickly we can educate the sales force and get them out to market, which we're doing right now. So I anticipate that will add to the Victory shares momentum that we have and kind of growing that business, but that will be a faster kind of growth. All of that said, institutionally, we have access to all of outside the U.S. that Amundi sales group is selling. Those are available now. We don't need to launch any specific products, but those are available today and can -- and are being sold.

Okay. Great. And then if we go back to the Pioneer deal, and maybe if you could talk about the kind of 2 to 3 metrics that you would use internally to judge the success of the transition over the next 12 to 18 months. You already talked about the net positive flows. You're 90% way through the retention that you -- or the synergy that you've actually raised. So maybe just what are some of the other things to kind of think through there?

So I'd start off with investment performance. I mean one of the things I think we've done well as a firm over the years is as we've done acquisitions and brought businesses onto our platform. We have not disrupted the client experience or the investment performance. So we're looking at investment performance. We said in our last earnings call that the investment performance for Pioneer under Amundi's ownership was good. Under our ownership, it's as good, if not better, depending on the product and the time period. So we'll be looking at investment performance. We'll still look at that synergy number. We want to get to that $110 million, and we'll complete that through calendar year '26, the remaining $13 million. We will look at gross flows and net flows on the Pioneer side. I mentioned that we are net flow positive. I don't expect that to change. They have a lot of good momentum and a lot of good products that are in demand. We will also look at the international channel. And so that's another -- even though going through that channel will be Pioneer and the legacy Victory products, we'll look at the performance of that channel. We're now flow positive there since we've done the transaction. We'll look at that going forward. And then the other thing we're going to look at, and we've done this is we'll look at product development on the Pioneer side. We've launched 1 ETF already. We'll launch more down the road, but we'll look at product development as another important KPI. And I think that's -- if I think about my top tier of things that are important to us, that's the list.

Got it. Got it. Great. That was really helpful. And then if we -- you talked about a lot on your earnings call, you talked about the real success on the gross sales side, and that was a really impressive result for the year. So the long-term net outflows have improved. But how would you think through the specific drivers of what gets you to kind of that positive firm-wide net flows?

Yes. And I think they've improved, but we're not happy with just being negative. I think our goal as an organization is to have organic growth. If you think about the different levers for our business around fee rate and margins and capital and gross flows. I mean, net flows, the net flows are the last KPI that needs for us to be green. And I think we're right on the cusp of that. And so you think about our are areas where we think we have strength to get us there. I think of our VictoryShares platform, the ETF business, it's growing nicely. We've seen great growth there. We've got a really good diversified group of ETFs that have good performance that are really solving issues within portfolios. And it's -- and by the way, the fee rate on those are an average, I think, of 34 basis points. So this is not passive type ETFs that need into your margins or your fee rates. So I look at VictoryShares as a driver for us. I also look at our international distribution channel, which, again, I said this a couple of times, is really white space for us. So that's going to be an area that's going to help us grow. Fixed income, we have 2 really high-performing fixed income franchises is the Pioneer portion and then the Victory Income Investors. And we have active -- we have ETFs, we have mutual funds, we have collective trust funds. And then we have, obviously, the institutional separate accounts. So I look at fixed income as an asset class, and we have a lot of different offerings there as another area. Our global products, we have really competitive global products, 1 under RS and 1 under Pioneer. And then our multi-asset products, we have a multi-asset income product, which has done really well and some of our solutions offerings. And so I look at all of that, and I think that, that is a lot of momentum that we should be able to capitalize on. And we'll have some headwinds like everybody else on the active equities side. The good thing about that is what's underlying our active equities is pretty good investment performance. I think some of the asset classes, we were penalized for in '25 and back have come back a little bit. Small-cap is 1 of them that we have a sizable amount of assets. I think you're seeing people allocate there now a little bit, and you're seeing some of the returns and a little bit of the market shift go away from maybe the AI trade or the Mag 7 trade, and there's definitely a rotation going on. So I think we'll benefit from there. But -- and then I see the last part is, we have invested quite significantly into distribution through the partnerships. So on the intermediary side, we've entered into probably half a dozen new partnerships at the end of '25 and into '26 where we have either become a premier partner, bought data packs, marketing support, conference support, which are super important to getting close to the buyers of the products. And then 1 more thing is we did in '25, really double the size of our intermediary sales force through the acquisition. And so having more people selling -- and that group, it will take time as we've gotten them educated as we've gotten them up to speed on the products from their organization. So the Pioneer people know the Victory products, the Victory products people know the Pioneer products. it takes time to get to the buyers and eventually for them to buy. So we're just in that phase. So I think all of those things gives us a lot of kind of tailwind into this organic growth mode.

So a lot going on the organic growth side. A lot of levers as you mentioned.

And it's super important for us.

Yes. That's great. Maybe a couple of things I wanted to kind of follow up on there. So you were starting to talk a little bit about the -- you might see a bit of a rotation from kind of the U.S. and the Mag 7 and probably a bit more in the kind of international markets. We've been seeing that in some of the flows. I'd love to hear your view on that, maybe a little bit more. What are you hearing and seeing from clients and seeing client behavior? And then the second part I wanted to ask you about, too, is just when you talk a lot about some of the non-U.S. growth and the opportunities there that you're still -- you're just early days in tapping into. Where specifically are you talking about?

Yes. So to answer the first part of your question around really asset classes, where we're seeing a little bit of a rotation from a performance perspective, out of some of the winners of '25 and maybe the end of '24, where it was a tech in the AI and some of the companies we all know, I think you're seeing that move into small-caps and you're seeing it to move to different types of sectors away from there. It doesn't mean that the AI and technology trade is not going to work, but I think you're seeing a broadening out of the market, which is super healthy. We're seeing clients allocate outside the U.S. I think there's a good article in the Journal this morning about that. You're seeing clients allocate to outside the U.S. to international products, to global products, we have fantastic offerings there. And I think the average U.S. retail investors under allocated outside their portfolio outside the U.S. So you're starting to see that. And I think you're seeing is the U.S. market potentially -- does that have the same growth prospects over the next year or 2 as some of the outside the U.S. markets. And so I think we're seeing a little bit of that. I think fixed income depending on what happens with the Fed and rates. I still think people really, really like fixed income. You're going to see people allocating to fixed income. I don't think that's going to change. So that's what we're seeing. Outside the U.S., the buyers, where we're positioned, and it's really through Amundi sales force, our best and biggest opportunity is in Asia. If you think of Asia and the Asia ex Japan and Japan. So I'd say Japan and the rest of Asia, we think is our best opportunity from an asset gathering perspective, from where we're positioned from a product perspective. So we're super excited about Asia. Europe, but Europe really not because there's so much of a desire to buy U.S. manufactured or product but just because Amundi is well positioned in Europe. And so Amundi's distribution in Europe is as good as it gets. And so we have great distribution there through Amundi and we have great partnerships there and long kind of deep rooted partnership. So we think Europe is going to be a good driver for us. And then the Middle East, we -- Amundi has a number of partnerships there, and they have good relationships there. And I think one of the things that we bring to the Amundi business when they go and they talk to their clients is a U.S. listed manage -- a U.S. listed investment manager, which I think is desirable for Middle East investors. They want to invest in the U.S. They want to invest. Historically, they've been in private markets. Historically, if they wanted to access the public markets, it's been very beta like. I think there's a little bit of a shift away from that we're seeing. And so we think we're going to benefit from that.

Interesting. Okay. Great. Why don't we switch gears to the active ETF side of the industry. That's been a big industry shift. And following the success of the VictoryShares platform, which you've touched on a few times, how do you continue to think you'll take share in that space? We've seen obviously a lot of the larger players also leaning into this industry shift. So how do you continue to separate yourself from them?

I mean we're approaching the active -- we have a number of active ETFs on the fixed income side and some on the equity side. We'll continue to do what we're doing. We're really creating differentiated product. We're not creating me-too products. If you looked at our -- like our free cash flow series is another one that I think is very differentiated. But we're going to create product off of our franchises and then off of our solutions platform and then wrap those obviously in an ETF structure and then go and sell those really as active management. They're priced like active management. They're sold like active management. But we're going back and saying, how do we solve problems in the portfolio. Our sales infrastructure, our marketing infrastructure, our client service infrastructure is totally integrated on the ETF side. So we don't have -- we have separate ETF sales specialists, but our entire infrastructure is set to basically support the ETF business. And so we're able to kind of use data and analytics on selling and servicing the ETFs, where we have our salespeople trained on ETFs. And so from that perspective, it's somewhat business as usual. But we're not trying to compete on the kind of the beta side, where there's a race to 0. And we're not trying to create products that everyone else is doing either.

Right. So MODL portfolios is another really fast-moving trend in the space, you're seeing a lot of good growth from that segment of the wealth market. Can you maybe just talk a little bit about the opportunity that you see there for Victory? Kind of what's your place in the market? What's the opportunities for growth there? And how is competition there?

So we've owned a MODL provider, since 2021 in WestEnd Advisors. It's got -- it's approaching close to $30 billion of assets, very well distributed on all the large platforms, a number of products, a number of different products. And we're net flow positive on that platform, since we did the acquisition. We've launched ETFs -- so we've taken their investment kind of process and put it into an ETF. MODL is an example of it. And so what we'll do on that platform is we'll evolve the WestEnd platform to potentially do some tax-efficient products that you've seen. We'll probably evolve their models to include some private market exposure as well. There is -- we have a 10-person MODL sales specialist team that today sells mostly or if not on exclusively WestEnd products. So we have people that just sell the WestEnd product and service it. And then the rest of our sales force also sells it, but really then is helped by this sales -- this MODL sales force. So we view that as a big part of our growth going forward. I think at the point of sale, the advisers like the MODLs. It allows them to do a lot of different things and allows them to kind of give their clients access in the right way and then for the advisers to go on and do different things, either servicing clients or getting new clients.

Can you maybe unpack a little bit about where WestEnd has had most of its success, either specific platforms or certain areas within the wealth management space?

So the larger platforms, so they've done well on the larger platforms. They've also -- when we've launched their ETF, they've seen a lot of demand on the ETF side because historically, they've only been able to offer advisers MODLs. Sometimes the advisers have clients that don't -- can't go into the MODLs and they want other structures. In the past, they've not been able to kind of say, I want WestEnd across my book. I'd like to buy an ETF. We're now -- in the past, they couldn't do it, where now they can put their clients into MODLs and then also put them in ETFs, so you can kind of get the complete package. So we've seen success there. But I think from a platform perspective, if you thought about the larger intermediary platforms, that's where they've seen the most success.

Okay. Great. And you did touch on 2 really interesting points there in terms of adding this tax efficiency element. Any view on kind of timing on that or maybe what's involved on the investment side to get there? And then adding privates is kind of an interesting angle. That's certainly something that we starting to see some products come to market with BlackRock and they have Partners Group. So maybe talk a little bit about how you would approach that from a partnership perspective.

On the tax side, that's a '26 kind of product launch. And I think that one, we're well down the path on that. On the MODLs from adding the private market exposure, we're working on that. And we're working back from what we think the clients want and need. We're also thinking about the retirement side of that as well. And so offering that through the retirement channel. How we get the private market kind of manufacturing, we're working on that as well. I think there's a lot of different options, and we're exploring all of them. But I think when you really take a step back, I think one of the ways we'll deliver those MODLs will be you'll have access to public market allocation. And then potentially, if you like, you can have a private market allocation within there, be it fixed income or real estate and -- or secondaries or private equity. And it will depend on the buyer, it will depend on the channel, but that's how we're thinking of it.

Really interesting. Okay. I'll just remind folks in the room and on the web that if you want to submit a question, you can do so through the app. You can submit a question through the web. You can ask any questions live here in the room. We'll see if any come through the web there. But -- so Dave, if we move to the margin side, which again was another really impressive result in 2025. And as I see a strong margin like that come through, I still kind of wonder, is that the ceiling here? Or how do you kind of think about what's the puts and takes to the margin going forward?

Yes. I mean our official guidance, it has been for a while, it has been 49%. And I think if you followed our company, we've exceeded that quite significantly even during kind of the integration period with Pioneer. And so we're looking at our margins, what the right level is on -- at least from a guidance perspective, today, it's 49%. I think from a ceiling perspective, our last quarter was 52.8%. I think the quarter before was 52.7%. I think we're at -- it doesn't mean we can't exceed it, but I think we're at where we think we can -- where it's a full margin. We have really spent a lot of time with our vendors. We spent a lot of time around technology. Instead of hiring people, we've tried to put scalable technology in. And if you think about a lot of the firms in our space, I think that they are investing a lot of money to try to get to the platform that we already have built. And so when I think about it, our margin expansion is going to be marginal from where it is today, if you will.

Okay. Yes, that makes a lot of sense. So if we take a step back and go a little more high level, you have talked about a public goal of reaching $1 trillion in AUM. And so you took a big step forward this year, still talking about more M&A in the space. How do you kind of bridge the gap in getting there from, call it, the $320 billion level now to the $1 trillion? How much will be organic? How much will be inorganic?

Yes. So I mean, it does seem like a lot to go from $300 billion plus to $1 trillion, but just a quick walk down memory lane. I mean, we did the MBO or management buyout from KeyCorp in July of 2013, we're under $15 billion. And then we went public in 2018, we had $60 billion. And so when you put in perspective to go from $15 billion to $60 billion and $60 billion to $300 billion plus, it doesn't -- it doesn't seem like that high of a hurdle, when you put it in perspective. How we're going to get there primarily is going to be through M&A. I would love to say that we could get there through organic growth in the next X amount of years, but that's not going to happen. I don't think that's possible in our industry. But it will be through inorganic growth. It will be through low single-digit organic growth and whatever the market gives us. But it will be through larger M&A, maybe smaller strategic M&A, but it will be through larger M&A. And as we discussed earlier, I think we -- that $50 million to $200 million range, and it can be higher than the $200 million. And I think that is -- if you go back and look since we did our MBO, I think we have averaged a transaction every 1.5 years is about the cadence. And so if you think about that, it's probably 3, 4 -- 2, 3, 4, 5 years out, depending on the size of M&A to get to that number. The number is important for us. We put it out there publicly because we think that, that is the size you need to be able to compete long term, kind of in perpetuity. The $1 trillion number is those firms will be big enough and scaled enough to go and have the depth of the product to have the resources to basically get access to clients, to service clients, to service the platforms to reinvest in your business. We think that's the number. I think -- if you go to the other side, there's going to be a smaller kind of sized manager that maybe will be a specialist, maybe have a few products, very different profile. And then everyone in between that small manager and large manager is going to be challenged. And I think that's -- I think -- I've said this for a while, I think consolidation is going to happen a lot faster than we all think. You think about some of the recent transactions over the last couple of years of public companies either getting bought or going private and all the transactions that are happening, I think it's only going to accelerate.

As we think about that kind of $1 trillion level for Victory, what does the firm look like at that point in time? Because at that point, yes, you are talking about a significant amount of scale of AUM. But when you think about what the team on the ground looks like versus today, what's going to be the biggest change?

Well, I think it's $1 trillion, just from what it looks like financially, it's a $1 trillion manager with $5 billion in revenue and probably $2.5 billion of earnings. I think that -- and everything that goes from there, I think that's very, very much like we look today. But I think when you think about the product set, I think you'll have a fully built out kind of public market offering, fixed income, multi-asset equities, very similar to what we have today, maybe deeper in a few areas. You'll have a sizable ETF business. You'll have a sizable outside the U.S. business. You'll have a number of UCITS. You'll have a sizable institutional business. Part of that will be private market -- I hate to use the term alternatives, I'll say, private market investing. So some of the products that we'll have in that $1 trillion, they will either be specifically private market -- so some of them. But then also, you'll have models or you'll have kind of very much like a target date fund, where you're going to have basically risk profiles and time lines and you're going to have private markets investing in those models. So we'll look like that. And then our business will be -- I mean, today, 17% of it is outside the U.S. I expect that number to be more. So maybe it's 25% or 30% and the rest probably inside the U.S.

So on the -- you kind of spark a thought in my mind as you talk about the private markets and that probably becomes a bigger piece of your business. We have, of course, observed that the public valuations for a lot of those names have been coming down. It's kind of a more recent phenomenon. But curious what you have observed maybe over the last 6 months as some of the opportunities in the private market space from an M&A standpoint improved at all? Is that getting a little more interesting to you?

I think -- well, I think the valuations coming down probably are well justified. I think they probably got ahead of themselves on where the businesses were. They're fantastic businesses. But on the other side, I look at a traditional asset manager, I think that the valuations are probably too low. And I think there's probably a coming together of those valuations. For us, we have -- one of the things we have done over the years, we have stuck to what we do really well. We've stuck to managing money in public markets, which I think we've done really well. We know how to sell, service, operate, reconcile all the things that go with selling public market type products. And also, we have stuck to doing acquisitions in areas where I think we have felt really good about being able to execute on them. I mean one of the things we've done really well is just consistently done acquisitions, where we hadn't been able to add value, been able to better our platform. They've been accretive. Some of them had lots of synergies, some of like a WestEnd has had revenue synergies. We're going to continue to do those. The private market acquisitions for us, we have studied and watched that space for a long, long time. I'm happy we have not done anything. It doesn't mean we wouldn't do something in the future. But I think we have made our way sticking to what we know best. And there's a lot of different ways to access private market manufacturing. You can get it through distributions, distribution partnerships. You can get it through minority stakes. There's lots of different ways you can do you build it yourself. So there's a lot of different ways to do it, and we're exploring those ways. But I think the alts and the private side, I think the valuations coming down is probably pretty justified.

Got it. Got it. Okay. While we're on the topic of M&A and capital allocation, maybe just touch base on -- just touch on quickly the view on kind of buybacks and dividends, and you talked about leverage levels are now kind of at a lower level. So I'm assuming debt paydown is not as high on the list, but maybe just give us a quick update on your priorities?

Yes. First and foremost is we want to make sure our balance sheet supports our strategic desires of doing acquisitions. And so we're always going to default to that first, make sure we have a balance sheet that supports that. I think today, leverage at the lowest it's been as a public company around 1x. We're in a really good spot from that perspective. And so when I think about the second level, what's #2, and it's a little bit of a shift for us, I'd say we lean more into buybacks. And we have bought back a significant amount of our stock, since our IPO, but -- and we've started to buy back more, and I think we were pretty clear on the call to say that we're going to buy back our stock aggressively. And I think the way we articulated on our call was we're at ground zero between the underappreciation of our industry and then the underappreciation specifically of Victory. So I can only think of -- if we're not buying a company, I want to use our dollars to buy our stock because I think it's a tremendous value for our shareholders. So we're going to use our capital to do that. We're not going to abandon the dividend. Our dividend has gone up every year, every quarter from when we were doing it quarterly. That's not going to change. But I think our use of -- primary use of capital is going to be acquisitions. And then second, we will be buying our stock back.

Great. Great. So maybe just kind of one to close out here as we get closer to the end. As you think about the next 3 to 5 years, and we're kind of sitting here back in [ Kerrville ] and we assess the asset management landscape, what do you think will kind of be the observations in terms of the folks that have separated themselves as kind of the true winners and maybe the laggards in the space?

Well, we've talked about size and scale. I think consolidation is going to happen. And I think the folks that are able to work their way through either consolidating or to be consolidated, I think will be winners. But I think what will be -- what type of firm will be a winner is you're going to have to be either a small specialist firm that's offering a product or 2, not going to be us. But for us and for the industry, it's going to have to be that $1 trillion type manager that has a really broad and deep product set that obviously adds value to their clients' portfolios, offers their manufacturing in all different kinds of vehicles, whether it's an ETF, an active ETF share class, whether it's a collective trust fund, whether it's a UCIT, you're going to have to be able to offer a model, SMA, you have to be able to offer your clients or every single vehicle, however they want to access, you're going to have to have that. And you're going to have to have the size and scale to service them. And then the other thing I think you're going to need to do is you're going to have to be up to speed operationally, technologically from an AI perspective, have to invest in your business.

Great. That's a great spot to end. Dave -- thanks so much. Everyone, please join me in thanking Dave.

Thank you.