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FAIR VALUE

12 Months Ended

Dec. 31, 2023

5. FAIR VALUE

Financial Instrument Valuations

The valuation techniques used by the Company to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation techniques applied to investments held by the Company and by the Consolidated Funds vary depending on the nature of the investment.

CLOs and CLO loan obligations: The fair value of CLOs held by the Company are estimated based on either a third-party pricing service or broker quote and are classified as Level III. The Company measures its CLO loan obligations of the Consolidated Funds by first determining whether the fair values of the financial assets or financial liabilities of its Consolidated CLOs are more observable.

Contingent consideration: The Company generally determines the fair value of its contingent consideration liabilities by using a probability weighted expected return method, including the Monte Carlo simulation model. These models consider a range of assumptions including historical experience, prior period performance, current progress towards targets, probability-weighted scenarios, and management’s own assumptions. The discount rate used is determined based on the weighted average cost of capital for the Company. Once the associated targets are achieved, the contingent consideration is reported at the settlement amount. The fair value of the Company’s contingent consideration liabilities are classified as Level III. Liabilities recorded in connection with the Company’s contingent consideration are included within accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition and the associated changes in fair value are included within other income, net in the Consolidated Statements of Operations.

Corporate debt, bonds, bank loans, securitization vehicles and derivative instruments: The fair value of corporate debt, bonds, bank loans, securitization vehicles and derivative instruments is estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs. These investments are generally classified as Level II. The Company obtains prices from independent pricing services that generally utilize broker quotes and may use various other pricing techniques, which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. If management is only able to obtain a single broker quote, or utilizes a pricing model, such securities will generally be classified as Level III.

Equity and equity-related securities: Securities traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. Securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II. Securities that have market prices that are not readily available, utilize

valuation models of third-party pricing service or internal models using unobservable inputs to determine the fair value are classified as Level III.

Money market funds and U.S. treasury securities: The fair value of money market funds and U.S. treasury securities is estimated using quoted market prices in active markets. These investments are classified as Level I.

Partnership interests: The Company generally values its investments using the NAV per share equivalent calculated by the investment manager as a practical expedient to determining an independent fair value or estimates based on various valuation models of third-party pricing services, as well as internal models. The Company does not categorize within the fair value hierarchy investments where fair value is measured using the net asset value per share practical expedient.

In limited circumstances, the Company may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses. As of December 31, 2023 and 2022, NAV per share represents the fair value of the Company’s investments in partnership interests. Discounted cash flow model has been used to determine the fair value of an investment in a partnership interest held by the Consolidated Funds where NAV per share was not deemed to be representative of fair value.

The substantial majority of the Company’s private commingled funds are closed-ended, and accordingly, do not permit investors to redeem their interests other than in limited circumstances that are beyond the control of the Company, such as instances in which retaining the interest could cause the investor to violate a law, regulation or rule. The Company also has open-ended and evergreen funds where investors have the right to withdraw their capital, subject to the terms of the respective constituent documents, over periods generally ranging from one month to three years. In addition, the Company has minority investments in vehicles that may only have a single other investor that may allow such investors to terminate the fund pursuant to the terms of the applicable constituent documents of such vehicle.

Fair Value of Financial Instruments Held by the Company and Consolidated Funds

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2023:


Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Common stock and other equity securities	$	—	$	86,572	$	412,491	$	—	$	499,063
Collateralized loan obligations and fixed income securities	—		—		126,294		—		126,294
Partnership interests	—		—		—		6,287		6,287
Total investments, at fair value	—		86,572		538,785		6,287		631,644
Derivatives-foreign currency forward contracts	—		1,129		—		—		1,129
Total assets, at fair value	$	—	$	87,701	$	538,785	$	6,287	$	632,773
Liabilities, at fair value
Derivatives-foreign currency forward contracts	$	—	$	(2,645)	$	—	$	—	$	(2,645)

Total liabilities, at fair value	$	—	$	(2,645)	$	—	$	—	$	(2,645)


Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Loans and securitization vehicles	$	—	$	9,879,915	$	736,543	$	—	$	10,616,458
Bonds	—		575,379		3,570		—		578,949
Money market funds and U.S. treasury securities	523,038		—		—		—		523,038


Total fixed income investments	523,038		10,455,294		740,113		—		11,718,445
Partnership interests	—		—		—		1,642,489		1,642,489
Equity securities	47,503		2,750		1,190,400		—		1,240,653
Total investments, at fair value	570,541		10,458,044		1,930,513		1,642,489		14,601,587

Derivatives-foreign currency forward contracts	—		9,126		—		—		9,126


Total assets, at fair value	$	570,541	$	10,467,170	$	1,930,513	$	1,642,489	$	14,610,713
Liabilities, at fair value
Loan obligations of CLOs	$	—	$	(12,345,657)	$	—	$	—	$	(12,345,657)
Derivatives:

Foreign currency forward contracts	—		(9,491)		—		—		(9,491)
Asset swaps	—		—		(1,291)		—		(1,291)


Total derivative liabilities, at fair value	—		(9,491)		(1,291)		—		(10,782)
Total liabilities, at fair value	$	—	$	(12,355,148)	$	(1,291)	$	—	$	(12,356,439)

The following tables summarize the financial assets and financial liabilities measured at fair value for the Company and the Consolidated Funds as of December 31, 2022:


Financial Instruments of the Company	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Common stock and other equity securities	$	—	$	77,022	$	121,785	$	—	$	198,807
Collateralized loan obligations and fixed income securities	—		—		76,934		—		76,934
Partnership interests	—		—		—		1,385		1,385
Total investments, at fair value	—		77,022		198,719		1,385		277,126
Derivatives-foreign currency forward contracts	—		4,173		—		—		4,173
Total assets, at fair value	$	—	$	81,195	$	198,719	$	1,385	$	281,299
Liabilities, at fair value
Derivatives-foreign currency forward contracts	$	—	$	(3,423)	$	—	$	—	$	(3,423)

Total liabilities, at fair value	$	—	$	(3,423)	$	—	$	—	$	(3,423)


Financial Instruments of the Consolidated Funds	Level I		Level II		Level III		Investments Measured at NAV		Total
Assets, at fair value
Investments:
Fixed income investments:
Loans and securitization vehicles	$	—	$	8,663,678	$	616,844	$	—	$	9,280,522
Money market funds and U.S. treasury securities	1,013,382		—		—		—		1,013,382
Bonds	—		534,137		252,824		—		786,961
Total fixed income investments	1,013,382		9,197,815		869,668		—		11,080,865
Partnership interests	—		—		368,655		1,023,514		1,392,169
Equity securities	719		—		730,880		—		731,599
Total investments, at fair value	1,014,101		9,197,815		1,969,203		1,023,514		13,204,633

Derivatives-foreign currency forward contracts	—		2,900		—		—		2,900


Total assets, at fair value	$	1,014,101	$	9,200,715	$	1,969,203	$	1,023,514	$	13,207,533
Liabilities, at fair value
Loan obligations of CLOs	$	—	$	(10,701,720)	$	—	$	—	$	(10,701,720)
Derivatives:
Warrants	(9,326)		—		—		—		(9,326)
Asset swaps	—		—		(3,556)		—		(3,556)
Foreign currency forward contracts	—		(2,942)		—		—		(2,942)
Total derivative liabilities, at fair value	(9,326)		(2,942)		(3,556)		—		(15,824)
Total liabilities, at fair value	$	(9,326)	$	(10,704,662)	$	(3,556)	$	—	$	(10,717,544)

The following tables set forth a summary of changes in the fair value of the Level III measurements:


Level III Assets of the Company	Equity Securities		Fixed Income		Total
Balance as of December 31, 2022	$	121,785	$	76,934	$	198,719


Purchases(1)	244,335		88,480		332,815
Sales/settlements(2)	(2)		(37,332)		(37,334)

Realized and unrealized appreciation (depreciation), net	46,373		(1,788)		44,585
Balance as of December 31, 2023	$	412,491	$	126,294	$	538,785
Change in net unrealized appreciation/depreciation included in earnings related to financial assets still held at the reporting date	$	46,161	$	(1,577)	$	44,584


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance as of December 31, 2022	$	730,880	$	869,668	$	368,655	$	(3,556)	$	1,965,647
Transfer out due to changes in consolidation	(2,076)		(4,563)		(374,049)		—		(380,688)
Transfer in	—		247,661		—		—		247,661
Transfer out	(36,681)		(504,037)		—		—		(540,718)
Purchases(1)	347,583		813,564		49,000		—		1,210,147
Sales/settlements(2)	(2,595)		(700,944)		(48,889)		(154)		(752,582)

Realized and unrealized appreciation, net	153,289		18,764		5,283		2,419		179,755
Balance as of December 31, 2023	$	1,190,400	$	740,113	$	—	$	(1,291)	$	1,929,222
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	152,336	$	(15,623)	$	—	$	1,590	$	138,303

(1)Purchases include paid-in-kind interest and securities received in connection with restructurings.

(2)Sales/settlements include distributions, principal redemptions and securities disposed of in connection with restructurings.

The following tables set forth a summary of changes in the fair value of the Level III measurements:



Level III Assets and Liabilities of the Company	Equity Securities		Fixed Income		Partnership Interests		Contingent Consideration		Total
Balance as of December 31, 2021	$	108,949	$	52,397	$	2,575	$	(57,435)	$	106,486
Transfer in due to changes in consolidation	1,491		—		—		—		1,491

Purchases(1)	894		32,392		—		—		33,286
Sales/settlements(2)	68		(2,425)		(2,538)		58,873		53,978
Change in fair value	—		—		—		(1,438)		(1,438)
Realized and unrealized appreciation (depreciation), net	10,383		(5,430)		(37)		—		4,916
Balance as of December 31, 2022	$	121,785	$	76,934	$	—	$	—	$	198,719
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	12,448	$	(5,430)	$	—	$	—	$	7,018


Level III Net Assets of Consolidated Funds	Equity Securities		Fixed Income		Partnership Interests		Derivatives, Net		Total
Balance as of December 31, 2021	$	339,183	$	742,952	$	238,673	$	(3,105)	$	1,317,703

Transfer in	—		184,037		94,386		—		278,423
Transfer out	—		(202,333)		—		—		(202,333)
Purchases(1)	323,699		732,477		59,258		—		1,115,434
Sales/settlements(2)	(31,932)		(536,125)		(52,828)		—		(620,885)

Realized and unrealized appreciation (depreciation), net	99,930		(51,340)		29,166		(451)		77,305
Balance as of December 31, 2022	$	730,880	$	869,668	$	368,655	$	(3,556)	$	1,965,647
Change in net unrealized appreciation/depreciation included in earnings related to financial assets and liabilities still held at the reporting date	$	70,591	$	(54,058)	$	29,166	$	(376)	$	45,323

(1)Purchases include paid-in-kind interest and securities received in connection with restructurings.

(2)Sales/settlements include distributions, principal redemptions, securities disposed of in connection with restructurings and contingent consideration payments.

Transfers out of Level III were generally attributable to certain investments that experienced a more significant level of market activity during the period and thus were valued using observable inputs either from independent pricing services or multiple brokers. Transfers into Level III were generally attributable to certain investments that experienced a less significant level of market activity during the period and thus were only able to obtain one or fewer quotes from a broker or independent pricing service.

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds’ Level III measurements as of December 31, 2023:

Level III Measurements of the Company

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

154,460

Discounted cash flow

Discount rate

20.0% -30.0%

25.0%

118,846

Market approach

Multiple of book value

1.3x - 1.6x

1.5x

100,000

Transaction price(1)

N/A

6,447

Market approach

Enterprise value / LTM multiple of FRE

15.4x

32,738

Other

N/A

Fixed income investments

83,000

Transaction price(1)

N/A

20,799

Broker quotes and/or 3rd party pricing services

N/A

22,495

Other

N/A

Total assets

538,785

Level III Measurements of the Consolidated Funds

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

648,581

Discounted cash flow

Discount rate

10.0% - 16.0%

13.0%

537,733

Market approach

Multiple of book value

1.0x - 1.7x

1.3x

3,909

Market approach

EBITDA multiple(2)

4.5x - 32.4x

8.9x

177

Other

N/A

Fixed income investments

516,070

Broker quotes and/or 3rd party pricing services

N/A

188,322

Market approach

Yield

8.3% - 24.1%

12.2%

2,974

Market approach

EBITDA multiple(2)

4.5x - 32.4x

9.0x

32,747

Other

N/A

Total assets

1,930,513

Liabilities

Derivative instruments

(1,291)

Broker quotes and/or 3rd party pricing services

N/A

Total liabilities

(1,291)

(1)Transaction price consists of securities purchased or restructured. The Company determined that there was no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2)“EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The following tables summarize the quantitative inputs and assumptions used for the Company’s and the Consolidated Funds’ Level III measurements as of December 31, 2022:

Level III Measurements of the Company

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

106,295

Market approach

Multiple of book value

1.3x - 3.2x

2.4x

15,490

Transaction price(1)

N/A

Fixed income investments

30,189

Transaction price(1)

N/A

25,163

Broker quotes and/or 3rd party pricing services

N/A

21,582

Other

N/A

Total assets

198,719

Level III Measurements of the Consolidated Funds

Fair Value

Valuation Technique(s)

Significant Unobservable Input(s)

Range

Weighted Average

Assets

Equity securities

401,229

Discounted cash flow

Discount rate

8.0% - 18.0%

12.0%

290,258

Market approach

Multiple of book value

1.0x - 1.2x

1.2x

36,681

Market approach

Net income multiple

30.0x

2,064

Market approach

EBITDA multiple(2)

6.3x - 31.0x

13.6x

648

Other

N/A

Partnership interests

368,655

Discounted cash flow

Discount rate

10.3% - 22.0%

18.9%

Fixed income investments

731,708

Broker quotes and/or 3rd party pricing services

N/A

125,612

Market approach

Yield

6.6% - 21.7%

12.8%

6,155

Transaction price(1)

N/A

4,479

Market approach

EBITDA multiple(2)

8.0x - 9.0x

8.5x

1,714

Other

N/A

Total assets

1,969,203

Liabilities

Derivative instruments

(3,556)

Broker quotes and/or 3rd party pricing services

N/A

Total liabilities

(3,556)

(1)Transaction price consists of securities purchased or restructured. The Company determined that there has been no change to the valuation based on the underlying assumptions used at the closing of such transactions.

(2)“EBITDA” in the table above is a non-GAAP financial measure and refers to earnings before interest, tax, depreciation and amortization.

The Consolidated Funds have limited partnership interests in private equity funds managed by the Company that are valued using NAV per share. The terms and conditions of these funds do not allow for redemptions without certain events or approvals that are outside the Company’s control.

The following table summarizes the investments held at fair value and unfunded commitments of the Consolidated Funds interests valued using NAV per share:


	As of December 31,
	2023		2022

Investments (held at fair value)	$	1,642,489	$	1,023,514
Unfunded commitments	738,621		869,016

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details