Segment Operating Results

3 Months Ended

Mar. 31, 2017

Segment Reporting [Abstract]

Segment Operating Results

Segment Operating Results

Business Segments – The Company's business results are categorized into the following two segments: Investment Banking and Investment Management. Investment Banking includes providing advice to clients on significant mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private placement services and commissions for agency-based equity trading services and equity research. Investment Management includes advising third-party investors in the Institutional Asset Management, Wealth Management and Private Equity sectors. On September 30, 2016, the Company deconsolidated the assets and liabilities of its Mexican Private Equity business, which was in the Investment Management segment.

The Company's segment information for the three months ended March 31, 2017 and 2016 is prepared using the following methodology:

• Revenue, expenses and income (loss) from equity method investments directly associated with each segment are included in determining pre-tax income.

• Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other performance and time-based factors.

• Segment assets are based on those directly associated with each segment, or for certain assets shared across segments; those assets are allocated based on the most relevant measures applicable, including headcount and other factors.

• Investment gains and losses, interest income and interest expense are allocated between the segments based on the segment in which the underlying asset or liability is held.

Each segment's Operating Expenses include: a) employee compensation and benefits expenses that are incurred directly in support of the segment and b) non-compensation expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, legal, facilities management and senior management activities.

Other Expenses include the following:

• Amortization of LP Units/Interests and Certain Other Awards - Includes amortization costs or the reversal of expenses associated with the vesting of Class E LP Units and Class G and H LP Interests issued in conjunction with the acquisition of ISI and certain other related awards.

• Fair Value of Contingent Consideration - Includes expense associated with changes in the fair value of contingent consideration issued to the sellers of certain of the Company's acquisitions.

• Intangible Asset and Other Amortization - Includes amortization of intangible assets and other purchase accounting-related amortization associated with certain acquisitions.

The Company evaluates segment results based on net revenues and pre-tax income, both including and excluding the impact of the Other Expenses.

One client accounted for more than 10% (14%) of the Company's consolidated Net Revenues for the three months ended March 31, 2017.

The following information presents each segment's contribution.

	For the Three Months Ended March 31,
	2017			2016
Investment Banking
Net Revenues (1)	$	370,770		$	239,713
Operating Expenses	281,592			192,264
Other Expenses (2)	(18,979		)	35,028
Operating Income	108,157			12,421
Income (Loss) from Equity Method Investments	(149		)	(272		)
Pre-Tax Income	$	108,008		$	12,149
Identifiable Segment Assets	$	1,077,509		$	940,859
Investment Management
Net Revenues (1)	$	16,477		$	18,000
Operating Expenses	13,305			14,214
Other Expenses (2)	—			82
Operating Income	3,172			3,704
Income from Equity Method Investments	1,759			1,559
Pre-Tax Income	$	4,931		$	5,263
Identifiable Segment Assets	$	355,253		$	343,818
Total
Net Revenues (1)	$	387,247		$	257,713
Operating Expenses	294,897			206,478
Other Expenses (2)	(18,979		)	35,110
Operating Income	111,329			16,125
Income from Equity Method Investments	1,610			1,287
Pre-Tax Income	$	112,939		$	17,412
Identifiable Segment Assets	$	1,432,762		$	1,284,677

(1) Net revenues include Other Revenue, net, allocated to the segments as follows:

	For the Three Months Ended March 31,
	2017			2016
Investment Banking (A)	$	(1,168	)	$	(913	)
Investment Management (B)	131			(429		)
Total Other Revenue, net	$	(1,037	)	$	(1,342	)

(A) Investment Banking Other Revenue, net, includes interest expense on the Notes Payable, subordinated borrowings and the line of credit of $2,581 and $1,478for the three months ended March 31, 2017 and 2016, respectively.

(B) Investment Management Other Revenue, net, includes interest expense on the Notes Payable and the line of credit of $670 for the three months ended March 31, 2016.

(2) Other Expenses are as follows:

	For the Three Months Ended March 31,
	2017			2016
Investment Banking
Amortization of LP Units / Interests and Certain Other Awards	$	(21,371	)	$	31,759
Fair Value of Contingent Consideration	—			106
Intangible Asset and Other Amortization	2,392			3,163
Total Investment Banking	(18,979		)	35,028
Investment Management
Intangible Asset and Other Amortization	—			82
Total Investment Management	—			82
Total Other Expenses	$	(18,979	)	$	35,110

Geographic Information – The Company manages its business based on the profitability of the enterprise as a whole.

The Company's revenues were derived from clients and private equity funds located and managed in the following geographical areas:

	For the Three Months Ended March 31,
	2017		2016
Net Revenues: (1)
United States	$	263,165	$	173,910
Europe and Other	122,911		72,211
Latin America	2,208		12,934
Total	$	388,284	$	259,055

(1) Excludes Other Revenue and Interest Expense.

The Company's total assets are located in the following geographical areas:

	March 31, 2017		December 31, 2016
Total Assets:
United States	$	1,167,473	$	1,376,101
Europe and Other	174,833		190,380
Latin America	90,456		95,865
Total	$	1,432,762	$	1,662,346