Fair Value Measurements

6 Months Ended

Dec. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

5. Fair Value Measurements

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

US GAAP provides a framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level. The following are the hierarchical levels of inputs to measure fair value:

▪Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

▪Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

▪Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

All financial assets or liabilities that are measured at fair value on a recurring and non-recurring basis have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.

The assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized in the tables below:

	Fair Value as of December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equity investments	$	16,252	$	-	$	-	$	16,252
Debt securities		4,287		-		-		4,287
Total assets within the fair value hierarchy	$	20,539	$	-	$	-	$	20,539
Investments valued at net asset value							$	18,773
Total assets							$	39,312
Liabilities:
Contingent consideration liability	$	-	$	-	$	962	$	962
Total liabilities	$	-	$	-	$	962	$	962

	Fair Value as of June 30, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Equity investments	$	14,296	$	-	$	-	$	14,296
Total assets within the fair value hierarchy	$	14,296	$	-	$	-	$	14,296
Investments valued at net asset value							$	18,315
Total assets							$	32,611
Liabilities:
Contingent consideration liability	$	-	$	-	$	1,903	$	1,903
Total liabilities	$	-	$	-	$	1,903	$	1,903

There were no transfers between levels of the fair value hierarchy during the three and six months ended December 31, 2023 and 2022.

The following is a reconciliation of changes in contingent consideration, a Level 3 liability:

	For the three months ended December 31,				For the six months ended December 31,
(in thousands)	2023		2022		2023			2022
Beginning balance	$	944	$	1,050	$	1,903		$	1,120
Payments		-		-		(977	)		-
Change in fair value		18		130		36			60
Ending balance	$	962	$	1,180	$	962		$	1,180

The assets of the Consolidated Funds measured at fair value on a recurring basis are summarized in the table below:

	Fair Value as of December 31, 2023
(in thousands)	Level 1		Level 2		Level 3		Total
Assets of Consolidated Funds:
Equity investments	$	-	$	-	$	92	$	92
Debt securities		-		2,673		1,915		4,588
Total assets within the fair value hierarchy	$	-	$	2,673	$	2,007	$	4,680

There were no assets or liabilities of the Consolidated Funds measured at fair value as of June 30, 2023. There were no transfers between levels of the fair value hierarchy during the three and six months ended December 31, 2023.

The following is a reconciliation of changes in fair value of Level 3 assets:

	For the three months ended December 31,			For the six months ended December 31,
(in thousands)	2023			2023
Beginning balance	$	-		$	-
Additions		1,911			1,911
Payments		(1	)		(1	)
Change in fair value		97			97
Ending balance	$	2,007		$	2,007

The valuation techniques applied to investments held by the Company and by the Consolidated Funds varied depending on the nature of the investment.

Equity and equity-related securities

Securities traded on a national securities exchange are stated at the close price on the valuation date. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level 1.

Investments in private funds

The Company values investments in private funds using NAV as reported by each fund’s investment manager. The private funds calculate NAV in a manner consistent with the measurement principles of FASB ASC Topic 946, Financial Services – Investment Companies, as of the valuation date. Investments valued using NAV as a practical expedient are not categorized within the fair value hierarchy.

As of December 31, 2023 and June 30, 2023, investments in private funds primarily consisted of our investments in Monomoy UpREIT and Great Elm Opportunities Fund I, LP Series D (GEOF Series D). Monomoy UpREIT allows redemptions annually with 90 days’ notice, subject to a one-year lockup from the date of initial investment, which are capped at 5% of its NAV. GEOF Series D allows withdrawals annually and there is no set duration for the private fund.

Contingent consideration

In conjunction with the acquisition of the Monomoy UpREIT investment management agreement, the Company entered into a contingent consideration agreement that requires the Company to pay up to $2.0 million to ICAM if certain fee revenue thresholds are achieved during fiscal years ending June 30, 2023 and 2024. As of June 30, 2023, the Company determined that the fee revenue threshold for the year ending June 30, 2023 was achieved and the amount payable to ICAM was approximately $1.0 million, which was paid in July 2023. Further, the Company determined that the fee revenue threshold for the year ending June 30, 2024 was expected to be achieved as well, and the related amount payable to ICAM was recorded at present value of approximately $1.0 million, using a discount rate of 8.0%, included within the current portion of related party payables in the condensed consolidated balance sheet as of December 31, 2023. As of June 30, 2023, the contingent consideration of $1.9 million was included within the current portion of related party payables and related party payables, net of current portion, in the condensed consolidated balance sheet.

See Note 7 - Long-Term Debt for additional discussion related to the fair value of our notes payable and other long-term debt. The carrying value of all other financial assets and liabilities approximate their fair values.