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Fair Value Disclosures
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Fair Value Disclosures
The Company classifies its fair value measurements using a three-tiered fair value hierarchy. The basis of the tiers is dependent upon the various “inputs” used to determine the fair value of the Company’s assets and liabilities. Fair value is considered the value using the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The inputs are summarized in the three broad levels listed below:
•Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.
•Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
•Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
Level 3 Valuation Techniques

In the absence of observable market prices, the Company values financial instruments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist; management’s determination of fair value is then based on the best information available in the circumstances and may incorporate management’s own assumptions and involves a significant degree of judgment, taking into
consideration a combination of internal and external factors. Financial instruments for which market prices are not observable include:
•Business Combination Earn-Out Liability - The Company’s valuation approach utilized a Monte Carlo simulation to estimate future share prices and the implied earn-out payment discounted using the risk-free rate.
•TRA Liability - The Company’s valuation approach utilized a Monte Carlo simulation to estimate future taxable income, share prices, and the implied TRA payments discounted using the liability discount rate which is estimated based on the Company’s credit rating.
•AWMS Earn-Out Liability - The Company’s valuation approach utilized a Monte Carlo simulation to estimate future revenue and the implied earn out payment discounted using the liability discount rate which is estimated based on the Company’s credit rating.
•EEA Earn-Out Liability - The Company’s valuation approach utilized a Discounted Cash Flow approach to determine the fair value using the liability discount rate which is estimated based on the Company’s credit quality.
•Earn-In Consideration Payable - The Company’s valuation approach utilized a Monte Carlo simulation to estimate future revenue and the implied earn in payment discounted using the liability discount rate which was estimated based on the credit rating of TWMH. On July 14, 2023, the Company amended the Holbein purchase agreement related to the Holbein acquisition discussed in Note 5 (Equity-Based Compensation and Earn-in Expenses), which crystallized the contingent earn-in consideration amount and discontinued the use of a Level 3 valuation technique.
•Investments in External Strategic Managers - The Company utilized a Discounted Cash Flow approach to determine the fair value of the External Strategic Managers. The discount rate selection for each investment was calibrated using the implied internal rate of return as of the original investment date, adjusted for certain market- and company-specific factors. The selected long-term growth rate for each investment was based on long-term GDP growth rates in the geographic locations of the underlying External Strategic Manager, with consideration for general growth in the asset management industry.

•Contingent Consideration Receivable - The Company utilized a Monte Carlo simulation to estimate the future share price of the acquirer of LXi, and the implied contingent consideration discounted using the risk-free rate and the acquirer’s estimated credit spread.
•Warrant Liabilities - The fair value of the Constellation Warrants is determined based on Level 3 inputs using a Black-Scholes-Merton option pricing model. As of June 30, 2024, the Constellation Warrants amounted to $2.9 million and is included in the line item Warrant liabilities, at fair value of the Condensed Consolidated Statement of Financial Condition.
Refer to the valuation methodologies table below for further analysis of Level 3 valuations.
The following is a summary categorization, as of June 30, 2024, and December 31, 2023, of the Company’s financial instruments based on the inputs utilized in determining the value of such financial instruments. Investments at fair value as of June 30, 2024, and December 31, 2023 are presented below:
As of June 30, 2024
Level 1Level 2Level 3
(Dollars in Thousands)Quoted PricesObservable InputsUnobservable InputsTotal
Assets:
Mutual funds$110 $— $— $110 
Exchange-traded funds109 — — 109 
Investments – External Strategic Managers (1)
6 — 161,139 161,145 
Investments – Affiliated Funds (2)
— — — 870 
Contingent consideration receivable— — 1,834 1,834 
Total$225 $— $162,973 $164,068 
Liabilities:
Warrant liability$— $— $2,934 $2,934 
Earn-out liability— — 49,124 49,124 
TRA liability (3)
— — 6,911 6,911 
Earn-in consideration payable969 — — 969 
Total$969 $— $58,969 $59,938 

(1) The fair value of certain investments within the Company’s Investments - External Strategic Managers are reported on a one-month lag from the fund financial statements due to timing of the information provided by the funds and third-party entities unless information is available on a more timely basis. As a result, any changes in the markets in which our managed funds operate, and the impact market conditions have on underlying asset valuations, may not yet be reflected in reported amounts.
(2) Investments in Affiliated Funds are measured at fair value using the net asset value (or its equivalent) practical expedient. The Company's investments in Affiliated Funds represent interests that do not trade in an active market and are valued using the NAV of each investment company as reported and without adjustment. The Company does not have any commitments to the Affiliated Funds and redemptions are permitted on a monthly basis and require 30 days’ notice. The strategies of the Affiliated Funds primarily focus on near-dated, hard catalyst events that typically involve hostile deals, proposals, minority interest buy-ins, leverage buyouts, activism, spin-offs, recapitalizations, and agreed upon deals. The investments held in the Affiliated Funds are primarily highly liquid and marketable securities. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statement of Financial Position.
(3) The Company carries a portion of its TRA liability at fair value equal to the expected future payments under the TRA.

As of December 31, 2023
Level 1Level 2Level 3
(Dollars in Thousands)Quoted PricesObservable InputsUnobservable InputsTotal
Assets:
Mutual funds$75 $— $— $75 
Exchange-traded funds108 — — 108 
Investments – External Strategic Managers7 — 164,077 164,084 
Investments – Affiliated Funds (1)
— — — 1,627 
Total$190 $— $164,077 $165,894 
Liabilities:
Earn-out liability— — 63,444 63,444 
TRA liability (3)
— — 13,233 13,233 
Earn-in consideration payable$1,830 $— $— $1,830 
Total$1,830 $— $76,677 $78,507 
(1) Investments in Affiliated Funds are measured at fair value using the net asset value (or its equivalent) practical expedient. The Company's investments in Affiliated Funds represent interests that do not trade in an active market and are valued using the NAV of each investment company as reported and without adjustment. The Company does not have any commitments to the Affiliated Funds and redemptions are permitted on a monthly basis and require 30 days’ notice. The strategies of the Affiliated Funds primarily focus on near-dated, hard catalyst events that typically involve hostile deals, proposals, minority interest buy-ins, leverage buyouts, activism, spin-offs, recapitalizations, and agreed upon deals. The investments held in the Affiliated Funds are primarily highly liquid and marketable securities. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Statement of Financial Position.
(2) The Company carries a portion of its TRA liability at fair value based on the expected future payments under the TRA.
Reconciliation of Fair Value Measurements Categorized within Level 3
Unrealized gains and losses on the Company’s assets and liabilities carried at fair value on a recurring basis are included within other loss in the Condensed Consolidated Statement of Operations. During the year ended December 31, 2023, there was one transfer from Level 3 to Level 1 of the earn-in consideration payable. The following table sets forth a summary of changes in the fair value of Level 3 measurements as of June 30, 2024 and December 31, 2023:
Level 3 Liabilities as of June 30, 2024
(Dollars in Thousands)TRA liabilityEarn-out
liability		AWMS earn-out
liability		EEA earn-out liabilityWarrant liabilitiesTotal
Beginning balance$13,233 $62,380 1,064 — — $76,677 
Issuances— — — 23,308 3,003 26,311 
Settlements— — — — — — 
Net gains/(losses)(6,322)(38,334)36 670 (69)(44,019)
Transfers out of Level 3$— $— — — — $— 
Ending balance$6,911 $24,046 1,100 23,978 2,934 $58,969 
Level 3 Liabilities as of December 31, 2023
(Dollars in Thousands)TRA LiabilityEarn-out
Liability		AWMS earn-out
liability		Earn-in consideration payableTotal
Beginning balance$13,000 $91,761 — $1,519 $106,280 
Issuances— — 2,721 — 2,721 
Settlements— — — — — 
Net (gains) losses233 (29,381)(1,657)311 (30,494)
Transfers out of Level 3$— $— — $(1,830)$(1,830)
Ending balance$13,233 $62,380 1,064 $— $76,677 

Level 3 Assets as of June 30, 2024
(Dollars in Thousands)Investments – External Strategic ManagersContingent Consideration ReceivableTotal
Beginning balance$164,077 $— $164,077 
Realized and Unrealized Gains (Losses)(2,938)(101)(3,039)
Purchases— 1,935 1,935 
Ending balance$161,139 $1,834 $162,973 
Level 3 Assets as of December 31, 2023
(Dollars in Thousands)Investments – External Strategic ManagersTotal
Beginning balance$146,130 $146,130 
Realized and Unrealized Gains (Losses)$2,580 $2,580 
Purchases$15,367 $15,367 
Ending balance$164,077 $164,077 

Valuation Methodologies for Fair Value Measurements Categorized within Level 3 as of June 30, 2024
(Dollars in Thousands)Fair
Value		Valuation
Techniques		Unobservable
Inputs		RangesImpact to Valuation from an Increase in Input
Level 3 Assets:
Investments – External Strategic Managers$161,139 Discounted Cash FlowDiscount rate
19.0% -29%
Lower
Long-term growth rate4.0 %Higher
Contingent consideration receivable$1,834 Monte CarloRisk-free rate4.1 %Higher
Volatility26.2 %Lower
Credit spread0.8 %Lower
Level 3 Liabilities:
TRA liability$6,911 Monte CarloVolatility50.0 %Lower
Correlation22.5 %Higher
Cost of debt range
14.2% - 15.0%
Lower
Equity risk premium
6.8% - 14.3%
Lower
Earn-out liability$24,046 Monte CarloVolatility50.0 %Higher
Risk-free rate4.5 %Higher
AWMS earn-out liability$1,100 Monte CarloVolatility7.0 %Higher
Risk-free rate0.8 %Higher
Revenue Discount Rate2.5 %Lower
Liability Discount Rate13.6 %Lower
EEA earn-out liability$23,978 Discounted Cash FlowEBITDA Discount Rate16.6 %Lower
Risk-free rate4.4 %Lower
Credit spread12.8 %Lower
Warrant liabilities$2,934 Black-Scholes-Merton modelVolatility39.0 %Higher
Risk-free rate4.4 %Higher
Valuation Methodologies for Fair Value Measurements Categorized within Level 3 as of December 31, 2023
(Dollars in Thousands)Fair
Value		Valuation
Techniques		Unobservable
Inputs		RangesImpact to Valuation from an Increase in Input
Level 3 Assets:
Investments – External Strategic Managers$164,077 Discounted Cash FlowDiscount rate
21.5% -29.0%
Lower
Long-term growth rate4.0 %Higher
Level 3 Liabilities:
TRA liability$13,233 Monte CarloVolatility40.0 %Lower
Correlation20.0 %Higher
Cost of debt range
4.1% - 5.1%
Lower
Equity risk premium
7.4% - 13.1%
Lower
Earn-out liability$62,380 Monte CarloVolatility40.0 %Higher
Risk-free rate3.9 %Higher
AWMS earn-out liability$1,064 Monte CarloRevenue Volatility14.0 %Higher
Risk-free rate1.1 %Higher
Revenue Discount Rate3.5 %Lower
Liability Discount Rate5.6 %Lower
Deferred Payment Liability Discount Rate5.3 %Lower