XML 81 R35.htm IDEA: XBRL DOCUMENT

Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2024

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

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 1		Level 2		Level 3
(Dollars in Thousands)	Quoted Prices		Observable Inputs		Unobservable Inputs		Total
Assets:
Mutual funds	$	110	$	—	$	—	$	110
Exchange-traded funds	109		—		—		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 payable	969		—		—		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 1		Level 2		Level 3
(Dollars in Thousands)	Quoted Prices		Observable Inputs		Unobservable Inputs		Total
Assets:
Mutual funds	$	75	$	—	$	—	$	75
Exchange-traded funds	108		—		—		108
Investments – External Strategic Managers	7		—		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.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

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 liability		Earn-out liability		AWMS earn-out liability	EEA earn-out liability	Warrant liabilities	Total
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 Liability		Earn-out Liability		AWMS earn-out liability	Earn-in consideration payable		Total
Beginning balance	$	13,000	$	91,761	—	$	1,519	$	106,280
Issuances	—		—		2,721	—		2,721
Settlements	—		—		—	—		—
Net (gains) losses	233		(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

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation


	Level 3 Assets as of June 30, 2024
(Dollars in Thousands)	Investments – External Strategic Managers		Contingent Consideration Receivable		Total
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 Managers		Total
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

Fair Value Measurement Inputs and Valuation Techniques


(Dollars in Thousands)	Fair Value		Valuation Techniques	Unobservable Inputs	Ranges		Impact to Valuation from an Increase in Input
Level 3 Assets:
Investments – External Strategic Managers	$	161,139	Discounted Cash Flow	Discount rate	19.0% -29%		Lower
				Long-term growth rate	4.0	%	Higher
Contingent consideration receivable	$	1,834	Monte Carlo	Risk-free rate	4.1	%	Higher
				Volatility	26.2	%	Lower
				Credit spread	0.8	%	Lower
Level 3 Liabilities:
TRA liability	$	6,911	Monte Carlo	Volatility	50.0	%	Lower
				Correlation	22.5	%	Higher
				Cost of debt range	14.2% - 15.0%		Lower
				Equity risk premium	6.8% - 14.3%		Lower
Earn-out liability	$	24,046	Monte Carlo	Volatility	50.0	%	Higher
				Risk-free rate	4.5	%	Higher
AWMS earn-out liability	$	1,100	Monte Carlo	Volatility	7.0	%	Higher
				Risk-free rate	0.8	%	Higher
				Revenue Discount Rate	2.5	%	Lower
				Liability Discount Rate	13.6	%	Lower
EEA earn-out liability	$	23,978	Discounted Cash Flow	EBITDA Discount Rate	16.6	%	Lower
				Risk-free rate	4.4	%	Lower
				Credit spread	12.8	%	Lower

Warrant liabilities	$	2,934	Black-Scholes-Merton model	Volatility	39.0	%	Higher
				Risk-free rate	4.4	%	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	Ranges		Impact to Valuation from an Increase in Input
Level 3 Assets:
Investments – External Strategic Managers	$	164,077	Discounted Cash Flow	Discount rate	21.5% -29.0%		Lower
				Long-term growth rate	4.0	%	Higher
Level 3 Liabilities:
TRA liability	$	13,233	Monte Carlo	Volatility	40.0	%	Lower
				Correlation	20.0	%	Higher
				Cost of debt range	4.1% - 5.1%		Lower
				Equity risk premium	7.4% - 13.1%		Lower

Earn-out liability	$	62,380	Monte Carlo	Volatility	40.0	%	Higher
				Risk-free rate	3.9	%	Higher

AWMS earn-out liability	$	1,064	Monte Carlo	Revenue Volatility	14.0	%	Higher
				Risk-free rate	1.1	%	Higher
				Revenue Discount Rate	3.5	%	Lower
				Liability Discount Rate	5.6	%	Lower
				Deferred Payment Liability Discount Rate	5.3	%	Lower

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References + Details