Fair Value Measurements

3 Months Ended

Mar. 31, 2024

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of March 31, 2024 and December 31, 2023 by fair value hierarchy level were as follows:

March 31, 2024


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	92,458	$	—	$	—	$	92,458
Investment securities - fair value
Sponsored funds	69,514		—		—		69,514
Equity securities	20,983		—		—		20,983


Nonqualified retirement plan assets	13,743		—		—		13,743
Total assets measured at fair value	$	196,698	$	—	$	—	$	196,698

Liabilities
Contingent consideration	$	—	$	—	$	41,708	$	41,708
Total liabilities measured at fair value	$	—	$	—	$	41,708	$	41,708

December 31, 2023


(in thousands)	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	197,240	$	—	$	—	$	197,240
Investment securities - fair value
Sponsored funds	77,433		—		—		77,433
Equity securities	19,871		—		—		19,871


Nonqualified retirement plan assets	12,682		—		—		12,682
Total assets measured at fair value	$	307,226	$	—	$	—	$	307,226

Liabilities
Contingent consideration	$	—	$	—	$	56,200	$	56,200
Total liabilities measured at fair value	$	—	$	—	$	56,200	$	56,200

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:

Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager. The fair value of open-end funds is determined based on their published net asset values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Contingent consideration represents liabilities associated with the Company's Westchester Capital Management ("WCM") and NFJ Investment Group ("NFJ") transactions . The continent consideration related to the WCM transaction as of March 31, 2024 was $11.1 million and represents the fair value of future potential earn-out payments based on pre-established performance metrics related to revenue growth rates. The estimated fair value of the WCM liability is measured using an options pricing model valuation technique utilizing unobservable market data inputs prepared with the assistance of an independent valuation firm. The most significant unobservable inputs used relate to the aforementioned revenue growth rates, discount rate (range of 6%-7%) and the market price of risk adjustment (9%). The NFJ contingent consideration liability as of March 31, 2024 was $30.6 million and represents the fair value of the projected future revenue participation payments. The NFJ revenue participation payments consist of variable payments based on a percentage of the investment management fees earned on certain NFJ managed assets. The estimated fair value of the NFJ liability is measured using an options pricing model valuation technique utilizing unobservable market data inputs prepared with the assistance of an independent valuation firm. The most significant unobservable inputs used relate to the revenue growth rates, discount rates (range of 6% - 7%) and the market price of risk adjustment (7%). These liabilities are categorized as Level 3.

The following table presents a reconciliation of beginning and ending balances of the Company's contingent consideration liabilities:


	Three Months Ended March 31,
(in thousands)	2024		2023









Contingent consideration, beginning of period	$	56,200	$	78,100


Reduction for payments made	(14,492)		(16,390)

Contingent consideration, end of period	$	41,708	$	61,710

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

- 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