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What changed in P10, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of P10, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+417 added−462 removedSource: 10-K (2024-03-13) vs 10-K (2023-03-27)

Top changes in P10, Inc.'s 2023 10-K

417 paragraphs added · 462 removed · 353 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

107 edited+17 added−20 removed171 unchanged
Biggest changeAccording to a recent Preqin Ltd. forecast, global private markets assets under management are expected to grow at an approximate 10% CAGR through 2027. This growth is underpinned by investors search for yield in a lower-for-longer rate environment, in which investors increasingly view allocations to private markets as essential for obtaining diversified exposure to global growth.
Biggest changeThis aforementioned growth across all verticals is underpinned by investors search for yield in a lower-for-longer rate environment, in which investors increasingly view allocations to private markets as essential for obtaining diversified exposure to global growth. 17 Favorable Middle / Lower Middle Market Dynamics As more companies choose to remain private, we believe smaller companies will continue to dominate market supply, with significantly less capital in pursuit.
In addition, our multi-asset class solutions are 5 highly synergistic, and coupled with our vast network of general partners and portfolio companies, drive cross-solution sourcing opportunities. Our global investor base includes some of the world’s largest institutional investors, including pension funds, endowments, foundations, corporate pensions and financial institutions.
In addition, our multi-asset class solutions are highly synergistic, and coupled with our vast network of general partners and portfolio companies, drive cross-solution sourcing opportunities. 5 Our global investor base includes some of the world’s largest institutional investors, including pension funds, endowments, foundations, corporate pensions and financial institutions.
In June 2022, the Company formed P10 Advisors, a fully consolidated subsidiary, to manage investment opportunities that are sourced across the P10 platform but do not fit within an existing investment mandate. 13 On October 13, 2022, the Company completed the acquisition of all of the issued and outstanding membership interests of WTI.
In June 2022, the Company formed P10 Advisors, a fully consolidated subsidiary, to manage investment opportunities that are sourced across the P10 platform but do not fit within an existing investment mandate. On October 13, 2022, the Company completed the acquisition of all of the issued and outstanding membership interests of WTI.
The 24 Hark APA provided for the acquisition of certain assets related to the business of making loans to portfolio companies that are owned or controlled by financial sponsors, such as private equity funds or venture capital funds, and which do not meet traditional direct lending underwriting criteria, but where the repayment of the loan by the portfolio company is guaranteed by its financial sponsor, for a purchase price of approximately $5 million.
The Hark APA provided for the acquisition of certain assets related to the business of making loans to portfolio companies that are owned or controlled by financial sponsors, such as private equity funds or venture capital funds, and which do not meet traditional direct lending underwriting criteria, but where the repayment of the loan by the portfolio company is guaranteed by its financial sponsor, for a purchase price of approximately $5 million.
In particular, our 20 proprietary database offers our investors a highly transparent, versatile and informative platform through which they can track, monitor and diligence portfolios, and we believe the expansive data set within our proprietary database, harvested from our robust network of general partners, enables us to make more informed investment decisions and, in turn, drive strong investment performance.
In particular, our proprietary database offers our investors a highly transparent, versatile and informative platform through which they can track, monitor and diligence portfolios, and we believe the expansive data set within our proprietary database, harvested from our robust network of general partners, enables us to make more informed investment decisions and, in turn, drive strong investment performance.
We believe our global investor base will facilitate such potential market penetration and our robust investment process, existing relationships and proven investment capabilities will continue to be core tenets of an international growth strategy. Grow Private Markets Network Effect Expanding into additional asset class solutions will enable us to further enhance our integrated network effect across private markets.
We believe our global investor base will facilitate such potential market penetration and our robust investment process, existing relationships and proven investment capabilities will continue to be core tenets of an international growth strategy. 22 Grow Private Markets Network Effect Expanding into additional asset class solutions will enable us to further enhance our integrated network effect across private markets.
While private markets saw record levels of fund-raising in 2021 and private markets in 2022 experienced a predictable pullback in their pace of growth, private markets have remained resilient, with about $3 trillion of dry powder available for deployment, a stable pool of locked-in capital, and an active market for secondaries, according to the 2022 McKinsey Report.
While private markets saw record levels of fund-raising in 2021 and private markets in 2022 experienced a predictable pullback in their pace of growth, private markets have remained resilient, with about $3 trillion of dry powder available for deployment, a stable pool of locked-in capital, and an active market for secondaries, according to the 2023 McKinsey Report.
We aim to continually improve and evolve, and plan to review our policy annually. Given our scale and position in the private markets ecosystem, we believe we are well positioned to help educate the broader investor and fund manager community on how best to integrate responsible investment considerations in their investment process and programs.
We aim to continually improve and evolve, and plan to review our policy annually. 25 Given our scale and position in the private markets ecosystem, we believe we are well positioned to help educate the broader investor and fund manager community on how best to integrate responsible investment considerations in their investment process and programs.
The discretion to invest committed capital generally is subject to investment guidelines established by our investors or by us in conjunction with our investors. In some cases, at the investor’s request, we establish a separate investment vehicle, generally a limited partnership with our investor as the sole limited partner and a wholly owned subsidiary as the general partner.
The discretion to invest committed capital generally is subject to investment guidelines established by our investors or by us in conjunction with our investors. In some cases, at the investor’s 27 request, we establish a separate investment vehicle, generally a limited partnership with our investor as the sole limited partner and a wholly owned subsidiary as the general partner.
In addition, holders of Class B common stock may elect to convert shares of Class B common stock on a one-for-one basis into Class A common stock at any time. 15 Our current stockholders believe that the contributions of the current ownership group and management team have been critical in P10’s growth to date.
In addition, holders of Class B common stock may elect to convert shares of Class B common stock on a one-for-one basis into Class A common stock at any time. Our current stockholders believe that the contributions of the current ownership group and management team have been critical in P10’s growth to date.
Under these laws and regulations, the SEC, relevant state securities authorities and other foreign regulatory agencies have broad administrative powers, including the power to limit, restrict or prohibit an 30 investment advisor from carrying on its business if it fails to comply with such laws and regulations.
Under these laws and regulations, the SEC, relevant state securities authorities and other foreign regulatory agencies have broad administrative powers, including the power to limit, restrict or prohibit an investment advisor from carrying on its business if it fails to comply with such laws and regulations.
Our compliance and legal teams review and makes recommendations regarding 32 amendments and requests for consents presented by the fund managers from time to time. In addition, our compliance and legal teams work with outside counsel as we deem necessary to prepare, review and negotiate all documents relating to the formation and operation of our funds.
Our compliance and legal teams review and makes recommendations regarding amendments and requests for consents presented by the fund managers from time to time. In addition, our compliance and legal teams work with outside counsel as we deem necessary to prepare, review and negotiate all documents relating to the formation and operation of our funds.
We emphasize a culture of accountability and conduct our business in a manner that is fair, ethical, and responsible to earn the trust of our employees. 33 Employee Attraction, Recruitment, Development and Retention We are also committed to pay equity and regularly review our compensation model to ensure fair and inclusive pay practices across our business.
We emphasize a culture of accountability and conduct our business in a manner that is fair, ethical, and responsible to earn the trust of our employees. Employee Attraction, Recruitment, Development and Retention We are also committed to pay equity and regularly review our compensation model to ensure fair and inclusive pay practices across our business.
We offer competitive benefits packages that reflect the needs of our workforce. In the U.S., we provide all full-time employees medical, dental, and vision benefits, life and disability coverage, parental leave, education reimbursement, and paid time off. We provide retirement benefits including a 401(k)-match program.
We offer competitive benefits packages that reflect the needs of our workforce. In the U.S., we provide all full-time employees medical, dental, and vision benefits, life and disability coverage, parental leave, education 31 reimbursement, and paid time off. We provide retirement benefits including a 401(k)-match program.
Furthermore, our risk management processes include reviewing information related to the general partners target asset classes, sector/sub-sectors, investment specialties, key personnel, and primary geographical regions in which the general partner invests. Investment Fund 26 Investment Funds are also subject to our due diligence and risk management framework.
Furthermore, our risk management processes include reviewing information related to the general partners target asset classes, sector/sub-sectors, investment specialties, key personnel, and primary geographical regions in which the general partner invests. Investment Fund Investment Funds are also subject to our due diligence and risk management framework.
However, additional legislation, changes in rules promulgated by financial regulatory authorities or self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States or elsewhere, may directly affect our mode of operation and profitability. Compliance Each Adviser has a Chief Compliance Officer.
However, additional legislation, changes in rules promulgated by financial regulatory authorities or self-regulatory organizations or changes in the interpretation or enforcement of existing laws and rules, either in the United States or elsewhere, may directly affect our mode of operation and profitability. 30 Compliance Each Adviser has a Chief Compliance Officer.
In many of these countries and jurisdictions, which include the European Union ("EU"), the European Economic Area ("EEA") , the individual member states of each of the EU and EEA, Central and South America, Australia and other countries in the South Pacific, we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
In many of these countries and jurisdictions, which include the European Union ("EU"), the European 29 Economic Area ("EEA"), the individual member states of each of the EU and EEA, Central and South America, Australia and other countries in the South Pacific, we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements.
The results of WTI’s operations have been included in the consolidated financial statements effective October 13, 2022. The Company reports noncontrolling interest related to the partnership interests which are owned by the WTI sellers. This is recorded as noncontrolling interest on the Consolidated Balance Sheets.
The results of WTI’s operations have been included in the consolidated financial statements effective October 13, 2022. The Company reports noncontrolling interest related to the partnership interests which are owned by the WTI sellers. This is recorded as noncontrolling interest on the Consolidated Balance Sheets and Consolidated Statements of Operations.
Increasing Private Markets Investor Allocations 18 We believe that alongside growth in the private markets in which we invest, long-term investor allocations are expected to significantly grow over the next several years, which will serve as a tailwind in growing our business.
Increasing Private Markets Investor Allocations We believe that alongside growth in the private markets in which we invest, long-term investor allocations are expected to significantly grow over the next several years, which will serve as a tailwind in growing our business.
Noncontrolling interest is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest. Additionally, the Company makes periodic distributions to the WTI sellers for tax related and other agreed upon expenses as disclosed in the purchase agreement. As we reflect on 2022, we are exceptionally proud of our accomplishments.
Noncontrolling interest is allocated a share of income or loss in the respective consolidated subsidiaries in proportion to their relative ownership interest. Additionally, the Company makes periodic distributions to the WTI sellers for tax related and other agreed upon expenses as disclosed in the purchase agreement. As we reflect on 2023, we are exceptionally proud of our accomplishments.
We have 18 active investment vehicles. Our VCS solution is differentiated by our innovative strategic partnerships and our vantage point within the venture capital and technology ecosystems, maximizing advantages for our investors. In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.
We have 20 active investment vehicles. Our VCS solution is differentiated by our innovative strategic partnerships and our vantage point within the venture capital and technology ecosystems, maximizing advantages for our investors. In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.
According to the 2020 McKinsey Report, as public awareness of and activism relating to ESG driven investing have increased, many prominent investors in Private Equity have followed suit, often requiring general partners to pass an ESG screen as part of their diligence processes – demanding transparency into ESG policies, procedures and performance of portfolio assets.
According to the 2023 McKinsey Report, as public awareness of and activism relating to ESG driven investing have increased, many prominent investors in Private Equity have followed suit, often requiring general partners to pass an ESG screen as part of their diligence processes – demanding transparency into ESG policies, procedures and performance of portfolio assets.
Historically, we have competed principally on the basis of the factors listed below: • Access to private markets investment opportunities through our size, expertise, reputation and strong relationships with fund managers; • Brand recognition of the platforms through which we operate and reputation within the investing community; • Performance of investment strategies; • Quality of service and duration of investor relationships; • Data and analytics capabilities; • Ability to customize product offerings to investor specifications; • Ability to provide cost effective and comprehensive range of services and products; and • Investors’perceptions of our independence and the alignment of our interests with theirs created through our investment in our own products.
Historically, we have competed principally on the basis of the factors listed below: • Access to private markets investment opportunities through our size, expertise, reputation and strong relationships with fund managers; • Brand recognition of the platforms through which we operate and reputation within the investing community; • Performance of investment strategies; • Quality of service and duration of investor relationships; • Data and analytics capabilities; • Ability to customize product offerings to investor specifications; • Ability to provide cost effective and comprehensive range of services and products; and • Investors’ perceptions of our independence and the alignment of our interests with theirs created through our investment in our own products.
The following table displays our Fund size as of December 31, 2022 and investment performance, which is presented from the inception date of each fund through September 30, 2022: 11 For the purposes of the tables above: • “Fund Size” refers to the total amount of capital committed by investors and, when applicable, the U.S.
The following table displays our Fund size as of December 31, 2023 and investment performance, which is presented from the inception date of each fund through September 30, 2023: 11 For the purposes of the tables above: • “Fund Size” refers to the total amount of capital committed by investors and, when applicable, the U.S.
Our management team has a successful track record of sourcing and executing mergers and acquisitions and is supported by a deep bench of talent consisting of 107 investment professionals. Ownership Structure Aligned with Investors The alignment between our stockholders, investors and investment professionals is one of our core tenets and is, we believe, imperative for value creation.
Our management team has a successful track record of sourcing and executing mergers and acquisitions and is supported by a deep bench of talent consisting of 108 investment professionals. Ownership Structure Aligned with Investors The alignment between our stockholders, investors and investment professionals is one of our core tenets and is, we believe, imperative for value creation.
We benefit from strong operating leverage driven by the quality and stability of our revenue base, the strong alignment we have with our respective investment teams, and the leveragability of our platform and back-office operations across our multiple solutions, which together allow us to generate strong contribution margins and free cash flow.
We benefit from strong operating leverage driven by the quality and stability of our revenue base, the strong alignment we have with our respective investment teams, and the ability to leverage our platform and back-office operations across our multiple solutions, which together allow us to generate strong contribution margins and free cash flow.
Due to our scale and tenure within middle and lower-middle market private equity and venture capital, we have cultivated long-standing relationships with leading middle and lower-middle market private equity and venture capital general partners. We have established relationships with over 265 general partners, which provides us with differentiated access to investment opportunities within private markets, benefiting our investors.
Due to our scale and tenure within middle and lower-middle market private equity and venture capital, we have cultivated long-standing relationships with leading middle and lower-middle market private equity and venture capital general partners. We have established relationships with over 270 general partners, which provides us with differentiated access to investment opportunities within private markets, benefiting our investors.
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports in a timely manner after we provide them to the Securities and Exchange Commission (“SEC”). 34
Through our website, we make available free of charge our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports in a timely manner after we provide them to the Securities and Exchange Commission (“SEC”). 32
Our investment talent across our different private market solutions is led by senior investment professionals with sustained track records of successful private markets investing. Our investment team consists of 107 investment professionals with deep industry expertise across middle and lower middle market private equity, venture capital, impact investing and private credit.
Our investment talent across our different private market solutions is led by senior investment professionals with sustained track records of successful private markets investing. Our investment team consists of 108 investment professionals with deep industry expertise across middle and lower middle market private equity, venture capital, impact investing and private credit.
Management and advisory fees during the commitment period are charged on capital commitments and after the commitment period (or a defined anniversary of the fund’s initial closing) is reduced by a percentage of the management and advisory fees for the preceding years or charged on net invested capital or NAV, in selected cases.
Management and advisory fees during the commitment period are charged on capital commitments and after the commitment period (or a defined anniversary of the fund’s initial closing) is reduced by a percentage of the management and advisory fees for the preceding years or charged on net invested capital or NAV, in select cases.
The Class B Holders have approximately 95% of the combined voting power of our common stock. Upon any transfer, Class B common stock converts automatically on a one-for-one basis to shares of Class A common stock, except in the case of transfers to certain permitted transferees.
The Class B Holders have approximately 91% of the combined voting power of our common stock. Upon any transfer, Class B common stock converts automatically on a one-for-one basis to shares of Class A common stock, except in the case of transfers to certain permitted transferees.
Our leadership team has a proven track record of identifying, acquiring and integrating companies to drive long-term value creation, and we will continue to maintain a highly disciplined approach to pursuing accretive acquisitions. In September 2021, Enhanced entered into a strategic relationship with Crossroads, parent company of CPF, to promote impact credit.
Our leadership team has a proven track record of identifying, acquiring and integrating companies to drive long-term value creation, and we will continue to maintain a highly disciplined approach to pursuing accretive acquisitions. In September 2021, Enhanced entered into a strategic relationship with Crossroads, parent company of Capital Plus Financial (" CPF"), to promote impact credit.
Attractive, Recurring Fee-based Financial Profile We believe our financial profile and revenue model have the following important attributes: Highly Predictable Fee-based Revenue Model Virtually all of our revenue is derived from management and advisory fees based on committed capital typically subject to multi-year commitment periods, usually between ten and fifteen years.
Attractive, Recurring Fee-based Financial Profile We believe our financial profile and revenue model have the following important attributes: Highly Predictable Fee-based Revenue Model Most of our revenue is derived from management and advisory fees based on committed capital typically subject to multi-year commitment periods, usually between ten and fifteen years.
Our capital commitment to the limited partnership is typically 1% of total capital commitments. We manage the limited partnership under an investment management agreement between our investor and us. 29 Fees We earn management and advisory fees based on a percentage of investors’ capital commitments to or, in selected cases, net invested capital in, or NAV of, our investment funds.
Our capital commitment to the limited partnership is typically 1% of total capital commitments. We manage the limited partnership under an investment management agreement between our investor and us. Fees We earn management and advisory fees based on a percentage of investors’ capital commitments to or, in select cases, net invested capital in, or NAV of, our investment funds.
Our leadership team has an average of over 22 years of experience and our investment professionals across the different solutions have a long track record of working together.
Our leadership team has an average of over 24 years of experience and our investment professionals across the different solutions have a long track record of working together.
We have 48 active investment vehicles. PES occupies a differentiated position within the private markets ecosystem helping our investors access, perform due diligence, analyze and invest in what we believe are attractive middle and lower-middle market private equity opportunities.
We have 55 active investment vehicles. PES occupies a differentiated position within the private markets ecosystem helping our investors access, perform due diligence, analyze and 7 invest in what we believe are attractive middle and lower-middle market private equity opportunities.
In 2022, we continued the evolution of our D&I strategy and objectives and recognize it as an ongoing business imperative. As of December 31, 2022, approximately 39% of our total work force and 17% of our senior leaders were female, while approximately 17% of our total work force and none of our senior leaders were minorities.
In 2023, we continued the evolution of our D&I strategy and objectives and recognize it as an ongoing business imperative. As of December 31, 2023, approximately 39% of our total work force and 17% of our senior leaders were female, while approximately 23% of our total work force and none of our senior leaders were minorities.
Our investment platform is designed to 23 provide high-net-worth investors access to private markets and we currently serve over 1,820 high-net-worth investors, which we believe positions us well to continue to capture increasing demand from private wealth investors.
Our investment platform is designed to provide high-net-worth investors access to private markets and we currently serve over 1,881 high-net-worth investors, which we believe positions us well to continue to capture increasing demand from private wealth investors.
In addition, our employees have committed separately to our investment vehicles as of December 31, 2022, as part of our General Partner commitment, which is typically 1% of total commitments of each fund. 22 Our Growth Strategy We aim to utilize our differentiated positioning and our core principles and values to continue to grow and expand our business.
In addition, our employees have committed separately to our investment vehicles as of December 31, 2023, as part of our General Partner commitment, which is typically 1% of total commitments of each fund. 21 Our Growth Strategy We aim to utilize our differentiated positioning and our core principles and values to continue to grow and expand our business.
Contingent upon the solution, each investment fund will have a designated “Manager,” which generally serves as the investment manager of the fund, responsible for all investment diligence, decision making and monitoring. 28 Fees We earn management and advisory fees based on a percentage of investors’ capital commitments to, in funds or deployed capital.
Contingent upon the solution, each investment fund will have a designated “Manager”, which generally serves as the investment manager of the fund, responsible for all investment diligence, decision making and monitoring. Fees We earn management and advisory fees based on a percentage of investors’ capital commitments to, in funds or deployed capital.
The details of our investment process are outlined below: 25 Opportunities Tracked As of December 31, 2022, we track thousands of potential investment opportunities across private markets, spanning primary investment funds, secondaries and direct and co-investments.
The details of our investment process are outlined below: Opportunities Tracked As of December 31, 2023, we track thousands of potential investment opportunities across private markets, spanning primary investment funds, secondaries and direct and co-investments.
Our direct investing platform comprises approximately $8.0 billion of our FPAUM as of December 31, 2022. Secondaries Secondaries refer to investments in existing private markets funds through the acquisition of an existing interest by one investor from another in a negotiated transaction.
Our direct investing platform comprises approximately $8.3 billion of our FPAUM as of December 31, 2023. Secondaries Secondaries refer to investments in existing private markets funds through the acquisition of an existing interest by one investor from another in a negotiated transaction.
We believe that ensuring that our key decision-makers will continue to guide the direction of P10 results in a high degree of alignment with our stockholders, and that issuing to our continuing voting members the Class B common stock with ten votes per share will help maintain this continuity.
We believe that ensuring that our key decision-makers will continue to guide the 15 direction of P10 results in a high degree of alignment with our stockholders, and voting members of the Class B common stock have ten votes per share which will help maintain this continuity.
When considering the data presented above, you should note that the historical results of our investments are not indicative of the future results you should expect from such investments, from any future funds we may raise or from your investment in our Class A common stock, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of net asset value of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds typically generate lower investment returns during the period that they initially deploy their capital; • changes in the global tax and regulatory environment may affect both the investment preferences of our investors and the financing strategies employed by businesses in which particular funds invest, which may reduce the overall capital available for investment and the availability of suitable investments, thereby reducing our investment returns in the future; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, which may cause an increase in cost and reduction in the availability of suitable investments, thereby reducing our investment returns in the future; • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest.
When considering the data presented above, you should note that the historical results of our investments are not indicative of the future results you should expect from such investments, from any future funds we may raise or from your investment in our Class A common stock, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of net asset value of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds typically generate lower investment returns during the period that they initially deploy their capital; • changes in the global tax and regulatory environment may affect both the investment preferences of our investors and the financing strategies employed by businesses in which particular funds invest, which may reduce the overall capital available for investment and the availability of suitable investments, thereby reducing our investment returns in the future; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, which may cause an increase in cost and reduction in the availability of suitable investments, thereby reducing our investment returns in the future; and • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest. 12 Net IRR reflects limited partner returns after allocation of management fees, general fund expenses, investment expenses, income earned on cash and cash equivalents, any carried interest to the general partner, and any other fees and expenses.
The PES investment team, which is comprised of 39 investment professionals with an average of 25+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,900+ investors, 260+ fund managers, 490+ private market funds and 2,000+ portfolio companies.
The PES investment team, which is comprised of 42 investment professionals with an average of 25+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,900+ investors, 300+ fund managers, 750+ private market funds and 2,000+ portfolio companies.
The PCS investment team, which is comprised of 38 investment professionals with an average of 24+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 300+ investors across 12 active investment vehicles and 1,600+ portfolio companies with over $9.7 billion capital deployed.
The PCS investment team, which is comprised of 39 investment professionals with an average of 24+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 300+ investors across 11 active investment vehicles and 1,600+ portfolio companies with $9.8+ billion capital deployed.
The IIS investment team, which is comprised of 15 investment professionals with an average of 22+ years of experience, has deep and long-standing relationships in the impact market which it has cultivated over the past 20 years, including deploying capital on behalf of over 100 investors. We currently have 32 active investment vehicles.
The IIS investment team, which is comprised of 15 investment professionals with an average of 23+ years of experience, has deep and long-standing relationships in the impact market which it has cultivated over the past 20 years, including deploying capital on behalf of over 110 investors. We currently have 35 active investment vehicles.
Our FPAUM has grown from approximately $9.9 billion as of December 31, 2018 to approximately $21.2 billion as of December 31, 2022 determined on a pro forma basis. 27 1. Organic FPAUM is calculated on a pro forma basis assuming the acquisitions of WTI, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark were completed as of January 1, 2018. 2.
Our FPAUM has grown from approximately $9.9 billion as of December 31, 2018 to approximately $23.3 billion as of December 31, 2023 determined on a pro forma basis. 1. Organic FPAUM is calculated on a pro forma basis assuming the acquisitions of WTI, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark were completed as of January 1, 2018. 2.
Privacy and Cyber Security Regulation Certain of our businesses are subject to laws and regulations enacted by U.S. federal and state governments, the E.U. or other non-U.S. jurisdictions and/or enacted by various regulatory organizations or exchanges relating to the privacy of the information of clients, employees or others, including the U.S.
Privacy and Cybersecurity Regulation Certain of our businesses are subject to laws and regulations enacted by U.S. federal and state governments, the E.U. or other non-U.S. jurisdictions and/or enacted by various regulatory organizations or exchanges relating to the privacy and data security of the information of clients, employees or others, or to our cybersecurity measures in general, including the U.S.
Capital commitments typically average ten to fifteen years, though they may vary by fund and strategy. We offer primary investment funds across our private equity and venture capital solutions. Our primary funds comprise approximately $11.7 billion of our FPAUM as of December 31, 2022.
Capital commitments typically average ten to fifteen years, though they may vary by fund and strategy. We offer primary investment funds across our private equity and venture capital solutions. Our primary funds comprise approximately $13.5 billion of our FPAUM as of December 31, 2023.
Our Fees and Other Key Contractual Terms Specialized Investment Vehicles While the terms of each fund may vary, we have outlined the key terms of the customized separate accounts and commingled funds within our specialized investment vehicles below: Commingled Investment Vehicles Capital Commitments Investors in our investment funds generally make commitments to provide capital at the outset of a fund and deliver capital when called upon by us, as investment opportunities become available and to fund operational expenses and other obligations.
“A” refers to calculations made on an actual basis. 26 Our Fees and Other Key Contractual Terms Specialized Investment Vehicles While the terms of each fund may vary, we have outlined the key terms of the customized separate accounts and commingled funds within our specialized investment vehicles below: Commingled Investment Vehicles Capital Commitments Investors in our investment funds generally make commitments to provide capital at the outset of a fund and deliver capital when called upon by us, as investment opportunities become available and to fund operational expenses and other obligations.
We provide global institutional investors differentiated access to a broad set of solutions and specialized investment vehicles across attractive asset classes and geographies generating competitive risk-adjusted returns. As of December 31, 2022, we 12 have $21.2 billion in fee paying assets under management.
We provide global institutional investors differentiated access to a broad set of solutions and specialized investment vehicles across attractive asset classes and geographies generating competitive risk-adjusted returns. As of December 31, 2023, we have $23.3 billion in fee paying assets under management.
Q4’22 organic FPAUM growth is the pro forma FPAUM growth from Q4’21 to Q4’22. Note: “PF” refers to calculations made on a pro forma basis. “A” refers to calculations made on an actual basis.
Q3’23 organic FPAUM growth is the pro forma FPAUM growth from Q3’22 to Q3’23. Q4’23 organic FPAUM growth is the pro forma FPAUM growth from Q4’22 to Q4’23. Note: “PF” refers to calculations made on a pro forma basis. “A” refers to calculations made on an actual basis.
A Sunset is triggered by any of the earlier of the following (a) the Sunset Holders cease to maintain direct or indirect beneficial ownership of 10% of the outstanding shares of Class A Common Stock (determined assuming all outstanding shares of Class B Common Stock have been converted into Class A Common Stock) (b) the Sunset Holders collectively cease to maintain direct or indirect beneficial ownership of at least 25% of the aggregate voting power of the outstanding shares of Common Stock and (c) upon the tenth anniversary of the effective date of our amended and restated certificate of incorporation.
A Sunset will occur on the earliest of the following: (a) the Sunset Holders cease to maintain direct or indirect beneficial ownership of 10% of the outstanding shares of Class A Common Stock (determined assuming all outstanding shares of Class B Common Stock have been converted into Class A Common Stock) (b) the Sunset Holders collectively cease to maintain direct or indirect beneficial ownership of at least 25% of the aggregate voting power of the outstanding shares of Common Stock and (c) upon the tenth anniversary of the effective date of our amended and restated certificate of incorporation.
The nature of our solutions and the integral role that our solutions play in our investors’ investment decisions have translated into high revenue visibility and investor retention. As of December 31, 2022, we had FPAUM of $21.2 billion.
The nature of our solutions and the integral role that our solutions play in our investors’ investment decisions have translated into high revenue visibility and investor retention. As of December 31, 2023, we had FPAUM of $23.3 billion.
Over 100 of our 21 employees have an equity interest in us, collectively owning approximately 63 % of the Company on a fully diluted basis as of December 31, 2022.
Over 100 of our employees have an equity interest in us, collectively owning approximately 54% of the Company on a fully diluted basis as of December 31, 2023.
Well Diversified Revenue and Investor Base As of December 31, 2022, we had 118 revenue generating vehicles across our solutions with over 3,100 investors across public pensions, family offices, wealth managers, endowments, foundations, corporate pension and financial institutions, across 50 states, 59 countries and 6 continents.
Well Diversified Revenue and Investor Base As of December 31, 2023, we had 121 revenue generating vehicles across our solutions with over 3,600 investors across public pensions, family offices, wealth managers, endowments, foundations, corporate pension and financial institutions, across 50 states, 60 countries and 6 continents.
In addition, our FPAUM has grown at a CAGR of 17 % from December 31, 2018 to December 31, 2022, determined on a pro 6 forma basis as if the acquisitions of Five Points, TrueBridge, Enhanced, Bonaccord, Hark, and WTI were completed as of January 1, 2018. 1.
In addition, our FPAUM has grown at a compound annual growth rate ("CAGR") of 16 % from December 31, 2018 to December 31, 2023, determined on a pro forma basis as if the acquisitions of Five Points, TrueBridge, Enhanced, Bonaccord, Hark, and WTI were completed as of January 1, 2018. 6 1.
As of December 31, 2022, we had 234 employees, including 107 investment professionals across 11 offices located in 9 states. Over 100 of our employees have an equity interest in P10, collectively owning approximately 63% of the Company on a fully-diluted basis as of December 31, 2022.
As of December 31, 2023, we had 252 employees, including 108 investment professionals across 11 offices located in 9 states. Over 100 of our employees have an equity interest in P10, collectively owning approximately 54% of the Company on a fully-diluted basis as of December 31, 2023.
As of December 31, 2022, VCS managed $5.4 billion of FPAUM. Impact Investing Solutions "IIS" Under IIS, we make equity, tax equity, and debt investments in impact initiatives across North America.
As of December 31, 2023, VCS managed $6.1 billion of FPAUM. Impact Investing Solutions "IIS" Under IIS, we make equity, tax equity, and debt investments in impact initiatives across North America.
As a result, we believe our revenue stream is contractual and highly predictable. The weighted average duration of remaining capital under management is 6.1 years as of December 31, 2022 .
As a result, we believe our revenue stream is contractual and highly predictable. The weighted average duration of remaining capital under management is 7.0 years as of December 31, 2023 .
“A” refers to calculations made on an actual basis. Our Solutions We operate and invest across private markets through a number of specialized investment solutions. We offer the following solutions to our investors: Private Equity Solutions "PES" Under PES, we make direct and indirect investments in middle and lower-middle market private equity across North America.
Our Solutions We operate and invest across private markets through a number of specialized investment solutions. We offer the following solutions to our investors: Private Equity Solutions "PES" Under PES, we make direct and indirect investments in middle and lower- middle market private equity across North America.
Proliferation of Private Market Choices According to research and data from the SEC and Principles for Responsible Investment (PRI), from 2013 to 2021, the number of managers across private markets has increased dramatically. From 2013 to 2021, the number of Private Equity firms, Venture Capital firms, Impact Investing firms and Private Credit firms have more than doubled.
Proliferation of Private Market Choices According to research and data from the SEC and Principles for Responsible Investment (PRI), from 2013 to 2022, the number of managers across private markets has increased dramatically. From 2013 to 2022, the number of Private Equity firms, Venture Capital firms, Impact Investing firms and Private Credit firms all saw increase.
Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies. We are further synergistically strengthened by our PES network of fund managers, characterized by more than 520 credit opportunities annually. We currently maintain 50+ active sponsor relationships and have 45+ platform investments. As of December 31, 2022, PCS managed $3.1 billion of FPAUM.
Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies. We are further synergistically strengthened by our PES network of fund managers, characterized by more than 400 credit opportunities annually. We currently maintain 55+ active sponsor relationships and have 80+ platform investments. As of December 31, 2023, PCS managed approximately $2.9 billion of FPAUM.
The VCS investment team, which is comprised of 15 investment professionals with an average of 22+ years of experience, has deep and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 1,000+ investors, 65+ fund managers, 74 direct investments, 300+ private market funds and 8,000+ portfolio companies.
The VCS investment team, which is comprised of 12 investment professionals with an average of 23+ years of experience, has deep and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 1,800+ investors, 80+ fund managers, 83 direct investments, 350+ private market funds and 12,000+ portfolio companies.
We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database 7 that contains comprehensive information on more than 5,000 investment firms, 9,000 funds, 38,000 individual transactions, 30,000 private companies and 250,000 financial metrics. As of December 31, 2022, PES managed $10.8 billion of FPAUM.
We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database that contains comprehensive information on more than 5,600 investment firms, 10,200 funds, 47,000 individual transactions, 31,000 private companies and 317,000 financial metrics. As of December 31, 2023, PES managed $12.3 billion of FPAUM.
General Partner We perform extensive, upfront due diligence on general partners prior to making an investment and all our current period partners are subject to our ongoing risk management framework.
We seek to mitigate risk through prudent portfolio diversification and through comprehensive due diligence on general partners, investment funds and portfolio companies. General Partner We perform extensive, upfront due diligence on general partners prior to making an investment and all our current period partners are subject to our ongoing risk management framework.
Our investors become limited partners in our funds and a separate entity that we form and control acts as the general partner. Our capital commitment to the limited partnership is generally 1% of total capital commitments.
Our investors become limited partners in our funds and a separate entity that we form and control acts as the general partner. Funds managed by the Company, who act as the general partner, make capital commitments to the limited partnership which are generally 1% of total capital commitments.
We managed $21.2 billion in FPAUM from which we earn management and advisory fees as of December 31, 2022.
We managed $23.3 billion in FPAUM from which we earn management and advisory fees as of December 31, 2023.
Organic FPAUM is calculated on a pro forma basis assuming the acquisitions of WTI, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark were completed as of January 1, 2018. 2. Q4’22 organic FPAUM growth is the pro forma FPAUM growth from Q4’21 to Q4’22. Note: “PF” refers to calculations made on a pro forma basis.
Organic FPAUM is calculated on a pro forma basis assuming the acquisitions of WTI, Five Points, TrueBridge, Enhanced, Bonaccord, and Hark were completed as of January 1, 2018. 2. Q1’23 organic FPAUM growth is the pro forma FPAUM growth from Q1’22 to Q1’23. Q2’23 organic FPAUM growth is the pro forma FPAUM growth from Q2’22 to Q3’23.
Private Credit Solutions "PCS" Under PCS, we primarily make debt investments across North America, targeting lower middle market companies owned by leading financial sponsors and also offer certain private equity solutions.
As of December 31, 2023, IIS managed $2.0 billion of FPAUM. Private Credit Solutions "PCS" Under PCS, we primarily make debt investments across North America, targeting lower middle market companies owned by leading financial sponsors and also offer certain private equity solutions.
We typically receive fees from investors on committed capital for a decade, the typical life of the fund. We currently offer secondaries funds across our private equity solutions. Our secondary funds comprise approximately $1.5 billion of our FPAUM as of December 31, 2022.
We typically receive fees from investors on committed capital for a decade, the typical life of the fund. We currently offer secondaries funds across our private equity solutions.
One-third of the original holdings of Equity Securities of each of the 210 Group, RCP Group and TrueBridge Group will be released from the Lock-Up Restrictions, on the first, second and third anniversary of the consummation of the public offering (the “Lock-Up Restrictions Release”). Company Lock-Up Agreements 16 Certain stockholders, including Messrs.
One-third of the original holdings of Equity Securities of each of the 210 Group, RCP Group and TrueBridge Group were released from the Lock-Up Restrictions, on each of the first and second anniversary of the consummation of the IPO and one-third of such original holdings will be released from the Lock-Up Restrictions, on the third anniversary of the consummation of the IPO (the “Lock-Up Restrictions Release”).
In addition, California and several other states have recently enacted, or are actively considering, consumer privacy laws that impose compliance obligations with regard to the collection, use and disclosure of personal information.
In addition, California and at least thirteen other states have recently enacted, or are actively considering, consumer privacy laws that impose compliance obligations with regard to the collection, use and disclosure of personal information, as well as cybersecurity requirements to protect personal information and our data systems in general.
According to the 2020 McKinsey Report, an ESG approach to private markets has been one of the most talked about developments of the past several years.
This continued into 2023. An ESG approach to private markets has been one of the most talked about developments of the past several years.
Enhanced undertakes and manages equity and debt investments in impact initiatives across North America, targeting underserved areas and other socially responsible end markets including renewable energy, historic building renovations, and affordable housing. ECP is a registered investment advisor with the United States Securities and Exchange Commission.
Enhanced undertakes and manages equity and debt investments in impact initiatives across North America, targeting underserved areas and other socially responsible end markets including renewable energy, historic building renovations, and affordable housing.
Our Investment Process We maintain rigorous investment, monitoring and risk management processes across each of our specialized private market solutions, all unified by a common philosophy and a focus on comprehensive analysis of fund managers and/or portfolio companies.
Consistent with this strategy, we continue to evaluate ongoing opportunities, some of which may be significant. 23 Our Investment Process We maintain rigorous investment, monitoring and risk management processes across each of our specialized private market solutions, all unified by a common philosophy and a focus on comprehensive analysis of fund managers and/or portfolio companies.
As of December 31, 2022, we have 234 full-time equivalent employees, primarily located in the United States. Our employees are not represented by a collective bargaining group. We consider our employee relations to be strong. Human Capital Objectives Our business is built on strong, trusted and relationships with stakeholders: employees, limited partners, general partners, and our public stockholders.
Our employees are not represented by a collective bargaining group. We consider our employee relations to be strong and have not experienced interruptions of operations due to labor disagreements. Human Capital Objectives Our business is built on strong, trusted and relationships with stakeholders: employees, limited partners, general partners, and our public stockholders.
Adding WTI to our solutions portfolio strengthens our market position by adding a strategy capable of delivering growth, and good fund performance, in various market cycles. Consistent with this strategy, we continue to evaluate ongoing opportunities, some of which may be significant.
Adding WTI to our solutions portfolio strengthens our market position by adding a strategy capable of delivering growth, and good fund performance, in various market cycles.
Investors purchased 23,000,000 Class A shares in conjunction with the IPO and the Company gained a top-tier set of institutional investors. The IPO process is described in more detail below.
The IPO priced on October 20, 2021, and P10’s Class A common stock began trading on the NYSE on October 21, 2021 under the ticker “PX”. Investors purchased 23,000,000 Class A shares in conjunction with the IPO and the Company gained a top-tier set of institutional investors. The IPO process is described in more detail below.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe rules relating to U.S. federal income taxation are periodically under review by persons involved in the legislative and administrative rulemaking processes, by the IRS and by the U.S. Department of the Treasury, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes, including decreases in the tax rate.
Biggest changePossible changes in regulations and interpretations of statutes and regulations could negatively affect our ability to use the tax benefits associated with our NOL carryforwards. The rules relating to U.S. federal income taxation are periodically under review by persons involved in the legislative and administrative rulemaking processes, by the IRS and by the U.S.
The historical performance of our funds should not be considered indicative of the future performance of these funds or of any future funds we may raise, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of net asset value of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds typically generate lower returns during the period that they initially deploy their capital; • changes in the global tax and regulatory environment may affect both the investment preferences of our investors and the financing strategies employed by businesses in which particular funds invest, which may reduce the overall capital available for investment and the availability of suitable investments, thereby reducing our investment returns in the future; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, which may cause an increase in cost and reduction in the availability of suitable investments, thereby reducing our investment returns in the future; and • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest.
The historical performance of our funds should not be considered indicative of the future performance of these funds or of any future funds we may raise, in part because: • market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future; • the performance of our funds is generally calculated on the basis of the net asset value of the funds’ investments, including unrealized gains, which may never be realized; • our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed; • our newly established funds typically generate lower returns during the period that they initially deploy their capital; • changes in the global tax and regulatory environment may affect both the investment preferences of our investors and the financing strategies employed by businesses in which particular funds invest, which may reduce the overall capital available for investment and the availability of suitable investments, thereby reducing our investment returns in the future; • in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, which may cause an increase in cost and reduction in the availability of suitable investments, thereby reducing our investment returns in the future; and • the performance of particular funds also will be affected by risks of the industries and businesses in which they invest.
In many cases, the companies in which our specialized investment vehicles invest have indebtedness or equity securities or may be permitted to incur indebtedness or to issue equity securities, that rank senior to our investors’ investments in our specialized investment vehicles or advisory accounts.
In many cases, the companies in which our specialized investment vehicles or advisory accounts invest have indebtedness or equity securities or may be permitted to incur indebtedness or to issue equity securities, that rank senior to our investors’ investments in our specialized investment vehicles or advisory accounts.
The effects on us, our funds, or on private markets funds generally, of future regulation, or of changes in the interpretation and enforcement of existing regulation, could have an adverse effect on our funds’ investment strategies or our business model.
The effects on us, our funds, or on private markets generally, of future regulation, or of changes in the interpretation and enforcement of existing regulation, could have an adverse effect on our funds’ investment strategies or our business model.
Our amended and restated certificate of incorporation and bylaws include provisions that: • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • specify that special meetings of our stockholders can be called only by our board of directors, chief executive officer(s), or the chairman of our board of directors; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; 62 • authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock; and • reflect two classes of common stock, as discussed above.
Our amended and restated certificate of incorporation and bylaws include provisions that: • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • establish that our board of directors is divided into three classes, with each class serving three-year staggered terms; • specify that special meetings of our stockholders can be called only by our board of directors, chief executive officer(s), or the chairman of our board of directors; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • authorize our board of directors to issue, without further action by the stockholders, up to 10,000,000 shares of undesignated preferred stock; and • reflect two classes of common stock, as discussed above.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering, (ii) the first fiscal year after our annual gross revenues are $1.07 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our Class A common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.
We will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of our initial public offering, (ii) the first fiscal year after our annual gross revenues are $1.07 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than 59 $1.0 billion in non-convertible debt securities or (iv) the end of any fiscal year in which the market value of our Class A common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.
These companies may be in an early stage of development, may not have a proven operating history, may be operating at a loss or have significant variations in operating results, may be engaged in a rapidly changing business with products subject to a substantial risk of obsolescence, may be subject to extensive regulatory oversight, may require substantial additional capital to support their operations, finance expansion or maintain their competitive position, may have a high level of leverage, or may otherwise have a weak financial condition.
These companies may be in an early stage of development, may not have a proven operating history, may be operating at a loss or have significant variations in operating results, may be engaged in a rapidly changing business with products subject to a substantial risk of obsolescence, may be subject to extensive regulatory 40 oversight, may require substantial additional capital to support their operations, finance expansion or maintain their competitive position, may have a high level of leverage, or may otherwise have a weak financial condition.
Moreover, certain of our contracts with state government-sponsored investors are secured through such government’s request for proposal process, and can be subject to renewal. If multiple investors were to exercise their termination rights or fail to renew their existing contracts or investors removed us from managing a fund and we were unable to secure new investors, our fees would decline.
Moreover, certain of our contracts with state government-sponsored clients are secured through such government’s request for proposal process, and can be subject to renewal. If multiple clients were to exercise their termination rights or fail to renew their existing contracts or investors removed us from managing a fund and we were unable to secure new clients, our fees would decline.
Emerging growth companies are exempt from this requirement for a period of five years, or until it no longer qualifies as an emerging growth company, whichever occurs first. We maintain internal control procedures to satisfy the requirements of Section 404(a), which requires annual management assessments of the effectiveness of our internal control over financial reporting.
Emerging growth companies are exempt from this requirement for a period of five years, or until it no longer qualifies as an emerging growth company, whichever occurs first. We maintain internal control procedures to satisfy the requirements of Section 404(a), which requires annual 58 management assessments of the effectiveness of our internal control over financial reporting.
In addition, if we have a net unrealized built-in gain (generally determined by comparing market capitalization plus total liabilities to the adjusted tax basis of assets) at the time of the ownership change, certain built-in gains recognized within five years after the ownership change (the “recognition period”) may increase the amount of the otherwise available annual limitation.
In addition, if we have a net unrealized built-in gain (generally determined by comparing market capitalization plus total liabilities to the adjusted tax basis of assets) at the time of an ownership change, certain built-in gains recognized within five years after the ownership change (the “recognition period”) may increase the amount of the otherwise available annual limitation.
In addition, our specialized funds directly or indirectly invest in businesses with capital structures that have significant leverage. The leveraged capital structure of such businesses increases the exposure of the funds’ portfolio companies to 42 adverse economic factors such as rising interest rates, downturns in the economy or deterioration in the condition of such business or its industry.
In addition, our specialized funds directly or indirectly invest in businesses with capital structures that have significant leverage. The leveraged capital structure of such businesses increases the exposure of the funds’ portfolio companies to adverse economic factors such as rising interest rates, downturns in the economy or deterioration in the condition of such business or its industry.
If we experience a change of control (as defined under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), or as otherwise set forth in the governing documents of our funds), continuation of the investment management agreements of our funds and our separate account clients would be subject to investor or client consent.
If we experience a change of control (as defined under the Investment Advisers Act of 1940, as amended (the “Investment Advisers Act”), or as otherwise set forth in the governing documents of our funds), continuation of the investment management agreements with our funds and our separate account clients would be subject to investor or client consent.
Although we endeavor to comply with all applicable data privacy and protection obligations, we may at times fail to do so or may be perceived to have failed to do so. 52 Moreover, despite our efforts, we may not be successful in achieving compliance if our personnel or third parties upon whom we rely fail to comply with such obligations.
Although we endeavor to comply with all applicable data privacy and protection obligations, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our personnel or third parties upon whom we rely fail to comply with such obligations.
Our amended and restated certificate of incorporation provides that, unless we, in writing, select or consent to the selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims in the right of our company: (i) that are based upon a violation of a duty by a current or former director, officer, employee, or stockholder in such capacity; or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, subject matter jurisdiction, another state court or a federal court located within the State of Delaware).
Our amended and restated certificate of incorporation provides that, unless we, in writing, select or consent to the selection of an alternative forum, all complaints asserting any internal corporate claims (defined as claims, including claims in the right of our company: (i) that are based upon a violation of a duty by a current or former director, officer, employee, or stockholder in such capacity; or (ii) as to which the Delaware General Corporation Law (the "DGCL") confers jurisdiction upon the Court of Chancery), to the fullest extent permitted by law, and subject to applicable jurisdictional requirements, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, subject matter jurisdiction, another state court or a federal court located within the State of Delaware).
Our asset management and advisory activities may subject us to the risk of significant 45 legal liabilities to our investors and third parties, including our investors’ stockholders or beneficiaries, under securities or other laws and regulations for materially false or misleading statements made in connection with securities and other transactions.
Our asset management and advisory activities may subject us to the risk of significant legal liabilities to our investors and third parties, including our investors’ stockholders or beneficiaries, under securities or other laws and regulations for materially false or misleading statements made in connection with securities and other transactions.
In our investment management business, we make investment decisions on behalf of our investors that could result in substantial losses. Any such losses also may subject us to the risk of legal and regulatory liabilities or actions alleging negligent misconduct, breach of fiduciary duty or breach of contract.
In our investment management business, we make investment decisions on behalf of our investors that could result in substantial losses. Any such losses also may subject us to the risk of legal and regulatory liabilities or actions 43 alleging negligent misconduct, breach of fiduciary duty or breach of contract.
We cannot assure you that required consents will be obtained if a change of control occurs. If the investments we make on behalf of our specialized investment vehicles perform poorly, our ability to raise capital for future specialized investment vehicles may be materially and adversely affected.
We cannot assure you that required consents will be obtained if such a change of control occurs. If the investments we make on behalf of our specialized investment vehicles perform poorly, our ability to raise capital for future specialized investment vehicles may be materially and adversely affected.
Any contractual protections we may have against relevant counterparties may not be sufficient to protect adequately us from any such liabilities and losses, and we may be unable to enforce any such contractual protections. Internationally, many jurisdictions have established their own data privacy and protection legal frameworks with which we may need to comply.
Any contractual protections we may have against relevant counterparties may not be sufficient to protect adequately us from any such liabilities and losses, and we may be unable to enforce any such contractual protections. 51 Internationally, many jurisdictions have established their own data privacy and protection legal frameworks with which we may need to comply.
In addition, calculating whether an ownership change has occurred within the meaning of Section 382 is subject to inherent uncertainty, both because of the complexity of applying Section 382 and because of limitations on a publicly traded and over-the-counter traded company’s knowledge as to 54 the ownership of, and transactions in, its securities.
In addition, calculating whether an ownership change has occurred within the meaning of Section 382 is subject to inherent uncertainty, both because of the complexity of applying Section 382 and because of limitations on a publicly traded and over-the-counter traded company’s knowledge as to the ownership of, and transactions in, its securities.
Our future success will depend upon our ability to find, attract, retain and motivate highly-skilled and highly-qualified individuals. We seek to provide our personnel with competitive benefits and compensation packages. However, our efforts may not be sufficient to enable us to attract, retain and motivate qualified individuals to support our growth.
Our future success will depend upon our ability to find, attract, retain, develop and motivate highly-skilled and highly-qualified individuals. We seek to provide our personnel with competitive benefits and compensation packages. However, our efforts may not be sufficient to enable us to find, attract, retain, develop and motivate qualified individuals to support our growth.
We may incur significant costs to further upgrade our data processing systems and other operating technology in the future. We are dependent on the effectiveness of our information security policies, procedures and capabilities to protect our computer and telecommunications systems and the data such systems contain or transmit.
We may incur significant costs to further upgrade our data processing systems and other operating technology in the future. 42 We are dependent on the effectiveness of our information security policies, procedures and capabilities to protect our computer and telecommunications systems and the data such systems contain or transmit.
Any change to our senior leadership team could materially and adversely affect our business, financial condition and results of operations. We intend to expand our business and may enter into new lines of business or geographic markets, which may result in additional risks and uncertainties in our business.
Any change to our senior leadership team could materially and adversely affect our business, financial condition and results of operations. 35 We intend to expand our business and may enter into new lines of business or geographic markets, which may result in additional risks and uncertainties in our business.
Our effective income tax rate can vary significantly between periods due to a few complex factors including, but not limited to, projected levels of taxable income, tax audits conducted and settled by tax authorities, and adjustments to income taxes upon finalization of income tax returns.
Our effective income tax rate can vary significantly between periods due to a few complex factors including, but not 53 limited to, projected levels of taxable income, tax audits conducted and settled by tax authorities, and adjustments to income taxes upon finalization of income tax returns.
The future growth of our business will 38 depend, among other things, on our ability to maintain the appropriate infrastructure and staffing levels to sufficiently address our growth and may require us to incur significant additional expenses and commit additional senior management and operational resources.
The future growth of our business will depend, among other things, on our ability to maintain the appropriate infrastructure and staffing levels to sufficiently address our growth and may require us to incur significant additional expenses and commit additional senior management and operational resources.
We have grown organically and further evolved by adding complementary solutions and integrating these solutions into our existing offerings to generate cross-selling opportunities across our existing investor base, as demonstrated by the recent acquisitions of Hark, Bonaccord, and WTI.
We have grown organically and further evolved by adding complementary solutions and integrating these solutions into our existing offerings to generate cross-selling opportunities across our existing investor base, as demonstrated by the acquisitions of Hark, Bonaccord, and WTI.
These laws and regulations may affect our costs and manner of conducting business in one or more markets, the risks of doing business, the assets that we manage or advise, and our ability to raise capital from investors.
These laws and regulations may affect our costs and manner of conducting business in one or more markets, the risks of doing business, the assets that we manage or advise, and our ability to raise capital from 54 investors.
Past returns of our specialized investment vehicles and advisory accounts have benefited from investment opportunities and general market conditions that may not continue or reoccur, including favorable borrowing conditions in the debt markets.
Past returns of our specialized investment vehicles and advisory accounts have benefited from investment opportunities and general market conditions that may not continue or reoccur, including previously favorable borrowing conditions in the debt markets.
Our valuation of the funds in which we invest is largely dependent upon the processes employed by the managers of those funds. The fair value of investments is determined using a number of methodologies described in the particular funds’ valuation policies.
Our valuation of the funds in which we invest is largely dependent upon the processes employed by the managers 39 of those funds. The fair value of investments is determined using a number of methodologies described in the particular funds’ valuation policies.
Our ability to retain our senior leadership team and attract, retain and develop human capital in a highly competitive talent market is critical to our success. Our success depends on our ability to retain our senior leadership team and to attract, retain, and develop additional qualified investment, sales and other professionals.
Our ability to retain our senior leadership team and find, attract, retain and develop human capital in a highly competitive talent market is critical to our success. Our success depends on our ability to retain our senior leadership team and to find, attract, retain, and develop additional qualified investment, sales and other professionals.
Department of State administer and enforce various export control laws and regulations, including economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and 55 individuals.
Department of State administer and enforce various export control laws and regulations, including economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals.
While we have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have similar effects as Section 203 of the DGCL, except that they provide that the Sunset Holders, their affiliates, groups that include the Sunset Holders and certain of their direct and indirect transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions. 63 Item 1B.
While we have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL, our amended and restated certificate of incorporation contains provisions that have similar effects as Section 203 of the DGCL, except that they provide that the Sunset Holders, their affiliates, groups that include the Sunset Holders and certain of their direct and indirect transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions. 60 Item 1B.
We continue to grow our business by offering 37 additional products and services, by entering into new lines of business and by entering into, or expanding our presence in, new geographic markets, including Europe and Asia.
We continue to grow our business by offering additional products and services, by entering into new lines of business and by entering into, or expanding our presence in, new geographic markets, including Europe and Asia.
The substantial growth of our business has placed, and if it continues, will continue to place, significant demands on our infrastructure, our investment team and other employees, and will increase our expenses.
The substantial growth of our business has placed, and if it continues, will 36 continue to place, significant demands on our infrastructure, our investment team and other employees, and will increase our expenses.
The availability of investment opportunities will be subject to market conditions and other factors outside of our control and the control of the private markets and fund managers with which we invest.
The availability of investment opportunities will be subject to market conditions and other factors outside of our control and the control of the private markets and fund managers with which and in which we invest.
In the event that our specialized investment vehicles or individual investments perform poorly, the fund manager’s revenues and earnings derived from incentive fees will decline, which may result in a decrease in our management and advisory fee revenue and make it more difficult for us to raise capital for new specialized funds or gain new customized separate account investors in the future.
In the event that our specialized investment vehicles or individual investments perform poorly, the fund manager’s revenues and earnings derived from incentive fees will decline, which may result in a decrease in our management and advisory fee revenue and make it more difficult for us to raise capital for new specialized funds or gain new customized separate account clients in the future.
The EU GDPR provides that European Union (“EU”) member states may introduce further conditions, including limitations, to make their own further laws and regulations limiting the processing of personal information which could limit our ability to collect, use and share European personal information, or could cause our compliance costs to increase, ultimately having an adverse impact on our business, and harm our business and financial condition.
The EU GDPR provides that EU member states may introduce further conditions, including limitations, to make their own further laws and regulations limiting the processing of personal information which could limit our ability to collect, use and share European personal information, or could cause our compliance costs to increase, ultimately having an adverse impact on our business, and harm our business and financial condition.
Acquisitions involve a number of risks, including the following, any of which could have an adverse effect on our business and our earnings and revenue growth: (i) incurring costs in excess of what we anticipated; (ii) potential loss of key wealth management professionals or other team members of the predecessor firm; (iii) inability to generate sufficient revenue to offset transaction costs; (iv) inability to retain investors following an acquisition; (v) incurring expenses associated with the amortization or impairment of intangible assets, particularly for goodwill and other intangible assets; and (vi) payment of more than fair market value for the assets of the acquired business.
Acquisitions involve a number of risks, including the following, any of which could have an adverse effect on our business and our earnings and revenue growth: (i) incurring costs in excess of what we anticipated; (ii) potential loss of key investment professionals or other team members of the predecessor firm; (iii) inability to generate sufficient revenue to offset transaction costs; (iv) inability to retain investors following an acquisition; (v) incurring expenses associated with the amortization or impairment of intangible assets, particularly for goodwill and other intangible assets; and (vi) payment of more than fair market value for the assets of the acquired business.
After repaying senior security holders, the 43 company may not have any remaining assets to use for repaying amounts owed in respect of our investors’ investments.
After repaying senior security holders, the company may not have any remaining assets to use for repaying amounts owed in respect of our investors’ investments.
As an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) until the later of either the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company.
As an emerging growth company, our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404(b) until the later of either the year following our first annual report required to be filed with the SEC or the date we no longer qualify as an emerging growth company.
In the United States, there are numerous U.S. federal and state laws and regulations relating to personal information privacy and protection. For example, at a federal level, we may be subject to the Gramm-Leach-Bliley Act (“GLBA”) that applies to financial institutions and requires regulated entities to implement and maintain certain data privacy and security safeguards.
In the U.S., there are numerous U.S. federal and state laws and regulations relating to personal information privacy and protection. For example, at a federal level, we may be subject to the Gramm-Leach-Bliley Act (“GLBA”) that applies to financial institutions and requires regulated entities to implement and maintain certain data privacy and security safeguards.
We may face damage to our professional reputation and legal liability if our services are not regarded as satisfactory or for other reasons. As a leading provider of private market solutions, we depend to a large extent on our relationships with our investors and our reputation for integrity and high-caliber professional services to attract and retain investors.
We may face damage to our professional reputation and legal liability if our services are not regarded as satisfactory or for other reasons. As a leading provider of private markets solutions, we depend to a large extent on our relationships with our investors and our reputation for integrity and high-caliber professional services to attract and retain investors.
These regulations have not been finalized but provide for an effective date of 30 days after the final regulations are published.
These regulations have not been finalized but provide generally for an effective date of 30 days after the final regulations are published.
These tariffs have resulted in, and may continue to trigger, retaliatory actions by affected countries, including the imposition of tariffs on the United States by other countries. Certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods and denying U.S. companies access to critical raw materials.
These tariffs have resulted in, and may continue to trigger, retaliatory actions by affected countries, including the imposition of tariffs on the U.S. by other countries. Certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S. goods and denying U.S. companies access to critical raw materials.
Under the Investment Advisers Act, each of the investment advisory agreements for the funds and other accounts we manage must provide that it may not be assigned without the consent of the particular fund or other investor. An assignment may occur under the Investment Advisers Act if, among other things, an Adviser undergoes a change of control.
Under the Investment Advisers Act, each of the investment advisory agreements for the funds and other accounts we manage must provide that it may not be assigned without the consent of the particular fund or other client. An assignment may occur under the Investment Advisers Act if, among other things, an Adviser undergoes a change of control.
While our financial profile features a highly predictable, recurring revenue stream of virtually all management and advisory fees, earned primarily on committed capital from long-term, contractually locked up funds, our profitability may be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in revenue relating to changes in market and economic conditions.
While our financial profile features a highly predictable, recurring revenue stream of most management and advisory fees, earned primarily on committed capital from long-term, contractually locked up funds, our profitability may be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in revenue relating to changes in market and economic conditions.
If our revenue declines without a commensurate reduction in our expenses, our net income will be reduced. Accordingly, difficult market conditions could materially and adversely affect our business, financial condition and results of operations. 50 Increased government regulation, compliance failures and changes in law or regulation could adversely affect us.
If our revenue declines without a 48 commensurate reduction in our expenses, our net income will be reduced. Accordingly, difficult market conditions could materially and adversely affect our business, financial condition and results of operations. Increased government regulation, compliance failures and changes in law or regulation could adversely affect us.
We believe that we are engaged primarily in the business of providing alternative asset management investment services and not in the business of investing, reinvesting or trading in securities. We also believe that the primary source of income from each of our businesses is properly characterized as income earned in exchange for the provision of services.
We believe that we are engaged, through our subsidiaries, primarily in the business of providing alternative asset management investment services and not in the business of investing, reinvesting or trading in securities. We also believe that the primary source of income from each of our businesses is properly characterized as income earned in exchange for the provision of services.
Any substantial decrease in net operating cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or force us to modify our operations. 39 Restrictive covenants in agreements and instruments governing our debt may adversely affect our ability to operate our business.
Any substantial decrease in net operating cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or force us to modify our operations. 37 Restrictive covenants in agreements and instruments governing our debt may adversely affect our ability to operate our business.
The SEC recently proposed rules that would significantly change how investment advisers manage and safeguard client assets by expanding the custody rule to apply to all client assets held in its advisory account, and if adopted as proposed, will introduce new challenges and costs to our investment advisory business.
In 2023, the SEC proposed rules that would significantly change how investment advisers manage and safeguard client assets by expanding the custody rule to apply to all client assets held in its advisory account, and if adopted as proposed, will introduce new challenges and costs to our investment advisory business.
The SEC has increased its regulation of the asset management and private equity industries in recent years, focusing on the private equity industry’s fees, allocation of expenses to funds, valuation practices, allocation of fund investment opportunities, marketing and advertising, disclosures to fund investors, the allocation of broken-deal expenses and general conflicts of interest disclosures.
The SEC has increased its regulation of the asset management and private fund industries in recent years, focusing on the private equity industry’s fees, allocation of expenses to funds, valuation practices, allocation of fund investment opportunities, custody of the fund assets, marketing and advertising, disclosures to fund investors, the allocation of broken-deal expenses and general conflicts of interest disclosures.
For example, we may recommend that various of our advisory investors invest in specialized funds managed by our investment management business. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions.
For example, we may recommend that various of our advisory clients invest in specialized funds managed by our investment management business. It is possible that actual, potential or perceived conflicts could give rise to investor dissatisfaction, litigation or regulatory enforcement actions.
Access to secondary investment opportunities is also highly competitive and is often controlled by a 36 limited number of general partners, fund managers and intermediaries. Our ability to continue to compete effectively will depend upon our ability to attract highly qualified investment professionals and retain existing employees.
Access to secondary investment opportunities is also highly competitive and is often controlled by a 34 limited number of general partners, fund managers and intermediaries. Our ability to continue to compete effectively will depend upon our ability to attract highly qualified investment professionals and retain existing employees.
If the SEC were to investigate and find errors in our methodologies or procedures, we and/or members of our management could be subject to penalties and fines, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
If the SEC were to investigate and find errors in our policies or procedures, we and/or members of our management could be subject to penalties and fines, which could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.
The FCPA is intended to prohibit bribery of foreign governments and their officials and political parties and requires public companies and investment advisers in the United States to keep books and records that accurately and fairly reflect those companies’ transactions. OFAC, the U.S. Department of Commerce and the U.S.
The FCPA is intended to prohibit bribery of foreign governments and their officials and political parties and requires public companies and investment advisers in the U.S. to keep books and records that accurately and fairly reflect those companies’ transactions. OFAC, the U.S. Department of Commerce and the U.S.
Our customized separate account and advisory account business operates in a highly competitive environment. While investors of our separate account and advisory account businesses may have multi-year contracts, certain of these contracts only provide for fees to the extent a client elects to make an investment.
Our customized separate account and advisory account business operates in a highly competitive environment. While clients of our separate account and advisory account businesses may have multi-year contracts, certain of these contracts only provide for fees to the extent a client elects to make an investment.
Any investor that did not fund a capital call would be subject to several possible penalties, including having a meaningful amount of its existing investment forfeited in that fund. However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund.
Any investor that does not fund a capital call would be subject to several possible penalties, including having a meaningful amount of its existing investment forfeited in that fund. However, the impact of the penalty is directly correlated to the amount of capital previously invested by the investor in the fund.
Misconduct by our employees, advisors or third-party service providers could harm us by impairing our ability to attract and retain investors and subjecting us to significant legal liability and reputational harm. There is a risk that our employees, advisors or third-party service providers could engage in misconduct that adversely affects our business.
Misconduct by our employees, advisors or third-party service providers could harm us by impairing our ability to attract and retain investors and subject us to significant legal liability and reputational harm. There is a risk that our employees, advisors or third-party service providers could engage in misconduct that adversely affects our business.
For example, increased competition from banks and other financial institutions in the credit markets could have the effect of reducing credit spreads, which may adversely affect the revenues we receive from our credit and other funds whose strategies include the provision of credit to borrowers.
Increased competition from banks and other financial institutions in the credit markets could have the effect of reducing credit spreads, which may adversely affect the revenues we receive from our credit and other funds whose strategies include the provision of credit to borrowers.
Our investors engage us across multiple private market solutions through different vehicles, including primary investment funds, direct and co-investment funds and secondary funds. Primary investment funds and direct and co-investment funds include both commingled investment vehicles with multiple investors as well as customizable separate accounts, which typically include one customer.
Our investors engage us across multiple private markets solutions through different vehicles, including primary investment funds, direct and co-investment funds and secondary funds. Primary investment funds and direct and co-investment funds include both commingled investment vehicles with multiple investors as well as customizable separate accounts, which typically include one customer.
A failure or interruption of our systems, including the loss of data, whether caused by fire, other natural disaster, power or telecommunications failure, service interruptions, system malfunction, computer viruses, acts of terrorism or war or otherwise, could result in a disruption of our business, liability to investors, regulatory intervention or reputational damage, and thus materially and adversely affect our 44 business.
A failure or interruption of our systems, including the loss of data, whether caused by fire, other natural disaster, power or telecommunications failure, service interruptions, system malfunction, unauthorized access, computer viruses, acts of terrorism or war or otherwise, could result in a disruption of our business, liability to investors, regulatory intervention or reputational damage, and thus materially and adversely affect our business.
The SEC recently proposed rules that would overhaul the regulation of the private fund industry, to significantly increase disclosure requirements and impose substantive requirements and prohibitions on fund advisory contracts, and if these rules are adopted as proposed, will increase our investment advisors’ compliance monitoring and reporting obligations, resulting in increased costs of compliance, and may require certain changes to our practices.
The SEC recently proposed rules that would overhaul the regulation of the private fund industry, to significantly increase disclosure requirements and impose substantive requirements and prohibitions on fund advisory contracts, and if these rules are adopted as proposed, will increase our Advisers’ compliance monitoring and reporting obligations, resulting in increased costs of compliance, and may require certain changes to our practices.
In the case of any such events, the management fees and advisory fees we earn in connection with managing such account would immediately cease, which could result in an adverse effect on our revenues.
In the case of any such events, the management fees and advisory fees we earn in connection with managing such account or fund would immediately cease, which could result in an adverse effect on our revenues.
Following the exit of the United Kingdom (“UK”) from the EU we can no longer rely on “passporting” privileges that allow issuers approved in the UK to raise capital in EU jurisdictions without restrictions.
Following the exit of the United Kingdom (“UK”) from the European Union ("EU") we can no longer rely on “passporting” privileges that allow issuers approved in the UK to raise capital in EU jurisdictions without restrictions.
The general partner entities hold no underlying assets other than being parties to the investment management agreements with our Advisors for their respective funds and serve to allocate carried interest to employees of the Advisors.
The general partner entities hold no underlying assets other than being parties to the investment management agreements with our Advisers for their respective funds and serve to allocate carried interest to employees of the Advisers.
As a result, we may take actions with respect to the allocation of investments among our specialized investment vehicles or funds (including funds and accounts that have different fee structures), the purchase or sale of investments in our specialized investment vehicles or funds, the structuring of investment transactions for those specialized investment vehicles or funds, the advice we provide or other actions in order to comply with these fiduciary and contractual obligations.
As a result, we may take actions with respect to the allocation of investments among our specialized investment vehicles or funds (including funds and accounts that have different fee structures), the purchase or sale of investments in our specialized investment vehicles or funds, the structuring of investment transactions for those specialized investment vehicles or funds, in order to comply with these fiduciary and contractual obligations.
As a result of disclosure of information as a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If the claims are successful, our business, financial condition and results of operations could be materially and adversely affected.
As a result of disclosure of information as a public company, our business and financial condition becomes more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If the claims are successful, our business, financial condition and results of operations could be materially and adversely affected.
Several factors serve to increase our competitive risks: • some of our competitors have more relevant experience, greater financial and other resources and more personnel than we do; • there are relatively few barriers to entry impeding new asset management firms, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our various lines of business have resulted in increased competition; • some of our competitors have recently raised, or are expected to raise, significant amounts of capital, and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities that our funds seek to exploit; • some of our funds may not perform as well as competitors’ funds or other available investment products; • several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • if, as we expect, allocation of assets to alternative investment strategies increases, there may be increased competition for alternative investments and access to fund general partners and managers; 49 • certain investors may prefer to invest with private partnerships rather than a public company; • other industry participants will from time to time seek to recruit our investment professionals and other employees away from us; • some of our competitors may have a lower cost of capital, which may be exacerbated to the extent potential changes to the Code limit the deductibility of interest expense; • some of our competitors may have access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we can and/or bear less compliance expense than we do; • some of our competitors may have more flexibility than us in raising certain types of investment funds under the investment management contracts they have negotiated with their investors; and • some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do.
Several factors serve to increase our competitive risks: • some of our competitors have more relevant experience, greater financial and other resources and more personnel than we do; • there are relatively few barriers to entry impeding new asset management firms, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our various lines of business have resulted in increased competition; • some of our competitors have recently raised, or are expected to raise, significant amounts of capital, and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities that our funds seek to exploit; • some of our funds may not perform as well as competitors’ funds or other available investment products; • several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; 47 • we face increased competition for alternative investments and access to fund general partners and managers; • certain investors may prefer to invest with private partnerships rather than a public company; • other industry participants will from time to time seek to recruit our investment professionals and other employees away from us; • some of our competitors may have a lower cost of capital, which may be exacerbated to the extent potential changes to the Internal Revenue Code of 1986, as amended, (the "Code"), limit the deductibility of interest expense; • some of our competitors may have access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we can and/or bear less compliance expense than we do; • some of our competitors may have more flexibility than us in raising certain types of investment funds under the investment management contracts they have negotiated with their investors; and • some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do.
To 56 the extent our access to capital from such investors is impaired, we may not be able to maintain or increase the size of our funds or raise sufficient capital for new funds, which may adversely affect our revenues. The effect of global climate change may impact the operations of our products’ investments.
To the extent our access to capital from such investors is impaired, we may not be able to maintain or increase the size of our funds or raise sufficient capital for new funds, which may adversely affect our revenues. The effect of global climate change may impact the operations of our products’ investments. There is evidence of global climate change.
Any such recognized built-in gains that are unused may be carried forward to later post-change years. Internal Revenue Service (“IRS”) Notice 2003-65 provides an approach which treats built-in gain assets of our Company as generating recognized built-in gain each year without regard to whether such assets are not disposed of at a gain during the recognition period.
Any such recognized built-in gains that are unused may be carried forward to later post-change years. Internal Revenue Service (“IRS”) Notice 2003-65 provides an approach which treats depreciable or amortizable built-in gain assets of our Company as generating recognized built-in gains each year without regard to whether such assets are disposed of at a gain during the recognition period.
Item 1A. R isk Factors. Risks Related to Our Business Our revenue in any given period is dependent on the number of fee-paying investors in such period.
Item 1A. R isk Factors. Risks Related to Our Business Our revenue in any given period is dependent on the number of fee-paying clients in such period.
From time to time states may conduct inquiries or investigations as to compliance with such requirements. Any such inquiry or investigation could be for periods prior to or subsequent to our acquisition.
From time to time regulators may conduct inquiries or investigations as to compliance with such requirements. Any such inquiry or investigation could be for periods prior to or subsequent to our acquisition.
In exchange for those services, ECG receives advisory fees from Enhanced PC based on a fixed fee schedule under which annual fees decline between $1.0 million and $4.0 million each year, totaling $76.0 million over 7 years.
In exchange for those services, ECG receives advisory fees from Enhanced PC based on a fixed fee schedule under which annual fees decline between $1.0 million and $4.0 million each year, totaling $107.5 million over 7 years.
We may not be able to fully utilize our net operating loss (“NOL”) and other tax carryforwards which may have the effect of devaluing significant deferred tax assets of the company. As of December 31, 2022, we had $177 million of federal NOL carryforwards, a portion of which will expire each year if not used to reduce taxable income.
We may not be able to fully utilize our net operating loss (“NOL”) and other tax carryforwards which may have the effect of devaluing significant deferred tax assets of the company. As of December 31, 2023, we had $164 million of federal NOL carryforwards, a portion of which will expire each year if not used to reduce taxable income.
Many of our separate accounts and funds are not registered under the Investment Company Act because we generally only form separate accounts for, and offer interests in our funds to, persons who we reasonably believe to be “qualified purchasers” as defined in the Investment Company Act.
Many of our separately managed accounts and funds are not registered under the Investment Company Act because we generally only form separately managed accounts for, and offer interests in our funds to, persons who we reasonably believe to be “qualified purchasers” as defined in the Investment Company Act.
Other future changes in tax laws or regulations, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities could adversely affect us.
Changes in tax laws or regulations, or the interpretation thereof, tax policy initiatives and reforms under consideration and the practices of tax authorities could adversely affect us.
The SEC has recently proposed rules that would require substantial standardized climate-related disclosure, and if adopted as proposed, could increase our costs for compliance. To the extent that one or more Advisers is a “fiduciary” under ERISA, with respect to benefit plan investors, it is subject to ERISA, and to regulations promulgated thereunder.
In 2023, the SEC proposed rules that would require substantial standardized climate-related disclosure, and if adopted as proposed, could increase our costs for compliance. To the extent that one or more Advisers is a “fiduciary” under ERISA, with respect to benefit plan investors, it is subject to ERISA, and to regulations promulgated thereunder.
Any or all of these risks and uncertainties, individually or collectively, could have material adverse effect on our business, financial condition and results of operations. Unforeseen liabilities may also arise from recent and future acquisition activity.
Any or all of these risks and uncertainties, individually or collectively, could have a material adverse effect on our business, financial condition and results of operations. Unforeseen liabilities may also arise from prior and future acquisition activity.
Any interruption or deterioration in the performance of these third parties or failures of their information systems and technology could impair the quality of the funds’ operations and could affect our reputation and hence adversely affect our business, financial condition and results of operations.
Any interruption or deterioration in the performance of these third parties, or failures of their information systems and technology or their data privacy programs, could impair the quality of the funds’ operations and could affect our reputation and hence adversely affect our business, financial condition and results of operations.
Future revisions in U.S. federal tax laws and interpretations thereof could adversely impact our ability to use some or all of the tax benefits associated with our NOL carryforwards, even if these carryforwards are not otherwise subject to limitation, as described above, or in addition to such other limitations.
Future revisions in the interpretation of U.S. federal tax laws could adversely impact our ability to use some or all of the tax benefits associated with our NOL carryforwards, even if these carryforwards are not otherwise subject to limitation, as described above, or in addition to such other limitations.
If we intend to raise capital in any EU jurisdiction, we may become subject to new and increased regulations and we may also be adversely affected by changes in the interpretation or enforcement of existing laws and rules by EU state governmental authorities and self-regulatory organizations. 51 In addition, global climate change and global climate change transitions could lead to new or enhanced regulation, which may be difficult or costly to comply with, or impact assets that we invest in, which may result in realized and unrealized losses in future periods that could have a material adverse impact on our results of operations and/or financial position.
To the extent we raise capital in any EU jurisdiction, we are subject to new and increased regulations and we may also be adversely affected by changes in the interpretation or enforcement of existing laws and rules by EU state governmental authorities and self-regulatory organizations. 49 In addition, global climate change and global climate change transitions could lead to new or enhanced regulation, which may be difficult or costly to comply with, or impact assets that we invest in, which may result in realized and unrealized losses in future periods that could have a material adverse impact on our results of operations and/or financial position.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough there can be no assurance of the outcome of such proceedings, our management does not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our consolidated financial statements. Item 4. Mine Safety Disclosures. Not applicable. 64 PART II
Biggest changeAlthough there can be no assurance of the outcome of such proceedings, our management does not believe it is probable that any pending or, to our knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect our consolidated financial statements. Item 4. Mine Safety Disclosures. Not applicable. 62 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of December 31, 2022, there were 3,104 stockholders of record of our Class A common stock and there were 2,930 stockholders of record of our Class B common stock.
Biggest changeThere is no established public trading market for our Class B common stock or our Series A Junior Participating Preferred Stock Purchase Rights. Holders of Record As of March 6, 2024, there were approximately 6,400 stockholders of record of our Class A common stock and there were approximately 2,740 stockholders of record of our Class B common stock.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividend Policy We declared a quarterly dividend of $0.30 per share of our common stock to record holders in each fiscal quarter of 2022.
The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. Dividend Policy We declared a quarterly dividend of $0.0325 per share of our common stock to record holders in each fiscal quarter of 2023.
Stock Performance Graph The following graph and table depict the total return to stockholders from the closing price on October 21, 2021 (the date our Class A common stock began trading on NYSE) through December 31, 2022, relative to the performance of the S&P 500 Index and Dow Jones U.S. Asset Managers Index.
Stock Performance Graph The following graph and table depict the total return to stockholders from the closing price on October 21, 2021 (the date our Class A common stock began trading on NYSE) through December 31, 2023, relative to the performance of the S&P 63 500 Index, Dow Jones U.S. Asset Managers Index, and Russell 2000 Index.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information for Common Stock Our Class A common stock is traded on the New York Stock Exchange under the symbol "PX". There is no established public trading market for our Class B common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities. Market Information for Common Stock Our Class A common stock is traded on the New York Stock Exchange under the symbol "PX".
The graph and table assume $100 invested on October 21, 2021, and dividends reinvested in the security or index. 65 The performance graph and table are not intended to be indicative of future performance.
The Company was admitted to the Russell 2000 Index in 2023. The graph and table assume $100 invested on October 21, 2021, and dividends reinvested in the security or index. The performance graph and table are not intended to be indicative of future performance.
Issure Purchases of Equity Securities The following table provides information about our repurchase activity with respect to shares of our common stock for the quarter ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program (1) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - 31, 2022 192,654 $ 10.30 192,654 November 1 - 30, 2022 994,950 $ 9.45 994,950 December 1 - 31, 2022 759,161 $ 9.68 759,161 $ 19,787,024 Total 1,946,765 $ 9.62 1,946,765 (1) On May 12, 2022, we announced that our Board of Directors authorized a program to repurchase outstanding shares of our Class A and Class B common stock as of the date of authorization, not to exceed $20 million (the "Stock Repurchase Program").
Issuer Purchases of Equity Securities The following table provides information about our repurchase activity with respect to shares of our common stock for the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program (1) Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) October 1 - 31, 2023 — $ - - $ 18,936,024 November 1 - 30, 2023 431,500 $ 9.75 431,500 $ 14,727,974 December 1 - 31, 2023 428,100 $ 9.72 428,100 $ 10,566,370 Total 859,600 $ 9.74 859,600 (1) On May 12, 2022, we announced that our Board of Directors authorized a program to repurchase outstanding shares of our Class A and Class B common stock as of the date of authorization, not to exceed $20 million (the "Stock Repurchase Program").
The Stock Repurchase Program does not obligate P10 to acquire any particular amount of common stock and it may be terminated or amended by the Board of Directors at any time.
The Stock Repurchase Program does not obligate P10 to acquire any particular amount of common stock and it may be terminated or amended by the Board of Directors at any time. Recent Sales of Unregistered Securities We did not sell any unregistered equity securities during the year ended December 31, 2023.
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For more information regarding risk factors that could materially and adversely affect us and our ability to continue to pay a comparable cash dividend on a quarterly basis, refer to "Item 1A. Risk Factors" in this Form 10-K.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

83 edited+33 added−67 removed85 unchanged
Biggest changeFor the Year Ended December 31, 2022 2021 2020 (in thousands) Net income $ 29,399 $ 10,767 $ 23,806 Add back (subtract): Depreciation & amortization 28,028 30,703 15,571 Interest expense, net 9,505 37,497 11,720 Income tax expense/(benefit) 6,064 (7,070 ) (26,837 ) Non-recurring expenses 9,587 8,807 9,832 Non-cash stock based compensation 9,587 2,416 714 Acquisition based compensation 9,029 — — Earn out related compensation 5,612 — — Adjusted EBITDA 106,811 83,120 34,806 Less: Cash interest expense (6,784 ) (17,997 ) (9,699 ) Cash income taxes, net of taxes related to acquisitions (2,114 ) (2,308 ) (1,169 ) Adjusted Net Income $ 97,913 $ 62,815 $ 23,938 The 2021 cash paid for interest includes a loss on extinguishment of $4.8 million.
Biggest changeFor the Years Ended December 31, 2023 2022 2021 (in thousands) Net (loss)/income $ (7,772 ) $ 29,399 $ 10,767 Adjustments: Depreciation & amortization 31,472 28,028 30,703 Interest expense, net 21,872 9,505 37,497 Income tax expense (benefit) 4,632 6,064 (7,070 ) Non-recurring expenses 13,874 9,587 8,807 Non-cash stock based compensation 21,519 9,587 2,416 Non-cash stock based compensation - acquisitions 8,674 9,029 — Non-cash stock based compensation - CEO transition 6,331 — — Earn out related compensation 22,992 5,612 — Adjusted EBITDA 123,594 106,811 83,120 Less: Cash interest expense (20,100 ) (6,784 ) (17,997 ) Cash income taxes, net of taxes related to acquisitions (1,539 ) (2,114 ) (2,308 ) Adjusted Net Income $ 101,955 $ 97,913 $ 62,815 Financial Position, Liquidity and Capital Resources Selected Statements of Financial Position As of As of December 31, December 31, 2023 2022 $ Change % Change (in thousands) Cash and cash equivalents (including restricted cash) $ 32,057 $ 29,492 $ 2,565 9% Goodwill and other intangibles 629,233 658,433 (29,200 ) (4)% Total assets 834,074 826,360 7,714 1% Accrued compensation and benefits 45,081 18,900 26,181 139% Debt obligations 289,844 289,224 620 0% Equity $ 425,162 $ 433,883 $ (8,721 ) (2)% There was an increase in cash and cash equivalents from $29.5 million as of December 31, 2022 to $32.1 million as of December 31, 2023 due to operating cash flows largely offset by cash used in financing activities.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount we believe is more likely than not to be realized.
Historical Liquidity and Capital Resources We have continued to support our ongoing operations through the receipt of management and advisory fee revenues. However, to fund our continued growth, we have utilized capital obtained through debt and equity raises. Our ability to continue to raise funds will be critical as we pursue additional business development opportunities and new acquisitions.
Liquidity and Capital Resources We have continued to support our ongoing operations through the receipt of management and advisory fee revenues. However, to fund our continued growth, we have utilized capital obtained through debt and equity raises. Our ability to continue to raise funds will be critical as we pursue additional business development opportunities and new acquisitions.
We believe that the growing number of private markets focused fund managers increases the operational burden on investors and will lead to a greater reliance on highly trusted advisors to help investors navigate the complexity associated with multi- asset class manager selection. 70 • Increasing regulatory requirements and political uncertainty.
We believe that the growing number of private markets focused fund managers increases the operational burden on investors and will lead to a greater reliance on highly trusted advisors to help investors navigate the complexity associated with multi- asset class manager selection. • Increasing regulatory requirements and political uncertainty.
The Company primarily earns fees for advisory services provided to clients where the Company does not have discretion over investment decisions. Management and advisory fees received in advance reflects the 83 amount of fees that have been received prior to the period the fees are earned. These fees are recorded as deferred revenue on the Consolidated Balance Sheets.
The Company primarily earns fees for advisory services provided to clients where the Company does not have discretion over investment decisions. Management and advisory fees received in advance reflects the amount of fees that have been received prior to the period the fees are earned. These fees are recorded as deferred revenue on the Consolidated Balance Sheets.
When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties. See Note 7 of our consolidated financial statements for further information.
When evaluating whether we are the primary beneficiary of a VIE, 78 we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties. See Note 7 of our consolidated financial statements for further information.
Our historical results discussed below, and the way we evaluate our results, may differ significantly from the descriptions of our business and key metrics used elsewhere in this annual report on Form 10-K due to the effects of acquisitions which occurred during the years ended December 31, 2022, 2021, and 2020, but may not have had a material impact on our statements of operations due to the limited period of time which they were included in our consolidated results.
Our historical results discussed below, and the way we evaluate our results, may differ significantly from the descriptions of our business and key metrics used elsewhere in this annual report on Form 10-K due to the effects of acquisitions which occurred during the years ended December 31, 2023, 2022, and 2021, but may not have had a material impact on our statements of operations due to the limited period of time which they were included in our consolidated results.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in "Risk Factors", the "Summary of Risk Factors" and the "Forward-Looking Information." Unless otherwise indicated, references in this Annual Report on Form 10-K to fiscal 2022, fiscal 2021 and fiscal 2020 are to our fiscal years ended December 31, 2022, 2021 and 2020, respectively.
Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this Form 10-K, particularly in "Risk Factors", the "Summary of Risk Factors" and the "Forward-Looking Information." Unless otherwise indicated, references in this Annual Report on Form 10-K to fiscal 2023, fiscal 2022 and fiscal 2021 are to our fiscal years ended December 31, 2023 and 2022, respectively.
We have 18 active investment vehicles. Our VCS solution is differentiated by our innovative strategic partnerships and our vantage point within the venture capital and technology ecosystems, maximizing advantages for our investors. In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.
We have 20 active investment vehicles. Our VCS solution is differentiated by our innovative strategic partnerships and our vantage point within the venture capital and technology ecosystems, maximizing advantages for our investors. In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.
Five Points, P10 Inc., P10 Holdings, and ECG are concluded to be consolidated subsidiaries of P10 under the voting interest model.
Five Points, P10 Holdings, and ECG are concluded to be consolidated subsidiaries of P10 under the voting interest model.
We have 48 active investment vehicles. PES occupies a differentiated position within the private markets ecosystem helping our investors access, perform due diligence, analyze and invest in what we believe are attractive middle and lower-middle market private equity opportunities.
We have 55 active investment vehicles. PES occupies a differentiated position within the private markets ecosystem helping our investors access, perform due diligence, analyze and invest in what we believe are attractive middle and lower-middle market private equity opportunities.
There is additional uncertainty around potential legal, regulatory, and tax changes, which may impact our profitability or impact our ability to operate and grow our business. • Our ability to raise capital to fund acquisitions and strategic growth initiatives.
There is additional uncertainty around potential legal, regulatory, and tax changes, which may impact our profitability or impact our ability to operate and grow our business. • Our ability to raise capital in order to fund acquisitions and strategic growth initiatives.
General, administrative and other includes occupancy, travel and entertainment, technology, insurance and other general costs associated with operating our business. Strategic alliance expense is included in operating expenses.
General, administrative and other includes rent, travel and entertainment, technology, insurance and other general costs associated with operating our business. Strategic alliance expense is included in operating expenses.
We believe the following critical accounting policies could potentially produce materially different results if we were to change the underlying assumptions, estimates, or judgements. See Note 2, “Significant Accounting Policies” of our consolidated financial statements for a summary of our significant accounting policies. Basis of Presentation 82 The accompanying Consolidated Financial Statements are prepared in accordance with GAAP.
We believe the following critical accounting policies could potentially produce materially different results if we were to change the underlying assumptions, estimates, or judgments. See Note 2 of our consolidated financial statements for a summary of our significant accounting policies. Basis of Presentation The accompanying Consolidated Financial Statements are prepared in accordance with GAAP.
The PES investment team, which is comprised of 39 investment professionals with an average of 25+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,900+ investors, 260+ fund managers, 490+ private market funds and 2,000+ portfolio companies.
The PES investment team, which is comprised of 42 investment professionals with an average of 25+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,900+ investors, 300+ fund managers, 750+ private market funds and 2,000+ portfolio companies.
The PCS investment team, which is comprised of 38 investment professionals with an average of 24+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 300+ investors across 12 active investment vehicles and 1,600+ portfolio companies with over $9.7+ billion capital deployed.
The PCS investment team, which is comprised of 39 investment professionals with an average of 24+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 300+ investors across 11 active investment vehicles and 1,600+ portfolio companies with $9.8+ billion capital deployed.
Often, the fees are structured such that they step down, or decrease, over the life of the fund. Our direct investing platform comprises approximately $8.0 billion of our FPAUM as of December 31, 2022. • Secondaries.
Often, the fees are structured such that they step down, or decrease, over the life of the fund. Our direct investing platform comprises approximately $8.3 billion of our FPAUM as of December 31, 2023. • Secondaries.
In order to compute Adjusted EBITDA, we adjust our GAAP net income for the following items: • Expenses that typically do not require us to pay them in cash in the current period (such as depreciation, amortization and stock-based compensation), 78 • The cost of financing our business, • Acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory, as well as bonuses paid to employees directly related to the acquisition; • Registration-related expenses includes professional services associated with our prospectus process incurred during the period, and does not reflect expected regulatory, compliance, and other costs associated with those that were incurred subsequent to our Initial Public Offering, and • The effects of income taxes.
In order to compute Adjusted EBITDA, we adjust our GAAP net (loss)/income for the following items: • Expenses that typically do not require us to pay them in cash in the current period (such as depreciation, amortization and stock-based compensation); • The cost of financing our business; 74 • One-time expenses related to restructuring of the management team including signing bonus, severance, and placement/search fees; • Acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory, as well as bonuses paid to employees directly related to the acquisition; • Registration-related expenses includes professional services associated with our prospectus process incurred during the period, and does not reflect expected regulatory, compliance, and other costs associated with those that were incurred subsequent to our Initial Public Offering, and • The effects of income taxes.
("P10") became the parent company and all of the existing equity of P10 Holdings, which is a wholly owned subsidiary of P10, and its consolidated subsidiaries, including the convertible preferred units of P10 Intermediate were converted into common stock of P10.
In connection with the reorganization, P10, Inc. ("P10") became the parent company and all of the existing equity of P10 Holdings, which is a wholly owned subsidiary of P10, and its consolidated subsidiaries, including the convertible preferred units of P10 Intermediate were converted into common stock of P10.
We also earn revenues through catch-up fees ("catch 71 up fees") on the funds we manage.
We also earn revenues through catch-up fees ("catch 69 up fees") on the funds we manage.
The IIS investment team, which is comprised of 15 investment professionals with an average of 22+ years of experience, has deep and long-standing relationships in the impact market which it has cultivated over the past 20 years, including deploying capital on behalf of over 100 investors. 68 We currently have 32 active investment vehicles.
The IIS investment team, which is comprised of 15 investment professionals with an average of 23+ years of experience, has deep and long-standing relationships in the impact market which it has cultivated over the past 20 years, including deploying capital on behalf of over 110 investors. We currently have 35 active investment vehicles.
(2) In certain vehicles, fees are based on capital deployed, as such increasing FPAUM. (3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis. 77 The following table provides a period-to-period roll-forward of our fee-earning AUM on an actual basis.
(2) In certain vehicles, fees are based on capital deployed, as such increasing FPAUM. (3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis. 73 The following table provides a period-to-period roll-forward of our fee paying assets under management on an actual basis.
Often, the fees are structured such that they step down, or decrease, over the life of the fund. Our primary funds comprise approximately $11.7 billion of our FPAUM as of December 31, 2022. • Direct and Co-Investment Funds.
Often, the fees are structured such that they step down, or decrease, over the life of the fund. Our primary funds comprise approximately $13.5 billion of our FPAUM as of December 31, 2023. • Direct and Co-Investment Funds.
There is also a $125 million accordion feature available in the credit agreement, which we exercised in September 2022. The accordion was not drawn until October 2022, at which point it was divided to $87.5 million of term loan and $37.5 million of revolver. $6.0 million of the revolver was drawn at the time. Both facilities are Term SOFR Loans.
There is also a $125 million accordion feature available in the credit agreement, which we exercised in September 2022. The accordion was not drawn until October 2022, at which point it was divided to $87.5 million of term loan and $37.5 million of revolver.
In accordance with Accounting Standards Codification (ASC) 740, Income Taxes (“ASC 740”), we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.
In accordance with ASC 740, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.
As of December 31, 2022, VCS managed $5.4 billion of FPAUM. • Impact Investing Solutions (IIS). Under IIS, we make equity, tax equity, and debt investments in impact initiatives across North America.
As of December 31, 2023, VCS managed $6.1 billion of FPAUM. • Impact Investing Solutions (IIS). Under IIS, we make equity, tax equity, and debt investments in impact initiatives across North America.
Of the proceeds, $86.8 million was used to paydown the outstanding term loan balance, $12.4 million was used to pay off the RCP Seller Notes, $1.1 million cash settled certain option awards, $1.0 million funded the dividend on P10 Intermediate's preferred stock and $4.5 million was used to pay expenses incurred in connection with the offering. 67 Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock.
Of the proceeds, $86.8 million was used to paydown the outstanding term loan balance, $12.4 million was used to pay off the RCP Seller Notes, $1.1 million cash settled certain option awards, $1.0 million funded the dividend on P10 Intermediate's preferred stock and $4.5 million was used to pay expenses incurred in connection with the offering.
We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database that contains comprehensive information on more than 5,000 investment firms, 9,000 funds, 38,000 individual transactions, 30,000 private companies and 250,000 financial metrics. As of December 31, 2022, PES managed $10.8 billion of FPAUM. • Venture Capital Solutions (VCS).
We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database that contains comprehensive information on more than 5,600 investment firms, 10,200 funds, 47,000 individual transactions, 31,000 private companies and 317,000 financial metrics. As of December 31, 2023, PES managed $12.3 billion of FPAUM. • Venture Capital Solutions (VCS).
Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies. We are further synergistically strengthened by our PES network of fund managers, characterized by more than 520 credit opportunities annually. We currently maintain 50+ active sponsor relationships and have 45+ platform investments. As of December 31, 2022, PCS managed $3.1 billion of FPAUM.
Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies. We are further synergistically strengthened by our PES network of fund managers, characterized by more than 400 credit opportunities annually. We currently maintain 55+ active sponsor relationships and have 80+ platform investments. As of December 31, 2023, PCS managed approximately $2.9 billion of FPAUM.
The acquisition was accounted for as a business combination and WTI is reported as a consolidated subsidiary of P10. During the 2022, the Board approved up to $40.0 million to repurchase stock.
The acquisition was accounted for as a business combination and WTI is reported as a consolidated subsidiary of P10. 65 During 2022, the Board approved a program to repurchase up to $40.0 million of outstanding shares of our Class A and Class B common stock.
The VCS investment team, which is comprised of 15 investment professionals with an average of 22+ years of experience, has deep and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 1,000+ investors, 65+ fund managers, 74 direct investments, 300+ private market funds and 8,000+ portfolio companies.
The VCS investment team, which is comprised of 12 investment professionals with an average of 23+ years of experience, has deep and long-standing investor and fund manager relationships in the venture market which it has cultivated over the past 14+ years, including over 1,800+ investors, 80+ fund managers, 83 direct investments, 350+ private market funds and 12,000+ portfolio companies.
The timing and amount of any repurchases pursuant to the program will depend on various factors including, the market price of its Class A Common Stock, trading volume, ongoing assessment of P10’s working capital needs, general market conditions, and other factors. For the year ended December 31, 2022, $19.8 million has been spent to buy back shares under this program.
The timing and amount of any repurchases pursuant to the program will depend on various factors including, the market price of our Class A Common Stock, trading volume, ongoing assessment of our working capital needs, general market conditions, and other factors. As of December 31, 2023, $28.7 million has been spent to buy back shares under this program.
For the Year Ended For the Year Ended December 31, December 31, 2022 2021 (in millions) (in millions) Balance, Beginning of period $ 17,263 $ 12,706 Add: Acquisitions 1,694 952 Capital raised (1) 2,454 3,384 Capital deployed (2) 940 697 Net Asset Value Change (3) 9 13 Less: Scheduled fee base stepdowns (547 ) (427 ) Expiration of fee period (607 ) (62 ) Balance, End of period $ 21,206 $ 17,263 (1) Represents new commitments from funds that earn fees on a committed capital fee base.
For the year ended December 31, For the year ended December 31, 2023 2022 (in millions) (in millions) Balance, Beginning of Period $ 21,206 $ 17,263 Add: Acquisitions — 1,694 Capital raised (1) 2,818 2,454 Capital deployed (2) 924 940 Net Asset Value Change (3) (121 ) 9 Less: Scheduled fee base stepdowns (601 ) (547 ) Expiration of fee period (967 ) (607 ) Balance, End of period $ 23,259 $ 21,206 (1) Represents new commitments from funds that earn fees on a committed capital fee base.
Trends Affecting Our Business Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American markets in which we operate, as well as changes in global economic conditions, and regulatory or other governmental policies or actions, which can materially affect the values of the funds our platforms manage, as well as our ability to effectively manage investments and attract capital.
Operating Segments We operate our business as a single operating segment, which is how our chief operating decision maker evaluates financial performance and makes decisions regarding the allocation of resources. 67 Trends Affecting Our Business Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American markets in which we operate, as well as changes in global economic conditions, and regulatory or other governmental policies or actions, which can materially affect the values of the funds our platforms manage, as well as our ability to effectively manage investments and attract capital.
Our FPAUM growth and concentration across solutions and vehicles has been relatively consistent over time but can vary in particular periods due to the systematic fundraising cycles of new funds, which typically lasts 12-24 months. We expect to continue to expand our fundraising efforts and grow FPAUM with the launch of new specialized investment vehicles and asset class solutions.
Our FPAUM growth and concentration across solutions and vehicles has been relatively consistent over time but can vary in particular periods due to the systematic fundraising cycles of new funds, which typically lasts 12-24 months.
Principal is contractually repaid at a rate of 1.25% on the term loan quarterly effective March 31, 2023. The Revolving Credit Facility has no contractual principal repayments until maturity, which is December 22, 2025 for both facilities. As of December 31, 2022, the Term Loan with a balance of $125.0 million is incurring interest at a SOFR rate of 2.61%.
Principal is contractually repaid at a rate of 1.25% on the term loan quarterly effective March 31, 2023. The Revolving Credit Facility has no contractual principal repayments until maturity, which is December 22, 2025 for both facilities.
Similarly, the cash income taxes paid during the 2022 and 2021 periods differ significantly from the net income tax benefit, which is primarily comprised of deferred tax expense as described in the results of operations.
Similarly, the cash income taxes paid during the 2022 and 2021 periods differ significantly from the net income tax benefit, which is primarily comprised of deferred tax expense as described in the results of operations. The 2021 cash paid for interest includes a loss on extinguishment of $4.8 million.
For the Year Ended December 31, 2022 2021 2020 REVENUES (in thousands) Management and advisory fees $ 196,546 $ 149,424 $ 66,125 Other revenue 1,814 1,110 1,243 Total revenues 198,360 150,534 67,368 OPERATING EXPENSES Compensation and benefits 94,297 54,755 24,529 Professional fees 12,856 11,508 13,953 General, administrative and other 18,522 9,870 4,710 Contingent consideration expense 1,717 3,472 21 Amortization of intangibles 26,867 30,431 15,466 Strategic alliance expense 678 152 — Total operating expenses 154,937 110,188 58,679 INCOME FROM OPERATIONS 43,423 40,346 8,689 OTHER (EXPENSE)/INCOME Interest expense implied on notes payable to sellers — (825 ) (988 ) Interest expense, net (9,505 ) (21,360 ) (10,732 ) Loss on early extinguishment of debt — (15,312 ) — Other income 1,545 848 — Total other (expense) (7,960 ) (36,649 ) (11,720 ) Net income before income taxes 35,463 3,697 (3,031 ) Income tax (expense)/benefit (6,064 ) 7,070 26,837 NET INCOME $ 29,399 $ 10,767 $ 23,806 Revenues Year Ended December 31, 2022 and December 31, 2021 Our revenue is composed almost entirely of recurring management and advisory fees, with the vast majority of fees earned on committed capital that is typically subject to ten to fifteen year lock up agreements, therefore our average fee rates have remained stable at approximately 1.03% for the year ended December 31, 2022 and 1.00% for the year ended December 31, 2021.
For the year ended December 31, 2023 2022 2021 REVENUES (in thousands) Management and advisory fees $ 238,729 $ 196,546 $ 149,424 Other revenue 3,005 1,814 1,110 Total revenues 241,734 198,360 150,534 OPERATING EXPENSES Compensation and benefits 154,286 94,297 54,755 Professional fees 12,668 12,856 11,508 General, administrative and other 22,584 18,522 9,870 Contingent consideration expense 560 1,717 3,472 Amortization of intangibles 29,221 26,867 30,431 Strategic alliance expense 1,494 678 152 Total operating expenses 220,813 154,937 110,188 INCOME FROM OPERATIONS 20,921 43,423 40,346 OTHER (EXPENSE)/INCOME Interest expense implied on notes payable to sellers — — (825 ) Interest expense, net (21,872 ) (9,505 ) (21,360 ) Loss on early extinguishment of debt — — (15,312 ) Other (expense)/income (2,189 ) 1,545 848 Total other (expense) (24,061 ) (7,960 ) (36,649 ) Net (loss)/income before income taxes (3,140 ) 35,463 3,697 Income tax (expense) (4,632 ) (6,064 ) 7,070 NET (LOSS)/INCOME $ (7,772 ) $ 29,399 $ 10,767 Revenues Years Ended December 31, 2023 and December 31, 2022 Our revenue is composed almost entirely of recurring management and advisory fees, with the vast majority of fees earned on committed capital that is typically subject to ten to fifteen year lock up agreements, therefore our average fee rates have remained stable at approximately 1% for the years ended December 31, 2023 and December 31, 2022.
Other revenues, which represent ancillary elements of our business, increased by $0.7 million or 63% to $1.8 million for the year ended December 31, 2022 as compared to the year ended December 31, 2021 driven primarily by an increase of 73 $0.6 million of interest income and $0.1 million of facility fee revenues, offset by a decrease of $0.2 million to referral fee revenues.
Other revenues, which represent ancillary elements of our business, increased by $1.2 million or 66% to $3.0 million for the year ended December 31, 2023 as compared to the year ended December 31, 2022 driven primarily by an increase of $1.3 million of interest income offset by a decrease of $0.1 million of subscription fee revenues.
Results of Operations For the year ended December 31, 2022, December 31, 2021, and December 31, 2020.
Results of Operations For the years ended December 31, 2023, December 31, 2022, and December 31, 2021.
For the Year Ended For the Year Ended December 31, December 31, 2022 2021 (in millions) (in millions) Balance, Beginning of period $ 19,031 $ 14,567 Add: Acquisitions — — Capital raised (1) 2,454 4,294 Capital deployed (2) 1,056 735 Net Asset Value Change (3) (151 ) (4 ) Less: Scheduled fee base stepdowns (578 ) (499 ) Expiration of fee period (607 ) (62 ) Balance, End of period $ 21,205 $ 19,031 (1) Represents new commitments from funds that earn fees on a committed capital fee base.
For the year ended December 31, For the year ended December 31, 2023 2022 (in millions) (in millions) Balance, Beginning of Period $ 21,206 $ 19,031 Add: Acquisitions — — Capital raised (1) 2,818 2,454 Capital deployed (2) 924 1,056 Net Asset Value Change (3) (121 ) (151 ) Less: Scheduled fee base stepdowns (601 ) (577 ) Expiration of fee period (967 ) (607 ) Balance, End of period $ 23,259 $ 21,206 (1) Represents new commitments from funds that earn fees on a committed capital fee base.
As such, while this does not impact the compensation we pay to our employees, it allows our investment professionals to receive additional benefit and provides economic incentive for them to outperform on behalf of our investors. This structure differs from that of most of our competitors, which we believe better aligns the objectives of our stockholders, investors and investment professionals.
As such, while this does not impact the compensation we pay to our employees, it allows our investment professionals to receive additional benefit and provides an economic incentive for them to outperform on behalf of our investors.
As of December 31, 2022, our private market solutions were comprised of the following: • Private Equity Solutions (PES) . Under PES, we make direct and indirect investments in middle and lower- middle market private equity across North America.
The associated expenses were recorded in compensation and benefits on the Consolidated Statement of Operations. As of December 31, 2023, our private market solutions were comprised of the following: • Private Equity Solutions (PES) . Under PES, we make direct and indirect investments in middle and lower- middle market private equity across North America.
We currently offer secondaries funds across our private equity solutions. Often, the fees are structured such that they step down, or decrease, over the life of the fund.
We currently offer secondaries funds across our private equity solutions. Often, the fees are structured such that they step down, or decrease, over the life of the fund. Our secondary funds comprise approximately $1.5 billion of our FPAUM as of December 31, 2023.
Off Balance Sheet Arrangements We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our consolidated financial statements.
Off Balance Sheet Arrangements We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any activities that expose us to any liability that is not reflected in our consolidated financial statements. 77 Contractual Obligations, Commitments and Contingencies In the ordinary course of business, we enter contractual arrangements that require future cash payments.
For the Year Ended December 31, 2022 2021 2020 OPERATING EXPENSES (in thousands) Compensation and benefits $ 94,297 $ 54,755 $ 24,529 Professional fees 12,856 11,508 13,953 General, administrative, and other 18,522 9,870 4,710 Contingent consideration expense 1,717 3,472 21 Amortization of intangibles 26,867 30,431 15,466 Strategic alliance expense 678 152 — Total operating expenses $ 154,937 $ 110,188 $ 58,679 Operating Expenses Year Ended December 31, 2022 and December 31, 2021 Total operating expenses increased by $44.7 million, or 41%, to $154.9 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
For the year ended December 31, 2023 2022 2021 OPERATING EXPENSES (in thousands) Compensation and benefits $ 154,286 $ 94,297 $ 54,755 Professional fees 12,668 12,856 11,508 General, administrative, and other 22,584 18,522 9,870 Contingent consideration expense 560 1,717 3,472 Amortization of intangibles 29,221 26,867 30,431 Strategic alliance expense 1,494 678 152 Total operating expenses $ 220,813 $ 154,937 $ 110,188 Operating Expenses Years Ended December 31, 2023 and December 31, 2022 Total operating expenses increased by $65.9 million, or 43%, to $220.8 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The facility includes the option to exercise a $125.0 million accordion feature. The accordion feature was exercised in order to complete the acquisition of Western Technology Investment LLC ("WTI") on October 13, 2022. The outstanding balance as of December 31, 2022 was $293.4 million.
The variable interest rate is 210 basis points over the Secured Overnight Financing Rate ("SOFR"). The facility includes the option to exercise a $125.0 million accordion feature. The accordion feature was exercised in order to complete the acquisition of Western Technology Investment LLC ("WTI") on October 13, 2022. The outstanding balance as of December 31, 2023 was $292.6 million.
This expense is driven by a Strategic Alliance Agreement ("SAA") that Bonaccord entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings and net distributable carried interest at the time of acquisition.
This expense is driven by the Strategic Alliance Agreement that Bonaccord entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings at the time of acquisition. Other (Expense)/Income Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs.
Cash Flows Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021 and December 31, 2020 The following table reflects our cash flows for the twelve months ended December 31, 2022, 2021 and 2020: For the Year Ended December 31, 2022 2021 2020 (in thousands) Net cash provided by operating activities $ 61,675 $ 49,019 $ 10,669 Net cash used in investing activities (98,590 ) (47,400 ) (214,193 ) Net cash provided by (used in) financing activities 22,925 29,080 196,841 Increase (decrease) in cash and cash equivalents and restricted cash $ (13,990 ) $ 30,699 $ (6,683 ) Operating Activities Year Ended December 31, 2022 and December 31, 2021 80 Cash from operating activities increased $12.6 million or 26%, to $61.7 million for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Cash Flows Year Ended December 31, 2023 Compared to the Years Ended December 31, 2022 and December 31, 2021 The following table reflects our cash flows for the years ended December 31, 2023, 2022 and 2021: For the Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 47,685 $ 61,675 $ 49,019 Net cash (used in) investing activities (2,250 ) (98,590 ) (47,400 ) Net cash (used in)/ provided by financing activities (42,870 ) 22,925 29,080 Increase (decrease) in cash, cash equivalents and restricted cash $ 2,565 $ (13,990 ) $ 30,699 76 Operating Activities Years Ended December 31, 2023 and December 31, 2022 Cash from operating activities decreased $14.0 million or 23%, to $47.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote.
Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock. Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote.
Professional fees primarily consist of legal, advisory, accounting and tax fees which may include services related to our strategic development opportunities such as due diligence performed in connection with potential acquisitions.
This structure differs from that of most of our competitors, which we believe better aligns the objectives of our stockholders, investors and investment professionals. Professional fees primarily consist of legal, advisory, accounting and tax fees which may include services related to our strategic development opportunities such as due diligence performed in connection with potential acquisitions.
Financing Activities Year Ended December 31, 2022 and December 31, 2021 We recorded a net $22.9 million for the year ended December 31, 2022 of cash provided by financing activities, as compared to cash provided by financing activities of $29.1 million for the twelve months ended December 31, 2021 due to the following factors: (1) borrowings on the Term Loan and Revolving Credit Facility of $75.6 million net of $41.0 million of repayments and associated debt issuance costs of $1.9 million, (2) repurchases of common stock of $21.9 million, (3) cash settlement of stock options of $12.5 million, (4) dividends paid of $10.5 million and (5) contingent consideration payments of $7.4 million.
Financing Activities Years Ended December 31, 2023 and December 31, 2022 We used a net $42.9 million in cash for financing activities for the year ended December 31, 2023, as compared to cash provided by financing activities of $22.9 million for the year ended December 31, 2022 due to the following factors: (1) net repayments of $0.8 million in 2023 as compared to net borrowings of $77.5 million in 2022 on the Term Loan and Revolver Facility, (2) repurchases of common stock of $18.6 million in 2023 as compared to $22.4 million in 2022, (3) cash settlement of stock options of $12.5 million in 2022, and (4) dividends paid of $14.8 million in 2023 as compared to $10.5 million in 2022.
On October 13, 2022, we completed the acquisition of WTI that again further expanded on solutions available to our investors by entering into the venture debt space. The effect of this acquisition is reflected in our Consolidated Balance Sheet at December 31, 2022 and Consolidated Statement of Operations from October 13, 2022 to December 31, 2022.
On October 13, 2022, we completed the acquisition of WTI that again further expanded on solutions available to our investors by entering into the venture debt space.
We use Adjusted Net Income, or ANI, as well as Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to provide additional measures of profitability.
Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure. We use Adjusted Net Income, or ANI, as well as Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to provide additional measures of profitability.
Non-GAAP Financial Measures Below is a description of our unaudited non-GAAP financial measures. These are not measures of financial performance under GAAP and should not be construed as a substitute for the most directly comparable GAAP measures, which are reconciled below.
These are not measures of financial performance under GAAP and should not be construed as a substitute for the most directly comparable GAAP measures, which are reconciled below. These measures have limitations as analytical tools, and when assessing our operating performance, you should not consider these measures in isolation or as a substitute for GAAP measures.
The Term Loan associated with the accordion exercise with a balance of $87.5 million is incurring interest at a SOFR rate of 4.45%. As of December 31, 2022, the Revolver Facility is split into seven tranches. The total principal outstanding is $80.9 million and the average SOFR rate amongst the tranches is 4.32%.
As of December 31, 2023, the Term Loan with a balance of $201.9 million is incurring interest at a weighted average SOFR rate of 7.39%. As of December 31, 2023, the Revolver Facility is split into thirteen tranches. The total principal outstanding is $90.7 million and the weighted average SOFR rate amongst the tranches is 7.56%.
FPAUM as of December 31, 2021 FPAUM increased $3.9 billion, or 29.3%, to $17.3 billion on a pro forma basis and $4.6 billion or 35.9% to $17.3 billion on an actual basis for the year ended December 31, 2021, due primarily to an increase in capital raised from our private equity and venture capital solutions.
FPAUM as of December 31, 2023 FPAUM increased by $2.1 billion, or 9.7%, to $23.3 billion on a pro forma basis and $2.1 billion or 9.7% to $23.3 billion on an actual basis for the year ended December 31, 2023, due primarily to an increase in capital raised and capital deployed from our private equity and venture capital solutions, which was offset by a decline of fees related to scheduled fee stepdowns and expiration of fees.
Income Tax Benefit/(Expense) 72 Income tax benefit/(expense) is comprised of current and deferred tax benefit/(expense). Current income tax benefit/(expense) represents our estimated taxes to be paid or refunded for the current period.
Other (expense)/income includes the accrued expenses related to litigation and regulatory activity as discussed in Note 14. 70 Income Tax Benefit/(Expense) Income tax benefit/(expense) is comprised of current and deferred tax benefit/(expense). Current income tax benefit/(expense) represents our estimated taxes to be paid or refunded for the current period.
Under PCS, we primarily make debt investments across North America, targeting lower middle market companies owned by leading financial sponsors and also offer certain private equity solutions. PCS also provides loans to mid-life, growth equity, venture and other funds backed by the unrealized investments at the fund level and provide financing for companies that would otherwise require equity.
PCS also provides loans to mid-life, growth equity, venture and other funds backed by the unrealized investments at the fund level and provide financing for companies that would otherwise require equity.
The complex regulatory and tax environment could restrict our operations and subject us to increased compliance costs and administrative burdens, as well as restrictions on our business activities.
The complex regulatory and tax environment could restrict our operations and subject us to increased compliance costs and administrative burdens, as well as restrictions on our business activities. The SEC recently adopted new rules and rule amendments to enhance the regulation of private fund advisers and update the existing compliance rule that applies to all investment advisers.
This increase was primarily due to increases in compensation and benefits as well as general, administrative, and other expenses primarily due to the acquisitions of Hark and Bonaccord on September 30, 2021 and WTI on October 13, 2022 as well as increased operating expenses related to organizational growth and public company expenses.
This increase was primarily due to increases in compensation and benefits, as well as amortization expense, and general, administrative, and other expenses primarily due to the transition of the Chief Executive Officer role in October 2023 and a full year of operation with WTI, which was acquired on October 13, 2022 as well as increased operating expenses related to organizational growth.
The Company recognizes an accrued contingent liability and contingent payments to customers in our Consolidated Balance Sheets for an agreement between ECG and a third party.
The Company recognizes an accrued contingent liability and contingent payments to customers in our Consolidated Balance Sheets for agreements between ECG and third parties. The agreements require ECG to share in certain revenues earned with the third party and also includes an option for the third party to sell back the revenue share to ECG at a set multiple.
Year Ended December 31, 2021 and December 31, 2020 Income tax benefit decreased by $19.8 million to $7.1 million for the year ended December 31, 2021 compared to a benefit of $26.8 million for the year ended December 31, 2020.
Income Tax Benefit/(Expense) Years Ended December 31, 2023 and December 31, 2022 Income tax expense decreased by $1.4 million to an expense of $4.6 million for the year ended December 31, 2023 compared to an expense of $6.1 million for the year ended December 31, 2022.
The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of December 31, 2022: Total 2023 2024 2025 2026 2027 Thereafter (in thousands) Operating lease obligations (1) $ 21,581 $ 3,003 $ 3,881 $ 2,741 $ 2,417 $ 2,338 $ 7,201 Debt obligations (2) 293,400 10,625 10,625 272,150 — — — Total $ 314,981 $ 13,628 $ 14,506 $ 274,891 $ 2,417 $ 2,338 $ 7,201 1) We lease office space under agreements that expire periodically through 2032.
The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of December 31, 2023: Total 2024 2025 2026 2027 2028 Thereafter (in thousands) Operating lease obligations (1) $ 23,471 $ 4,012 $ 3,284 $ 2,993 $ 2,889 $ 2,586 $ 7,707 Debt obligations (2) 292,575 10,625 281,950 — — — — Total $ 316,046 $ 14,637 $ 285,234 $ 2,993 $ 2,889 $ 2,586 $ 7,707 1) We lease office space under agreements that expire periodically through 2032.
Investing activities Year Ended December 31, 2022 and December 31, 2021 The cash used in investing activities increased by $51.2 million, or 108% to $98.6 million, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Investing activities Years Ended December 31, 2023 and December 31, 2022 The cash used in investing activities decreased by $96.3 million, or 98% to $2.3 million, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This decrease in cash used in investing activities was due almost entirely to the 2022 acquisition of WTI.
The tranches are all incurring interest at a set rate for three month periods and are subsequently reset at the current SOFR rate. The Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio of less than or equal to 3.50.
The Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio of less than or equal to 3.50. As of December 31, 2023, P10 was in compliance with its financial covenants required under the facility.
Operating Expenses Compensation and benefits are our largest expense and consists of salaries, bonuses, stock-based compensation, employee benefits and employer-related payroll taxes.
The amortization is reported in management and advisory fees on the Consolidated Statements of Operations. Operating Expenses Compensation and benefits are our largest expense and consists of salaries, bonuses, severance, stock-based compensation, earnout and bonus payments related to the acquisition of WTI, employee benefits and employer-related payroll taxes.
Contingent consideration expense decreased $1.8 million, to $1.7 million, for the twelve months ended December 31, 2022 as compared to the twelve months ended December 31, 2021. This was driven by quarterly revaluations of the contingent consideration from the acquisitions of Hark and Bonaccord.
Contingent consideration expense decreased $1.2 million, to $0.6 million, for the year ended December 31, 2023 as compared to the year ended December 31, 2022. This was driven by remeasurements of the fair value of contingent consideration from the acquisitions of Hark and Bonaccord. More expense was recognized during 2022 due to increased probability of achieving performance hurdles.
As investors entrust us with additional capital, our relationships with our fund managers are strengthened, which drives additional investment opportunities, sources more data, enables portfolio optimization and enhances returns, and in turn attracts new investors. During the year ended December 31, 2020, we completed several acquisitions to expand the private market solutions available to our investors.
As investors entrust us with additional capital, our relationships with our fund managers are strengthened, which drives additional investment opportunities, sources more data, enables portfolio optimization and enhances returns, and in turn attracts new investors. On October 20, 2021, P10 Holdings, in connection with its Initial Public Offering ("IPO"), completed a reorganization and restructure.
The effect of these acquisitions is reflected in our Consolidated Balance Sheet at December 31, 2021 and 2022 and the Consolidated Statement of Operations beginning with the period from September 30, 2021 to December 31, 2021 and forward. These acquisitions were accounted for as business combinations and are reported as consolidated subsidiaries of P10.
The effect of this acquisition is reflected in our Consolidated Balance Sheets at December 31, 2022 and Consolidated Statements of Operations for the year ended December 31, 2022 beginning with the period from October 13, 2022 to December 31, 2022 and forward.
Compensation and benefits expense increased by $39.5 million, or 72%, to $94.3 million, for the year ended December 31, 2022 compared to the year ended December 31, 2021. Stock compensation accounts for $18.6 million of the increase.
Compensation and benefits expense increased by $60.0 million, or 64%, to $154.3 million, for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase is due to a number of factors. The acquisition of WTI contributed $9.6 million to the increase in compensation expense.
The decrease was primarily due to the increase of deferred tax assets during 2021, which is largely driven by the prior year's large release in valuation allowance. 76 FPAUM The following table provides a period-to-period roll-forward of our fee earning AUM on a pro forma basis as if Hark, Bonaccord, and WTI were acquired on January 1, 2021.
The decrease in income tax expense from 2022 to 2023 was due to a reduction in overall taxable income in 2023. FPAUM The following table provides a period-to-period roll-forward of our fee paying assets under management on a pro forma basis as if WTI was acquired on January 1, 2022.
Amortization of intangibles increased by $15.0 million, or 97%, to $30.4 million, for the year ended December 31, 2021 as compared to the year ended December 31, 2020.
Additionally, Hark's earnout was fully settled during the first half of 2023. Amortization of intangibles increased by $2.4 million, or 9%, to $29.2 million, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
For the year ended December 31, 2022 compared to the year ended December 31, 2021, revenues increased $47.8 million or 32% due to higher management fees primarily from the impact of organic growth in 2022.
For the year ended December 31, 2023 compared to the year ended December 31, 2022, revenues increased $43.4 million or 22% due to higher management fees from the impact of inorganic growth increasing revenue by $20.3 million driven by the acquisition of WTI and $24.4 million of organic growth across Bonaccord, Hark, RCP, and TrueBridge.
The acquistion of WTI resulted in net cash payments of $96.5 million whereas the acquisitions of Hark and Bonaccord resulted in net cash payments of $46.9 million during the third quarter of 2021.
The acquisition of WTI resulted in net cash payments of $96.5 million.
The options to repurchase the revenue share are not exercisable until July of 2025. The Company believes it is probable that the third party will exercise its option to sell back the revenue share and has recognized a liability on the Consolidated Balance Sheets.
The Company believes it is probable that the third parties will exercise their options to sell back the revenue share and has recognized liabilities on the Consolidated Balance Sheets. The Company has also recognized contingent payments to customers asset associated with the agreements and will amortize the assets against revenue over the length of the management contracts.
Year Ended December 31, 2021 and December 31, 2020 Other expenses increased by $24.9 million, or 213%, to $36.6 million for the year ended December 31, 2021 compared to the year ended December 31, 2020. This increase was primarily driven by the early extinguishment of the credit and guaranty facility on December 22, 2021.
Other (Expense)/Income Years Ended December 31, 2023 and December 31, 2022 Other expenses increased by $16.1 million, or 202%, to $24.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. This increase was driven by a rise in interest expense of $12.4 million.
The components of this net increase primarily consist of a $18.6 million increase in net income as well as of the following changes in operating assets and liabilities: • An increase of $14.4 million in due from related parties primarily driven by the Advisory Agreement at Enhanced; • An increase in cash used for accounts payable for the year of $10.2 million, of which $8.6 million related to the distribution of a payable related to the acquisition of WTI; • A decrease in income tax benefit of $13.1 million primarily driven by a decrease of deferred tax assets.
The components of this net increase primarily consisted of the following changes in revenue and operating assets and liabilities: • An increase in revenues of $43.4 million associated with the acquisition of WTI as well as additional fund closings which is offset by an increase of $21.2 million in the current year of due from related parties that has not been received as of December 31, 2023 related to the Advisory Agreement at Enhanced compared to the year ended December 31, 2022; and • An increase of $9.7 million in prepaid expenses and other assets primarily driven by inventory assets related to Enhanced tax credit projects; and • An increase in cash used for certain deposits for investments held for customers from December 31, 2022 of $7.9 million; and • An increase in cash used for interest payments of $13.3 million.
In September 2022, the Company exercised the accordion feature of the Credit Agreement. There were no draws made until the fourth quarter of 2022. The Company incurred $1.4 million of up front fees during the exercise which are reflected as debt obligations on the Consolidated Balance Sheets.
The Company incurred $1.4 million of up front fees during the exercise which are reflected as debt obligations on the Consolidated Balance Sheets. Both facilities are Term SOFR Loans. The Company can elect one or three months for the Revolver Facility and three or six months for the Term Loan.
The agreement requires ECG to share in certain revenues earned with the third party and also includes an option for the third party to sell back the revenue share to ECG at a set multiple. Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple.
Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple. The options to repurchase the revenue share are not exercisable until a certain period of time has lapsed per the agreements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFair value of the financial assets and liabilities of our specialized investment vehicles may fluctuate in response to changes in the value of underlying assets, and interest rates. Interest Rate Risk As of December 31, 2022, we had $293.4 million in outstanding principal under our Term Loan and Revolving Credit Facility.
Biggest changeFair value of the financial assets and liabilities of our specialized investment vehicles may fluctuate in response to changes in the value of underlying assets, and interest rates. Interest Rate Risk As of December 31, 2023, we had $201.9 million in outstanding principal in Term debt under our Term Loan and Revolving Credit Facility.
The annual interest rate on the Term Loan is based on SOFR, subject to a floor of 0.10%, plus 2.00%. On December 31, 2022, the interest rate on these borrowings was 2.1% + SOFR.
The annual interest rate on the Term Loan is based on SOFR, subject to a floor of 0.10%, plus 2.00%. On December 31, 2023, the interest rate on these borrowings was 2.1% + SOFR.
We estimate that a 100-basis point increase in the interest rate would result in an approximately $2.1 million increase in interest expense related to the loan over the next 12 months.
We estimate that a 100-basis point increase in the interest rate would result in an approximately $2.0 million increase in interest expense related to the loan over the next 12 months.
We generally endeavor to minimize our risk of exposure by 84 limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. 85
We generally endeavor to minimize our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets. 80

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