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Item 1A. Risk Factors

2022-02-24 compared with 2021-02-25 · 64 added, 75 removed, 389 unchanged (26% of the section changed)

Risks Related to Our Business

Difficult market conditions may adversely affect our business in many ways, including reducing the volume of the transactions involving our Investment Banking business and reducing the value of the assets we manage in our Investment Management businesses, which, in each case, may materially reduce our revenue or income.

Difficult market conditions may adversely affect our business in many ways, including reducing the volume of the transactions involving our Investment Banking business, which may materially reduce our revenue or income.

As a financial services firm, our businesses are materially affected by conditions in the financial markets and economic conditions in the U.S.

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Unfavorable market or economic conditions, as well as volatility in the financial markets can materially reduce the demand for our services and present new challenges.

For example, the COVID-19 pandemic had a significant impact on market and economic conditions throughout 2020 which, at different times throughout the year, had both positive and negative impacts on the results of operations for each of our business units.

The course of the COVID-19 pandemic into 2021, including the timing and acceptance of vaccinations, or other similar unrelated pandemics, epidemics or global events leading to difficult market or economic conditions, may cause the number of global and domestic M&A transactions to significantly decrease, and we cannot be certain that any associated increases in activity in our restructuring, debt advisory, capital markets advisory businesses and Equities business will be sufficient to offset weakness in M&A activity.

The associated decline in revenue could have a significant adverse impact on our results of operations and cash flows, and our ability to fund operations, make capital investments, maintain compliance with our debt covenants and fund shareholder dividends and other capital commitments or stock repurchases could be adversely affected.

For example, the COVID-19 pandemic has had a significant impact on market and economic conditions at various times, which has had both positive and negative impacts on the results of operations for each of our business units.

The course of the COVID-19 pandemic into 2022, or other similar unrelated pandemics, epidemics or global events leading to difficult market or economic conditions, may cause the number of global and domestic M&A transactions to significantly decrease, and we cannot be certain that any associated increases in activity in our restructuring, debt advisory, capital markets advisory businesses and Equities business will be sufficient to offset weakness in M&A activity.

The associated decline in revenue could have a significant adverse impact on our results of operations and cash flows, and our ability to fund operations, make capital investments, maintain

compliance with our debt covenants and fund shareholder dividends and other capital commitments or stock repurchases could be adversely affected.

Revenue generated by our Investment Banking business is related to the volume and value of the transactions in which we are involved.

The majority of our bankers are focused on covering clients in the context of providing M&A services and those activities generate a substantial portion of our revenues.

During periods of unfavorable market and economic conditions, our

operating results may be adversely affected by a decrease in the volume and value of M&A transactions and increasing price competition among financial services companies seeking advisory engagements.

During periods of unfavorable market and economic conditions, our operating results may be adversely affected by a decrease in the volume and value of M&A transactions and increasing price competition among financial services companies seeking advisory engagements.

Our clients engaging in M&A transactions often rely on access to the credit and/or capital markets to finance their transactions.

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We also seek to generate greater business from our restructuring and capital advisory services and our Evercore ISI business.

However, we cannot be certain that we will be able to offset lower revenues in their entirety from a decline in our M&A activities with revenues generated from restructuring and capital advisory services or from our Evercore ISI business.

However, we cannot be certain that we will be able to offset lower revenues from a decline in our M&A activities with increased revenues generated from restructuring and capital advisory services or from our Evercore ISI business.

Our restructuring services, which provide financial advice and investment banking services to companies in financial transition, as well as to creditors, shareholders and potential acquirers, our capital advisory services, which provide corporations and financial sponsors with advice relating to a broad array of financing issues, and our Evercore ISI business, which provides equity research and agency securities trading for institutional investors, are intentionally smaller than our M&A advisory business and we expect that they will remain that way for the foreseeable future.

Unfavorable market conditions may also lead to a reduction in revenues from our underwriting and placement agent activities, and to the extent that adverse economic market conditions affect M&A and capital raising activities generally, the demand for the research and other services provided by our Evercore ISI business could correspondingly decline.

During a market or general economic downturn, our Wealth Management business would also be expected to generate lower revenue as, among other things, the management fees we receive are typically based on the market value of the securities that comprise the assets we manage, and our clients or prospective clients may withdraw funds from, or hesitate to allocate assets to, these businesses in favor of investments they perceive as offering greater opportunity or lower risk.

We depend on our senior professionals, including our executive officers, and the loss of their services could have a material adverse effect on us.

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Our growth strategy is based, in part, on our ability to attract and retain highly skilled and profitable senior professionals across all of our businesses.

Due to competition from other firms, we may face difficulties in recruiting and retaining professionals of a caliber consistent with our business strategy.

Due to competition from other firms, we may face difficulties in or increases in the cost of recruiting and retaining professionals of a caliber consistent with our business strategy.

In particular, many of our competitors may be able to offer more attractive compensation packages or broader career opportunities.

Additionally, it may take more than one year for us to determine whether new advisory professionals will be profitable or effective, during which time we may incur significant expenses and expend significant time and resources on training, integration and business development aimed at developing this new talent.

Further, we may not be able to retain our professionals, which could result in increased recruiting expenses or our recruiting professionals at higher compensation levels.

Further, we may not be able to retain our professionals, which could result in increased recruiting

expenses or our recruiting professionals at higher compensation levels.

Failure to retain other key professionals, including maintaining adequate compensation levels, may materially adversely affect our business.

Certain aspects of our cost structure are largely fixed, and we may incur costs associated with new or expanded lines of business prior to these lines of business generating significant revenue.

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We cannot provide assurance that our financial controls, the level of knowledge of our personnel, our operational abilities, our legal and compliance controls and our other corporate support systems will be adequate to manage our expanding operations effectively.

Any failure to do so could adversely affect our ability to pursue our growth strategy, generate revenue and control expenses.

Any failure to do so could adversely affect our ability to pursue our growth strategy, generate revenue and control expenses, and could result in regulatory fines or sanctions.

Our revenue and profits are highly volatile, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of our Class A common stock to decline.

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It may be difficult for us to achieve steady earnings growth on a quarterly basis, which could, in turn, lead to large adverse movements in the price of our Class A common stock or increased volatility in our stock price generally.

We earn a majority of our revenue from advisory engagements, and, in many cases, we are not paid until the successful consummation of the transactions.

We earn a majority of our revenue from advisory engagements, and, in most cases, we are not paid until the successful consummation of the transactions.

As a result, our Investment Banking revenue is highly dependent on market conditions and the decisions and actions of our clients, interested third parties and governmental authorities.

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The loss of even one such mandate may have a significant effect on our near-term financial results.

In Wealth Management, our revenue includes management fees from assets we manage.

These revenues are dependent upon the amount of AUM, which can decline as a result of market depreciation, withdrawals or otherwise, as well as the performance of the assets.

The timing of flows, contributions and withdrawals are often out of our control, can occur on short notice, and may be inconsistent from quarter to quarter.

See "— The amount and mix of our AUM are subject to significant fluctuations ." Even in the absence of a market downturn, below-market investment performance by our funds and portfolio managers could reduce AUM and asset management revenues.

Our failure to deal appropriately with actual, potential or perceived conflicts of interest could damage our reputation and materially adversely affect our business.

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Additionally, client-imposed conflicts requirements could place additional limitations on us, for example, by limiting our ability to accept Investment Banking advisory engagements.

Policies, controls and procedures that we may be required to implement to address additional regulatory requirements, including as a result of additional foreign jurisdictions in which we operate, Evercore ISI's business and our underwriting activities, or to mitigate actual or potential conflicts of interest, may result in increased costs, including for additional personnel and infrastructure and information technology improvements, as well as limit our activities and reduce the positive synergies that we seek to cultivate across our businesses.

Policies, controls and procedures that we may be required to implement to address additional regulatory requirements, including as a result of additional foreign jurisdictions in which we operate, Evercore ISI's business and our underwriting activities, or to mitigate actual or potential conflicts of interest, may result in increased costs, including for additional personnel and infrastructure and information technology improvements, as well as limit our activities and reduce the benefit of positive synergies that we seek to cultivate across our businesses.

For example, due to our equity research activities through Evercore ISI, we face potential conflicts of interest, including situations where our publication of research may conflict with the interests of an advisory client, or allegations that research objectivity is being inappropriately impacted by advisory client considerations.

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regulators and enforcement agencies, including the U.S.

Department of Justice and the SEC, continue to devote greater resources to the enforcement of the Foreign Corrupt Practices Act, anti-money laundering laws and anti-corruption laws, and the United Kingdom has significantly expanded the reach of its anti-bribery laws.

Department of Justice and the SEC, continue to devote greater resources to the enforcement of the Foreign Corrupt Practices Act, anti-money laundering laws and anti-corruption laws, and the United Kingdom and other jurisdictions have significantly expanded the reach of its anti-bribery laws.

While we have developed and implemented policies and procedures designed to ensure strict compliance with anti-bribery, anti-money laundering, anti-corruption and other laws, such policies and procedures may not be effective in all instances to prevent violations.

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The financial services industry faces substantial litigation and regulatory risks, and we may face damage to our professional reputation and legal liability.

If there are allegations of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, whether or not valid, may harm our reputation.

Allegations against us of improper conduct by private litigants or regulators, whether the ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, whether or not valid, may harm our reputation.

Moreover, our role as advisor to our clients on important mergers and acquisitions or restructuring transactions often involves complex analysis and the exercise of professional judgment, including, if appropriate, rendering fairness opinions in connection with mergers and other transactions.

Particularly in highly volatile markets, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against M&A financial advisors can be significant.

Particularly in highly volatile markets, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against M&A financial advisors and underwriters can be significant.

Our business is also subject to regulation in the countries in which it operates.

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Regulatory changes make it harder for our clients to estimate future potential losses that may be incurred.

Our M&A advisory activities may subject us to the risk of significant legal liability to our clients and third parties, including our clients' stockholders, under securities or other laws for materially false or misleading statements made in connection with securities and other transactions and potential liability for the fairness opinions and other advice

provided to participants in corporate transactions.

In addition, a portion of our advisory fees are obtained from restructuring clients, and often these clients do not have sufficient resources to indemnify us for costs and expenses associated with third-party subpoenas and direct claims, to the extent such claims are not barred as part of the reorganization process.

Our M&A advisory and underwriting activities may subject us to the risk of significant legal liability to our clients and third parties, including our clients' stockholders, under securities or other laws for materially false or misleading statements made in connection with securities and other transactions and potential liability for the fairness opinions and other advice provided to participants in corporate transactions.

reorganization process.

Our engagements typically include broad indemnities from our clients and provisions designed to limit our exposure to legal claims relating to our services, but these provisions may not protect us or may not be adhered to in all cases.

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Our reputation could be impacted by events that may be difficult or impossible to control, and costly or impossible to remediate.

For example, alleged or actual failures by us or our employees to comply with applicable laws, rules or regulations, errors in our public reports, perceptions of our environmental, social and governance practices or business selection, or the public announcement and potential publicity surrounding any of these events, even if inaccurate, satisfactorily addressed, or if no violation or wrongdoing actually occurred, could adversely impact our reputation, our relationships with clients, and our ability to negotiate joint ventures and strategic alliances, any of which could have an adverse effect on our financial condition and results of operations.

For example, alleged or actual failures by us or our employees to provide satisfactory services or to comply with applicable laws, rules or regulations, errors in our public reports, perceptions of our environmental, social and governance practices or business selection, or the public announcement and potential publicity surrounding any of these events, even if inaccurate, satisfactorily addressed, or if no violation or wrongdoing actually occurred, could adversely impact our reputation, our relationships with clients, and our ability to negotiate joint ventures and strategic alliances, any of which could have an adverse effect on our financial condition and results of operations.

Extensive and evolving regulation of our businesses exposes us to the potential for significant penalties and fines due to compliance failures, increases our costs and limits our ability to engage in certain activities.

As a participant in the financial services industry, we are subject to extensive and evolving regulation by governmental and self-regulatory organizations in jurisdictions around the world, as described further under "Business - Regulation" above.

"Business – Regulation" above.

Our ability to conduct business and our operating results, including compliance costs, may be adversely affected as a result of any new requirements imposed by the SEC, FINRA, or other U.S.

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In addition, adverse regulatory scrutiny of any of our strategic partners could have a material adverse effect on our business and reputation.

Furthermore, following the U.K.’s exit from the EU (as described below), the U.K.

on-shored MiFID regime, which broadly continued the requirements under the previous EU directive and regulation, continues to have significant and wide-ranging impacts on U.K.

and EU securities and derivatives markets as a result of enhanced investor protection and organizational requirements, including, among other things, (i) rules regarding the ability of portfolio management firms to receive and pay for investment research relating to all asset classes, (ii) enhanced regulation of algorithmic trading, (iii) the

movement of trading in certain shares and derivatives onto regulated execution venues, (iv) the extension of pre- and post-trade transparency requirements to wider categories of financial instruments, (v) restriction on the use of so-called dark pool trading, (vi) the creation of a new type of trading venue called the Organized Trading Facility for non-equity financial instruments, (vii) commodity derivative position limits and reporting requirements, and (viii) the move away from vertical silos in execution, clearing and settlement.

The U.K.'s exit from the European Union could adversely impact our business and operations.

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and the EU entered into the TCA on December 24, 2020, which was accompanied by a non-binding Joint Declaration committing the U.K.

and the EU to cooperate on matters of financial regulation, which is intended to be facilitated by a Memorandum of Understanding due to be agreed by March 2021.

However, the TCA does not presently make provision for financial services firms in the U.K.

to access the EU single market.

and the EU to cooperate on matters of financial regulation, which was intended to be facilitated by a Memorandum of Understanding.

"Business" for more information.

and the EU are unable to enter into a Memorandum of Understanding, or if the Memorandum of Understanding does not reinstate passporting rights to Evercore U.K.

and Evercore ISI U.K., our U.K.

entities would continue to be unable to conduct regulated activities on a cross-border and off-shore basis into all EU countries without obtaining regulatory approval outside of the U.K..

We have taken certain actions to prepare for this outcome, including obtaining a license from BaFin for Evercore Germany, through which regulated activities can be conducted in Germany and in other EU and EEA jurisdictions on a cross-border basis, subject to certain exceptions and in compliance with applicable legal requirements.

On the basis that the Memorandum of Understanding has not been finalized and that passporting rights are unlikely to be reinstated, Evercore U.K.

and Evercore ISI U.K.

will continue to be unable to conduct regulated activities on a cross-border and off-shore basis into all

EU countries without obtaining regulatory approval outside of the U.K.

We have taken certain actions that prepared us for this outcome, including obtaining a license from BaFin for Evercore Germany, through which regulated activities can be conducted in Germany and in other EU and EEA jurisdictions on a cross-border basis, subject to certain exceptions and in compliance with applicable legal requirements.

In addition, activities performed by Evercore U.K.

and Evercore ISI U.K.

which are not regulated activities may still be conducted within the EU and the EEA directly.

which are not regulated activities may still be conducted within the EU and the EEA directly, subject to local law restrictions.

However, the inability of Evercore U.K.

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Our business is subject to various cybersecurity risks.

We face various operational risks related to our businesses on a day-to-day basis.

We face various cybersecurity risks related to our businesses on a day-to-day basis.

We rely heavily on financial, accounting, communication and other data processing systems to securely process, transmit, and store sensitive and confidential client information, and communicate among our locations around the world and with our staff, clients, partners, and vendors.

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We expect to incur significant costs in maintaining and enhancing appropriate protections to keep pace with increasingly sophisticated methods of attack.

In addition to the implementation of data security measures, we require our employees to maintain the confidentiality of the proprietary

information we hold.

In addition to the implementation of data security measures, we require our employees to maintain the confidentiality of the proprietary information we hold.

If an employee's failure to follow proper data security procedures results in the improper release of confidential information, or our systems are otherwise compromised, do not operate properly or are disabled, we could suffer a disruption of our business, financial losses, liability to clients, regulatory sanctions and damage to our reputation.

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In particular, we depend on our headquarters in New York City, where a large number of our personnel are located, for the continued operation of our business.

Although we have developed business continuity plans, a disaster or a disruption in the infrastructure that supports our businesses, a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or a disruption that directly affects our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption.

The incidence and severity of disasters or other business continuity problems are unpredictable,

and our inability to timely and successfully recover could materially disrupt our businesses and cause material financial loss, regulatory actions, reputational harm or legal liability.

Although we have developed business continuity plans and enhanced our remote working capabilities, a disaster or a disruption in the infrastructure that supports our businesses, a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or a disruption that directly affects our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption.

The incidence and severity of disasters or other business continuity problems are unpredictable, and our inability to timely and successfully recover could materially disrupt our businesses and cause material financial loss, regulatory actions, reputational harm or legal liability.

We may not be able to generate sufficient cash to service all of our indebtedness.

Our ability to make scheduled payments on, or to refinance, our debt obligations depends on our financial condition and operating performance.

We cannot provide assurance that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal of, and interest on, our indebtedness, including the $170.0 million principal amount of the 2016 senior notes issued, (the "2016 Private Placement Notes") and the $175.0 million and £25.0 million principal amount of the 2019 senior notes issued, (the "2019 Private Placement Notes"), subject to semi-annual interest payments, as well as principal payments beginning in 2021 and 2029, respectively.

The final payments of all amounts outstanding, plus accrued interest, are due 2028, for the 2016 Private Placement Notes, and 2033, for the 2019 Private Placement Notes.

See Note 14 to our consolidated financial statements for further information.

If our cash flows and capital resources are insufficient to fund our debt service obligations, including the principal and semi-annual interest payments noted above, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness, including the Private Placement Notes and other contractual commitments.

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Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC, or violations of applicable stock exchange listing rules.

There could also be a negative reaction in the financial markets

due to a loss of investor confidence in us and the reliability of our financial statements.

There could also be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements.

Confidence in the reliability of our financial statements is also likely to suffer if we identify a material weakness in our internal control over financial reporting.

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Management believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities.

However, the tax authorities could challenge our interpretation, resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate.

However, the tax authorities could challenge our

interpretation, resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate.

In addition, tax laws, regulations or treaties newly enacted or enacted in the future, or interpretations of the Tax Cuts and Jobs Act, or other tax laws, may cause us to revalue our net deferred tax assets and have a material change to our effective tax rate.

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and our ability to identify and enter into mutually beneficial relationships with joint venture partners.

Additionally, integrating acquired businesses, providing a platform for new businesses and partnering with other firms involve a number of risks and present financial, managerial and operational challenges, including the following factors, among others:

Additionally, integrating acquired businesses, providing a platform for new businesses and partnering with other firms involve a number of risks and present financial, managerial, operational and reputational challenges, including the following factors, among others:

loss of key employees or customers;

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Also, the cost savings and other synergies from these acquisitions may be offset by costs incurred in integrating the companies, increases in other expenses or problems in the business unrelated to these acquisitions.

In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to

personnel, systems and activities that are not under our direct and sole control, and conflicts and disagreements between us and our joint venture partners may negatively impact our business.

In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to personnel, systems and activities that are not under our direct and sole control, and conflicts and disagreements between us and our joint venture partners may negatively impact our business.

Risks Related to Our Investment Banking Business

A substantial portion of our revenue is derived from advisory assignments for Investment Banking clients, which are not long-term contracted sources of revenue and are subject to intense competition, and declines in these engagements could have a material adverse effect on our financial condition and operating results.

We historically have earned a substantial portion of our revenue from fees paid to us by our Investment Banking clients for advisory services.

We historically have earned a substantial portion of our revenue from fees paid to us by our Investment Banking clients for advisory and underwriting services.

These fees are typically payable upon the successful completion of a particular transaction or restructuring.

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In addition, many businesses do not routinely engage in transactions requiring our services.

As a consequence, our fee-paying engagements with many clients are not likely to be predictable and high levels of revenue in one quarter are not necessarily predictive of continued high levels of revenue in future periods.

As a consequence, our

fee-paying engagements with many clients are not likely to be predictable and high levels of revenue in one quarter are not necessarily predictive of continued high levels of revenue in future periods.

We also lose clients each year as a result of the sale or merger of a client, a change in a client's senior management, competition from other financial advisors and financial institutions and other causes.

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We compete on both a global and regional basis, and on the basis of a number of factors, including the quality of our employees, industry knowledge, transaction execution skills, our products and services, innovation, reputation, strength of relationships and price.

We have experienced intense competition over obtaining advisory mandates in recent years, and we may experience pricing pressures in our Investment Banking business in the future, as some of our competitors seek to obtain increased market share by reducing fees.

We have experienced intense competition for advisory mandates in recent years, and we may experience pricing pressures in our Investment Banking business in the future, as some of our competitors seek to obtain increased market share by reducing fees.

When making proposals for fixed-fee engagements, we estimate the costs and timing for completing the engagements.

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Evercore ISI's business relies on non-affiliated third-party service providers.

Evercore ISI has entered into service agreements with third-party service providers for client order management, trade execution and settlement and clearance of client securities transactions and research distribution.

This business faces the risk of operational failure of any of the vendors we use to facilitate our securities transactions.

Evercore ISI has entered into service agreements with third-party service providers for order management, trade execution, settlement and clearance of client securities transactions and research distribution.

This business faces the risk of operational failure of any of the vendors we use to facilitate our securities transactions or research distribution.

Our senior management and officers oversee and manage these relationships.

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In such cases, any indemnification provisions in the applicable underwriting agreement may not be enforceable or available to us, for example, if the client is not financially able to satisfy its indemnification obligations in whole, or part, or the scope of the indemnity is not sufficient to protect us against financial or reputational losses arising from such liability.

In addition, through indemnification provisions in our agreement with our clearing organization, customer activities may expose us to off-balance sheet credit risk.

We may have to purchase or sell securities at prevailing market prices in the event a customer fails to settle a trade on its original terms.

We seek to manage the risks associated with customer trading activities through customer screening, internal review and trading procedures, but such procedures and processes may not be effective in all cases.

In addition, the associated litigation process can place operational strain on our business.

In addition, as customer trading activities expose us to potential losses, we may have to purchase or sell securities at prevailing market prices in the event a customer fails to settle a trade on its original terms.

We seek to manage the risks

associated with customer trading activities through customer screening, internal review and trading policies and procedures, but such policies and procedures may not be effective in all cases.

If the number of debt defaults or bankruptcies declines or other factors affect the demand for our restructuring services, our restructuring revenue could be adversely affected.

We provide financial advice and investment banking services to companies in financial transition, as well as to creditors, shareholders and potential acquirers.

We provide financial advice and investment banking services to companies in financial transition, as well as to creditors, shareholders and potential acquirers of such companies.

Our services may include reviewing and analyzing the business, financial condition and prospects of the company or providing advice on strategic transactions, capital raising or restructurings.

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Furthermore, if the volatility in the U.S.

and global markets cause a decline in the price of securities that constitutes a significant portion of our AUM, our clients could withdraw funds from, or be hesitant to invest in, our Investment Management business due to the uncertainty or volatility in the market or in favor of investments they perceive as offering greater opportunity or lower risk, which would also result in lower investment management revenue.

and global markets causes a decline in the price of securities that constitutes a significant portion of our AUM, our clients could withdraw funds from, or be hesitant to invest in, our Investment Management business due to the uncertainty or volatility in the market or in favor of investments they perceive as offering greater opportunity or lower risk, which would also result in lower investment management revenue.

Our Investment Management business' reliance on non-affiliated third-party service providers subjects the Company to operational risks.

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business, and this growth is critical to our overall success.

Many of our larger clients for our Investment Banking business are non-U.S.

Many of our large Investment Banking clients are non-U.S.

entities seeking to enter into transactions involving U.S.

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We also must communicate and monitor standards and directives across our global operations.

Our failure to

successfully manage and grow our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and to enforce compliance with non-U.S.

Our failure to successfully manage and grow our geographically diverse operations could impair our ability to react quickly to changing business and market conditions and to enforce compliance with non-U.S.

standards and procedures.

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dollar would result in an adverse or beneficial impact, respectively, to our financial results.

Fluctuations in foreign currency exchange rates may also affect the levels of our AUM and, as a result, our investment advisory fees.

On occasion, we enter into foreign currency exchange forward contracts as an economic hedge against exchange rate risk for foreign currency denominated accounts receivable in EGL.

There were no foreign currency exchange forward contracts outstanding as of December 31, 2020 .

There were no foreign currency exchange forward contracts outstanding as of December 31, 2021 and 2020.

The cost of compliance with international broker-dealer, employment, labor, benefits and tax regulations may adversely affect our business and hamper our ability to expand internationally.

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We are required to pay some of our Senior Managing Directors for most of the benefits relating to any additional tax depreciation or amortization deductions we may claim as a result of the tax basis step-up we receive in connection with exchanges of Evercore LP partnership units ("LP Units") for shares and related transactions.

As of December 31, 2020, there were vested LP Units held by some of our Senior Managing Directors and former employees that may in the future be exchanged for shares of our Class A common stock.

As of December 31, 2021, there were certain vested LP Units held by some of our Senior Managing Directors and former employees that may in the future be exchanged for shares of our Class A common stock.

The exchanges may result in increases in the tax basis of the assets of Evercore LP that otherwise would not have been available.

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While the actual increase in tax basis, as well as the amount and timing of any payments under this agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, and the amount and timing of our income, we expect that, as a result of the size of the increases in the tax basis of the tangible and intangible assets of Evercore LP attributable to our interest in Evercore LP, during the expected term of the tax receivable agreement, the payments that we may make to our Senior Managing Directors could be substantial.

Recent changes in tax legislation may modify the amounts paid under the agreement.

Changes in tax legislation may modify the amounts paid under the agreement.

For example, the Tax Cuts and Jobs Act includes a permanent reduction in the federal corporate income tax rate from 35% to 21%, which reduced future amounts to be paid under the agreement with respect to tax years beginning in 2018.

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In addition, our current and former Senior Managing Directors own an aggregate of 1,772,378 Class A limited partnership units of Evercore LP ("Class A LP Units"), which were all fully vested as of December 31, 2021.

Further, as of December 31, 2020, there were 3,051,501 vested Class E limited partnership units of Evercore LP ("Class E LP Units").

In addition, 400,000 unvested Class I-P units of Evercore LP ("Class I-P Units") which convert into Class I limited partnership units of Evercore LP ("Class I LP Units") based on the achievement of certain market and service conditions, and 283,992 unvested Class K-P units of Evercore LP ("Class K-P Units"), which convert into a number of Class K limited partnership units of Evercore LP ("Class K LP Units") based on the achievement of certain defined benchmark results, were outstanding as of December 31, 2020.

Further, as of December 31, 2021, there were 2,971,046 vested Class E limited partnership units of Evercore LP ("Class E LP Units") and 79,990 vested Class K limited partnership units of Evercore LP ("Class K LP Units").

In addition, 400,000 unvested Class I-P units of Evercore LP ("Class I-P Units") which convert into Class I limited partnership units of Evercore LP ("Class I LP Units") based on the achievement of certain market and service conditions, and 620,000 unvested Class K-P units of Evercore LP ("Class K-P Units"), which convert into a number of Class K LP Units based on the achievement of certain market and service conditions and defined benchmark results, were outstanding as of December 31, 2021.

Our amended and restated certificate of incorporation allows the exchange of Class A, Class E, Class I and Class K LP Units (other than those held by us) for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications.

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As of February 16, 2022, we had a total of 44,247,344 shares of Class A common stock outstanding and units which were convertible, or potentially convertible, into Class A common stock.

This is comprised of 42,023,195 shares of our Class A common stock outstanding, 1,902,278 Class A LP Units, 3,018,893 Class E LP Units, 400,000 Class I-P Units and 283,992 Class K-P Units (which convert into a number of Class K LP Units based on the achievement of certain defined benchmark results).

See Note 19 to our consolidated financial statements for further information.

This is comprised of 38,403,930 shares of our Class A common stock outstanding, 1,772,378 Class A LP Units, 2,971,046 Class E LP Units, 400,000 Class I-P Units, 79,990 Class K LP Units and 620,000 Class K-P Units (which convert into a number of Class K LP Units based on the achievement of certain market and service conditions and defined benchmark results).

See Notes 16 and 18 to our consolidated financial statements for further information.

Further, as part of annual bonuses and incentive compensation, we award restricted stock units ("RSUs") to employees, as well as to new hires.

As of December 31, 2021, 5,115,716 RSUs issued pursuant to the Amended and Restated 2016 Evercore Inc.

Stock Incentive Plan (the "2016 Plan") and the Amended and Restated 2006 Evercore Inc.

Stock Incentive Plan (as approved in 2016 and amended in 2020) and the Amended and Restated 2006 Evercore Inc.

Stock Incentive Plan were outstanding.

10 unchanged sentences

Anti-takeover provisions in our charter documents and Delaware law could delay or prevent a change in control.

Our certificate of incorporation and by-laws may discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable by permitting our board of directors to issue one or more series of preferred stock, requiring advance notice for stockholder proposals and nominations and placing limitations on convening stockholder meetings.

notice for stockholder proposals and nominations and placing limitations on convening stockholder meetings.

In addition, we are subject to provisions of the Delaware General Corporation Law that restrict certain business combinations with interested stockholders.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors