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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-11 · 507 added, 613 removed, 938 unchanged (54% of the section changed)

11 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Perella Weinberg Partners (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated statements of financial condition of Perella Weinberg Partners (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

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New York, New York

March 11, 2022

February 28, 2023

Perella Weinberg Partners

4 unchanged sentences

Restricted cash

Investments in short-term marketable debt securities 140,110 —

Accounts receivable, net of allowance

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33,094 21,091

$ 717,093 $ 718,327

Liabilities and Equity

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Deferred compensation programs

11,221 17,208

Accounts payable, accrued expenses and other liabilities

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165,601 43,448

Debt, net of unamortized debt discounts and issuance costs

Warrant liabilities — 27,805

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Class A common stock, par value $ 0.0001 per share ( 1,500,000,000 shares authorized, 52,237,247 issued and 41,744,961 outstanding at December 31, 2022;

1,500,000,000 shares authorized, 43,649,319 issued and 42,649,319 outstanding at December 31, 2021)

Class B common stock, par value $ 0.0001 per share ( 600,000,000 shares authorized, 44,563,877 issued and outstanding at December 31, 2022;

600,000,000 shares authorized, 50,154,199 issued and outstanding at December 31, 2021)

Preferred stock, par value $ 0.0001 per share ( 100,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and 2021, respectively)

Additional paid-in-capital 242,129 158,131

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( 6,538 ) ( 1,746 )

Treasury stock, at cost ( 1,000,000 shares of Class A common stock at December 31, 2021)

Partners' capital

Total Perella Weinberg Partners equity / Partners’ capital

Treasury stock, at cost ( 10,492,286 and 1,000,000 shares of Class A common stock at December 31, 2022 and December 31, 2021, respectively)

( 80,067 ) ( 12,000 )

Total Perella Weinberg Partners equity

137,462 126,319

Non-controlling interests

122,678 145,033

Total equity 260,140 271,352

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Other income (expense)

7,978 761 185

Change in fair value of warrant liabilities 15,806 ( 4,897 ) —

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Net income (loss) attributable to non-controlling interests

( 49,625 ) 13,444

Net income (loss) attributable to Perella Weinberg Partners $ 17,878 $ ( 9,421 )

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Diluted 89,755,632 92,749,911

__________________

(1) For the year ended December 31, 2021, net income (loss) per share of Class A common stock and weighted-average shares of Class A common stock outstanding is representative of the period from June 24, 2021 through December 31, 2021, the period following the Business Combination, as defined in Note 1—Organization and Nature of Business.

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Net income (loss) $ ( 31,747 ) $ 4,023 $ ( 24,342 )

$ 4,023 $ ( 24,342 ) $ ( 164,019 )

Foreign currency translation gain (loss) ( 1,481 ) 3,494 837

Foreign currency translation gain (loss), net of tax ( 9,682 ) ( 1,481 ) 3,494

Comprehensive income (loss) ( 41,429 ) 2,542 $ ( 20,848 )

2,542 $ ( 20,848 ) $ ( 163,182 )

Comprehensive income (loss) attributable to non-controlling interests ( 54,515 ) 12,883

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Balance at December 31, 2019 $ 87,725 — — — $ — $ — $ — $ — $ — $ ( 5,820 ) $ — $ 81,905

Net income (loss) ( 164,019 ) — — — — — — — — — — ( 164,019 )

Equity-based compensation 193,299 — — — — — — — — — — 193,299

Distributions to partners ( 38,376 ) — — — — — — — — — — ( 38,376 )

Other ( 2,355 ) — — — — — — — — — — ( 2,355 )

Foreign currency translation gain (loss) — — — — — — — — — 837 — 837

Balance at December 31, 2019 $ 87,725 — — — $ — $ — $ — $ — $ — $ ( 5,820 ) $ — $ 81,905

New accounting pronouncement adoption ( 188 ) — — — — — — — — — — ( 188 )

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Liability awards reclassification to equity — — — — — — — 3,912 — — — 3,912

Issuance of Class A common stock for vested RSUs — 692,652 — — — — — — — — — —

Withholding payments on vested RSUs — — — — — — — ( 10,462 ) — — — ( 10,462 )

Issuance of Class A common stock for vested PWP Incentive Plan Awards — 692,652 — — — — — — — — — —

Withholding payments on vested PWP Incentive Plan Awards — — — — — — — ( 10,462 ) — — — ( 10,462 )

Dividends declared ($ 0.14 per share of Class A common stock)

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Perella Weinberg Partners

Consolidated Statements of Changes in Equity – Continued

(Dollars in Thousands)

Shares Accumulated

Comprehensive

Income (Loss)

Capital Class A

Stock Class B

Stock Treasury

Stock Class A

Stock Class B

Stock Treasury

Stock Additional

Capital Retained

Deficit) Non-

Interests Total

Balance at December 31, 2021 $ — 43,649,319 50,154,199 ( 1,000,000 ) $ 4 $ 5 $ ( 12,000 ) $ 158,131 $ ( 18,075 ) $ ( 1,746 ) $ 145,033 $ 271,352

Net income (loss) — — — — — — — — 17,878 — ( 49,625 ) ( 31,747 )

Equity-based awards — — — — — — — 81,804 — — 74,616 156,420

Distributions to partners — — — — — — — — — — ( 44,455 ) ( 44,455 )

Issuance of Class A common stock for vested PWP Incentive Plan Awards — 1,426,073 — 51,730 — — 620 ( 620 ) — — — —

Withholding payments on vested PWP Incentive Plan Awards — — — — — — — ( 9,703 ) — — — ( 9,703 )

Dividends declared ($ 0.28 per share of Class A common stock)

— — — — — — — 522 ( 17,874 ) — — ( 17,352 )

Foreign currency translation gain (loss) — — — — — — — — — ( 4,792 ) ( 4,890 ) ( 9,682 )

Other — — — — — — — 702 — — 1,233 1,935

Issuance of Class A common stock and exchange of PWP OpCo Units with corresponding Class B common stock for cash using Offering proceeds (Note 11—Stockholders' Equity)

— 3,502,033 ( 3,498,534 ) — 1 — — ( 538 ) — — — ( 537 )

Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 11—Stockholders' Equity)

— 2,093,874 ( 2,091,788 ) — — ( 1 ) — 598 — — — 597

Warrant exchange for Class A common stock — 1,565,948 — — — — — 11,999 — — — 11,999

Treasury stock purchases — — — ( 9,544,016 ) — — ( 68,687 ) — — — — ( 68,687 )

Change in ownership interests — — — — — — — ( 766 ) — — 766 —

Balance at December 31, 2022 $ — 52,237,247 44,563,877 ( 10,492,286 ) $ 5 $ 4 $ ( 80,067 ) $ 242,129 $ ( 18,071 ) $ ( 6,538 ) $ 122,678 $ 260,140

The accompanying notes are an integral part of these consolidated financial statements.

Perella Weinberg Partners

Consolidated Statements of Cash Flows

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Change in fair value of warrant liabilities ( 15,806 ) 4,897 —

Foreign currency revaluation ( 4,692 ) — —

Non-cash operating lease expense

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Cash flows from investing activities

Distributions from company-owned life insurance policies

Purchases of fixed assets

( 26,560 ) ( 1,462 ) ( 5,522 )

Purchases of investments in short-term marketable debt securities ( 139,171 ) — —

( 500 ) ( 978 ) —

Net cash provided by (used in) investing activities

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Draw down of Revolving Credit Facility

— 22,000 20,000

Principal payment on Revolving Credit Facility

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Redemption of partners’ interests — ( 104,540 ) —

Proceeds from the Offering, net of underwriting discount 36,526 — —

Exchange of PWP OpCo Units and corresponding Class B common stock for cash using Offering proceeds ( 36,526 ) — —

Payment of offering costs ( 1,318 ) — —

Distributions to partners

( 44,455 ) ( 65,931 ) ( 11,989 )

Dividends paid ( 5,990 ) — —

Withholding payments for vested RSUs ( 10,462 ) — —

Dividends paid on Class A and Class B common stock ( 12,840 ) ( 5,990 ) —

Withholding payments for vested PWP Incentive Plan Awards ( 9,703 ) ( 10,462 ) —

Treasury stock purchases ( 68,452 ) ( 12,000 ) —

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Proceeds from Partner Promissory Note — 1,757 —

— — ( 1,837 )

Net cash provided by (used in) financing activities

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Cash, cash equivalents and restricted cash, end of period $ 174,166 $ 504,775 $ 330,908

Supplemental disclosure of non-cash investing activity

Liability awards reclassification to equity $ 3,912 $ — $ —

Dividends declared and unpaid $ 2,664 $ — $ —

The accompanying notes are an integral part of these consolidated financial statements.

Perella Weinberg Partners

Consolidated Statements of Cash Flows – Continued

(Dollars in Thousands)

Year Ended December 31,

2022 2021 2020

Supplemental disclosures of non-cash activities

Lease liabilities arising from obtaining right-of-use lease assets

$ 131,232 $ 4,111 $ 14,192

Accrued capital expenditures $ 16,395 $ — $ —

Accrued dividends and dividend equivalent units on unvested PWP Incentive Plan Awards $ 5,711 $ 2,664 $ —

Non-cash paydown of Partner promissory notes $ 2,567 $ — $ —

Deferred tax effect resulting from exchanges of PWP OpCo Units, net of amounts payable under tax receivable agreement $ 1,362 $ — $ —

Accrued treasury stock purchases $ 235 $ — $ —

Liability awards reclassification to equity $ — $ 3,912 $ —

Net assets of deconsolidated affiliate $ — $ 394 $ —

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Perella Weinberg Partners and its consolidated subsidiaries, including PWP Holdings LP (“PWP OpCo”) (collectively, “PWP” and the “Company”), is a global independent advisory firm that provides strategic and financial advice to a wide range of clients.

The Company’s activities as an investment banking advisory firm constitute a single business segment that provides a range of advisory services related to mission-critical strategic and financial decisions, mergers and acquisitions advice and execution, capital markets advisory, shareholder and defense advisory, capital structure and restructuring, underwriting, equity research and private capital raising.

The Company’s activities as an investment banking advisory firm constitute a single business segment that provides a range of advisory services, including advice related to mission-critical strategic and financial decisions, mergers and acquisitions execution, shareholder and defense advisory, financing and capital solutions advice with resources focused on restructuring and liability management, capital markets advisory, private capital placement, as well as specialized underwriting and research services primarily for the energy and related industries.

Perella Weinberg Partners (formerly known as FinTech Acquisition Corp.

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See Note 11—Stockholders' Equity for additional information.

Historical Transactions

PWP OpCo was formed under Delaware law on November 30, 2016 in conjunction with a business combination between NoCo A L.P.

and Tudor, Pickering, Holt & Co., LLC (the “TPH Business Combination”).

Prior to February 28, 2019, PWP OpCo owned and operated two distinct businesses:

investment banking advisory (“Advisory business”) and asset management (“Asset Management business”).

On February 28, 2019 (the “Separation Date”), a reorganization of the existing Advisory and Asset Management businesses of PWP Holdings LP was effected which resulted in the spin-off of its Asset Management business (the “Separation”).

PWP Holdings LP was divided into (i) PWP OpCo, which holds the former Advisory business and (ii) PWP Capital Holdings LP, which holds the former Asset Management business.

In connection with the Separation, the net assets primarily related to the Asset Management business were allocated to PWP Capital Holdings LP and the net assets primarily related to the Advisory business were allocated to PWP OpCo.

Subsequent to the Separation, the ILPs and Professional Partners hold equity in both PWP OpCo and PWP Capital Holdings LP.

Note 2—Summary of Significant Accounting Policies

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All intercompany balances and transactions between the consolidated subsidiaries comprising the Company have been eliminated in the accompanying consolidated financial statements.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Business Combination was treated as a reverse recapitalization transaction between entities under common control, whereby PWP OpCo was considered the accounting acquirer and predecessor entity and therefore recognized the carrying value of the net assets of FTIV as an equity contribution with no incremental goodwill or intangible assets.

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See Note 3—Business Combination for additional discussion related to the transaction.

Prior to the Separation in February 2019, assets and liabilities held by PWP Group were for both the Advisory and Asset Management businesses.

Based on an evaluation of the guidance under SAB Topic 5.z.7, Accounting for the spin-off of a subsidiary, it was determined that the Separation should be reflected as a change in reporting entity.

As such, the accompanying consolidated financial statements of the Company retroactively reflect the Separation, including all distributions and transactions in conjunction therewith, and exclude the Asset Management business for the year ended December 31, 2019.

Assets and liabilities associated with the Asset Management business that historically were held at PWP Group were specifically identified and allocated to the Asset Management business using the same methodology applied at the time of the Separation and therefore were removed from these consolidated financial statements along with their related cash flows.

The Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss) reflect the Advisory business’ share of certain corporate functions and shared services, including, but not limited to, executive oversight, accounting, treasury, tax, legal, compliance, human resources, rent and occupancy, procurement, information technology, and other shared services.

Where feasible, the expense allocations were made on a specific identification basis, and in other cases, these expenses were allocated based on a pro-rata basis of headcount, relative usage or another basis depending on the nature of the expense.

Refer to Note 17—Related Party Transactions for further information.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Use of Estimates

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Estimates and the assumptions underlying these estimates are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

In preparing the consolidated financial statements, management makes estimates regarding the following:

• measurement of amount due pursuant to the tax receivable agreement;

• measurement and timing of revenue recognition;

• adequacy of the allowance for credit losses;

• measurement and realization of deferred taxes;

• measurement of equity-based awards;

• evaluation of goodwill and intangible assets;

• fair value measurement of financial instruments;

• other matters that affect the reported amounts and disclosures of contingencies in the consolidated financial statements.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

In preparing the consolidated financial statements, management makes certain estimates regarding the measurement of amounts due pursuant to the tax receivable agreement, measurement and timing of revenue recognition, assumptions used in the provision for income taxes, measurement of equity-based compensation, evaluation of goodwill and intangible assets, fair value measurement of financial instruments, and other matters that affect the reported amounts and disclosures of contingencies in the consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents includes cash and highly liquid investments with original maturities of three months or less from the date of purchase.

Cash includes both cash and interest-bearing money market accounts and cash equivalents are defined as highly liquid investments with original maturities of three months or less from the date of purchase.

As of December 31, 2022 and 2021 the Company had no cash equivalents.

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Cash, cash equivalents and restricted cash as shown on statements of cash flows $ 174,166 $ 504,775

Investments in Short-Term Marketable Debt Securities

The Company invests in short-term marketable debt securities to manage excess liquidity.

As of December 31, 2022, these investments consisted solely of U.S.

Treasury securities held by a consolidated broker-dealer subsidiary and were carried at fair value with changes in fair value included in Other income (expense) on the Consolidated Statements of Operations, as is required for broker-dealers.

In general, these investments are recorded on the Consolidated Statements of Financial Condition within Cash and cash equivalents for investments with an original maturity from the date of purchase of three months or less, and within Investments in short-term marketable debt securities for those with original maturities longer than three months but less than one year.

Accounts Receivable

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The Company regularly reviews its accounts receivable for collectability and an allowance is recognized for credit losses, if required.

As of December 31, 2021 and 2020, $ 2.5 million and $ 5.1 million of accrued revenue, respectively, was included in Accounts receivable, net of allowance for credit losses on the Consolidated Statements of Financial Condition.

As of December 31, 2022 and 2021, $ 5.1 million and $ 2.5 million, respectively, of accrued revenue was included in Accounts receivable, net of allowance on the Consolidated Statements of Financial Condition.

These amounts represent amounts due from clients and recognized as revenue in accordance with the Company’s revenue recognition policies but unbilled at the end of the period.

Accounts receivable represents amounts due from clients from various industry and geographic backgrounds.

As of December 31, 2021, certain accounts receivable in the aggregate amount of $ 13.6 million, were individually greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients.

Of that amount, $ 6.7 million was subsequently received after year end.

As of December 31, 2020, no accounts receivable were individually greater than 10% of the Company’s total gross accounts receivable.

Allowance for Credit Losses

On January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No.

2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) under the modified retrospective approach.

This new standard replaces the incurred loss impairment methodology for financial instruments with the current expected credit loss (“CECL”) model which requires an estimate of future credit losses.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Accounts receivable represent amounts due from clients from various industry and geographic backgrounds.

As of December 31, 2022, certain accounts receivable in the aggregate amount of $ 28.4 million, were individually greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients.

Of that amount, all was subsequently received after year end.

As of December 31, 2021, certain accounts receivable in the aggregate amount of $ 13.6 million, were greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients.

Of that amount, all was subsequently received after year end.

Allowance for Credit Losses

The Company maintains an allowance for credit losses that, in management’s opinion, provides for an adequate reserve to cover estimated losses on accounts receivable.

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As of December 31, 2022 and December 31, 2021, the net assets of PWP OpCo were $ 237.9 million and $ 268.5 million, respectively.

As of December 31, 2021 and December 31, 2020, the Company did not consolidate any VIEs other than PWP OpCo that were deemed material to the consolidated financial statements.

As of December 31, 2022 and December 31, 2021, the Company did not consolidate any VIEs other than PWP OpCo.

Equity Method Investments

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Fair Value of Financial Instruments

The carrying values of the Company’s financial instruments approximate their fair value as of December 31, 2021 and 2020 due to their short-term nature or the bearing of market interest rates.

Refer to Note 16—Fair Value Measurements and Investments for discussion on the fair value of the Company’s assets and liabilities that qualify as financial instruments under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”).

The Company’s financial instruments are generally recorded at fair value or at amounts that approximate fair value.

The carrying values of cash, restricted cash, accounts receivable, amounts due from related parties, accounts payable and certain accrued liabilities approximate their fair values due to the short-term nature of these items.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Fixed assets include furniture and fixtures, equipment, software development costs and leasehold improvements, which are all stated at cost less accumulated depreciation and amortization.

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The Company evaluates fixed assets for impairment whenever events or changes in circumstances indicate that an asset’s carrying value may not be fully recovered.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Prepaid Expenses and Other Assets

Generally, the majority of Prepaid expenses and other assets consists of prepaid expenses.

Prepaid expenses relate to various services, including subscriptions, software licenses and insurance, which are amortized over the life, related service period or policy.

When applicable, deferred offering costs are also presented within Prepaid expenses and other assets.

As of December 31, 2020, cumulative offering costs of $ 9.1 million were deferred in relation to the Business Combination and were netted against proceeds of the Business Combination on the Closing Date.

Prior to the Business Combination, the Company had deferred $ 14.8 million of costs associated with its pursuit of a traditional initial public offering, but upon termination of this process in May 2020, expensed this amount to Professional fees on the Consolidated Statements of Operations.

As of December 31, 2021, Prepaid expenses and other assets included deferred offering costs of $ 0.9 million related to a primary offering of shares of its Class A common stock.

Refer to Note 20—Subsequent Events for additional information regarding this offering.

The Company evaluated the public and private warrants under ASC Topic 815, Derivatives and Hedging (“ASC 815”), and concluded that they do not meet the criteria to be classified as equity in the Consolidated Statements of Financial Condition.

Since the public and private warrants meet the definition of a derivative under ASC 815, the Company recorded these warrants as liabilities at fair value upon the closing of the Business Combination in accordance with ASC 820, Fair Value Measurement, with subsequent changes in their respective fair values recorded in Change in fair value of warrant liabilities on the Consolidated Statements of Operations and on the Consolidated Statements of Cash Flows.

Generally, prepaid expenses comprise the majority of Prepaid expenses and other assets on the Consolidated Statements of Financial Condition and represent upfront payments for various services, including subscriptions, cloud computing arrangements, software licenses and insurance, which are amortized over the life, related service period or policy.

Other substantial components of Prepaid expenses and other assets are receivables from landlords for tenant improvements, income tax receivables, and certain investments.

Repurchases of Common Stock

Shares of the Company’s Class A common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise.

The Company may structure such repurchases as either a purchase of treasury stock or a retirement of shares.

The Company records its purchases of treasury stock at cost as a separate component of equity.

The Company may re-issue treasury stock using the first-in-first-out method.

Tax Receivable Agreement

In connection with the Business Combination as described in Note 3—Business Combination, PWP entered into a tax receivable agreement with PWP OpCo, Professional Partners and ILPs under which PWP agreed to payment of 85 % of the amount of savings, if any, that PWP realizes in U.S.

federal, state, local and foreign income taxes as a result of (i) the Business Combination and related transactions, (ii) exchanges of interests in PWP OpCo for cash or stock of the Company and certain other transactions and (iii) payments made under the tax receivable agreement.

Management’s best estimate of the amounts expected to be owed in connection with the tax receivable agreement at each reporting date are reported within the Amount due pursuant to tax receivable agreement on the Consolidated Statements of Financial Condition.

In connection with the Business Combination, the Company entered into a tax receivable agreement with PWP OpCo, Professional Partners and ILPs that provides for payment of 85 % of the amount of cash savings, if any, in U.S.

federal, state and local and foreign income taxes that the Company is deemed to realize as a result of (a) each exchange of interests in PWP OpCo for cash or stock of the Company and certain other transactions and (b) payments made under the tax receivable agreement.

Management’s best estimate of the amounts expected to be owed in connection with the tax receivable agreement at each reporting date are reported within Amount due pursuant to tax receivable agreement on the Consolidated Statements of Financial Condition.

Goodwill and Intangible Assets

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A reporting unit is a component of an operating segment for which discrete financial information is available that is regularly reviewed by management.

In accordance with ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”), the Company can opt to perform a qualitative assessment to test goodwill for impairment to determine whether it is more likely than not (a likelihood of more than 50 percent) that an impairment has occurred.

If it is determined that it is more likely than not that the reporting unit’s fair value is less than its carrying value, a quantitative assessment is performed to (i) calculate the fair value of the reporting unit and compare it to its carrying value;

and (ii) if the carrying value exceeds its fair value, an impairment loss is recognized for the excess.

Alternatively, the Company can forego the qualitative assessment and only perform the quantitative assessment to test goodwill for impairment.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Intangible assets are derived from customer relationships, trade names and trademarks.

1 unchanged sentence

The Company reviews intangible assets for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

Deferred Compensation

The Company enters into certain deferred compensation arrangements whereby portions of compensation related to certain employees and partners are deferred and paid in later periods.

The deferred compensation amounts are charged to expenses over the period that each employee and partner is required to provide services in order to vest in the payment.

Refer to Note 14—Other Compensation and Benefits for further information.

See Note 5—Leases for further information regarding leases that fall under ASC Topic 842, Leases (“ASC 842”).

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company leases office space and certain office equipment under operating lease agreements.

The Company determines if an arrangement or contract is a lease at inception and does not separate lease and non-lease components of the contract.

The Company records the present value of its commitments for leases with terms of more than one year on the Consolidated Statements of Financial Condition as a right-of-use asset with the corresponding liability.

Right-of-use assets are subject to certain adjustments for lease incentives, deferred rent and initial direct costs.

The Company elected the practical expedient not to separate lease components and non-lease components in calculating the net present value of the lease payments on office space and office equipment leases.

Thus, the measurement of the right-of-use asset and corresponding lease obligation uses one single combined component.

All leases were determined to be operating leases.

Right-of-use assets represent the Company’s right to use the underlying assets for their lease terms and lease liabilities represent the Company’s obligation to make lease payments arising from these leases.

The Company’s lease agreements do not contain any residual value guarantees.

Lease expense is recognized on a straight-line basis over the lease term.

The implicit discount rates used to determine the present value of the Company’s leases are not readily determinable, thus, the Company uses its incremental borrowing rate to determine the present value of its lease payments.

The determination of an appropriate incremental borrowing rate requires significant assumptions and judgement.

The Company’s incremental borrowing rate is calculated based on multiple factors, including current market conditions, the Company’s credit rating and the terms of the Company’s recent debt issuances and/or current revolving credit facilities.

The Company weights the rates appropriately depending on the term of the leases.

Renewal and termination terms of the Company’s leases vary depending on the lease.

The Company estimates the expected lease terms by assuming the exercise of renewal options and extensions where an economic penalty exists that would preclude the abandonment of the lease at the end of the initial non-cancelable term and the exercise of such renewal or extension is at the sole discretion of the Company.

Certain lease agreements are secured by security deposits, which are reflected in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition.

The Company subleases certain portions its office space.

Sublease income is recognized on a straight-line basis over the term of the lease.

The Company elected the practical expedient not to separate lease components and non-lease components for subleases.

Prior to the Business Combination, the Company operated as a partnership, and therefore, was generally not subject to U.S.

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federal or state income tax at the partnership level.

The Company primarily conducts business through disregarded entities held by PWP OpCo, as well as non-U.S.

subsidiaries which generally operate as corporate entities in various non-U.S.

jurisdictions.

The Company primarily conducts business through entities held by PWP OpCo, that are disregarded for U.S.

federal and state tax purposes.

Certain non-U.S.

subsidiaries are subject to income taxes in their respective local jurisdictions, and therefore, the related income tax provision is reported in the Consolidated Statements of Operations.

Taxes are accounted for using the asset and liability method of accounting pursuant to ASC Topic 740, Income Taxes (“ASC 740”).

Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases, using tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period when the change is enacted.

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the financial reporting bases of assets and liabilities and their respective tax bases, using tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in Income tax benefit (expense) in the period when the change is enacted.

Deferred tax assets are reduced by a valuation allowance when it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

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This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies.

The Company analyzes its tax positions for all U.S.

federal, state and local tax jurisdictions where it is required to file income tax returns in accordance with the provisions of ASC 740.

This standard establishes consistent thresholds for recognizing the benefits of tax return positions in the financial statements as more-likely-than-not to be sustained by the relevant taxing authority upon audit.

This standard requires a two-step process in which (i) determination is made whether it is more-likely-than-not that the tax position will be sustained based on the technical merits of the position, and (ii) those tax positions that meet the more-likely-than-not threshold are recognized as the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

If upon performance of an assessment pursuant to ASC 740 the Company determines that uncertainties in tax positions exist that do not meet the minimum threshold for recognition of the related tax benefit, a liability is recorded in the consolidated financial statements.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as Interest expense and General, administrative and other expenses in the Consolidated Statements of Operations.

Refer to Note 9—Income Taxes for further information.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company analyzes its tax positions for all U.S.

federal, state and local and foreign tax jurisdictions where it is required to file income tax returns.

The Company records unrecognized tax benefits based on whether it is more-likely-than-not that the uncertain tax position will be sustained based on the technical merits of the position.

If it is determined, that an uncertain tax position is more-likely-than-not to be sustained, the Company records the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authorities.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in Income tax benefit (expense) in the Consolidated Statements of Operations.

Debt Discounts and Issuance Costs

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Debt discounts and issuance costs are amortized using the effective interest method to determine interest expense over the life of the underlying debt instrument.

The Company includes unamortized debt issuance costs within Prepaid expenses and other assets on the Consolidated Statements of Financial Position in periods with no outstanding borrowings.

Foreign Currencies

In the normal course of business, the Company may enter into transactions not denominated in U.S.

Foreign exchange gains and losses arising from such transactions are included in Other income (expense) in the Consolidated Statements of Operations.

In the normal course of business, the Company and its subsidiaries may enter into transactions denominated in a non-functional currency.

The Company recognized net foreign exchange gains (losses) arising from such transactions of $ 6.8 million, $( 0.2 ) million and $( 0.2 ) million during the years ended December 31, 2022, 2021, and 2020, respectively, which are included in Other income (expense) in the Consolidated Statements of Operations.

In addition, the Company consolidates its foreign subsidiaries that have non-U.S.

1 unchanged sentence

dollar denominated assets and liabilities are translated to U.S.

dollars at the exchange rate prevailing at the reporting date and income, expenses, gains and losses are translated using the average exchange rate throughout the period.

dollars at the exchange rate prevailing at the reporting date and income, expenses, gains and losses are generally translated using the average exchange rate throughout the period.

Cumulative translation adjustments arising from the translation of non-U.S.

dollar denominated operations are included as a component of Accumulated other comprehensive loss in the Consolidated Statements of Changes in Equity.

Revenue and Expense Recognition

See Note 4—Revenue and Receivables from Contracts with Customers for further information on contracts within the scope of ASU 2014-09.

Revenue Recognition

The services provided under contracts with clients include transaction-related advisory services, fairness opinion services, research and trading services, and underwriting services, each of which are typically identified as a separate performance obligation in contracts that contain more than one type of service.

As discussed in detail below, each performance obligation meets the criteria for either over time or point in time revenue recognition.

Transaction-Related Advisory Services

The Company is contracted to provide different investment banking and advisory services that vary depending on the nature of the contract with each individual client.

These transaction-related advisory services include, but are not limited to, providing financial advice and assistance in analyzing, structuring, planning, negotiating and effecting a transaction, providing financial advice with regard to a restructuring of a client’s capital structure, which may or may not result in a court-approved bankruptcy plan, and providing certain ongoing services, including research and analysis on potential targets, identifying potential investors, and financial modeling for potential transactions.

Typically, the Company provides such advisory services to its clients to assist with corporate finance activities such as mergers and acquisitions, reorganizations, tender offers, leveraged buyouts, and the pricing of securities to be issued.

In most circumstances, the Company considers the nature of the promises in its advisory contracts to comprise of a single performance obligation of providing advisory services to its clients.

Although there may be many individual services provided in a typical contract, the individual services are not distinct within the context of the contract;

rather the performance of these individual services helps to fulfill one overall performance obligation to deliver advisory services to the client.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company recognizes revenue from providing advisory services when or as its performance obligations are fulfilled.

The majority of the Company’s advisory revenue is recognized over time.

However, certain performance obligations may be recognized at a point in time if the performance obligation represents a singular objective that does not transfer any notable value until formally completed, such as when issuing fairness opinions, which are further discussed below.

The Company provides its advisory services on an ongoing basis, which, for example, may include evaluating and selecting one of multiple strategies.

During such engagements, the Company’s clients continuously benefit from its advice as the Company is providing financial and strategic advice throughout the engagement, and, accordingly, over time revenue recognition matches the transfer of such benefits.

Although the Company’s transaction-related advisory services meet the criteria for over time revenue recognition, the fee structures often involve an “all or nothing” consideration amount and the associated fees are predominantly considered variable as they are often based on the ultimate transaction value or the outcome ultimately achieved and/or are susceptible to factors outside of the Company’s influence such as third-party negotiations, regulatory approval, court approval, and shareholder votes.

Accordingly, a large portion of the fees associated with these services is constrained until substantially all services have been provided, specified conditions have been met and/or certain milestones have been achieved, and it is probable that a significant revenue reversal will not occur in a future period.

Such determination of probability may require significant judgment.

In some cases, a portion of the variable fees may be deferred based on the services remaining to be completed, if any (e.g., when announcement fees are earned but additional services are expected to be provided between transaction announcement and transaction close).

The deferred amount is often based on an estimate of the services remaining to be completed, if any.

The determination of when and to what extent to subsequently recognize deferred variable fees may require significant judgment, particularly when milestones are met near the end of a reporting period and in cases where additional services are expected to be provided subsequent to the achievement of the milestone.

Certain fixed fees specified in the Company’s contracts, which may include upfront fees and retainers, are recognized on a systematic basis over the estimated period in which the related services are performed.

Payments for transaction-related advisory services are generally due upon completion of a specified event or, for retainer fees, periodically over the course of the engagement.

The Company recognizes a receivable between the date of completion of the event and payment by the client.

Fairness Opinion Services

Although the Company usually provides fairness opinion services in conjunction with and in the same contract as other transaction-related advisory services, fairness opinion services are considered to be a separate performance obligation in such contracts because they could be obtained separately, and the Company is able to fulfill its promise to transfer transaction-related advisory services independent from its promise to provide fairness opinion services.

The Company typically charges a separate, fixed fee associated with fairness opinion services that represents the standalone selling price of the fairness opinion services.

The fee is recognized at the point in time at which the fairness opinion is delivered rather than over the period of time during which the services are being performed because the client does not simultaneously receive and consume the benefit of the Company’s performance to provide the fairness opinion but rather receives the benefit upon delivery of the fairness opinion itself.

Payments for fairness opinion services are generally due upon delivery of the fairness opinion.

The Company recognizes a receivable between the date of delivery of the fairness opinion and payment by the client.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Research and Trading Services

The Company provides research on the energy and related industries and related equity and commodity markets.

The Company’s research clients continuously benefit from the research provided throughout arrangements between the Company and such clients, and, accordingly, over time revenue recognition matches the transfer of such benefits.

Recipients of this research compensate the Company for these market insights in various ways - by direct payment (the amount of which is typically at the client’s discretion based upon the perceived value of the research services provided) or through trades directed through the Company’s trading desk (for commission generation) or through third-party commission sharing agreements.

These services are sometimes referred to as “soft-dollar arrangements,” and the amount of payment is typically based on a percentage of commission income generated from the client’s trades executed by the Company.

The commission per share and volume of trades are at the client’s discretion based upon the perceived value of the research services and trade execution provided.

Generally, the Company does not provide trading services separate and apart from research services (i.e., clients do not typically execute trades through the Company in the normal course of business;

rather, trade execution is used as a means to be compensated for research services).

Because fees received for research services, and any associated trading services, are typically at the complete discretion of the client and are based on the value the client perceives in the research services provided, the entire transaction price associated with such services is variable.

Accordingly, because of the broad range of possible outcomes and the inability to predict the value the client will ascribe to such services, the Company fully constrains the revenue associated with research services, and any associated trading services, until the uncertainty associated with the variable consideration is subsequently resolved, which is typically upon the earlier of receiving an invoice request from the client or receiving payment from the client.

Underwriting Services

Revenue associated with underwriting services includes management fees, selling concessions and underwriting fees attributable to public and private offerings of equity and debt securities.

The nature of the Company’s underwriting services is raising capital on behalf of an issuer and therefore is typically accounted for as a single performance obligation.

A separate performance obligation is identified in instances in which the contract with the client includes an over-allotment option.

The Company’s underwriting services generally do not meet any of the requirements for revenue to be recognized over time and, therefore, the Company typically recognizes underwriting revenue on the pricing date of the offering, which is when the Company receives the pricing wire communication from the lead underwriter detailing the underwriting fees to which the Company is entitled.

Similarly, the performance obligation associated with the over-allotment is satisfied at the point in time at which the option is exercised.

The Company’s role in underwriting commitments is usually as a co-manager or passive bookrunner, rather than as the lead underwriter.

Accordingly, the Company estimates its share of transaction-related expenses incurred by the underwriting syndicate on the pricing date of the offering and presents these expenses gross within Travel and related expenses in the Consolidated Statements of Operations.

Such amounts are adjusted to reflect actual expenses in the period in which the Company receives the final settlement, typically within 90 days following the closing of the transaction.

Contract Costs and Contract Balances

Incremental costs of obtaining a contract are expensed as incurred as such costs are generally not recoverable.

Costs to fulfill contracts consist of out-of-pocket expenses that are part of performing transaction-related advisory services and are typically expensed as incurred as these costs are related to performance obligations that are satisfied over time.

The Company is typically reimbursed by the client for certain of these out-of-pocket expenses, which is recorded within Revenues in the Consolidated Statements of Operations.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The timing of revenue recognition may differ from the timing of payment.

The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment.

The Company records deferred revenue (otherwise known as contract liabilities) when it receives fees from clients that have not yet been earned or when the Company has an unconditional right to consideration before all performance obligations are complete (e.g., receipt of certain announcement, retainer or upfront fees before the performance obligation has been fully satisfied).

Interest Income

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In all instances, compensation expense is accrued over the requisite service period.

Refer to Note 14—Other Compensation and Benefits for further information.

Equity-Based Compensation

Equity-based compensation relates to equity-based awards granted to employees and partners of the Company.

In all instances of equity-based awards, compensation expense is recognized over the requisite vesting period in an amount equal to the fair value of the awards at the grant date.

In all instances of equity-based awards, compensation expense is recognized over the requisite vesting period or requisite service period in an amount equal to the fair value of the awards at the grant date.

Certain awards are amortized over the expected service period for employees who are or will become retirement eligible prior to the stated vesting date.

Equity-based compensation expense for employees and partners is included in Equity-based compensation on the Consolidated Statements of Operations and equity-based compensation expense for non-employees is included in Professional fees on the Consolidated Statements of Operations.

2 unchanged sentences

For an award with service-only conditions that has a graded vesting schedule, the Company recognizes the compensation cost for the entire award on a straight-line basis over the requisite service period, ensuring that the amount recognized is at least equal to the vested portion of the award at each reporting date.

Deferred Compensation

The Company enters into certain deferred compensation arrangements whereby portions of compensation related to certain employees and partners are deferred and paid in later periods.

The deferred compensation amounts are charged to expenses over the period that each employee and partner is required to provide services in order to vest in the payment.

Non-Controlling Interests

24 unchanged sentences

Recently Adopted Accounting Pronouncements

Leases —Effective January 1, 2019, the Company adopted the new lease accounting standard, ASU 2016-02, Leases (“ASU 2016-02”) which requires lessees to recognize on its Balance Sheet (Statement of Financial Condition), assets and liabilities for all leases, other than the leases that meet the definition of short-term leases, at the option of the lessee.

The Company used the alternative transition approach which allows the guidance to be applied initially at the adoption date without restating comparative periods.

The Company did not have a cumulative-effect adjustment to retained earnings as of the date of adoption.

The Company elected the transition package of practical expedients to alleviate certain operational complexities related to the adoption, but has not elected the use of hindsight practical expedient.

Following the adoption of the lease standard, the present value of the Company’s lease commitments for leases with terms of more than one year and related assets are reflected as Lease liabilities and Right-of-use lease assets on the Consolidated Statements of Financial Condition.

The impact of adoption of the lease guidance as of January 1, 2019 did not have any material impact on the Consolidated Statements of Operations or Consolidated Statements of Cash Flows, but had the following impact on the Consolidated Statements of Financial Condition:

December 31, 2018 Adjustments January 1, 2019

Right-of-use lease assets $ — $ 70,199 $ 70,199

Lease liabilities — 78,394 78,394

Deferred rent 8,927 ( 8,927 ) —

Prepaid expenses and other assets 28,959 ( 732 ) 28,227

See Note 5—Leases for additional information regarding the Company’s leases.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Credit Losses on Financial Instruments —In June 2016, the FASB issued ASU 2016-13.

ASU 2016-13 provides amendments to ASC Topic 326, Financial Instruments – Credit Losses , which amend the guidance on the impairment of financial instruments and adds an impairment model (the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses.

Entities recognize an allowance for its estimate of expected credit losses as of the end of each reporting period.

On January 1, 2020 the Company adopted ASU 2016-13 using the modified retrospective approach by means of a cumulative-effect adjustment to decrease retained earnings by $ 0.2 million as of January 1, 2020.

There were no recently adopted accounting pronouncements that had a material effect on the Company’s co nsolidated financial statements.

Future Adoption of Accounting Pronouncements

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The PIPE Investment was consummated concurrently with the Closing.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

In connection with the consummation of the Business Combination, the following occurred:

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• FTIV issued new shares of Class B-1 common stock, which have 10 votes per share and Class B-2 common stock, which have one vote per share, to PWP OpCo, with the Class B-1 common stock being distributed to and owned by Professional Partners and the Class B-2 common stock being distributed to and owned by ILPs, with the number of shares of such common stock issued to PWP OpCo equal the number of PWP OpCo Units that were held by Professional Partners and ILPs, respectively, following the Closing;

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

• Professional Partners contributed the equity interests of PWP GP, the general partner of PWP OpCo, to FTIV;

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• FTIV was renamed “Perella Weinberg Partners.”

On the Closing Date, the Company recorded $ 22.2 million in public warrant liabilities and $ 0.7 million in private warrant liabilities, which represented their fair value on such date.

On the date of the Closing, the Company recorded $ 22.2 million in public warrant liabilities and $ 0.7 million in private warrant liabilities, which represented their fair value on such date.

See Note 12—Warrants for further information.

In conjunction with the Business Combination, the Company incurred approximately $ 2.9 million in transaction expenses, which were recorded in Professional fees on the Consolidated Statements of Operations, as well as $ 27.6 million of offering costs which were offset against the proceeds of the Business Combination.

The Business Combination resulted in an increase to the Company’s deferred tax assets, with a corresponding increase to the Amount due pursuant to tax receivable agreement, primarily related to a step-up in the tax basis of certain assets that will be recovered as those assets are amortized.

At the time of the Closing, there were 42,956,667 shares of Class A common stock and 50,154,199 shares of Class B common stock outstanding.

The number of shares of Class B common stock outstanding corresponds to the number of PWP OpCo Units attributable to Professional Partners and the ILPs.

The number of shares of Class B common stock outstanding corresponds to the number of PWP OpCo Units attributable to the Professional Partners and ILPs.

Such PWP OpCo Units are exchangeable into shares of PWP’s Class A common stock on a one-for-one basis and represent the non-controlling ownership interests in the Company.

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Concurrent with the Closing, the Company entered into certain other related agreements which are discussed further in Note 11—Stockholders' Equity and Note 17—Related Party Transactions.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 4—Revenue and Receivables from Contracts with Customers

As discussed in detail below, each performance obligation meets the criteria for either over time or point in time revenue recognition.

The following table disaggregates the Company’s revenue between over time and point in time recognition:

4 unchanged sentences

Total revenues $ 631,507 $ 801,662 $ 518,986

Additionally, the Company is typically reimbursed for certain professional fees and other expenses incurred that are necessary in order to provide services to the client.

These fees and related reimbursements are recorded when incurred to the relevant expense item and Revenues, respectively, in the Consolidated Statements of Operations.

Reimbursable expenses billed to clients was $ 3.2 million, $ 5.0 million, and $ 6.5 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Transaction-Related Advisory Services

The Company is contracted to provide different investment banking and advisory services that vary depending on the nature of the contract with each individual client.

In most circumstances, the Company considers the nature of the promises in its advisory contracts to comprise of a single performance obligation of providing advisory services to its clients.

Although there may be many individual services provided in a typical contract, the individual services are not distinct within the context of the contract;

rather the performance of these individual services helps to fulfill one overall performance obligation to deliver advisory services to the client.

The Company recognizes revenue from providing advisory services when or as its performance obligations are fulfilled.

The majority of the Company’s advisory revenue is recognized over time.

The Company provides its advisory services on an ongoing basis, which, for example, may include evaluating and selecting one of multiple strategies.

The determination of when and to what extent to recognize variable fees may require significant judgment, particularly when milestones are met near the end of a reporting period and in cases where additional services are expected to be provided subsequent to the achievement of the milestone.

Fixed fees specified in the Company’s contracts, which may include upfront fees and retainers, are recognized on a systematic basis over the estimated period in which the related services are performed.

Payments for transaction-related advisory services are generally due upon completion of a specified event or, for retainer fees, periodically over the course of the engagement.

The Company recognizes a receivable between the date of completion of the event and payment by the client.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Fairness Opinion Services

The Company typically charges a separate, fixed fee associated with fairness opinion services that represents the standalone selling price of the fairness opinion services.

Payments for fairness opinion services are generally due upon delivery of the fairness opinion.

The Company recognizes a receivable between the date of delivery of the fairness opinion and payment by the client.

Research and Trading Services

The Company provides research on the energy and related industries and related equity and commodity markets.

Recipients of this research compensate the Company for these market insights in two ways—either by direct payment (the amount of which is typically at the client’s discretion based upon the perceived value of the research services provided) or through trades directed through the Company’s trading desk (for commission generation) or through third-party commission sharing agreements.

Generally, the Company does not provide trading services separate and apart from research services (i.e., clients do not typically execute trades through the Company in the normal course of business;

rather, trade execution is used as a means to be compensated for research services).

Underwriting Services

Revenue associated with underwriting services includes management fees, selling concessions and underwriting fees attributable to public and private offerings of equity and debt securities.

The nature of the Company’s underwriting services is raising capital on behalf of an issuer and therefore is typically accounted for as a single performance obligation.

A separate performance obligation is identified in instances in which the contract with the client includes an over-allotment option.

Similarly, the performance obligation associated with the over-allotment is satisfied at the point in time at which the option is exercised.

The Company’s role in underwriting commitments is usually as a co-manager or passive bookrunner, rather than as the lead underwriter.

Such amounts are adjusted to reflect actual expenses in the period in which the Company receives the final settlement, typically within 90 days following the closing of the transaction.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Contract Costs

Incremental costs of obtaining a contract are expensed as incurred as such costs are generally not recoverable.

Remaining Performance Obligations and Revenue Recognized from Past Performance

As of December 31, 2022, the aggregate amount of the transaction price allocated to performance obligations yet to be satisfied is $ 4.5 million and the Company generally expects to recognize this revenue within the next twelve months .

Such amounts primarily relate to the Company’s performance obligations of providing transaction-related advisory services and fairness opinion services.

During the years ended December 31, 2021, 2020, and 2019, the Company recognized revenue of $ 313.2 million, $ 177.4 million, and $ 217.9 million, respectively, related to performance obligations that were satisfied or partially satisfied in prior periods, mainly due to constraints on variable consideration in prior periods being resolved for transaction-related advisory services.

Such amounts primarily relate to the Company’s performance obligations of providing transaction-related advisory services.

The Company recognized revenue of $ 333.2 million, $ 313.2 million, and $ 177.4 million, respectively, during the years ended December 31, 2022, 2021, and 2020, related to performance obligations that were satisfied or partially satisfied in prior periods.

These amounts were recognized upon resolution of revenue constraints and uncertainties in the respective current period and generally related to transaction-related advisory services.

Contract Balances

The timing of revenue recognition may differ from the timing of payment.

The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment.

As of December 31, 2021 and 2020, the Company recorded $ 7.8 million and $ 10.6 million, respectively, for these contract liabilities which are presented as Deferred revenue on the Consolidated Statements of Financial Condition.

For the years ended December 31, 2021, 2020, and 2019, $ 10.6 million, $ 1.7 million and $ 1.6 million, respectively, of the respective beginning deferred revenue balance was recognized as revenue and was primarily related to the Company’s transaction-related advisory services performance obligations that are recognized over time.

As of December 31, 2022 and 2021, the Company recorded $ 5.0 million and $ 7.8 million, respectively, for contract liabilities which are presented as Deferred revenue on the Consolidated Statements of Financial Condition.

The Company recognized revenue of $ 5.6 million, $ 10.6 million and $ 1.7 million, respectively, for the years ended December 31, 2022, 2021, and 2020, of the respective beginning deferred revenue balance, which was primarily related to transaction-related advisory services that are recognized over time.

Allowance for Credit Losses

5 unchanged sentences

Bad debt expense 2,158 646 2,991

Recoveries 710 — —

Write-offs ( 2,834 ) ( 551 ) ( 3,588 )

Recoveries — 710 —

Foreign currency translation and other adjustments ( 32 ) 1 ( 282 )

1 unchanged sentence

__________________

(1) Beginning balance for the year ended December 31, 2020 includes the cumulative adjustment of approximately $ 0.2 million which reflects the increase in the Company’s allowance for credit losses upon adoption of ASU 2016-13 and the CECL model on January 1, 2020.

See Note 2—Summary of Significant Accounting Policies for further information.

Perella Weinberg Partners

3 unchanged sentences

The Company leases office space and certain office equipment under operating lease agreements.

The Company determines if an arrangement or contract is a lease at inception and does not separate lease and non-lease components of the contract.

Right-of-use assets are subject to certain adjustments for lease incentives, deferred rent and initial direct costs.

Thus the measurement of the right-of-use asset and corresponding lease obligation use one single combined component.

All leases were determined to be operating leases.

The Company’s lease agreements do not contain any residual value guarantees.

Lease expense is recognized on a straight-line basis over the lease term for new leases and over the remaining lease term for existing leases already in place at January 1, 2019 (date of adoption of ASC 842).

The determination of an appropriate incremental borrowing rate requires significant assumptions and judgement.

The Company’s incremental borrowing rate was calculated based on the Company’s recent debt issuances and market conditions at the time of adoption or upon entering into a new lease, as applicable.

The Company weights the rates appropriately depending on the term of the leases.

Renewal and termination terms of the Company’s leases vary depending on the lease.

Certain lease agreements are secured by security deposits, which are reflected in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition.

In conjunction with the Separation, the Company entered into sublease agreements for a portion of its Houston and New York office space with PWP Capital Holdings LP through 2027 and 2022, respectively.

These subleases are considered operating leases.

The subleases do not include renewal options and the Company has the right to terminate these subleases for any reason after giving 90 days prior written notice.

Sublease income is recognized on a straight-line basis over the term of the lease.

The Company elected the practical expedient not to separate lease components and non-lease components for these subleases.

During the year ended December 31, 2021, the Houston sublease was terminated, and the New York sublease was modified to extend the term and reduce the subleased space.

See additional information regarding these subleases in Note 17—Related Party Transactions.

Significant New Leases and Lease Modifications

See summary below of significant new leases and lease modifications.

In July 2020, the Company modified the terms of its New York office space lease by shortening the lease term of certain floor space and extending the contractual lease term of other floor space.

1 unchanged sentence

The modified lease was reassessed and continues to be considered an operating lease.

The lease liability was remeasured as of the modification date and resulted in an increase of $ 12.9 million and a corresponding increase to the right-of-use asset as well as a $ 0.1 million gain, which was recognized as Other income (expense) on the Consolidated Statements of Operations.

The lease liability was remeasured as of the modification date and resulted in an increase of $ 12.9 million and a corresponding increase to the right-of-use asset as well as a $ 0.1 million gain, which was recognized as Other income (ex pense) on the Consolidated Statements of Operations.

In May 2021, the Company extended the term of its New York office lease by five months , which resulted in an increase to Lease liabilities and a corresponding increase to Right-of-use lease assets of $ 5.1 million.

On July 26, 2021, the Company executed a lease amendment to vacate a portion of its Houston office space, which resulted in a $ 1.9 million decrease to Right-of-use lease assets, a $ 2.4 million decrease to Lease liabilities and a $ 0.5 million gain recorded in Other income (expense) in the Consolidated Statements of Operations.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

During the first half of 2022, the Company entered into amendments to its New York and Los Angeles office leases, as well as a new 12-year lease agreement related to the relocation of the Company’s U.K.

office in London.

The New York lease amendment extended the term of the lease by approximately 16 years with an expiration of December 31, 2039.

The amended term of the Los Angeles lease is scheduled to expire on December 31, 2032.

In the second quarter of 2022, the Company’s amended Los Angeles lease commenced and the amended New York lease partially commenced resulting in an increase to Lease liabilities and a corresponding increase to Right-of-use lease assets of $ 66.3 million.

In the third quarter of 2022, the New York lease became fully commenced and the U.K.

lease also commenced, which resulted in an additional $ 62.3 million increase to Lease liabilities and a corresponding increase to Right-of-use lease assets.

Other information as it relates to the Company’s operating leases is as follows:

9 unchanged sentences

Cash paid for lease obligation $ 17,057 $ 19,858 $ 21,532

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

As of December 31, 2022, the maturities of undiscounted operating lease liabilities of the Company are as follows:

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Thereafter 187,612 — 187,612

Total minimum lease payments 45,050 $ 923 $ 44,127

Total lease payments (1)

247,340 $ 307 $ 247,033

Imputed Interest ( 81,739 )

Total lease liabilities $ 165,601

__________________

(1) Total future lease payments are presented net of expected lease incentives, including landlord contributions to tenant improvements.

Refer to Note 17—Related Party Transactions for information regarding the Company’s subleasing arrangements.

Note 6—Goodwill and Intangible Assets

In connection with the TPH Business Combination, the Company recorded goodwill in the amount of $ 34.4 million .

Goodwill represents the Advisory business’ portion of goodwill which is based on the relative fair value of the TPH Advisory business as of the date of the TPH Business Combination.

Goodwill is primarily attributable to the in-place workforce, which allowed the Company to continue serving its existing client base, begin marketing to potential clients and avoid significant costs reproducing the workforce.

No goodwill is expected to be deductible for tax purposes.

In connection with the 2016 business combination between the Company and Tudor, Pickering, Holt & Co., LLC (the “TPH Business Combination”), the Company recorded goodwill in the amount of $ 34.4 million .

Based on the Company’s quantitative assessment for impairment, no goodwill impairment was recorded during the years ended December 31, 2022, 2021, and 2020.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Intangible Assets

Intangible assets related to the TPH Business Combination were recognized at their estimated fair values, which was based on certain projected future revenues and involved the use of significant judgment.

Below is the detail of the intangible assets:

Below is the detail of the intangible assets that were recognized in conjunction with the TPH Business Combination:

December 31, 2022

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$ 65,800 $ ( 33,448 ) $ 32,352

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The intangible assets are amortized over an average useful life of 10 years.

For each of the years ended December 31, 2021, 2020, and 2019, intangible amortization expense was $ 6.6 million, which is included in Depreciation and amortization in the Consolidated Statements of Operations.

Intangible amortization expense was $ 6.6 million for each of the years ended December 31, 2022, 2021, and 2020, which is included in Depreciation and amortization in the Consolidated Statements of Operations.

Amortization of intangible assets held at December 31, 2022 is expected to be $ 6.6 million for each of the years ending December 31, 2023, 2024, and 2025, and $ 6.0 million for the year ending December 31, 2026.

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Note 7—Regulatory Requirements

The Company has a number of consolidated subsidiaries registered as broker-dealers with regulatory agencies in their respective countries, including the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (FINRA), the Investment Industry Regulatory Organization of Canada (IIROC), the Financial Conduct Authority (FCA) of the United Kingdom (the “UK”) and the Autorité de contrôle prudentiel et de resolution (ACPR) of France.

These subsidiaries are subject to various minimum net capital requirements as outlined below.

The Company has a number of consolidated subsidiaries registered as broker-dealers with regulatory agencies in their respective countries, including the Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (FINRA), the New Self-Regulatory Organization of Canada (“New SRO,” formerly the Investment Industry Regulatory Organization of Canada or “IIROC”), the Financial Conduct Authority (FCA) of the United Kingdom (the “UK”) and the Autorité de contrôle prudentiel et de resolution (ACPR) of France.

None of the SEC regulated subsidiaries hold funds or securities for, or owe money or securities to, clients or carry accounts of or for clients, and as such are all exempt from the SEC Customer Protection Rule (Rule 15c3-3).

As of December 31, 2022 and 2021, all regulated subsidiaries were in excess of their applicable capital requirements.

As a result of the minimum capital requirements and various regulations on these broker dealers, a portion of the capital of each subsidiary of the Company is restricted and may be unavailable to pay its creditors.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

As a result of the capital requirements and various regulations on these broker dealers, a portion of the capital of each subsidiary of the Company is restricted and may be unavailable to pay its creditors.

Note 8—Fixed Assets

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During the year ended December 31, 2022, the Company disposed of certain obsolete assets, substantially all of which were fully depreciated.

Substantially all leasehold improvement assets capitalized during the year ended December 31, 2022 were related to build-out projects associated with new or amended office leases in New York, Los Angeles, and the U.K.

Refer to Note 5—Leases for further information.

Note 9—Income Taxes

The Company’s income (loss) before income taxes is associated with activities in domestic and international jurisdictions, as follows:

Year Ended December 31,

2021 2020 2019

$ 256 $ ( 33,803 ) $ ( 176,157 )

International

22,694 12,914 14,561

Income (loss) before income taxes

$ 22,950 $ ( 20,889 ) $ ( 161,596 )

The Company’s operations are generally comprised of entities that are organized as limited liability companies and limited partnerships.

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The tax (provision) / benefit consists of the following:

The Company’s income (loss) before income taxes is associated with activities in domestic and international jurisdictions, as follows:

Year Ended December 31,

2022 2021 2020

$ ( 36,935 ) $ 256 $ ( 33,803 )

International

15,515 22,694 12,914

Income (loss) before income taxes

$ ( 21,420 ) $ 22,950 $ ( 20,889 )

The components of Income tax benefit (expense) consist of the following:

Year Ended December 31,

2022 2021 2020

Federal income tax

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Foreign income tax

( 43 ) 1,677 589

Total deferred income tax benefit (expense) 2,743 3,651 589

(Provision)/benefit for income taxes

Income tax benefit (expense)

$ ( 10,327 ) $ ( 18,927 ) $ ( 3,453 )

The Company’s effective tax rate is dependent on many factors, including the amount of income subject to tax.

Consequently, the effective tax rate can vary from period to period.

The Company’s overall effective tax rate in each of the periods described below varies from the U.S.

federal statutory rate primarily because (i) the Company was not subject to U.S.

federal corporate income taxes prior to the Business Combination, (ii) a portion of compensation expense is non-deductible, both prior to the Business Combination and for the subsequent period, (iii) the Company has recorded unrecognized tax benefits related to a potential double inclusion of income on its foreign tax returns and (iv) a portion of the Company’s income is allocated to non-controlling interests held in PWP OpCo in which the majority of any tax liability on such income is borne by the holders of such non-controlling interests and reported outside of the consolidated financial statements.

The Business Combination resulted in a $ 16.1 million increase to the Company’s deferred tax asset primarily related to a step-up in the tax basis of certain assets that will be recovered as those assets are amortized.

In connection with the step-up in tax basis generated on the day of the Business Combination, the Company recorded a payable of $ 14.1 million pursuant to the terms of the tax receivable agreement.

The following table reconciles the U.S.

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Expected income tax expense at the federal statutory rate 21.0 % 21.0 % 21.0 %

Partnership (income) loss not subject to U.S.

Partnership income not subject to U.S.

corporate income taxes ( 10.7 ) % ( 21.4 ) % ( 21.0 ) %

2 unchanged sentences

Non-deductible compensation expense ( 53.5 ) % 26.0 % — %

Unrecognized tax benefits 26.7 % — % — %

Unrecognized tax benefits, net of federal benefit 5.3 % 26.7 % — %

Change in fair value of warrant liabilities 7.5 % 2.1 % — %

Other, net 2.6 % 1.7 % — %

Effective income tax rate ( 48.2 ) % 82.5 % ( 16.5 ) %

The Company’s effective tax rate is dependent on many factors, including the amount of income subject to tax.

Consequently, the effective tax rate can vary from period to period.

The Company was not subject to U.S.

federal or state corporate income taxes prior to the Business Combination.

Current tax receivables and payables are included in Prepaid expenses and other assets and Accounts payable, accrued expenses and other liabilities, respectively, on the Consolidated Statements of Financial Condition.

Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount in the Company’s Consolidated Statements of Financial Condition.

These temporary differences result in taxable or deductible amounts in future years.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount on the Company’s Consolidated Statements of Financial Condition.

These temporary differences result in taxable or deductible amounts in future years.

The significant components of deferred tax assets and liabilities included on the Company’s Consolidated Statements of Financial Condition are as follows:

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Operating lease liabilities

RSU amortization 9,510 3,818

Deferred compensation

Deferred tax assets before valuation allowance

66,298 31,793

Valuation allowance

Total deferred tax assets

65,555 31,793

Deferred tax liability

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Intangible assets ( 2,600 ) ( 3,118 )

( 2,905 ) ( 1,615 )

Total deferred tax liabilities

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Deferred tax asset, net $ 33,094 $ 21,091

The realization of deferred tax assets arising from timing differences and net operating losses requires taxable income in future years in order to deduct the reversing timing differences and absorb the net operating losses.

The Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date.

Accounting for income taxes guidance requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized.

No deferred tax asset has been recorded for the excess of tax basis related to the outside partnership basis of its investment in PWP OpCo for the amount of the deferred tax asset that is not expected to reverse.

As of December 31, 2022, the Company recorded a valuation allowance of $ 0.7 million related to certain state income tax credits that the Company does not expect to utilize.

As of December 31, 2021, no valuation allowance was recognized.

No deferred tax asset has been recorded for the excess tax over book outside basis difference related to the Company’s investment in PWP OpCo as the deferred tax asset is not expected to reverse.

The Company believes it is more-likely-than-not that the remaining net deferred tax asset recorded as of December 31, 2022 will be recovered in the future based on all available positive and negative evidence.

As of December 31, 2020, as it relates to the deferred tax asset for the Company’s Canadian subsidiary, Tudor, Pickering, Holt & Co.

Securities Canada, ULC (“TPH Canada”), the Company concluded that the weight of historical evidence in the form of cumulative losses should be greater than the weight given to projections of future income, which cannot be substantiated until earned.

As such, a full valuation allowance was recorded on the TPH Canada deferred tax asset of $ 1.0 million.

During the year ended December 31, 2021, the Company reevaluated the historical evidence and projections of future income in the jurisdiction in which it operates and determined that the realization of the deferred tax assets is probable.

As such, the valuation allowance was reversed and there was no valuation allowance related to the deferred tax asset of TPH Canada as of December 31, 2021.

The Company does not have excess basis in its foreign investments and has therefore not provided a deferred tax liability with respect to an outside basis difference in its investment in foreign subsidiaries.

The Company is subject to taxation in the United States and various state, local and foreign jurisdictions.

As of December 31, 2021, the Company is not generally subject to examination by the tax authorities for years before 2018.

In connection with the step-up in tax basis generated on the day of the Business Combination, the Company recorded a payable of $ 14.1 million pursuant to the terms of the tax receivable agreement.

For the year ended December 31, 2022, the Company recorded an increase to the deferred tax asset of $ 9.5 million related to the step-up in tax basis of PWP OpCo assets in connection with the exchanges of PWP OpCo units for shares of Class A common stock during the year.

In connection with the step-up in tax basis generated from the exchanges, the Company increased the Amount due pursuant to tax receivable agreement on the Consolidated Statements of Financial Condition by $ 8.9 million.

The remaining tax benefit is allocable to the Company and is recorded within additional paid-in-capital.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company does not have excess book over tax basis in its foreign investments and has therefore not provided a deferred tax liability with respect to an outside basis difference in its investment in foreign subsidiaries.

A reconciliation of the changes in tax positions for the years ended December 31, 2022, 2021, and 2020 is as follows:

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Additions for tax positions of prior years — 1,574 —

Reductions for tax positions of prior years ( 184 ) — —

Additions for tax positions of current year — 4,564 —

Foreign currency translation ( 326 ) — —

Ending unrecognized tax benefit $ 5,628 $ 6,138 $ —

The Company classifies interest relating to tax matters and tax penalties as components of income tax expense in its Consolidated Statements of Operations.

As of December 31, 2021, there were $ 6.1 million of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

For the years ended December 31, 2021, 2020, and 2019, no interest or penalties were accrued with respect to unrecognized tax positions.

The following is a summary of the Company’s debt as of December 31, 2021 and 2020:

The Company classifies interest relating to tax matters and tax penalties as components of Income tax benefit (expense) in its Consolidated Statements of Operations.

As of December 31, 2022 and 2021, there were $ 4.7 million and $ 6.1 million, respectively, of unrecognized tax benefits that, if recognized, would affect the effective tax rate.

For the years ended December 31, 2022, 2021, and 2020, no material amounts of interest or penalties were recognized with respect to unrecognized tax positions.

The Company is subject to taxation in the United States and various state, local and foreign jurisdictions.

As of December 31, 2022, the Company is not generally subject to examination by the tax authorities in these jurisdictions for years before 2019.

Revolving Credit Facility

Convertible Notes — 150,000

Total debt facilities — 177,690

Unamortized debt discount and issuance costs (1)

( 521 ) ( 30,725 )

Total debt, net $ ( 521 ) $ 146,965

(1) As of December 31, 2021, the Company included unamortized debt issuance costs within Prepaid expenses and other assets on the Consolidated Statements of Financial Position since there were no outstanding borrowings under the Revolving Credit Facility, as defined below.

Credit Agreement – Revolving Credit Facility

The Company has a revolving credit facility (the “Revolving Credit Facility”) with Cadence Bank, N.A.

(“Cadence Bank”).

Prior to the Business Combination

On November 11, 2020, the Revolving Credit Facility was amended to extend the maturity date from December 31, 2021 to April 1, 2022.

On December 28, 2020, the agreement was further amended to expressly permit the transactions contemplated by the proposed Business Combination.

During the years ended December 31, 2020 and 2019, the Company made principal payments on the Revolving Credit Facility of $ 32.0 million and $ 10.0 million, respectively, as well as drawdowns of $ 22.0 million and $ 20.0 million, respectively.

The Company has a revolving credit facility (the “Revolving Credit Facility”) through a credit agreement with Cadence Bank, N.A.

(“Cadence Bank”), dated November 30, 2016 (as amended, the “Credit Agreement”), with an available line of credit of $ 50.0 million.

Upon consummation of the Business Combination, the Company repaid all of the outstanding borrowings under the Credit Agreement, which included $ 27.7 million of principal plus accrued and unpaid interest.

In anticipation of the Closing, on June 15, 2021, the Credit Agreement was amended such that as of the Closing Date, (i) the maturity was extended from April 1, 2022 to July 1, 2025, (ii) interest accrues at LIBOR plus a fixed rate of 2.00 % per annum (with a 0.25 % LIBOR floor) with an alternate base rate option equal to Cadence Bank’s prime rate minus 1.00 % (with a 3.25 % floor), (iii) a commitment fee of 0.25 % on any unused portion of the $ 50.0 million line of credit is due quarterly, (iv) up to $ 15.0 million of the Revolving Credit Facility may be used for the issuance of letters of credit, (v) up to $ 20.0 million of incremental revolving commitments may be incurred under the Credit Agreement, and (vi) certain financial covenants were amended.

The Credit Agreement provides that the benchmark of LIBOR will be replaced with a SOFR-based rate on or prior to the date that the LIBOR benchmark is unavailable.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

For the period prior to the Business Combination, the Revolving Credit Facility bore interest at a rate per annum equal to either the variable Eurodollar Rate (or London Interbank Offered Rate, LIBOR) or a variable Base Rate (defined as the higher of the (i) Federal Funds Rate plus ½ of 1.0%;

(ii) Cadence Bank prime rate;

or (iii) Eurodollar Rate plus 1.0%) plus a rate which varies by the Company’s leverage ratio, as noted in the table below.

Applicable Rate

Combined Leverage Ratio Eurodollar Rate Base Rate

1.00 2.50 % 1.50 %

1.00, but < 1.50 :

1.00 2.75 % 1.75 %

1.00 3.00 % 2.00 %

Business Combination Impact

In anticipation of the Closing, on June 15, 2021, the Credit Agreement was amended such that as of the Closing Date, (i) the maturity was extended from April 1, 2022 to July 1, 2025, (ii) interest accrues at LIBOR plus a fixed rate of 2.00 % per annum (with a 0.25 % LIBOR floor) with an alternate base rate option equal to Cadence Bank’s prime rate minus 1.00 % (with a 3.25 % floor), (iii) up to $ 15.0 million of the Revolving Credit Facility may be used for the issuance of letters of credit, (iv) up to $ 20.0 million of incremental revolving commitments may be incurred under the Credit Agreement, and (v) certain financial covenants were amended.

Average Interest rate, Effective Interest Rate and Interest Expense

The weighted average interest rate for the Revolving Credit Facility was 2.62 % for the period from January 1, 2021 through June 24, 2021 (the Closing Date) and 3.02 %, and 4.95 % for the years ended December 31, 2020 and 2019, respectively.

Debt Issuance Cost —Prior to the Business Combination, the Company incurred $ 1.8 million in issuance costs related to the Credit Agreement, which were amortized to Interest expense using the effective interest method over the life of the Revolving Credit Facility.

The effective interest rate of the Revolving Credit Facility taking into account these issuance costs was 3.73 % for the period from January 1, 2021 through June 24, 2021 and 3.93 % and 6.48 % for the years ended December 31, 2020 and 2019, respectively.

The amendment that occurred with the Business Combination was accounted for as a modification as opposed to a debt extinguishment in accordance with U.S.

As such, the unamortized original debt issuance costs as well as the additional $ 0.4 million in fees incurred to amend the facility are being amortized using the effective interest method to Interest expense over the amended remaining term of the Revolving Credit Facility.

Prior to the Business Combination, the weighted average interest rate for the Revolving Credit Facility was 2.62 % for the period from January 1, 2021 through June 24, 2021 (the Closing Date) and 3.02 % for the year ended December 31, 2020.

The effective interest rate of the Revolving Credit Facility taking into account $ 1.8 million in issuance costs was 3.7 % for the period from January 1, 2021 through June 24, 2021 and 3.9 % and for the year ended December 31, 2020.

The amendment that occurred with the Business Combination was accounted for as a modification, and therefore, the unamortized original debt issuance costs as well as the additional $ 0.4 million in fees incurred to amend the facility are being amortized using the effective interest method to Interest expense over the amended remaining term of the Revolving Credit Facility.

As of December 31, 2022 and 2021, there were no outstanding borrowings under the Revolving Credit Facility, and as such, unamortized debt issuance costs of $ 0.4 million and $ 0.5 million, respectively, are reported within Prepaid expenses and other assets on the Consolidated Statements of Financial Position.

Interest expense related to the Revolving Credit Facility was $ 0.3 million, $ 0.7 million, and $ 1.6 million during the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2021, the Company had no outstanding balance related to the Revolving Credit Facility and no incremental revolving commitments were incurred.

Convertible Notes – Outstanding Prior to the Business Combination

The Company issued 7.0 % subordinated unsecured convertible notes with an aggregate principal amount of $ 150.0 million (the “Convertible Notes”) under a Note Purchase Agreement (as amended, the “NPA”) executed in conjunction with the TPH Business Combination on November 30, 2016 (the “TPH Closing Date”).

The Convertible Notes were due to mature on November 30, 2026 (the “Maturity Date”), unless earlier converted or repaid pursuant to the terms.

Interest payments were due quarterly;

however, until the fifth anniversary of the TPH Closing Date, the Company had the ability to elect to defer its payment of interest up to eight separate times but never exercised this election.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Applicable only to the period after the Separation and before the Business Combination, the NPA named PWP Capital Holdings LP as a guarantor of the Convertible Notes and required that financial covenants be determined on a combined basis with the results of both the Company and PWP Capital Holdings LP for the applicable periods ended.

Debt Discount and Issuance Costs - A portion of the Convertible Notes was issued at a 5.0 % original issue discount in the amount of $ 5.8 million coupled with a 3.0 % commitment fee in the amount of $ 3.5 million.

In addition to the discount and commitment fees, the Company incurred debt issuance costs of approximately $ 1.1 million in relation to the NPA.

The debt discounts and issuance costs were amortized using the effective interest method over the term of the Convertible Notes prior to the Business Combination and redemption.

Optional Conversion - In accordance with the NPA, each holder of Convertible Notes (each herein referred to as a “Holder”) had the right at any time on or prior to the Maturity Date, to convert all or a portion of their portion of the Convertible Notes into the Company’s common units at the conversion rate, plus an amount in cash equal to accrued and unpaid interest.

In 2016, the Company issued 7.0 % subordinated unsecured convertible notes with an aggregate principal amount of $ 150.0 million (the “Convertible Notes”).

Prior to the Business Combination, each holder of Convertible Notes (each herein referred to as a “Holder”) had the right to convert all or a portion of their Convertible Notes into the Company’s common units at the conversion rate, plus an amount in cash equal to accrued and unpaid interest.

The optional conversion was evaluated and deemed to be both beneficial and significant to require separation.

The estimated intrinsic value of the Beneficial Conversion Feature (“BCF”) was measured at the most favorable conversion terms and determined to be $ 32.7 million as of the Closing Date.

The estimated intrinsic value of the beneficial conversion feature (“BCF”) was determined to be $ 32.7 million.

The recognition of the BCF created a discount on the Convertible Notes with an offsetting increase to Partners’ capital.

Letter Agreements - In December 2020, the Company entered into letter agreements (the “2020 Letter Agreements”) with all Holders, which amended and restated any existing letter agreements, pursuant to which all of the Holders (the “Redeeming Holders”) agreed to collectively tender for redemption $ 150 million aggregate principal amount of their Convertible Notes (such Convertible Notes, the “Redeemed Notes”) for cash.

Pursuant to the terms of the 2020 Letter Agreements, the Redeeming Holders agreed not to convert their Convertible Notes in connection with the Business Combination.

Business Combination Impact and Redemption

Upon consummation of the Business Combination, the Company redeemed the Convertible Notes for $ 161.6 million, which included the total outstanding $ 150.0 million aggregate principal, an applicable premium for redeeming Holders owning at least $ 5.0 million of principal, and accrued and unpaid interest.

The Company recognized a $ 39.4 million loss on extinguishment of the Convertible Notes composed of the $ 10.9 million premium and $ 28.5 million of unamortized debt discount and issuance costs.

Each Redeeming Holder was entitled to receive a “top-up” payment if the redemption price was exceeded by the five-day volume weighted average price at which the Company’s Class A common stock traded on the 30th calendar day following the Business Combination plus the aggregate amount of accrued and unpaid interest on such Redeemed Notes.

No additional “top-up” payment was required to the Redeeming Holders.

Prior to the Business Combination and redemption, certain of the Redeeming Holders were partners.

Refer to Note 17—Related Party Transactions for further information.

Effective Interest Rate and Interest Expense

The effective interest rate of the Convertible Notes, considering the cash coupon rate of 7.0 % as well as amortization of the BCF discount, debt discount and issuance costs, was 11.95 % for the period from January 1, 2021 through June 24, 2021 (the date such Convertible Notes were redeemed) and 11.95 %, and 11.95 % for the years ended December 31, 2020, and 2019, respectively.

The aggregate interest expense related to the Convertible Notes was $ 6.9 million, $ 14.1 million, and $ 13.8 million during the years ended December 31, 2021, 2020, and 2019, respectively.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Prior to the Business Combination, the effective interest rate of the Convertible Notes, considering the cash coupon rate of 7.0 % as well as amortization of the BCF discount, debt discount and issuance costs, was 11.95 % for the period from January 1, 2021 through June 24, 2021 (the date such Convertible Notes were redeemed) and 11.95 % for the year ended December 31, 2020.

The aggregate interest expense related to the Convertible Notes was $ 6.9 million, and $ 14.1 million during the years ended December 31, 2021 and 2020, respectively.

Note 11—Stockholders' Equity

Subsequent to the Business Combination as described in Note 3—Business Combination, the Company’s authorized capital stock consists of 2,200,000,000 shares including (i) 1,500,000,000 shares of Class A common stock, par value $ 0.0001 per share (the “Class A common stock”), (ii) 300,000,000 shares of Class B-1 common stock, par value $ 0.0001 per share (the “Class B-1 common stock”), and (iii) 300,000,000 shares of Class B-2 common stock, par value $ 0.0001 per share (the “Class B-2 common stock” and together with the Class B-1 common stock, the “Class B common stock”), and (iv) 100,000,000 shares of preferred stock, par value $ 0.0001 per share (the “Preferred Stock”).

Holders of Class A common stock and Class B common stock vote together as a single class on all matters submitted to the stockholders for their vote or approval, except as required by applicable law.

Shares of Class A common stock and Class B common stock are not subject to any conversion right and holders of the Class A common stock and Class B common stock do not have preemptive or subscription rights.

Additionally, the Company has 7,869,975 warrants outstanding as of December 31, 2021.

See Note 12—Warrants for additional information.

Class A Common Stock

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Additionally, holders of shares of Class A common stock are entitled to receive ratably, in proportion to the number of shares held by them, dividends and other distributions in cash, stock or property of PWP when, as, and if declared by the Board of Directors out of our assets or legally available funds.

Holders of Class A common stock vote together with holders of Class B common stock as a single class on all matters submitted to the stockholders for their vote or approval, except as required by applicable law.

Shares of Class A common stock as well as Class B common stock are not subject to any conversion rights and do not have preemptive or subscription rights.

As of December 31, 2021, the Company had 7,869,975 warrants outstanding, all of which were exchanged for shares of Class A common stock during the third quarter of 2022.

As of December 31, 2022, no warrants remained outstanding.

See Note 12—Warrants for additional information.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Class B Common Stock

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We currently do not have any preferred stock issued and outstanding.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

On August 3, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.07 per outstanding share of Class A common stock that was paid on September 21, 2021 to each of the holders of Class A common stock of record as of the close of business on September 3, 2021.

On November 3, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.07 per outstanding share of Class A common stock that was paid on December 17, 2021 to each of the holders of Class A common stock of record as of the close of business on December 3, 2021.

Holders of Class B common stock also received dividends equal to the amount of dividends made on 0.001 shares of Class A common stock.

During the years ended December 31, 2022 and 2021, the Company’s Board of Directors declared cash dividends of $ 0.28 per share and $ 0.14 per share, of Class A common stock, respectively, totaling $ 17.9 million and $ 8.7 million, respectively, including dividends paid, accrued dividends and dividend equivalent units on unvested PWP Incentive Plan Awards (as defined in Note 13—Equity-Based Compensation).

Holders of Class B common stock also receive dividends equal to the amount of dividends declared on 0.001 shares of Class A common stock, and such dividends are included in the aforementioned total dividends declared.

Share Repurchase Program

On February 16, 2022, the Company’s Board of Directors approved a stock repurchase program under which the Company is authorized to repurchase up to $ 100.0 million of the Company’s Class A common stock with no requirement to purchase any minimum number of shares.

Shares may be repurchased under the new repurchase program through open market purchases, privately negotiated transactions, block trades, accelerated or other structured share repurchase programs, or other means.

The manner, timing, pricing and amount of any transactions will be subject to the Company’s discretion.

During the year ended December 31, 2022, the Company purchased 9,544,016 shares, at an average price per share of $ 7.20 , resulting in an increase of $ 68.7 million, at cost, to Treasury stock on the Company’s Consolidated Statement of Financial Condition.

Rights upon Liquidation

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For purposes of any such distribution, each share of Class B common stock shall be entitled to receive the same distribution as 0.001 shares of Class A common stock.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Non-Controlling Interests

Non-controlling interests represents the ownership interests in PWP OpCo held by holders other than Perella Weinberg Partners.

Professional Partners and the ILPs own 50,154,199 PWP OpCo Units as of December 31, 2021, which represent a 54.01 % non-controlling ownership interest in PWP OpCo.

As of December 31, 2022 and 2021, Professional Partners and the ILPs own 44,563,877 and 50,154,199 PWP OpCo Units, respectively, which represent a 51.61 % and 54.01 % non-controlling ownership interest in PWP OpCo, respectively.

These PWP OpCo Units are exchangeable into PWP Class A common stock on a one-for-one basis.

See further discussion of exchange rights and exchange activity below.

Class B-1 and Class B-2 common stock have de minimis economic rights.

Registration Rights Agreement

In connection with the Closing, the Company entered into a registration rights agreement among the Sponsor, Professional Partners, the ILPs and other parties thereto from time to time pursuant to which the Company was required to file with the SEC a registration statement pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”) registering the resale of certain shares of its Class A common stock and certain of its other equity securities, which was filed by the Company with the SEC on July 15, 2021.

In connection with the Closing, the Company entered into a registration rights agreement among the Sponsor, Professional Partners and the ILPs pursuant to which the Company was required to file with the SEC a registration statement pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”) registering the resale of certain shares of its Class A common stock and certain of its other equity securities, which was filed by the Company with the SEC on July 15, 2021.

On July 7, 2022, the Company filed a post-effective amendment to the registration statement on Form S-3 for the purpose of converting the prior registration statement on Form S-1 into a registration statement on Form S-3.

The Company bears the expenses incurred in connection with the filing of any registration statements filed pursuant to the registration rights agreement.

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Sponsor Share Surrender and Share Restriction Agreement

Concurrent with the Business Combination Agreement, FTIV, PWP OpCo and certain other parties entered into the Surrender Agreement with the Sponsor, which was amended on May 4, 2021, under which the Founder Shares owned by the Sponsor as of the Closing and certain shares of Class A common stock purchased by the Sponsor as part of private placement units in connection with FTIV’s initial public offering were subject to transfer restrictions for six months following the Closing of the Business Combination, or until December 24, 2021, and certain of the Founder Shares owned by the Sponsor as of the closing continue to be subject to transfer restrictions that lapse in tranches based on share price targets or the 10 year anniversary of the Closing, whichever occurs first.

Additionally, if, prior to the fourth anniversary of the Closing, the closing share price is greater than $ 12.00 per share or $ 15.00 per share for any 20 trading days out of 30 consecutive trading days (each a “Trigger Date”), then, during the 15 day period following such Trigger Date, the Company shall have the right to purchase from the Sponsor up to an aggregate of 1,000,000 Founder Shares per Trigger Date for a purchase price of $ 12.00 per share or $ 15.00 per share, respectively, by providing written notice of such repurchase election to the Sponsor.

Concurrent with the Business Combination Agreement, FTIV, PWP OpCo and certain other parties entered into the Surrender Agreement with the Sponsor, which was amended on May 4, 2021, under which the founder shares owned by the Sponsor as of the Closing and certain shares of Class A common stock purchased by the Sponsor as part of private placement units in connection with FTIV’s initial public offering were subject to transfer restrictions for six months following the Closing of the Business Combination, or until December 24, 2021, and certain of the founder shares owned by the Sponsor as of the Closing continue to be subject to transfer restrictions that lapse in tranches based on share price targets or the 10 year anniversary, whichever occurs first.

On January 7, 2022, the Sponsor distributed 5,456,667 shares of Class A common stock to its members (the “Sponsor Distribution”), after which the Sponsor owned 1,000,000 founder shares.

The 1,000,000 founder shares retained by the Sponsor and 1,738,680 of the founder shares distributed in the Sponsor Distribution remain subject to the transfer restrictions referred to above.

Additionally, if, prior to the fourth anniversary of the Closing, the closing share price is greater than $ 12.00 per share or $ 15.00 per share for any 20 trading days out of 30 consecutive trading days (each a “Trigger Date”), then, during the 15 day period following such Trigger Date, the Company shall have the right to purchase from the Sponsor or its permitted transferees, as applicable, up to an aggregate of 1,000,000 founder shares per Trigger Date for a purchase price of $ 12.00 per share or $ 15.00 per share, respectively, by providing written notice of such repurchase election to the Sponsor or its permitted transferees, as applicable.

On August 9, 2021, the Company repurchased 1,000,000 founder shares from the Sponsor at a purchase price of $ 12.00 per share for a total purchase price of $ 12.0 million.

The share repurchase was recorded to Treasury stock, at cost, on our Consolidated Statements of Financial Condition.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

On August 9, 2021, the Company repurchased 1,000,000 Founder Shares from the Sponsor at a purchase price of $ 12.00 per share for a total purchase price of $ 12.0 million.

The share repurchase was recorded to Treasury stock, at cost, on our Consolidated Statements of Financial Condition as of December 31, 2021.

Stockholder Agreement

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federal, state and local income tax rate prescribed for an individual or corporation (taking into account the non-deductibility of certain expenses and the character of PWP OpCo’s income).

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Exchange Rights

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Concurrently with an exchange of PWP OpCo Units for shares of Class A common stock or cash by a PWP OpCo Unitholder who also holds shares of Class B common stock, such PWP OpCo Unitholder will be required to surrender to the Company a number of shares of Class B common stock equal to the number of PWP OpCo Units exchanged, and such shares will be converted into shares of Class A common stock or cash (at our option) which will be delivered to such PWP OpCo Unitholder (at our option) at a conversion rate of 0.001 .

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The PWP OpCo LPA contains restrictions on the ability to exchange PWP OpCo Units for shares of Class A common stock or cash from an offering of shares of Class A common stock, for the following periods:

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PWP GP may waive, and in certain cases has waived, the foregoing restrictions for any holder with respect to all or a portion of such holder’s units, with no obligation to do so for any other holder.

On January 21, 2022, the Company closed a follow-on public offering of 3,502,033 shares of Class A common stock (the “Offering”) at a public offering price of $ 10.75 per share for total gross proceeds of $ 37.6 million, before deducting underwriting discounts and commissions.

All proceeds from the Offering, net of the underwriting discounts and commissions of $ 0.32 per share or an aggregate of $ 1.1 million, were used by the Company to settle an exchange of certain PWP OpCo Units and certain shares of Class B common stock.

Under the terms of the underwriting agreement, directors, officers and certain significant shareholders signed customary lockup agreements with respect to their ownership of Class A common stock.

Total deferred offering costs of $ 1.3 million for the Offering were netted against the proceeds of the offering in Additional paid-in-capital on the Consolidated Statements of Financial Condition.

On February 28, 2022, May 31, 2022, September 6, 2022, and December 1, 2022 the Company settled exchanges of certain PWP OpCo Units and certain shares of Class B common stock for 337,048 , 629,591 , 764,873 and 362,362 shares of Class A common stock, respectively.

The exchanges created a step-up in tax basis for which the Company recorded on the Consolidated Statements of Financial Condition an increase in Deferred tax assets, net, as well as a related increase in Amounts due pursuant to tax receivable agreement resulting in a net increase to Additional paid-in-capital.

Note 12—Warrants

Public Warrants

Each public warrant entitles the registered holder to purchase one share of Class A common stock at an exercise price of $ 11.50 per share, subject to adjustment, and became exercisable on September 29, 2021, the one-year anniversary of FTIV’s initial public offering.

A warrant holder may exercise its warrants only for a whole number of shares of Class A common stock.

This means that only a whole warrant may be exercised at any given time by a warrant holder.

The warrants will expire five years after the Business Combination, or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a public warrant and will have no obligation to settle such public warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the public warrants is then effective and a current prospectus relating thereto is available, subject to the Company satisfying its obligations described below with respect to registration.

No public warrant will be exercisable and the Company will not be obligated to issue any shares to holders seeking to exercise their public warrants, unless the issuance of the shares upon such exercise has been registered, qualified or deemed exempt under the securities laws of the state of residence of the exercising holder.

The Company filed a registration statement under the Securities Act with the SEC on July 15, 2021 which was declared effective July 26, 2021.

It is the Company’s responsibility to maintain the effectiveness of such registration statement and a current prospectus related thereto, until the expiration of the public warrants in accordance with the provisions of the warrant agreement.

Notwithstanding the above, if the shares of Class A common stock are, at the time of any exercise of a public warrant, not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their public warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Warrant Exchange

On August 23, 2022, the Company concluded an offer to holders of its outstanding warrants which provided such holders the opportunity to receive 0.20 shares of the Company’s Class A common stock in exchange for each warrant tendered by such holders.

This offer coincided with a solicitation of consents from holders of the public warrants to amend the warrant agreement (together, the “Warrant Exchange Offer”).

As a result, 7,388,071 public warrants and 80,456 private warrants were exchanged, collectively, for 1,493,688 shares of the Company’s Class A common stock, with a minimal cash settlement in lieu of partial shares.

Subsequently, as a result of the warrant amendment, each remaining outstanding warrant was converted into 0.18 shares of Class A common stock for a total of 72,260 shares of the Company’s Class A common stock with a minimal cash settlement in lieu of partial shares, and subsequently, no warrants remained outstanding.

The Company incurred $ 1.3 million of costs directly related to the Warrant Exchange Offer, consisting primarily of dealer manager fees and professional, legal, printing, filing, regulatory, and other costs.

The costs were recorded in Professional fees on the Consolidated Statements of Operations as the transactions did not generate any proceeds to the Company and therefore the costs did not qualify to be deferred or charged to Additional paid-in-capital.

Immediately prior to exchange, the warrants were marked to fair value on the respective date of settlement, which was recorded within Change in fair value of warrant liabilities on the Consolidated Statements of Operations.

Upon exchange, the warrant liabilities were removed from the Consolidated Statements of Financial Condition and the issuance of shares of Class A common stock was reflected within equity.

No public or private warrants remained outstanding as of December 31, 2022.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company may call the warrants for redemption as follows:

(i) in whole and not in part;

(ii) at a price of $ 0.01 per warrant;

(iii) upon a minimum of 30 days’ prior written notice of redemption to each warrant holder;

and (iv) if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending on the third day prior to the date on which the Company sends the notice of redemption to the warrant holders.

If the Company calls the public warrants for redemption for cash, management will have the option to require any holder that wishes to exercise the public warrants to do so on a “cashless basis” as described in the warrant agreement.

The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation.

Additionally, in no event will the Company be required to net cash settle the warrants.

Warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock.

After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

As of December 31, 2021, the Company had 7,666,642 public warrants outstanding.

Private Warrants

The private warrants are identical to the public warrants, except that the private warrants and the Class A common stock issuable upon the exercise of the private warrants were subject to certain restrictions on transfer, assignment or sale until July 24, 2021, 30 days after the completion of the Business Combination.

Additionally, the private warrants will be non-redeemable so long as they are held by the Sponsor or its permitted transferees.

If the private warrants are held by someone other than the Sponsor or its permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the public warrants.

As of December 31, 2021, the Company had 203,333 private warrants outstanding.

Valuation of Warrants

The public and private warrants meet the definition of a derivative under ASC 815 and as such, the Company recorded these warrants as liabilities at fair value upon the closing of the Business Combination in accordance with ASC 820 with subsequent changes in their respective fair values recorded in Change in fair value of warrant liabilities on the Consolidated Statements of Operations.

Prior to Warrant Exchange

Prior to the Warrant Exchange Offer, each warrant entitled the registered holder to purchase one share of Class A common stock at an exercise price of $ 11.50 per share.

The warrants met the definition of a derivative under Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging, and as such, the Company recorded these warrants as liabilities at fair value upon the closing of the Business Combination in accordance with ASC Topic 820, Fair Value Measurement, with subsequent changes in their respective fair values recorded in Change in fair value of warrant liabilities on the Consolidated Statements of Operations.

See Note 16—Fair Value Measurements and Investments for descriptions of the valuation methodology and further information.

Exercise of Warrants

On September 29, 2021, all of the public and private warrants became exercisable.

As of December 31, 2021, none of the warrants were exercised.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 13—Equity-Based Compensation

PWP Omnibus Incentive Plan Awards

Concurrent with the Business Combination, the Company adopted the Perella Weinberg Partners 2021 Omnibus Incentive Plan (the “PWP Incentive Plan”), which establishes a plan for the granting of incentive compensation awards measured by reference to PWP Class A common stock.

Under the PWP Incentive Plan, the Company may grant options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance restricted stock units (“PSUs”), stock bonuses, other stock-based awards, cash awards or any combination of the foregoing.

The maximum aggregate number of shares of Class A common stock reserved for issuance under the PWP Incentive Plan for general purposes (the “General Share Reserve”) is 13,980,000 shares and will be increased on the first day of each fiscal year of the Company beginning in calendar year 2022 by the number of shares of Class A common stock equal to the excess, if any, of (i) 15 % of the number of outstanding shares of Class A common stock and the outstanding PWP OpCo Units that are exchangeable for shares of Class A common stock, in each case, on the last day of the immediately preceding fiscal year, over (ii) the number of shares of Class A common stock reserved and available for issuance in respect to future grants of awards under the PWP Incentive Plan as of the last day of the immediately preceding fiscal year.

In addition to the General Share Reserve, 10,200,000 shares of Class A common stock (the “Transaction Pool Share Reserve”) are reserved for issuance under the plan through the one-year anniversary of the Business Combination, of which (i) up to 7,000,000 shares are reserved for Transaction Pool RSUs (defined below) and (ii) 3,200,000 shares are reserved for Transaction Pool PSUs (defined below).

The Company intends to use newly issued shares of PWP Class A common stock to satisfy vested awards under the PWP Incentive Plan, with the exception of vested awards for certain employees in France which will be issued out of the Company’s treasury shares.

Certain employees in France and Canada receive dividend equivalents in the form of additional awards that have the same vesting terms as the original underlying awards.

These additional dividend equivalent awards are granted from the General Share Reserve.

The PWP Incentive Plan established a reserve for a one-time grant of awards that occurred in connection with the Business Combination (the “Transaction Pool Reserve”) as well as a reserve for general purpose grants (the “General Share Reserve”).

The maximum aggregate number of shares of Class A common stock reserved for issuance from the General Share Reserve will be increased on the first day of each fiscal year of the Company beginning in calendar year 2022 by the number of shares of Class A common stock equal to the excess, if any, of (i) 15 % of the number of outstanding shares of Class A common stock and the outstanding PWP OpCo Units that are exchangeable for shares of Class A common stock, in each case, on the last day of the immediately preceding fiscal year, over (ii) the number of shares of Class A common stock reserved and available for issuance in respect to future grants of awards under the PWP Incentive Plan as of the last day of the immediately preceding fiscal year.

The Company uses newly issued shares of Class A common stock to satisfy vested awards under the PWP Incentive Plan, with the exception of vested awards for certain employees in France which are issued out of the Company’s shares of treasury stock.

Awards granted from the General Share Reserve that are subsequently forfeited, cancelled, exchanged, surrendered, terminated or expired are available for future grant.

However, awards granted from the Transaction Pool Share Reserve that are subsequently forfeited, cancelled, exchanged, surrendered, terminated or expired are not available for future grant.

However, awards granted from the Transaction Pool Reserve that are subsequently forfeited, cancelled, exchanged, surrendered, terminated or expired are not available for future grant.

As of December 31, 2022, 7,733,628 total shares remained reserved and available for future issuance under the PWP Incentive Plan.

Business Combination Awards

During the third quarter of 2021, in connection with the Business Combination, the Company granted awards in the form of (i) restricted stock units out of the Transaction Pool Share Reserve consisting of (a) PSUs that only vest upon the achievement of both service and market conditions (“Transaction Pool PSUs”) and (b) RSUs that vest upon the achievement of service conditions (“Transaction Pool RSUs”) as well as (ii) PSUs out of the General Share Reserve to certain executives that vest upon the achievement of both service and market conditions (“Management PSUs”).

During the third quarter of 2021, in connection with the Business Combination, the Company granted awards in the form of (i) restricted stock units out of the Transaction Pool Reserve consisting of (a) PSUs that only vest upon the achievement of both service and market conditions (“Transaction Pool PSUs”) and (b) RSUs that vest upon the achievement of service conditions (“Transaction Pool RSUs”) as well as (ii) PSUs out of the General Share Reserve to certain executives that vest upon the achievement of both service and market conditions (“Long-Term Incentive Awards”).

Transaction Pool PSUs —The service condition requirement with respect to the Transaction Pool PSUs is generally satisfied over three to five years , with 20 % of the awards vesting on each of the 36, 42, 48, 54 and 60 month anniversaries of the grant date.

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The following table summarizes activity related to unvested Transaction Pool PSUs for the year ended December 31, 2021:

Transaction Pool PSUs Weighted Average Grant Date Fair Value Per Share

The following table summarizes the balance of unvested Transaction Pool PSUs and activity during the year ended December 31, 2022:

Transaction Pool PSUs

Number of Shares Weighted-Average Grant Date Fair Value Per Share

Balance at January 1, 2022

3,208,126 $ 12.74

Vested ( 5,000 ) 13.53

Forfeited ( 160,000 ) 12.74

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__________________

(1) Includes dividend equivalents that have been awarded in the form of additional Transaction Pool PSUs that were granted from the General Share Reserve.

The grant date fair value of the Transaction Pool PSUs granted during the year ended December 31, 2021 was $ 40.9 million.

(1) Includes dividend equivalent units that have been awarded in the form of additional Transaction Pool PSUs that were granted from the General Share Reserve.

The weighted-average grant date fair value of the Transaction Pool PSUs granted during the year ended December 31, 2021 was $ 12.74 per award.

The total fair value of Transaction Pool PSUs that vested during each of the years ended December 31, 2022 and 2021 was nominal.

As of December 31, 2022, total unrecognized compensation expense related to unvested Transaction Pool PSUs was $ 25.3 million, which is expected to be recognized over a weighted average period of 2.7 years.

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Volatility factor (1)

________________

(1) Based on historical peer company volatility.

Transaction Pool RSUs —The Transaction Pool RSUs generally vest in equal annual installments over the requisite service period of three years .

The grant date fair value of the Transaction Pool RSUs granted during the year ended December 31, 2021 was $ 97.7 million, which was based on the PWP stock price on the date of grant.

As of December 31, 2021, total unrecognized compensation expense related to unvested Transaction Pool RSUs was $ 60.0 million, which is expected to be recognized over a weighted average period of 2.44 years.

The following table summarizes activity related to unvested Transaction Pool RSUs for the year ended December 31, 2021:

Transaction Pool RSUs Weighted Average Grant Date Fair Value Per Share

The following table summarizes the balance of unvested Transaction Pool RSUs and activity during the year ended December 31, 2022:

Transaction Pool RSUs

Number of Shares Weighted-Average Grant Date Fair Value Per Share

Balance at January 1, 2022

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__________________

(1) Includes dividend equivalents that have been awarded in the form of additional Transaction Pool RSUs that were granted from the General Share Reserve.

Certain employee offer letter awards, that were previously accounted for as liability awards due to a cash settlement option, have been settled using Transaction Pool RSUs.

This settlement was treated as a modification of the award, and as such, the liability balance of $ 3.9 million as of the Transaction Pool RSU grant date was reclassified from Accounts payable, accrued expenses and other liabilities to Additional paid-in capital on the Consolidated Statement of Financial Condition as of December 31, 2021.

(1) Includes dividend equivalent units that have been awarded in the form of additional Transaction Pool RSUs that were granted from the General Share Reserve.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Management PSUs — The service condition requirement with respect to the Management PSUs is generally satisfied in two equal installments subject to continued employment on the third and fifth anniversaries of the grant date.

The market condition is satisfied upon the achievement of closing stock prices equal to $ 15 , $ 20 , $ 25 and $ 30 for any 20 trading days out of any 30 consecutive trading days prior to the fifth anniversary of the grant date, as measured on the last calendar day of each month, subject to linear interpolation between the applicable price points.

The following table summarizes activity related to unvested Management PSUs for the year ended December 31, 2021:

Management PSUs Weighted Average Grant Date Fair Value Per Share

The weighted-average grant date fair value of the Transaction Pool RSUs granted during the year ended December 31, 2021 was $ 13.97 per award, which was based on the PWP stock price on the date of grant.

The total fair value of Transaction Pool RSUs that vested during the years ended December 31, 2022 and 2021 was $ 16.2 million and $ 20.1 million, respectively.

As of December 31, 2022, total unrecognized compensation expense related to unvested Transaction Pool RSUs was $ 27.7 million, which is expected to be recognized over a weighted average period of 1.8 years.

Long-Term Incentive Awards —The service condition requirement with respect to the Long-Term Incentive Awards is generally satisfied in two equal installments subject to continued employment on the third and fifth anniversaries of the grant date.

The market condition is satisfied with respect to 30 % of each award at the $ 15 closing stock price, 65 % of each award at the $ 20 closing stock price, 82.5 % of each award at the $ 25 closing stock price, and 100 % of each award at the $ 30 closing stock price, subject to linear interpolation between the applicable price points.

The following table summarizes the balance of unvested Long-Term Incentive Awards and activity during the year ended December 31, 2022:

Long-Term Incentive Awards

Number of Shares Weighted-Average Grant Date Fair Value Per Share

Balance at January 1, 2022

Granted 9,500,000 8.86

9,500,000 $ 9.55

Forfeited ( 500,000 ) 9.55

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9,000,000 $ 9.55

The weighted average grant date fair value of the Management PSUs granted during the year ended December 31, 2021 was $ 84.2 million.

As of December 31, 2021, total unrecognized compensation expense related to unvested Management PSUs was $ 76.6 million, which is expected to be recognized over a weighted average period of 3.69 years.

The Company estimated the fair value of the Management PSUs on the grant date using a Monte-Carlo simulation valuation model with the following assumptions:

The weighted-average grant date fair value of the Long-Term Incentive Awards granted during the year ended December 31, 2021 was $ 9.55 per award.

No Long-Term Incentive Awards vested during the years ended December 31, 2022 or 2021.

As of December 31, 2022, total unrecognized compensation expense related to unvested Long-Term Incentive Awards was $ 55.4 million, which is expected to be recognized over a weighted average period of 2.8 years.

The Company estimated the fair value of the Long-Term Incentive Awards on the grant date using a Monte-Carlo simulation valuation model with the following assumptions:

Risk-free interest rate 0.77 %

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Volatility factor (1)

__________________

(1) Based on historical peer company volatility.

General Awards

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The General RSUs vest over the requisite service period, which is generally one to five years .

The grant date fair value of the General RSUs granted during the year ended December 31, 2021 was $ 12.5 million, which was based on the PWP stock price on the date of grant.

As of December 31, 2021, total unrecognized compensation expense related to unvested General RSUs was $ 10.2 million which is expected to be recognized over a weighted average period of 2.60 years.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The following table summarizes activity related to unvested General RSUs for the year ended December 31, 2021:

General RSUs Weighted Average Grant Date Fair Value Per Share

The following table summarizes the balance of unvested General RSUs and activity during the year ended December 31, 2022:

Number of Shares Weighted Average Grant Date Fair Value Per Share

Balance at January 1, 2022

Granted 906,836 13.76

906,517 $ 13.76

6,983,355 9.82

Vested ( 697,932 ) 11.97

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7,144,227 $ 10.10

__________________

(1) Includes dividend equivalent units that have been awarded in the form of additional General RSUs that were granted from the General Share Reserve.

The weighted-average grant date fair value of the General RSUs granted during the year ended December 31, 2021 was $ 13.76 per award, which was based on the PWP stock price on the date of grant.

The total fair value of General RSUs that vested during the year ended December 31, 2022 was $ 6.5 million and was a nominal amount for the year ended December 31, 2021.

As of December 31, 2022, total unrecognized compensation expense related to unvested General RSUs was $ 46.8 million which is expected to be recognized over a weighted average period of 2.1 years.

Voting and Dividend Equivalent Rights

Grantees of the Company’s RSUs and PSUs have no rights as stockholders with respect to the right to vote or the right to receive dividends prior to the date that the underlying shares are issued.

Grantees of the Company’s PWP Incentive Plan Awards have no rights as stockholders with respect to the right to vote or the right to receive dividends prior to the date that the underlying shares are issued.

If during the period commencing on the grant date and ending on the date the underlying shares are issued, the Company declares a dividend on its shares, then the grantee shall be eligible to receive such dividends on or about the date such shares are issued.

Certain employees in France and Canada receive dividends in the form of award grants that match the underlying award from which the dividends were generated.

The remaining employees receive such awards in the form of cash.

Grantees receive dividends in the form of cash when the underlying shares are issued, with the exception of certain employees in France and Canada who receive dividend equivalent units in the form of award grants that match the underlying award from which the dividends were generated.

These additional dividend equivalent awards are issued out of the Company’s shares of treasury stock for employees in France and granted from the General Share Reserve for employees in Canada.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Legacy Awards and Professional Partners Awards

Professional Partner Awards

As more fully described below, prior to the Business Combination, Professional Partners granted certain equity-based awards to partners providing services to PWP OpCo (the “Legacy Awards”).

Prior to the Business Combination, Professional Partners granted certain equity-based awards to partners providing services to PWP OpCo (the “Legacy Awards”).

In connection with the Business Combination and a related internal reorganization of Professional Partners, an ownership structure was implemented that includes a class of partnership units that allocates increases in value and income and distributions on a pro-rata basis to all holders of such partnership units in accordance with their ownership interests.

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The $ 301.5 million grant-date fair value of the Professional Partners Awards is based on the closing price of PWP Class A common stock on the date of grant as units in Professional Partners are ultimately exchangeable into shares of PWP Class A common stock on a one-for-one basis.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The vesting of Professional Partners Awards does not dilute Perella Weinberg Partners shareholders relative to Professional Partners as Professional Partners’ interest in PWP OpCo does not change as a result of granting those equity awards to its working partners.

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As of December 31, 2022, there was $ 206.2 million of unrecognized compensation expense related to unvested Professional Partners Awards, which is expected to be recognized over a weighted-average period of 3.4 years.

Legacy Awards Prior to Business Combination

Concurrent with the TPH Business Combination, an initial tranche of Legacy Awards was granted to certain partners supporting the Company’s operations.

The initial tranche of the Legacy Awards generally vested over a three-year service period beginning on the grant date.

Subsequent to the initial tranche, Legacy Awards were granted to partners on a periodic basis in accordance with the LPA and generally vested over four years .

Prior to the Business Combination, in the event one of these partners was terminated or left at will before meeting their service requirement, all or a portion of their equity was forfeited and allocated to the other partners in accordance with the LPA.

Professional Partners had a right but not an obligation to repurchase the awards upon certain termination events.

During the years ended December 31, 2018 and 2017, Professional Partners granted Legacy Awards in the amount of $ 4.6 million and $ 37.6 million, respectively, which vested over a four year service period beginning on the grant date.

The measurement of the grant-date fair value required Professional Partners to make estimates about future operating results and the appropriate risk-adjusted discount rates.

The methods used to estimate the fair value of equity-based compensation include the market approach and the income approach, each of which involve a significant degree of judgment.

Under the market approach, fair value is determined by multiplying earnings before interest and taxes, depreciation and amortization (“EBITDA”) and revenues by the relevant valuation multiple of comparable public companies—adjusted for differences that impact comparability.

Under the income approach, fair value is determined by converting future projected cash flows to a single present value amount (discounted) using current expectations about those future cash flows.

Perella Weinberg Partners

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(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The following table presents the ranges of the significant assumptions used to develop the grant date fair value of these equity-based awards:

Range for the Year Ended December 31,

Valuation methodology Significant assumptions 2018 2017

Income approach Discount rate 9.90 % - 10.80 %

9.80 % - 11.10 %

Market approach Income multiples 12.00 - 20.00

11.00 - 14.00

Revenue multiples 2.25 - 4.00

Growth rate 2.50 % - 2.75 %

2.50 % - 2.75 %

On October 1, 2018, the Company modified certain of its existing Legacy Awards, and as a result of the modification, the Company was required to recognize incremental equity-based compensation expense of $ 74.6 million, which was subject to a graded vesting schedule over a five year service period beginning on October 1, 2018.

In connection with the October 1, 2018 modification, the Company utilized a Monte Carlo simulation, in addition to the market and income approaches, to estimate the fair value of the modification.

The following table presents the ranges of the significant assumptions used to develop the fair value estimate of this modification:

Valuation methodology Significant assumptions Range for October 1, 2018

Monte Carlo simulation Risk-free interest rate 2.98 %

Expected volatility 30 %

Expected term of the awards granted during the period (years) 5

Income approach Discount rate 9.90 % - 10.80 %

Market approach Income multiples 12.00 - 20.00

Revenue multiples 2.25 - 4.00

Growth rate 2.50 % - 2.75 %

The risk-free interest rate selected was based on a five-year U.S.

Treasury rate, which matched the expected term of the award.

The stock price volatility selected was based upon an average of historical volatilities of comparable publicly traded companies in industries similar to the Professional Partners, as the Professional Partners did not have a basis for actual stock price volatility.

Additionally, it was assumed that no dividends would be paid over the vesting period.

During the year ended December 31, 2019, Professional Partners granted Legacy Awards with a grant date fair value of $ 14.7 million.

The fair value of these awards was estimated using the income approach and assumed a range of discount rates between 3.6 % and 12.1 %.

During the year ended December 31, 2020, Professional Partners granted Legacy Awards with a grant date fair value of $ 6.4 million.

Legacy Awards Prior to Business Combination

During the year ended December 31, 2020, Professional Partners granted Legacy Awards with a grant date fair value of $ 6.4 million and a vesting term of one year .

The fair value of these awards was estimated using the income approach and assumed a range of discount rates between 3.8 % and 11.2 %.

During the year ended December 31, 2021, Professional Partners granted Legacy Awards with a grant date fair value of $ 9.3 million, which was estimated using the income approach and assume a range of discount rates between 2.0 % and 9.8 %.

During the year ended December 31, 2021, Professional Partners granted Legacy Awards with a vesting term of one year and a grant date fair value of $ 9.3 million, which was estimated using the income approach and assume a range of discount rates between 2.0 % and 9.8 %.

Under the income approach, fair value is determined by converting future projected cash flows to a single present value amount (discounted) using current expectations about those future cash flows.

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Additionally, the Company elected to continue to recognize Equity-based compensation expense over the original vesting period.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Legacy Awards were cancelled in connection with the Business Combination, but the Company will continue to amortize the unrecognized cost associated with the Legacy Awards over the original vesting schedule.

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Professional Partners Awards (1)

61,375 32,334 —

Total Equity-based compensation $ 154,158 $ 96,330 $ 24,815

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As such the related equity-based compensation expense is fully attributed to non-controlling interests.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 14—Other Compensation and Benefits

Compensation and benefits includes, but is not limited to, salaries, bonuses (discretionary awards and guaranteed amounts), severance and deferred compensation.

Compensation and benefits includes, but is not limited to, salaries, bonuses (discretionary awards and guaranteed amounts), severance, deferred compensation, benefits and payroll taxes.

In all instances, compensation expense is accrued over the requisite service period.

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The cash surrender value of these life insurance policies is also included in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition.

During the year ended December 31, 2019, the Company granted deferred compensation to certain U.S.

These awards total approximately $ 8.8 million and vest on various dates between January 1, 2022 and January 1, 2023 or earlier upon the occurrence of certain events.

Forfeiture of unvested grants occurs in the event of involuntary termination, and payment is due on various dates between April 2022 and April 2023 or earlier upon the occurrence of certain events.

Also, during the year ended December 31, 2019, the Company entered into deferred profit sharing arrangements with certain UK partners in the amount of $ 3.4 million.

The deferred amounts will be paid to these UK partners on various dates, commencing on December 31, 2020 through April 15, 2023.

No deferred compensation awards were granted during the years ended December 31, 2021 and 2020.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Deferred compensation liabilities will be paid at various intervals through 2023 and are presented within Deferred compensation programs on the Consolidated Statements of Financial Condition.

During the year ended December 31, 2019, $ 0.9 million of deferred compensation awards were forfeited.

During the year ended December 31, 2022, the Company settled $ 8.5 million of the deferred compensation liability, of which $ 2.6 million was settled through a reduction of certain partners’ outstanding promissory notes and interest receivable.

Refer to Note 17—Related Party Transactions for more information.

There were no forfeitures during the years ended December 31, 2022, 2021, and 2020.

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Benefit Plans

Certain employees participate in employee benefit plans, which consists of defined contribution plans including (i) profit-sharing plans qualified under Section 401(k) of the Internal Revenue Code and (ii) a UK pension scheme for UK employees and (iii) a Germany pension plan for employees in Germany.

Certain employees participate in employee benefit plans, which consists of defined contribution plans including (i) profit-sharing plans qualified under Section 401(k) of the Internal Revenue Code, (ii) a UK pension scheme for UK employees and (iii) a Germany pension plan for employees in Germany.

For the years ended December 31, 2022, 2021 and 2020, expenses related to the Company’s employee benefit plans were $ 5.8 million, $ 5.0 million, and $ 4.5 million, respectively, and are included in Compensation and benefits in the Consolidated Statements of Operations.

Separation and Termination Benefits

In the second quarter of 2020, the Company underwent a review of operations and headcount levels and the decision was made to reduce employee headcount.

In conjunction with such reduction, affected employees were offered a combination of separation and transition benefits (the “termination cost”).

The total termination cost was approximately $ 6.0 million which was included in Compensation and benefits in the Consolidated Statements of Operations for the year ended December 31, 2020.

These termination costs were fully recognized once the service requirement of the affected employees was complete.

The termination costs were substantially paid by December 31, 2020.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 15—Net Income (Loss) Per Share Attributable to Class A Common Shareholders

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The calculations of basic and diluted net income (loss) per share attributable to Class A common shareholders are presented below:

Year Ended December 31, 2022

For the period from June 24, 2021 through December 31, 2021

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Diluted $ ( 0.46 ) $ ( 0.66 )

Basic and diluted net income (loss) per share attributable to Class B common shareholders has not been presented as these shares are entitled to an insignificant amount of economic participation.

The Company uses the treasury stock method to determine the potential dilutive effect of unvested PWP Incentive Plan Awards and outstanding warrants and the if-converted method to determine the potential dilutive effect of exchanges of PWP OpCo Units into Class A common stock.

The Company adjusts net income (loss) attributable to Class A common shareholders under both the treasury stock method and if-converted method for the reallocation of net income (loss) between Class A common shareholders and non-controlling interests that result upon the assumed issuance of dilutive shares of Class A common stock as if the issuance occurred as of the beginning of the applicable period.

To the extent the warrants were dilutive prior to the Warrant Exchange Offer, the Company adjusted the net income (loss) attributable to Class A common shareholders under the treasury stock method to reverse the effect on earnings of classifying the warrants as liabilities.

All adjustments are presented net of any tax impact.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Basic and diluted net income (loss) per share attributable to Class B common shareholders has not been presented as these shares are entitled to an insignificant amount of economic participation.

The Company uses the treasury stock method to determine the potential dilutive effect of outstanding warrants and unvested RSUs and PSUs and the if-converted method to determine the potential dilutive effect of exchanges of PWP OpCo Units into Class A common stock.

The Company also adjusts the net income (loss) attributable to Class A common shareholders under the treasury stock method to reverse the effect on earnings of classifying the warrants as liabilities.

All adjustments are net of any tax impact.

The following table presents the weighted average potentially dilutive shares that were excluded from the calculation of diluted net income (loss) per share under the treasury stock method or if-converted method, as applicable, because the effect of including such potentially dilutive shares was antidilutive for the period presented:

Year Ended December 31, 2022

For the period from June 24, 2021 through December 31, 2021

Warrants 1,029,210

RSUs and PSUs 275,453

PWP Incentive Plan Awards 369,413 275,453

Total 369,413 1,304,663

__________________

(1) When assessed for the year ended December 31, 2022, the warrants were out-of-the-money prior to the Warrant Exchange Offer, which resulted in no potentially dilutive shares under the treasury stock method.

Refer to Note 12—Warrants for further information regarding the Warrant Exchange Offer.

Note 16—Fair Value Measurements and Investments

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Level 1—Unadjusted quoted prices are available in active markets for identical financial instruments as of the reporting date.

Level 2 - Pricing inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in active markets.

Level 3 - Pricing inputs are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument.

Level 2—Pricing inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3—Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument.

The inputs into the determination of fair value require significant management judgment or estimation.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the instrument.

As of December 31, 2022 and 2021, the fair values of cash, restricted cash, accounts receivable, due from related parties, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these items.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The fair values of cash, restricted cash, accounts receivable, due from related parties, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these items.

Due to the variable rate nature of the Revolving Credit Facility, the carrying value as of December 31, 2020 approximated the fair value.

Fair Value of Financial Instruments

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Financial assets

Investments in mutual funds and other

Treasury securities

$ — $ 140,110 $ — $ 140,110

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$ — $ 140,598 $ — $ 140,598

Financial liabilities

Warrant liabilities - Public warrants $ 27,063 $ — $ — $ 27,063

Warrant liabilities - Private warrants — — 742 742

Total financial liabilities $ 27,063 $ — $ 742 $ 27,805

December 31, 2021

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$ 500 $ 565 $ — $ 1,065

Financial liabilities

Warrant liabilities - Public warrants $ 27,063 $ — $ — $ 27,063

Warrant liabilities - Private warrants — — 742 742

Total financial liabilities $ 27,063 $ — $ 742 $ 27,805

The Company had no transfers between fair value levels during each of the years ended December 31, 2022 and 2021.

As of December 31, 2021 and 2020, the Company held investments related to a legacy deferred compensation program and securities.

As of December 31, 2022, a consolidated broker-dealer subsidiary held investments in U.S.

Treasury securities with original maturities of less than 12 months, which are included in Investments in short-term marketable debt securities on the Consolidated Statements of Financial Condition.

These securities are carried at fair value with changes in fair value, including earned interest income, included in Other income (expense) on the Consolidated Statements of Operations, as required for broker-dealers.

The aggregate cost basis of these securities was $ 139.2 million as of December 31, 2022.

As of December 31, 2021, the Company held investments related to a legacy deferred compensation program and securities.

These amounts are included in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition.

The Company recognized interest income and net unrealized gains (losses) on the U.S.

Treasury securities and other investments of $ 1.4 million for the year ended December 31, 2022 and nominal amounts for the years ended December 31, 2021 and 2020.

The cash surrender value of company-owned life insurance is included in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition at the amount that could be realized under the contract as of December 31, 2022 and 2021, which approximates fair value.

The public warrants are valued using quoted market prices on the Nasdaq Global Select Market under the ticker PWPPW and are included in Warrant liabilities on the Consolidated Statements of Financial Condition.

As of December 31, 2021, the price per public warrant was $ 3.53 .

Prior to the Warrant Exchange Offer, the public warrants were valued using quoted market prices on the Nasdaq Global Select Market under the ticker PWPPW and were included in Warrant liabilities on the Consolidated Statements of Financial Condition.

Management determined the fair value of the private warrants using the Black-Scholes option pricing valuation model (“Valuation Model”).

The private warrants were classified as Level 3 because of the use of significant unobservable inputs in the Valuation Model, which, as of December 31, 2021, included an expected dividend yield of 2.2 % and expected volatility of 35.1 %.

Perella Weinberg Partners

1 unchanged sentence

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Management determines the fair value of the private warrants using the Black-Scholes option pricing valuation model (“Valuation Model”).

The private warrants are classified as Level 3 as of December 31, 2021 because of the use of significant unobservable inputs in the Valuation Model.

The inputs into the Valuation Model for the private warrants, including some significant unobservable inputs, were as follows:

December 31, 2021

Risk-free rate of return 1.19 %

Expected volatility 35.06 %

Expected dividend yield 2.20 %

Expected term (years) 4.48

Exercise price per share $ 11.50

Asset price per share $ 12.86

The Company’s use of the Valuation Model required the use of the following assumptions:

• The risk-free rate of return assumption was based on the continuously compounded, term-matching, zero-coupon rate derived from a U.S.

Treasury yield curve on each valuation date.

An increase in the risk-free interest rate, in isolation, would result in an increase in the fair value measurement of the warrant liabilities and vice versa.

• The expected volatility assumption was based on the average of the implied volatility from the Company’s publicly traded warrants and a leverage adjusted volatility of the Company’s publicly traded industry peers.

An increase in the expected volatility, in isolation, would result in an increase in the fair value measurement of the warrant liabilities.

• The dividend yield was based on the continuously compounded quarterly dividend the Company expects to pay during the term.

The resulting valuation for the private warrants were determined to be $ 3.65 per unit as of December 31, 2021.

The Company had 203,333 private warrants outstanding as of December 31, 2021, resulting in a fair value of $ 0.7 million recorded within Warrant liabilities in the Consolidated Statements of Financial Condition.

The following table presents changes in Level 3 financial liabilities measured at fair value for the period from June 24, 2021 to December 31, 2021:

The following table presents the fair value of the private warrants as included in Warrant liabilities on the Consolidated Statements of Financial Condition and the changes in fair value of the private warrants:

Private Warrants

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Change in fair value 67

Balance at end of period $ 742

Other Investments

As of December 31, 2021, the Company applies the equity method of accounting to its investment in PFAC Holdings I LLC (“PFAC Holdings”), an indirect parent of PWP Forward Acquisition Corp.

Balance at December 31, 2021

Change in fair value ( 457 )

Private warrants exchanged for shares of Class A common stock ( 285 )

Balance at December 31, 2022

Changes in fair value of the private and public warrants are presented within Change in fair value of warrant liabilities on the Consolidated Statements of Operations.

Equity Method Investments

Beginning in 2021, the Company applied the equity method of accounting to its $ 0.9 million investment in PFAC Holdings I LLC (“PFAC Holdings”), an indirect parent of PWP Forward Acquisition Corp.

I (“PFAC”), a special purpose acquisition company.

As of December 31, 2021, the Company’s investment in PFAC Holdings was $ 1.3 million.

The Company’s share of earnings of PFAC Holdings is included in the Consolidated Statements of Operations for the year ended December 31, 2021.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

As of December 31, 2021, the balance of the Company’s equity method investment in PFAC Holdings was $ 1.3 million, which was presented within Prepaid expenses and other assets on the Consolidated Statements of Financial Condition.

On December 13, 2022, PFAC was dissolved and as a result the Company wrote off its investment in PFAC Holdings.

The Company recorded a $ 1.3 million net loss and a $ 0.4 million net gain in Other income (expense) on the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively, for its share of PFAC earnings net of the investment write off in 2022.

Note 17—Related Party Transactions

Asset Management Business / PWP Capital Holdings LP

Prior to the Separation, PWP Holdings LP paid for shared costs including compensation for corporate support functions and non-compensation costs such as rent, occupancy, professional services, information technology and communication costs.

Such costs were paid on behalf of the Asset Management business and allocated to the Asset Management business on a specific identification basis or on a pro-rata basis of headcount, relative usage or another basis depending on the nature of the expense.

PWP Capital Holdings LP

On February 28, 2019, a reorganization of the existing investment banking advisory and asset management businesses of PWP Holdings LP was effected which resulted in the spin-off of its asset management business (the “Separation”).

PWP Holdings LP was divided into (i) PWP OpCo, which holds the former advisory business and (ii) PWP Capital Holdings LP, which holds the former asset management business.

TSA Agreemen t—In connection with the Separation, the Company entered into a transition services agreement (the “TSA”) with PWP Capital Holdings LP under which the Company agreed to provide certain services to PWP Capital Holdings LP and PWP Capital Holdings LP agreed to provide certain services to the Company.

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Additionally, the Company pays certain vendors for services that were previously contracted and are shared between PWP Capital Holdings LP and the Company until such time as separate terms can be reached with the vendors or the TSA terminates.

Fees for services provided as well as a list of specified vendors are stipulated within the TSA.

Sublease Income - In connection with the Separation, the Company subleases a portion of its office space at its New York location to PWP Capital Holdings LP.

Sublease Income —In connection with the Separation, the Company subleases a portion of its office space at its New York location to PWP Capital Holdings LP through 2023.

The Company also subleased a portion of its office space at its Houston location to PWP Capital Holdings LP, but this sublease was terminated in August 2021.

Sublease rent payments are due monthly and are based on PWP Capital Holdings LP’s pro-rata portion of the underlying lease agreements including base rent as well as other lease related charges.

See additional information regarding the subleases at Note 5—Leases.

Compensation Arrangements - In addition, PWP Capital Holdings LP has entered into an arrangement with an employee of the Company related to services provided directly to PWP Capital Holdings LP.

With respect to services provided to PWP Capital Holdings LP, the amounts paid and payable to the employee now and in the future are recognized by PWP Capital Holdings LP.

All compensation related to services this employee provides to the Company are included in Compensation and benefits in the Consolidated Statements of Operations.

See additional information regarding the subleases in Note 5—Leases.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Compensation Arrangements —In addition, PWP Capital Holdings LP has entered into an arrangement with certain employees of the Company, including members of management, related to services provided directly to PWP Capital Holdings LP.

With respect to services provided to PWP Capital Holdings LP, the amounts paid and payable to such employees now and in the future are recognized by PWP Capital Holdings LP.

All compensation related to services these employees provide to the Company are included in Compensation and benefits in the Consolidated Statements of Operations.

Amounts due from PWP Capital Holdings LP are reflected as Due from related parties on the Consolidated Statements of Financial Condition.

The following table shows the components of related party income and expenses related to the TSA and sublease agreements included in the Consolidated Statements of Operations for the periods presented.

The following table shows the components of income from PWP Capital Holdings LP reported within Related party income in the Consolidated Statements of Operations for the periods presented.

Year Ended December 31,

2022 2021 2020

Related party income

TSA income – Compensation related

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682 2,957 3,942

Total related party income

$ 6,781 $ 9,263 $ 8,810

Related party expenses

TSA compensation expense (1)

$ 134 $ 176 $ 588

TSA non-compensation expense (2)

$ 134 $ 286 $ 612

Total income from PWP Capital Holdings LP

$ 2,690 $ 6,781 $ 9,263

(1) TSA compensation expense is included in Compensation and benefits in the Consolidated Statements of Operations.

(2) TSA non-compensation expense is included in various financial statement line items in the Consolidated Statements of Operations.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Tax Receivable Agreement

In connection with the Business Combination, the Company entered into a tax receivable agreement with PWP OpCo, Professional Partners and ILPs under which the Company agreed to payment of 85 % of the amount of savings, if any, that the Company realizes in U.S.

As of December 31, 2021, the Company had an amount due of $ 14.1 million pursuant to the tax receivable agreement, which represents management’s best estimate of the amounts currently expected to be owed in connection with the tax receivable agreement.

As of December 31, 2022, the Company had an amount due of $ 23.0 million pursuant to the tax receivable agreement, which represents management’s best estimate of the amounts currently expected to be owed in connection with the tax receivable agreement and is reported within Amount due pursuant to tax receivable agreement on the Consolidated Statement of Financial Condition.

The Company expects to make the following payments with respect to the tax receivable agreement, which may differ significantly from actual payments made:

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Total payments $ 22,991

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Partner Promissory Notes

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As the Partner Promissory Notes and associated interest receivable relate to equity transactions, they have been recognized as a reduction of equity on the Consolidated Statements of Financial Condition in the amounts of $ 3.5 million and $ 6.0 million as of December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, $ 1.8 million of principal and interest was repaid to the Company from partners.

During the year ended December 31, 2019, $ 1.3 million of principal and interest was repaid to the Company from partners and $ 1.8 million of additional Partner Promissory Notes were issued to certain partners with terms similar to those previously described.

During the year ended December 31, 2022, $ 2.6 million of principal and interest related to Partner Promissory Notes was effectively repaid to the Company from certain partners by foregoing the amount due from their respective deferred compensation agreements.

During the year ended December 31, 2021, $ 1.8 million of principal and interest related to the Partner Promissory notes was repaid to the Company from certain partners.

No amounts related to the Partner Promissory Notes were repaid to the Company or newly issued by the Company for the year ended December 31, 2020.

During the year ended December 31, 2019 and in connection with the Separation, certain Partner Promissory Notes in the amount of $ 1.6 million were transferred from the Company to PWP Capital Holdings LP.

Other Partner Loans and Loan Guarantees

In November 2021, PWP OpCo agreed to provide loans to certain partners in an aggregate amount of approximately $ 3.3 million.

These loans are recognized in Due from related parties on the Consolidated Statements of Financial Condition.

As of December 31, 2022 and 2021 $ 3.4 million and $ 3.3 million, respectively of outstanding loans to certain partners and related interest receivable are recognized in Due from related parties on the Consolidated Statements of Financial Condition.

The Company has unconditionally guaranteed certain of its partners’ loans with First Republic Bank.

Refer to Note 18—Commitments and Contingencies for additional information on the guarantees.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Convertible Notes

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Refer to Note 10—Debt for additional information on the Convertible Notes.

Revolving Credit Facility

An executive of the Company was an independent director on the board of Cadence Bank, the holder of the Revolving Credit Facility, until May of 2019 at which time he retired from that position.

Refer to Note 10—Debt for additional information on the Revolving Credit Facility.

Other Related Party Transactions

The Company has a minority interest in PFAC Holdings, an indirect parent of PFAC.

In February 2022, the Company paid $ 0.5 million to an entity controlled by a member of the Board of Directors to reimburse a portion of expenses incurred by that entity in connection with the joint pursuit of a potential investment opportunity.

The Company had a minority interest in PFAC Holdings, an indirect parent of PFAC.

The Company earned an advisory fee related to PFAC’s initial public offering of $ 0.6 million during the year ended December 31, 2021.

In addition, the Company receives a fee of $ 10,000 per month for certain administrative services provided to PFAC.

On December 31, 2022, PFAC was dissolved and as a result the Company wrote off its investment in PFAC Holdings.

During the year ended December 31, 2021, the Company earned $ 3.1 million in advisory fees from entities controlled by a member of the Board of Directors, which are included in Revenues on the Consolidated Statements of Operations.

The Company may earn additional advisory fees from these related entities in future periods.

In September 2021, Perella Weinberg UK Limited, Professional Partners and certain partners (including one partner who serves as a Company director and co-president) entered into a reimbursement agreement, pursuant to which such partners directed Professional Partners to pay distributions related to their ACUs first to a subsidiary of the Company, so that the subsidiary can make employment income tax payments on such distributions to the appropriate non-US authorities.

Perella Weinberg UK Limited, Professional Partners and certain partners (including one partner who serves as a Company director and president) are party to a reimbursement agreement, pursuant to which such partners directed Professional Partners to pay distributions related to their ACUs first to a subsidiary of the Company, so that the subsidiary can make employment income tax payments on such distributions to the appropriate non-US authorities.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 18—Commitments and Contingencies

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These guarantees are secured by the partners’ interests in Professional Partners.

As of December 31, 2021 and 2020, no loan was in default.

As of December 31, 2022 and 2021, no loans were in default.

Indemnifications

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Although there can be no assurance of the outcome of such legal actions, in the opinion of management and, after consultation with external counsel, the Company believes it is neither probable nor reasonably possible that any current legal proceedings or claims would individually or in the aggregate have a material adverse effect on the consolidated financial statements of the Company as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021, and 2020.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

On October 20, 2015, Perella Weinberg Partners LLC, PWP MC LP, PWP Equity I LP and Perella Weinberg Partners Group LP (collectively, the “PWP Plaintiffs”), filed a complaint against Michael A.

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The Defendants are seeking declaratory relief and damages of no less than $ 60.0 million, as well as statutory interest.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Discovery is complete.

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These litigation costs are included in Professional fees in the Consolidated Statements of Operations.

In the ordinary course of business and in connection with hiring certain senior employees, the Company entered into employment agreements whereby the Company committed to grant equity awards to such newly hired employees contingent upon certain events (including, but not limited to, the Company becoming a public company).

The Company settled these commitments in the third quarter of 2021 with a grant of awards approved by the compensation committee under our PWP Incentive Plan.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 19—Business Information

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$ 717,093 $ 718,327

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 20—Subsequent Events

The Company has evaluated subsequent events through the issuance date of these consolidated financial statements.

On January 1, 2022, the total shares reserved and available for future issuance under the PWP Incentive Plan increased to 13.9 million in accordance with the terms of such plan, and on March 4, 2022, the Company granted 6,322,746 RSUs to certain employees and executive officers pursuant to such plan.

On January 21, 2022, the Company closed its public offering of 3,502,033 shares of Class A common stock (the “Offering”) at a public offering price of $ 10.75 per share for total gross proceeds of $ 37.6 million, before deducting underwriting discounts and commissions.

All proceeds from the Offering, net of the underwriting discounts and commissions of $ 0.32 per share or an aggregate of $ 1.1 million, were used by the Company to purchase from certain non-employee holders (i) outstanding PWP OpCo Units and (ii) outstanding shares of the Company’s Class B common stock.

As a result of the use of proceeds, the non-controlling ownership interests in PWP OpCo decreased to 50.17 %.

Under the terms of the underwriting agreement, directors, officers and certain significant shareholders signed customary lockup agreements with respect to their ownership of Class A common stock.

On January 1, 2023, the total shares reserved and available for future issuance under the PWP Incentive Plan increased to 13.0 million in accordance with the terms of such plan, and on February 24, 2023, the Company granted 6,786,750 RSUs and 1,000,000 PSUs to certain employees and executive officers pursuant to such plan.

On February 8, 2023, the Company’s Board of Directors declared a cash dividend of $ 0.07 per outstanding share of Class A common stock.

This dividend will be payable on March 17, 2022 to each of the holders of Class A common stock of record as of the close of business on March 3, 2022.

This dividend will be payable on March 10, 2023 to each of the holders of Class A common stock of record as of the close of business on February 28, 2023.

Holders of Class B common stock will also receive dividends equal to the amount of dividends made on 0.001 shares of Class A common stock.

Perella Weinberg Partners

Notes to Consolidated Financial Statements

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

On February 8, 2023, the Company’s Board of Directors approved an additional repurchase of the Company’s Class A common stock in an amount of up to $ 100.0 million which is incremental to the remaining value of the February 2022’s authorization with no requirement to purchase any minimum number of shares.

The manner, timing, pricing and amount of any transactions will be subject to the Company’s discretion.

On February 18, 2022, the Company entered into a lease agreement related to the relocation of its U.K.

office to 80 Charlotte Street, London, United Kingdom.

The lease has an initial term of 12 years and is expected to commence in mid 2022.

On February 22, 2022, the Company entered into an amendment to its Los Angeles office lease whereby the Company will move to a larger space within the building.

The lease is expected to commence in mid 2022 and is scheduled to expire on December 31, 2032.

On February 28, 2022, the Company settled an exchange of certain PWP OpCo Units and certain shares of Class B common stock for 337,048 shares of Class A common stock.

Changes in and Disagreement with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data