Perella Weinberg Partners 10-K

Item 8. Financial Statements and Supplementary Data Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 64 Consolidated Statements of Financial Condition as of December 31, 2022 and 2021 65 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021, and 2020 66 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021, and 2020 67 Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021, and 2020 68 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020 70 Notes to Consolidated Financial Statements 72 63 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Perella Weinberg Partners Opinion on the 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. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2007. New York, New York February 28, 2023 64 Perella Weinberg Partners Consolidated Statements of Financial Condition (Dollars in Thousands, Except Per Share Amounts) December 31, 2022 2021 Assets Cash and cash equivalents $ 171,570 $ 502,773 Restricted cash 2,596 2,002 Investments in short-term marketable debt securities 140,110 — Accounts receivable, net of allowance 67,906 46,914 Due from related parties 3,362 4,225 Fixed assets, net of accumulated depreciation and amortization 48,390 10,362 Intangible assets, net of accumulated amortization 25,772 32,352 Goodwill 34,383 34,383 Prepaid expenses and other assets 36,190 24,313 Right-of-use lease assets 153,720 39,912 Deferred tax asset, net 33,094 21,091 Total assets $ 717,093 $ 718,327 Liabilities and Equity Accrued compensation and benefits $ 214,082 $ 311,500 Deferred compensation programs 2,929 11,221 Accounts payable, accrued expenses and other liabilities 46,336 31,048 Deferred revenue 5,014 7,845 Lease liabilities 165,601 43,448 Warrant liabilities — 27,805 Amount due pursuant to tax receivable agreement 22,991 14,108 Total liabilities 456,953 446,975 Commitments and Contingencies (Note 18) 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) $ 5 $ 4 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) 4 5 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 Retained earnings (accumulated deficit) ( 18,071 ) ( 18,075 ) Accumulated other comprehensive income (loss) ( 6,538 ) ( 1,746 ) 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 Total liabilities and equity $ 717,093 $ 718,327 The accompanying notes are an integral part of these consolidated financial statements. 65 Perella Weinberg Partners Consolidated Statements of Operations (Dollars in Thousands, Except Per Share Amounts) Year Ended December 31, 2022 2021 2020 Revenues $ 631,507 $ 801,662 $ 518,986 Expenses Compensation and benefits 391,333 504,364 374,332 Equity-based compensation 154,158 96,330 24,815 Total compensation and benefits 545,491 600,694 399,147 Professional fees 34,824 41,891 42,880 Technology and infrastructure 30,084 28,355 27,281 Rent and occupancy 24,898 26,406 27,958 Travel and related expenses 13,034 6,261 5,725 General, administrative and other expenses 20,215 16,982 15,060 Depreciation and amortization 10,694 14,489 15,531 Total expenses 679,240 735,078 533,582 Operating income (loss) ( 47,733 ) 66,584 ( 14,596 ) Non-operating income (expenses) Related party income 2,805 7,516 9,263 Other income (expense) 7,978 761 185 Change in fair value of warrant liabilities 15,806 ( 4,897 ) — Loss on extinguishment of debt — ( 39,408 ) — Interest expense ( 276 ) ( 7,606 ) ( 15,741 ) Total non-operating income (expenses) 26,313 ( 43,634 ) ( 6,293 ) Income (loss) before income taxes ( 21,420 ) 22,950 ( 20,889 ) Income tax benefit (expense) ( 10,327 ) ( 18,927 ) ( 3,453 ) Net income (loss) ( 31,747 ) 4,023 $ ( 24,342 ) Less: Net income (loss) attributable to non-controlling interests ( 49,625 ) 13,444 Net income (loss) attributable to Perella Weinberg Partners $ 17,878 $ ( 9,421 ) Net income (loss) per share attributable to Class A common shareholders (1) Basic $ 0.41 $ ( 0.22 ) Diluted $ ( 0.46 ) $ ( 0.66 ) Weighted-average shares of Class A common stock outstanding (1) Basic 43,837,640 42,595,712 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. For more information, refer to Note 15—Net Income (Loss) Per Share Attributable to Class A Common Shareholders. The accompanying notes are an integral part of these consolidated financial statements. 66 Perella Weinberg Partners Consolidated Statements of Comprehensive Income (Loss) (Dollars in Thousands) Year Ended December 31, 2022 2021 2020 Net income (loss) $ ( 31,747 ) $ 4,023 $ ( 24,342 ) Foreign currency translation gain (loss), net of tax ( 9,682 ) ( 1,481 ) 3,494 Comprehensive income (loss) ( 41,429 ) 2,542 $ ( 20,848 ) Less: Comprehensive income (loss) attributable to non-controlling interests ( 54,515 ) 12,883 Comprehensive income (loss) attributable to Perella Weinberg Partners $ 13,086 $ ( 10,341 ) The accompanying notes are an integral part of these consolidated financial statements. 67 Perella Weinberg Partners Consolidated Statements of Changes in Equity (Dollars in Thousands) Shares Accumulated Other Comprehensive Income (Loss) Partners’ Capital Class A Common Stock Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Non- Controlling Interests Total Equity Balance at December 31, 2019 $ 87,725 — — — $ — $ — $ — $ — $ — $ ( 5,820 ) $ — $ 81,905 New accounting pronouncement adoption ( 188 ) — — — — — — — — — — ( 188 ) Net income (loss) ( 24,342 ) — — — — — — — — — — ( 24,342 ) Equity-based compensation 24,815 — — — — — — — — — — 24,815 Distributions to partners ( 11,989 ) — — — — — — — — — — ( 11,989 ) Other 488 — — — — — — — — — — 488 Foreign currency translation gain (loss) — — — — — — — — — 3,494 — 3,494 Balance at December 31, 2020 $ 76,509 — — — $ — $ — $ — $ — $ — $ ( 2,326 ) $ — $ 74,183 Net income (loss) prior to Business Combination 59,857 — — — — — — — — — — 59,857 Equity-based compensation prior to Business Combination 11,761 — — — — — — — — — — 11,761 Foreign currency translation gain (loss) prior to Business Combination — — — — — — — — — 526 — 526 Distributions to partners prior to Business Combination ( 47,389 ) — — — — — — — — — — ( 47,389 ) Other, prior to Business Combination 374 — — — — — — — — — — 374 Effect of Business Combination ( 101,112 ) 42,956,667 50,154,199 — 4 5 — 133,832 — 974 154,619 188,322 Net income (loss) after Business Combination — — — — — — — — ( 9,421 ) — ( 46,413 ) ( 55,834 ) Equity-based awards after Business Combination — — — — — — — 45,594 — — 39,678 85,272 Distributions to partners after Business Combination — — — — — — — — — — ( 18,542 ) ( 18,542 ) Liability awards reclassification to equity — — — — — — — 3,912 — — — 3,912 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) — — — — — — — 230 ( 8,654 ) — — ( 8,424 ) Foreign currency translation gain (loss) after Business Combination — — — — — — — — — ( 920 ) ( 1,087 ) ( 2,007 ) Other, after Business Combination — — — — — — — 870 — — 933 1,803 Treasury stock purchase — — — ( 1,000,000 ) — — ( 12,000 ) — — — — ( 12,000 ) Change in ownership interests — — — — — — — ( 15,845 ) — — 15,845 — 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 The accompanying notes are an integral part of these consolidated financial statements. 68 Perella Weinberg Partners Consolidated Statements of Changes in Equity – Continued (Dollars in Thousands) Shares Accumulated Other Comprehensive Income (Loss) Partners’ Capital Class A Common Stock Class B Common Stock Treasury Stock Class A Common Stock Class B Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings (Accumulated Deficit) Non- Controlling Interests Total Equity 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. 69 Perella Weinberg Partners Consolidated Statements of Cash Flows (Dollars in Thousands) Year Ended December 31, 2022 2021 2020 Cash flows from operating activities Net income (loss) $ ( 31,747 ) $ 4,023 $ ( 24,342 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Loss on debt extinguishment — 39,408 — Equity-based awards vesting expense 156,420 97,033 24,815 Depreciation and amortization 10,694 14,489 15,531 Amortization of debt discounts and deferred financing costs 149 2,087 3,964 Change in fair value of warrant liabilities ( 15,806 ) 4,897 — Foreign currency revaluation ( 4,692 ) — — Non-cash operating lease expense 15,948 17,361 17,069 Deferred taxes ( 2,743 ) ( 3,716 ) ( 564 ) Bad debt expense 2,158 646 2,991 Other 286 ( 319 ) 19 Decrease (increase) in operating assets: Accounts receivable, net of allowance ( 24,339 ) ( 7,127 ) 27,527 Due from related parties 864 ( 3,612 ) 1,537 Prepaid expenses and other assets ( 14,440 ) ( 15,205 ) 3,089 Increase (decrease) in operating liabilities: Accrued compensation and benefits ( 91,431 ) 103,851 19,348 Deferred compensation programs ( 5,704 ) ( 5,939 ) 2,756 Accounts payable, accrued expenses and other liabilities ( 3,324 ) 7,780 2,966 Deferred revenue ( 2,481 ) ( 2,667 ) 8,717 Lease liabilities ( 7,585 ) ( 18,082 ) ( 19,516 ) Net cash provided by (used in) operating activities: ( 17,773 ) 234,908 85,907 Cash flows from investing activities Purchases of fixed assets ( 26,560 ) ( 1,462 ) ( 5,522 ) Purchases of investments in short-term marketable debt securities ( 139,171 ) — — Other ( 500 ) ( 978 ) — Net cash provided by (used in) investing activities ( 166,231 ) ( 2,440 ) ( 5,522 ) Cash flows from financing activities Proceeds from Business Combination, including PIPE Investment — 355,021 — Payment of Business Combination costs — ( 23,895 ) — Draw down of Revolving Credit Facility — — 22,000 Principal payment on Revolving Credit Facility — ( 27,690 ) ( 32,000 ) Redemption of Convertible Notes — ( 160,930 ) — 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 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 ) — Debt issuance costs — ( 361 ) — Proceeds from Partner Promissory Note — 1,757 — Net cash provided by (used in) financing activities ( 136,768 ) ( 55,021 ) ( 21,989 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 9,837 ) ( 3,580 ) 5,930 Net increase (decrease) in cash, cash equivalents and restricted cash ( 330,609 ) 173,867 64,326 Cash, cash equivalents and restricted cash, beginning of period 504,775 330,908 266,582 Cash, cash equivalents and restricted cash, end of period $ 174,166 $ 504,775 $ 330,908 The accompanying notes are an integral part of these consolidated financial statements. 70 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 $ — Supplemental disclosures of cash flow information Cash paid for income taxes $ 25,995 $ 12,547 $ 2,242 Cash paid for interest $ 127 $ 5,515 $ 11,777 The accompanying notes are an integral part of these consolidated financial statements. 71 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 1—Organization and Nature of Business 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, 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. IV (“FTIV”)) was incorporated in Delaware on November 20, 2018 as a special purpose acquisition company for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business transaction, one or more businesses or assets. On June 24, 2021 (the “Closing Date” or “Closing”), the Company consummated a business combination pursuant to that certain Business Combination Agreement, dated as of December 29, 2020, by and among FTIV, FinTech Investor Holdings IV, LLC, FinTech Masala Advisors, LLC (together with FinTech Investor Holdings IV, LLC, the “Sponsor”), PWP OpCo, PWP GP LLC, PWP Professional Partners LP (“Professional Partners”), and Perella Weinberg Partners LLC (“Professionals GP”) (the “Business Combination Agreement”). As contemplated by the Business Combination Agreement, (i) FTIV acquired certain partnership interests in PWP OpCo, (ii) PWP OpCo became jointly-owned by Perella Weinberg Partners, Professional Partners and certain existing partners of PWP OpCo, and (iii) PWP OpCo serves as the Company’s operating partnership as part of an umbrella limited partnership C-corporation (Up-C) structure (collectively with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). See Note 3—Business Combination for additional discussion related to the transaction. The operations of PWP OpCo are conducted through a wholly-owned subsidiary, Perella Weinberg Partners Group LP (“PWP Group”), and its subsidiaries which are consolidated in these financial statements. PWP GP LLC is the general partner that controls PWP OpCo. The limited partner interests of PWP OpCo are held by Investor Limited Partners (the “ILPs”) and Professional Partners. The Company shareholders are entitled to receive a portion of PWP OpCo’s economics through their direct ownership interests in shares of Class A common stock of PWP. The non-controlling interest owners of PWP OpCo receive economics through ownership of PWP OpCo Class A partnership units (“PWP OpCo Units”). See Note 11—Stockholders' Equity for additional information. Note 2—Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements reflect the financial condition, results of operations and cash flows of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All intercompany balances and transactions between the consolidated subsidiaries comprising the Company have been eliminated in the accompanying consolidated financial statements. 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. The historical operations of PWP OpCo are deemed to be those of the Company. Thus, the consolidated financial statements included in this Annual Report on Form 10-K reflect (i) the historical operating results of PWP OpCo prior to the Business Combination and (ii) the combined results of the Company following the Business Combination. See Note 3—Business Combination for additional discussion related to the transaction. 72 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Use of Estimates The preparation of the consolidated financial statements and related disclosures in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 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 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 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. The Company maintains cash with banks and brokerage firms, which from time to time may exceed federally insured limits. Restricted cash represents cash that is not readily available for general purpose cash needs. As of December 31, 2022 and 2021, the Company had restricted cash of $ 2.6 million and $ 2.0 million, respectively, maintained as collateral for letters of credit related to certain office leases. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of December 31, 2022 and 2021 is presented below: December 31, 2022 2021 Cash $ 171,570 $ 502,773 Cash equivalents — — Restricted cash 2,596 2,002 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 Accounts receivable are presented net of allowance for credit losses based on the Company’s assessment of collectability. The Company regularly reviews its accounts receivable for collectability and an allowance is recognized for credit losses, if required. 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. 73 Perella Weinberg Partners Notes to Consolidated Financial Statements (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. The Company determines the adequacy of the allowance by estimating the probability of loss based on the Company’s historical credit loss experience of its client receivables and taking into consideration current market conditions and supportable forecasts that affect the collectability of the reported amount. The Company updates its average credit loss rates periodically and maintains a quarterly allowance review process to consider current factors that would require an adjustment to the credit loss allowance. In addition, the Company periodically performs a qualitative assessment to monitor risks associated with current and forecasted conditions that may require an adjustment to the expected credit loss rates. The Company also regularly reviews the age of the receivables, credit worthiness of the client and the current economic conditions that may affect a client’s ability to pay such amounts owed to the Company and as a result may recognize a specific credit loss reserve. Changes to expected credit losses during the period are included in General, administrative and other expenses in the Consolidated Statements of Operations. After concluding that a reserved accounts receivable is no longer collectible, the Company reduces both the gross receivable and the allowance for credit losses. Consolidation The Company’s policy is to consolidate entities in which the Company has a controlling financial interest and variable interest entities where the Company is deemed to be the primary beneficiary. The Company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) when it has both (i) the power to make the decisions that most significantly affect the economic performance of the VIE and (ii) the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. PWP is the primary beneficiary of and consolidates PWP OpCo, a VIE. 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, 2022 and December 31, 2021, the Company did not consolidate any VIEs other than PWP OpCo. Equity Method Investments When the Company does not have a controlling financial interest in an entity but exerts significant influence over the entity’s operating and financial decisions, the Company applies the equity method of accounting. The investment balance related to an equity method investee reflects the Company’s share of contributions made to, distributions received from, and the equity earnings and losses of the investee. Equity method investments are included within Prepaid expenses and other assets on the Consolidated Statements of Financial Condition. The Company reflects its share of income and losses of the investee in Other income (expense) on the Consolidated Statements of Operations using the most recently available earnings data for the reporting period. Fair Value of Financial Instruments 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. 74 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Fixed Assets Fixed assets include furniture and fixtures, equipment, software development costs and leasehold improvements, which are all stated at cost less accumulated depreciation and amortization. Depreciation and amortization are determined using the straight-line method over the estimated useful lives of the assets, including (i) five years for furniture, fixtures and equipment; (ii) the lesser of the estimated life of the improvement or the remaining term of the lease for leasehold improvements; and (iii) three years for software development costs. 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. Prepaid Expenses and Other Assets 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, 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 Goodwill is recorded for the excess of the fair value of consideration transferred over the fair value of identifiable net assets, including other intangibles, acquired at the time of an acquisition. Goodwill is periodically reviewed, and tested at least annually, for impairment, and when certain events or circumstances indicate impairment may exist. Goodwill is tested for impairment at the reporting unit level. A reporting unit is a component of an operating segment for which discrete financial information is available that is regularly reviewed by management. Intangible assets are derived from customer relationships, trade names and trademarks. Identifiable finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of ten years , reflecting the average time over which such intangible assets are expected to contribute to cash flow. The Company reviews intangible assets for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. 75 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Leases 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. Income Taxes Prior to the Business Combination, the Company operated as a partnership, and therefore, was generally not subject to U.S. federal and state corporate income taxes. Subsequent to the Business Combination, PWP is a corporation and is subject to U.S. federal and state corporate income taxes on its proportionate share of taxable income generated by the operating partnership, PWP OpCo, as well as any standalone income (or loss) generated at the PWP entity level. PWP OpCo is treated as a partnership, and as a result, taxable income (or loss) generated by PWP OpCo flows through to its limited partners, including PWP, and is generally not subject to U.S. federal or state income tax at the partnership level. 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. 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. The realization of deferred tax assets is dependent on the amount, timing and character of the Company’s future taxable income. When evaluating the realizability of deferred tax assets, all evidence – both positive and negative – is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies. 76 Perella Weinberg Partners Notes to Consolidated Financial Statements (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 The Company presents its outstanding debt principal, net of the unamortized debt discounts and issuance costs on the Consolidated Statements of Financial Condition. 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 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. dollar functional currencies. Non-U.S. 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 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 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. 77 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. 78 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. 79 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 The Company typically earns interest on cash at banks, which is recorded on an accrual basis. Compensation and Benefits Compensation and benefits expense consists of salaries, bonuses (discretionary awards and guaranteed amounts), severance, deferred compensation, as well as payroll and related taxes and benefits for the Company’s employees. In all instances, compensation expense is accrued over the requisite service period. 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 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. Refer to Note 13—Equity-Based Compensation for detail of amounts included in each financial statement line item. The Company accounts for forfeitures of awards as they occur rather than applying an estimated forfeiture rate. 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 For entities that are consolidated but not 100% owned, a portion of the income or loss and equity is allocated to holders of the non-controlling interest. The aggregate of the income or loss and corresponding equity that is owned by the holders of the non-controlling interest is included in non-controlling interest in the consolidated financial statements. Non-controlling interests are presented as a separate component of equity on the Consolidated Statements of Financial Condition. Net income (loss) includes the net income (loss) attributable to the holders of the non-controlling interests on the Consolidated Statements of Operations. Profits and losses of PWP OpCo are allocated to the non-controlling interests in proportion to their ownership interest regardless of their basis, with an exception for certain equity-based compensation expense which are fully attributed to non-controlling interests. Refer to Note 13—Equity-Based Compensation for further information. 80 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) attributable to Class A common shareholders by the weighted-average shares of Class A common shares outstanding without the consideration for potential dilutive securities. Diluted net income (loss) per share represents basic net income (loss) per share adjusted to include the potentially dilutive effect of outstanding unvested share awards, warrants, and PWP OpCo Units that are exchangeable into shares of Class A common stock on a one-for-one basis. Diluted net income (loss) per share is computed by dividing the net income attributable to Class A common shareholders by the weighted-average number of shares of Class A common stock outstanding for the period determined using the treasury stock method and if-converted method, as applicable. Contingencies and Litigation The Company records loss contingencies if (i) information available prior to issuance of the consolidated financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the consolidated financial statements; and (ii) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a loss will occur, no accrual for a loss contingency is recorded. However, the Company describes the contingency and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made. Costs incurred with defending matters are expensed as incurred. Accruals related to loss contingencies are recorded in Other income (expenses) in the Consolidated Statements of Operations. Comprehensive Income (Loss) Comprehensive income (loss) consists of Net income (loss) and Other comprehensive income (loss). The Company’s Other comprehensive income (loss) is comprised of foreign currency cumulative translation adjustments. Recently Adopted Accounting Pronouncements 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 No changes to U.S. GAAP that are not yet effective are expected to have a material effect on the Company’s consolidated financial statements. Note 3—Business Combination On June 24, 2021, the Company consummated a business combination pursuant to the Business Combination Agreement dated as of December 29, 2020, by and among the Company (previously FTIV), the Sponsor, PWP OpCo, PWP GP LLC, PWP GP, Professional Partners, and Professionals GP. Pursuant to the Business Combination Agreement, among other things, (i) FTIV acquired certain partnership interests in PWP OpCo, (ii) PWP OpCo became jointly-owned by PWP, Professional Partners and certain existing partners of PWP OpCo, and (iii) PWP OpCo now serves as the Company’s operating partnership as part of an Up-C structure. 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. On December 29, 2020, concurrent with the execution of the Business Combination Agreement, FTIV also entered into subscription agreements with certain private investors (“PIPE Investors”), pursuant to which the PIPE Investors collectively subscribed for 12,500,000 shares of the Company’s Class A common stock for an aggregate purchase price equal to $ 125.0 million (the “PIPE Investment”), including $ 1.5 million subscribed by entities related to the Sponsor. The PIPE Investment was consummated concurrently with the Closing. 81 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: • Pursuant to the Sponsor Share Surrender and Share Restriction Agreement executed concurrently with the Business Combination Agreement among the Sponsor, FTIV, PWP OpCo and certain other parties (the “Surrender Agreement”), which was amended on May 4, 2021, Sponsor surrendered and forfeited to FTIV 1,023,333 shares of Class B common stock, par value $ 0.0001 per share, of FTIV; • All outstanding shares of FTIV’s Class B common stock (other than the 1,023,333 shares of FTIV Class B common stock that were forfeited by the Sponsor) were converted into shares of FTIV’s Class A common stock, and FTIV’s outstanding warrants were assumed by the Company and became exercisable for shares of Company Class A common stock on the same terms as were contained in the warrant agreements prior to the Business Combination; • FTIV acquired newly-issued common units of PWP OpCo in exchange for $ 355.0 million in cash and 42,956,667 shares of Class A common stock. The cash contributed equated to the proceeds from the PIPE Investment and the outstanding cash balances and marketable securities held in a trust account of FTIV as of Closing; • 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; • Professional Partners contributed the equity interests of PWP GP, the general partner of PWP OpCo, to FTIV; • PWP OpCo repaid all of its indebtedness including $ 150.0 million of Convertible Notes and $ 27.7 million of the Revolving Credit Facility, both as defined in Note 10—Debt, as well as accrued interest and applicable premium, resulting in a Loss on debt extinguishment of $ 39.4 million; • PWP OpCo first redeemed PWP OpCo Units held by certain electing ILPs in the amount of $ 80.5 million, and second, redeemed PWP OpCo Units held by certain electing former working partners in the amount of $ 28.6 million; and • FTIV was renamed “Perella Weinberg Partners.” 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 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. Class B-1 and B-2 common stock have de minimis economic rights. See Note 11—Stockholders' Equity for additional information. 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. 82 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 The following table disaggregates the Company’s revenue between over time and point in time recognition: Year Ended December 31, 2022 2021 2020 Over time $ 609,392 $ 749,067 $ 494,295 Point in time 22,115 52,595 24,691 Total revenues $ 631,507 $ 801,662 $ 518,986 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. 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. 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 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 The allowance for credit losses activity for the years ended December 31, 2022, 2021, and 2020 is as follows: Year Ended December 31, 2022 2021 2020 Beginning Balance (1) $ 1,851 $ 1,045 $ 1,924 Bad debt expense 2,158 646 2,991 Write-offs ( 2,834 ) ( 551 ) ( 3,588 ) Recoveries — 710 — Foreign currency translation and other adjustments ( 32 ) 1 ( 282 ) Ending Balance $ 1,143 $ 1,851 $ 1,045 __________________ (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 Accounting Standards Update 2016-13 on January 1, 2020. 83 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 5—Leases The Company leases office space and certain office equipment under operating lease agreements. 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. These contractual changes were treated as a modification of the original lease. 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 (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. 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: Year Ended December 31, 2022 2021 Weighted-average discount rate - operating leases 4.6 % 2.5 % Weighted-average remaining lease term - operating leases 14.9 years 3.3 years Year Ended December 31, 2022 2021 2020 Operating lease cost $ 20,140 $ 19,006 $ 19,486 Variable lease cost 2,550 4,716 6,145 Sublease income - operating leases ( 682 ) ( 2,957 ) ( 3,942 ) Total net lease cost $ 22,008 $ 20,765 $ 21,689 Cash paid for lease obligation $ 17,057 $ 19,858 $ 21,532 84 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: Years Ending: Operating Leases Sublease Income Net Payments 2023 $ ( 3,851 ) $ 307 $ ( 4,158 ) 2024 7,628 — 7,628 2025 18,214 — 18,214 2026 19,285 — 19,285 2027 18,452 — 18,452 Thereafter 187,612 — 187,612 Total lease payments (1) 247,340 $ 307 $ 247,033 Less: 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 Goodwill 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. Intangible Assets Below is the detail of the intangible assets that were recognized in conjunction with the TPH Business Combination: December 31, 2022 Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 47,400 $ ( 28,835 ) $ 18,565 Trade names and trademarks 18,400 ( 11,193 ) 7,207 Total $ 65,800 $ ( 40,028 ) $ 25,772 December 31, 2021 Gross Amount Accumulated Amortization Net Carrying Amount Customer relationships $ 47,400 $ ( 24,095 ) $ 23,305 Trade names and trademarks 18,400 ( 9,353 ) 9,047 Total $ 65,800 $ ( 33,448 ) $ 32,352 85 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. 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. These intangible assets will be fully amortized by November 30, 2026. 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 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 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 Fixed assets are recorded at cost less accumulated depreciation and amortization and consist of the following as of December 31, 2022 and 2021: December 31, 2022 2021 Leasehold improvements $ 76,389 $ 45,770 Furniture and fixtures 15,313 12,028 Equipment 21,382 15,969 Software 6,945 8,581 Total 120,029 82,348 Less: Accumulated depreciation and amortization ( 71,639 ) ( 71,986 ) Fixed assets, net $ 48,390 $ 10,362 Depreciation expense related to fixed assets was $ 3.1 million, $ 6.7 million, and $ 7.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. Amortization expense related to software development costs was $ 1.0 million, $ 1.2 million, and $ 1.7 million for the years ended December 31, 2022, 2021, and 2020, respectively. 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 operations are generally comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of their interest holders. The Company is subject to certain foreign, state and local entity-level taxes (for example, the New York City Unincorporated Business Tax). These taxes have been reflected in the Company’s consolidated financial statements and allocated between the Company and the non-controlling interest holders. In addition, the Company is subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from PWP OpCo. 86 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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 Domestic $ ( 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 Current Federal income tax $ ( 6,090 ) $ ( 6,500 ) $ — State and local income tax ( 3,428 ) ( 4,437 ) ( 1,427 ) Foreign income tax ( 3,552 ) ( 11,641 ) ( 2,615 ) Total current income tax benefit (expense) ( 13,070 ) ( 22,578 ) ( 4,042 ) Deferred Federal income tax 2,554 1,462 — State and local income tax 232 512 — Foreign income tax ( 43 ) 1,677 589 Total deferred income tax benefit (expense) 2,743 3,651 589 Income tax benefit (expense) $ ( 10,327 ) $ ( 18,927 ) $ ( 3,453 ) The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate: Year Ended December 31, 2022 2021 2020 Expected income tax expense at the federal statutory rate 21.0 % 21.0 % 21.0 % Partnership income not subject to U.S. corporate income taxes ( 10.7 ) % ( 21.4 ) % ( 21.0 ) % Foreign income taxes, net of federal benefit ( 7.9 ) % 10.7 % ( 9.7 ) % State and local income taxes, net of federal benefit ( 12.5 ) % 15.7 % ( 6.8 ) % Non-deductible compensation expense ( 53.5 ) % 26.0 % — % 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. 87 Perella Weinberg Partners Notes to Consolidated Financial Statements (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: December 31, 2022 2021 Deferred tax asset Step-up in tax basis in PWP OpCo assets $ 24,387 $ 16,090 Operating lease liabilities 27,977 6,601 RSU amortization 9,510 3,818 Deferred compensation 1,758 3,241 Other 2,666 2,043 Deferred tax assets before valuation allowance 66,298 31,793 Valuation allowance ( 743 ) — Total deferred tax assets 65,555 31,793 Deferred tax liability Operating right-of-use lease assets ( 26,956 ) ( 5,969 ) Intangible assets ( 2,600 ) ( 3,118 ) Other ( 2,905 ) ( 1,615 ) Total deferred tax liabilities ( 32,461 ) ( 10,702 ) Deferred tax asset, net $ 33,094 $ 21,091 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. 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. 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. 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. 88 Perella Weinberg Partners Notes to Consolidated Financial Statements (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: Year Ended December 31, 2022 2021 2020 Beginning unrecognized tax benefit $ 6,138 $ — $ — 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 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. Note 10—Debt Revolving Credit Facility 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. 89 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 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. Convertible Notes – Outstanding Prior to the Business Combination 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 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. 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. 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 Class A Common Stock Holders of Class A common stock are entitled to one vote for each share on all matters submitted to the stockholders for their vote or approval. 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. 90 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Class B Common Stock The Company has two classes of Class B common stock: Class B-1 common stock and Class B-2 common stock. Holders of Class B common stock are entitled to receive ratably, in proportion to the number of shares held, dividends of the same type as any dividends and other distributions in cash, stock or property of PWP payable or to be made on outstanding shares of Class A common stock in an amount per share of Class B common stock equal to the amount of such dividends or other distributions as would be made on 0.001 shares of Class A common stock. Additionally, the holders of shares of Class B common stock are entitled to receive on a pari passu basis with the holders of the Class A common stock, such dividend or other distribution on the Class A common stock when, as, and if declared by the Board of Directors out of our assets or legally available funds. Each holder of Class B-1 common stock shall be entitled to ten votes for each share of Class B-1 common stock held of record by such holder for so long as the Professional Partners directly or indirectly maintain units that represent at least ten percent of issued and outstanding Class A common stock (the “ 10 % Condition”). After the 10 % Condition ceases to be satisfied, each share of Class B-1 common stock shall be entitled to one vote. Each holder of Class B-2 common stock shall be entitled to one vote for each share of Class B-2 common stock held of record by such holder. The Class B-1 common stock was distributed to and owned by Professional Partners and the Class B-2 common stock was distributed to and owned by ILPs, with the number of shares of such Class B common stock issued equal to the number of PWP OpCo Units held by Professional Partners and ILPs, respectively, at the Business Combination Closing. Preferred Stock The Board of Directors may establish one or more classes or series of preferred stock (including convertible preferred stock). Our Board of Directors may determine, with respect to any class or series of preferred stock, the terms and rights of such class or series. We currently do not have any preferred stock issued and outstanding. Dividends 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 In the event of any liquidation, dissolution or winding up of PWP, after payments to creditors of the corporation that may at the time be outstanding and subject to the rights of any holders of Preferred Stock that may then be outstanding, holders of shares of Class A common stock and Class B common stock shall be entitled to receive ratably, in proportion to the number of shares held by them, all remaining assets and funds of PWP available for distribution. 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. 91 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. 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 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. The registration rights agreement does not contain any penalties associated with failure to file or to maintain the effectiveness of a registration statement covering the shares owned by individuals covered by such agreement. 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, 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. 92 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Stockholder Agreement On the date of the Closing, PWP and Professional Partners entered into a Stockholders Agreement (the “Stockholders Agreement”), providing for certain approval and director nomination rights in favor of Professional Partners. The Stockholders Agreement provides that for so long as Professional Partners or its limited partners as of the date of the Closing (or their permitted successors or assigns) continue to hold securities representing at least five percent of the Company’s outstanding Class A common stock on an as-exchanged basis (the “ 5 % Condition”), the Board of Directors may not approve, absent the prior consent of Professional Partners, any amendment to the certificate of incorporation or bylaws of the Company, or the limited partnership agreement of PWP OpCo, in each case, that would materially and adversely affect in a disproportionate manner the rights of Professional Partners or its limited partners. In addition, for so long as the 10 % Condition is met, the Board of Directors may not approve, absent the prior consent of Professional Partners, a number of ordinary course operating activities in respect of the Company, PWP OpCo and PWP OpCo’s subsidiaries. The effect of the agreement is that Professional Partners may maintain control over the Company’s significant corporate transactions even if it holds less than a majority of the combined total voting power of the Class A and Class B common stock. The Stockholders Agreement will terminate once the 5 % Condition is no longer satisfied. PWP OpCo Limited Partnership Agreement Governance and Voting and Economic Rights On the date of the Closing, PWP OpCo adopted an Amended and Restated Agreement of Limited Partnership of PWP OpCo (as amended, restated, modified or supplemented from time to time, the “PWP OpCo LPA”). Through the Company’s control of PWP GP, the general partner of PWP OpCo, the Company will have unilateral control (subject to the consent of PWP OpCo’s partners on certain limited matters) over the affairs and decisions of PWP OpCo, including the appointment of officers of PWP OpCo. As such, including through such officers and directors, the Company will be responsible for all operational and administrative decisions of PWP OpCo and the day-to-day management of PWP OpCo’s business. Furthermore, PWP GP cannot be removed as the general partner without the Company’s approval. No holders of PWP OpCo Units (the “PWP OpCo Unitholders”), in their capacity as such, will have any authority or right to control the management of PWP OpCo or to bind it in connection with any matter. However, Professional Partners, which is ultimately managed by a committee of limited partners that manages Professionals GP, the general partner of Professional Partners, will have the ability to exercise majority voting control over the Company by virtue of its ownership of all outstanding shares of Class B-1 common stock. In accordance with the PWP OpCo LPA, the Company intends to use best efforts to cause PWP OpCo to make sufficient cash distributions to the PWP OpCo Unitholders to fund their tax obligations in respect of the income of PWP OpCo that is allocated to them. Generally, these tax distributions will be computed based on the Company’s estimate of the net taxable income of PWP OpCo allocable to such holder of partnership units multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. 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). Exchange Rights In accordance with the PWP OpCo LPA, PWP OpCo Unitholders (other than the Company) may exchange these units for (i) shares of Class A common stock on a one -for-one basis or (ii) cash from an offering of shares of Class A common stock with the form of consideration determined by the Company. 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 . 93 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: (i) PWP OpCo Units held by Professional Partners are subject to a restriction for time periods that are fully back-to-back with the lock-up periods contemplated in the amended and restated limited partnership agreement of Professional Partners (generally speaking, such lock-up periods (a) for former working partners, was 180 days after Closing and expired on December 24, 2021; and (b) for working partners, is between three to five years after the Closing), (ii) PWP OpCo Units held by ILPs existing at the time of the Business Combination were subject to such restriction for 180 days after the Closing, which expired on December 24, 2021, and (iii) any other outstanding PWP OpCo Units not previously covered by clauses (i) and (ii) above are subject to such restriction for a period of twelve months following the date on which such PWP OpCo Units were acquired. 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 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. 94 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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. 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 (“PWP Incentive Plan Awards”). 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 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 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 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. The market condition requirement will be satisfied in 25 % increments upon the publicly traded shares of Class A common stock achieving closing share prices equal to $ 12 , $ 13.50 , $ 15 and $ 17 for any 20 trading days out of any 30 consecutive trading days ending prior to the sixth anniversary of the grant date. As of December 31, 2022, the $ 12 and $ 13.50 market condition requirements were satisfied. 95 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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 Granted (1) 33,171 12.74 Vested ( 5,000 ) 13.53 Forfeited ( 160,000 ) 12.74 Balance at December 31, 2022 3,076,297 $ 12.73 __________________ (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. The Company estimated the fair value of the Transaction Pool PSUs on the grant date using a Monte-Carlo simulation valuation model with the following assumptions: 2021 Risk-free interest rate 0.93 % Dividend yield 2.00 % Volatility factor (1) 32.90 % ________________ (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 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 5,450,604 $ 13.97 Granted (1) 18,561 13.97 Vested ( 1,820,718 ) 13.97 Forfeited ( 1,058,471 ) 13.97 Balance at December 31, 2022 2,589,976 $ 13.97 __________________ (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. 96 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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 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. 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 9,500,000 $ 9.55 Granted — — Vested — — Forfeited ( 500,000 ) 9.55 Balance at December 31, 2022 9,000,000 $ 9.55 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: 2021 Risk-free interest rate 0.77 % Dividend yield 2.00 % Volatility factor (1) 32.41 % __________________ (1) Based on historical peer company volatility. General Awards On August 31, 2021, the Company granted RSU awards out of the General Share Reserve that vest upon the achievement of service conditions (the “General RSUs”). The Company expects to grant General RSUs from time to time in the ordinary course of business. The General RSUs vest over the requisite service period, which is generally one to five years . 97 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) The following table summarizes the balance of unvested General RSUs and activity during the year ended December 31, 2022: General RSUs Number of Shares Weighted Average Grant Date Fair Value Per Share Balance at January 1, 2022 906,517 $ 13.76 Granted (1) 6,983,355 9.82 Vested ( 697,932 ) 11.97 Forfeited ( 47,713 ) 11.03 Balance at December 31, 2022 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 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. 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. 98 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 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. Pursuant to the internal reorganization, existing Legacy Awards were canceled and replaced by converting each limited partner’s capital interests in Professional Partners attributable to PWP OpCo into a combination of original capital units (“OCUs”), value capital units (“VCUs”), and/or alignment capital units (“ACUs”). The OCUs are held by current limited partners of Professional Partners based on a pro-rata allocation of their existing capital and were fully vested upon recapitalization. The VCUs and ACUs (collectively, “Professional Partners Awards”) are held by current working partners and require services to be performed on behalf of PWP OpCo. The Professional Partners Awards are generally subject to a service-based graded vesting schedule over a three to five-year period. Fully vested Professional Partners Awards are exchangeable for PWP OpCo Units and allow for their exchange into Class A common stock of PWP on a one-for-one basis. Holders of Professional Partners Awards and OCUs are entitled to participate in distributions made on PWP OpCo Units underlying their Professional Partners Awards during the vesting period. The Company accounted for the cancellation of the Legacy Awards and concurrent grant of Professional Partners Awards as a modification of the Legacy Awards. The fair value of the Professional Partners Awards granted was determined to be incremental value conveyed to the holders of the Legacy Awards and will be accounted for under ASC Topic 718, Compensation—Stock Compensation, with the cost reflected in Equity-based compensation over the requisite service period. The Company will continue to amortize the unrecognized cost associated with the Legacy Awards over its original vesting schedule. 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. 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. As a result, all of the compensation expense and corresponding capital contribution associated with the Professional Partners Awards, as well as the remaining compensation expense related to the Legacy Awards, is allocated to non-controlling interests on the Consolidated Statements of Operations and Consolidated Statements of Financial Condition. If any Professional Partners Award is forfeited, the value attributable to the forfeited Professional Partners Award will accrete to all limited partners in Professional Partners based on relative ownership at the time of forfeiture. The accretion of value upon forfeiture reflects a reallocation of value attributable to the forfeited Professional Partners Award and does not result in an incremental grant. On August 31, 2021, certain Professional Partner ACUs and VCUs held by French partners were canceled, and an equal number of Transaction Pool PSUs were issued to such partners. The Company accounted for these transactions as a modification. The grant-date fair value of the Transaction Pool PSUs was based on the closing price of PWP Class A common stock on the date of grant. The total expense associated with the replacement awards will be amortized over the remaining service period for Transaction Pool PSUs. The canceled Professional Partner Awards were reallocated to certain other working partners on August 31, 2021, and the Company accounted for these as a new grant of ACUs and VCUs. The grant date fair value of these awards was $ 11.5 million which was based on the closing price of PWP Class A common stock on the date of grant. 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. 99 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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 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. During the year ended December 31, 2020, the Company modified certain Legacy Awards that were granted in 2016 by extending the vesting period and changing certain vesting provisions regarding termination, resignation or death/disability. The awards were considered probable of vesting both prior to and post modification and therefore the modification was considered a Type 1 modification. The award value at the time of modification was determined to be less than the original grant date fair value and as a result no additional compensation expense was recognized due to the modification. Additionally, the Company elected to continue to recognize Equity-based compensation expense over the original vesting period. 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. As of December 31, 2022, there was $ 9.7 million of unrecognized compensation cost associated with the Legacy Awards that is expected to be recognized over a weighted-average period of 0.8 years. The following table presents the expense related to awards that were recorded in Professional fees and components of Equity-based compensation included on the Consolidated Statements of Operations: Year Ended December 31, 2022 2021 2020 Professional fees PWP Incentive Plan Awards $ 2,262 $ 703 $ — Total Professional fees $ 2,262 $ 703 $ — Equity-based compensation PWP Incentive Plan Awards $ 79,542 $ 44,891 $ — Legacy Awards (1) 13,241 19,105 24,815 Professional Partners Awards (1) 61,375 32,334 — Total Equity-based compensation $ 154,158 $ 96,330 $ 24,815 Income tax benefit of equity-based awards $ 10,332 $ 4,901 $ — _________________ (1) The vesting of these awards does not dilute Perella Weinberg Partners shareholders relative to Professional Partners. As such the related equity-based compensation expense is fully attributed to non-controlling interests. 100 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, deferred compensation, benefits and payroll taxes. In all instances, compensation expense is accrued over the requisite service period. Deferred Compensation Programs The Company has various deferred compensation plans. Some plans allow employees to defer cash payments for services performed in the past and some plans require future service. The Company recognizes compensation expense over the requisite service period. In addition, certain legacy plans required the Company to invest the deferred amounts into designated brokerage accounts at the employee’s discretion, while others allowed employees to make hypothetical investments in which their deferrals were deemed to be invested. The designated brokerage balances are reflected in Prepaid expenses and other assets on the Consolidated Statements of Financial Condition. The Company maintains company-owned life insurance policies which are designed to offset a portion of the liability for the hypothetical investments of these legacy plans. 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. 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, 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. Compensation expenses related to these deferred compensation plans was $ 0.2 million, $ 1.1 million and $ 5.8 million for the years ended December 31, 2022, 2021, and 2020, respectively, and are presented within Compensation and benefits in the Consolidated Statements of Operations. 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, (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. 101 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 The Company analyzed the calculation of net income (loss) per share for periods prior to the Business Combination on June 24, 2021 and determined that it resulted in values that would not be meaningful to the users of the consolidated financial statements. Therefore, net income (loss) per share information has not been presented for periods prior to the Business Combination. The basic and diluted net income (loss) per share attributable to Class A common shareholders for the year ended December 31, 2021, as presented on the Consolidated Statements of Operations, represent only the period after the Business Combination to December 31, 2021. 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 Numerator: Net income (loss) attributable to Perella Weinberg Partners – basic $ 17,878 $ ( 9,421 ) Dilutive effect from assumed exchange of PWP OpCo Units, net of tax ( 59,197 ) ( 51,904 ) Net income (loss) attributable to Perella Weinberg Partners – diluted $ ( 41,319 ) $ ( 61,325 ) Denominator: Weighted average shares of Class A common stock outstanding – basic 43,837,640 42,595,712 Weighted average number of incremental shares from assumed exchange of PWP OpCo Units 45,917,992 50,154,199 Weighted average shares of Class A common stock outstanding – diluted 89,755,632 92,749,911 Net income (loss) per share attributable to Class A common shareholders Basic $ 0.41 $ ( 0.22 ) 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. 102 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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) — 1,029,210 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 Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs: 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 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. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. 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. 103 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Fair Value of Financial Instruments The following table summarizes the categorization and fair value estimate of the Company’s financial instruments that are measured on a recurring basis pursuant to the above fair value hierarchy levels as of December 31, 2022 and 2021: December 31, 2022 Level 1 Level 2 Level 3 Total Financial assets U.S. Treasury securities $ — $ 140,110 $ — $ 140,110 Cash surrender value of company-owned life insurance — 488 — 488 Total financial assets $ — $ 140,598 $ — $ 140,598 December 31, 2021 Level 1 Level 2 Level 3 Total Financial assets Investments in mutual funds and other $ 500 $ — $ — $ 500 Cash surrender value of company-owned life insurance — 565 — 565 Total financial assets $ 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, 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. 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 %. 104 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) 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 Balance at Business Combination $ 675 Change in fair value 67 Balance at December 31, 2021 742 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 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 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. Either party to the TSA may terminate the agreement solely as it applies to the services it receives under the agreement with 90 days prior written notice. The services provided under the TSA primarily relate to administrative services such as legal, human resources, compliance, information technology and certain finance functions. 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. 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 in Note 5—Leases. 105 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 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 TSA income – Compensation related $ 888 $ 3,165 $ 3,837 TSA income – Non-compensation related 1,120 659 1,484 Sublease income 682 2,957 3,942 Total income from PWP Capital Holdings LP $ 2,690 $ 6,781 $ 9,263 Tax Receivable Agreement 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. 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: Years Ending: Estimated Payments Under Tax Receivable Agreement 2023 $ 1,562 2024 1,228 2025 1,254 2026 1,281 2027 1,309 Thereafter 16,357 Total payments $ 22,991 106 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Partner Promissory Notes The Company loaned money pursuant to promissory note agreements (the “Partner Promissory Notes”) to certain partners. The Partner Promissory Notes bear interest at an annual rate equal to the Federal Mid-Term Rate on an annual basis. The Partner Promissory Notes are due on various dates or in the event a partner is terminated or leaves at will. Repayment of the Partner Promissory Notes may be accelerated based on certain conditions as defined in the promissory note agreements and are primarily secured by the partner’s equity interests in PWP OpCo or other affiliate. 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, 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. 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. 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. Convertible Notes Principal amounts of $ 8.7 million related to the Convertible Notes were held by partners prior to redemption upon closing of the Business Combination. Refer to Note 10—Debt for additional information on the Convertible Notes. Other Related Party Transactions 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. 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. 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. 107 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Note 18—Commitments and Contingencies Loan Guarantees The Company has unconditionally guaranteed certain of its partners’ loans with First Republic Bank (“Lender”) whereby it will pay the Lender upon the occurrence of a default event. The total guarantees related to partners was $ 1.6 million and $ 3.3 million as of December 31, 2022 and 2021, respectively. These guarantees are secured by the partners’ interests in Professional Partners. As of December 31, 2022 and 2021, no loans were in default. Indemnifications The Company enters into certain contracts that contain a variety of indemnification provisions. The Company’s maximum exposure under these arrangements is unknown. As of December 31, 2022 and 2021, the Company expects no claims or losses pursuant to these contracts; therefore, no liability has been recorded related to these indemnification provisions. Legal Contingencies From time to time, the Company is named as a defendant in legal actions relating to transactions conducted in the ordinary course of business. Some of these matters may involve claims of substantial amounts. 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. 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. Kramer, Derron S. Slonecker, Joshua S. Scherer, Adam W. Verost (collectively, the “Individual Defendants”) and Ducera Partners LLC (together with the Individual Defendants, the “Defendants”) in New York Supreme Court, Commercial Division (the “Court”). The complaint alleges that the Individual Defendants, three former partners and one former employee of the PWP Plaintiffs, entered into a scheme while still at PWP to lift out the PWP Plaintiffs’ restructuring group to form a new competing firm that they were secretly forming in breach of their contractual and fiduciary duties to the PWP Plaintiffs. The complaint contains 14 causes of action, and seeks declaratory relief as well as damages resulting from the Individual Defendants’ breaches of their obligations under the PWP Plaintiffs’ partnership and employment agreements, and from Defendants’ unfair competition and tortious interference with the PWP Plaintiffs’ contracts and client relationships. On November 9, 2015, the Defendants filed an Answer, Counterclaims, Cross-claims and a Third-Party Complaint, which contained 14 causes of action. On July 17, 2016, the Court issued a decision, dismissing half of the Defendants’ counterclaims and cross-claims with prejudice. On August 18, 2016, the Defendants filed an Amended Answer, Counterclaims, Cross-claims and Third-Party Complaint, which contained only seven counterclaims and cross-claims. On December 12, 2016, the Defendants appealed the dismissal of three of their counterclaims and cross-claims to the New York Appellate Division, First Department (the “First Department”). On August 29, 2017, the First Department issued a decision denying the Defendants’ appeal in its entirety other than allowing only one Defendant to proceed with his breach of fiduciary duty counterclaim. On October 27, 2017, the Defendants moved the First Department for leave to appeal its decision to the New York Court of Appeals. On December 28, 2017, the First Department denied the Defendants’ motion for leave to appeal to the New York Court of Appeals. On April 24, 2018, the Defendants filed a Second Amended Answer, Counterclaims, Cross-claims and Third-Party Complaint, which contains eight counterclaims and cross-claims. The Defendants are seeking declaratory relief and damages of no less than $ 60.0 million, as well as statutory interest. 108 Perella Weinberg Partners Notes to Consolidated Financial Statements (Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted) Discovery is complete. Both the PWP Plaintiffs and the Defendants subsequently moved for summary judgment. As of March 20, 2020 the parties had completed briefing their respective motions for summary judgment. The PWP Plaintiffs moved affirmatively for summary judgment on each of their 14 claims and also moved for dismissal of each of the Defendants’ remaining eight counterclaims and cross-claims. The Defendants moved affirmatively for summary judgment on four of their eight counterclaims and cross-claims and also moved for dismissal of each of the PWP Plaintiffs’ 14 claims. The Court held oral argument on the motions for summary judgment on May 27, 2021. The Court has yet to issue a decision on the motions for summary judgement. In addition, on January 19, 2022, Defendants filed a motion for leave to renew one of their counterclaims brought under the New York Labor Law that the Court dismissed in 2016 (the dismissal of which was affirmed by the First Department in 2017). That motion was fully briefed as of February 3, 2022. We believe that our 14 causes of action are meritorious. Further, we believe that we have substantial meritorious defenses to the Defendants’ remaining counterclaims and cross-claims and plan to vigorously contest them. Litigation, however, can be uncertain and there can be no assurance that any judgment for one or more of the Defendants or other outcome of the case would not have a material adverse effect on us. Additionally, even if we prevail in the litigation and are awarded damages, we do not know if we will be able to fully collect on any judgment against any or all Defendants. During the years ended December 31, 2022, 2021, and 2020, the Company incurred $ 0.6 million, $ 1.1 million, and $ 1.4 million, respectively, in legal and professional fees, net of expected insurance reimbursement, related to this litigation. These litigation costs are included in Professional fees in the Consolidated Statements of Operations. Note 19—Business Information The Company’s activities of providing advisory services for mergers-and-acquisitions, private placements and financial advisory, as well as services for underwriting of securities offered for sale in public markets, commissions for the brokerage of publicly traded securities and equity research constitute a single business segment. The Company is organized as one operating segment in order to maximize the value of advice to clients by drawing upon the diversified expertise and broad relationships of its senior professionals across the Company. The Company has a single operating segment and therefore a single reportable segment. There was no individual client that accounted for more than 10% of aggregate revenues for the years ended December 31, 2022, 2021, and 2020. Since the financial markets are global in nature, the Company generally manages its business based on the operating results of the Company taken as a whole, not by geographic region. The following tables set forth the geographical distribution of revenues and assets based on the location of the office that generates the revenues or holds the assets and therefore may not be indicative of the geography in which the Company’s clients are located. Year Ended December 31, 2022 2021 2020 Revenues United States $ 477,990 $ 659,947 $ 387,038 International 153,517 141,715 131,948 Total $ 631,507 $ 801,662 $ 518,986 December 31, 2022 2021 Assets United States $ 531,590 $ 552,865 International 185,503 165,462 Total $ 717,093 $ 718,327 109 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, 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 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. 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. 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. 110 Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure None.