What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-15 compared with 2022-05-13 · 157 added, 126 removed, 382 unchanged (43% of the section changed)

37 unchanged sentences

Borrowings were used to pay down the outstanding balance under the previous credit facility with HPS and related transaction expenses, pay off Seller's Notes related to the RCP acquisition and to finance working capital needs and for general corporate purposes.

During the first quarter of 2022, the Company paid down $25 million of the outstanding balance under the Revolver Facility and as of March 31, 2022, the outstanding balance was $65.9 million.

As of March 31, 2022, our private market solutions were comprised of the following:

During the first quarter of 2022, the Company paid down $25 million of the outstanding balance under the Revolver Facility and as of June 30, 2022, the outstanding balance was $65.9 million.

In July 2022, the Company paid down an additional $12 million of the outstanding balance under the Revolver Facility.

As of June 30, 2022, our private market solutions were comprised of the following:

Private Equity Solutions (PES) .

Under PES, we make direct and indirect investments in middle and lower- middle market private equity across North America.

PES also makes minority equity investments in a diversified portfolio of mid-sized managers across private equity, private credit, real estate and real assets.

PES also makes minority equity investments in a diversified portfolio of mid-sized managers across private equity, private credit and real assets.

The PES investment team, which is comprised of 38 investment professionals with an average of 24+ years of experience, has deep and long-standing investor and fund manager relationships in the middle and lower-middle market which it has cultivated over the past 20 years, including over 1,800+ investors, 200+ fund managers, 400+ private market funds and 1,900+ portfolio companies.

2 unchanged sentences

We are further differentiated by the scale, depth, diversity and accuracy of our constantly expanding proprietary private markets database that contains comprehensive information on more than 4,900 investment firms, 9,000 funds, 43,000 individual transactions, 29,000 private companies and 260,000 financial metrics.

As of March 31, 2022, PES managed $10.0 billion of FPAUM.

As of June 30, 2022, PES managed $10.4 billion of Fee Paying Assets Under Management ("FPAUM").

Venture Capital Solutions (VCS).

4 unchanged sentences

In addition, since 2011, we have partnered with Forbes to publish the Midas List, a ranking of the top value-creating venture capitalists.

As of March 31, 2022, VCS managed $4.6 billion of FPAUM.

As of June 30, 2022, VCS managed $5.1 billion of FPAUM.

Impact Investing Solutions (IIS).

4 unchanged sentences

We are differentiated in both the breadth of impact areas served, the type of capital deployed and the duration of our track record.

We have collectively deployed over $4.8 billion into 700+ projects, supporting 390+ businesses across 38 states, Washington DC and Puerto Rico since 2000.

We have collectively deployed over $4.8 billion into 750+ projects, supporting 400+ businesses across 38 states since 2000.

We have invested $2.6 billion in Impact Assets across our Small Business Lending, Impact Real Estate and Climate Finance Strategies.

Investments in solar assets will generate 16 billion KWh of renewable energy over the lifetime of the portfolio.

As of March 31, 2022, IIS managed $1.7 billion of FPAUM .

Investments in solar assets have generated over 781 million KWh of renewable energy over the lifetime of the portfolio.

As of June 30, 2022, IIS managed $1.7 billion of FPAUM .

Private Credit Solutions (PCS).

2 unchanged sentences

The PCS investment team, which is comprised of 24 investment professionals with an average of 22+ years of experience, has deep and long-standing relationships in the private credit market which it has cultivated over the past 22 years, including 270+ investors across 11 active investment vehicles and 70+ portfolio companies with over $1.9+ billion capital deployed.

Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for growth-oriented companies.

Our PCS is differentiated by our relationship-driven sourcing approach providing capital solutions for

growth-oriented companies.

We are further synergistically strengthened by our PES network of fund managers, characterized by more than 575 credit opportunities annually.

We currently maintain 45+ active sponsor relationships and have 60+ platform investments.

As of March 31, 2022, PCS managed $1.3 billion of FPAUM.

As of June 30, 2022, PCS managed $1.3 billion of FPAUM.

Sources of Revenue

9 unchanged sentences

Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our primary funds comprise approximately $10.9 billion of our FPAUM as of March 31, 2022.

Our primary funds comprise approximately $11.1 billion of our FPAUM as of June 30, 2022.

Direct and Co-Investment Funds.

6 unchanged sentences

Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our direct investing platform comprises approximately $5.4 billion of our FPAUM as of March 31, 2022.

Our direct investing platform comprises approximately $6.1 billion of our FPAUM as of June 30, 2022.

Secondaries refer to investments in existing private markets funds through the acquisition of an existing interest in a private markets fund by one investor from another in a negotiated transaction.

4 unchanged sentences

Often, the fees are structured such that they step down, or decrease, over the life of the fund.

Our secondary funds comprise approximately $1.3 billion of our FPAUM as of March 31, 2022.

Our secondary funds comprise approximately $1.3 billion of our FPAUM as of June 30, 2022.

Operating Segments

2 unchanged sentences

Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American markets in which we operate, as well as changes in global economic conditions and regulatory or other governmental policies or actions, which can materially affect the values of the funds our platforms manage, as well as our ability to effectively manage investments.

With interest rates remaining historically low, we continue to see investors turning towards alternative investments to achieve higher yields.

With interest rates continuing to rise and the global economy outlook remaining uncertain, we continue to see investors turning towards alternative investments to achieve consistent and higher yields with our contractually guaranteed fee rate.

The continued growth of our business may be influenced by several factors, including the following market trends:

3 unchanged sentences

Furthermore, investors continue to increase their exposure to passive strategies in search for lower fee alternatives as relative returns in active public market strategies have compressed.

We believe the continued move away from active public market

strategies into passive strategies will support growth in private market solutions as investors seek higher risk-adjusted returns.

We believe the continued move away from active public market strategies into passive strategies will support growth in private market solutions as investors seek higher risk-adjusted returns.

Additional trends driving investor demand are 1) increasing long-term investor allocations towards private market asset classes, 2) legislation that allows retirement plans to add private equity vehicles as an investment option, and 3) the adoption of Environmental, Social, and Corporate Governance (“ESG”) and impact investing by the institutional and high net worth investor community.

27 unchanged sentences

There has been a trend amongst larger private markets investors to consolidate the number of general partners in which they invest and work with.

At times, this has led to certain funds being oversubscribed due to the increasing flow of capital.

At times, this

has led to certain funds being oversubscribed due to the increasing flow of capital.

This has resulted in some investors, primarily smaller investors or less strategically important investors, not being able to gain access to certain funds.

Our ability to invest and maintain our sphere of influence with these high-performing fund

managers is critical to our investors’

Our ability to invest and maintain our sphere of influence with these high-performing fund managers is critical to our investors’

success and our ability to maintain our competitive position and grow our revenue.

28 unchanged sentences

Professional fees primarily consist of legal, advisory, accounting and tax fees which may include services related to our strategic development opportunities such as due diligence performed in connection with potential acquisitions.

Our professional fees will fluctuate commensurate with our strategic objectives and potential acquisitions, and certain recurring accounting advisory, audit and tax expenses are expected to increase as our Company has become an SEC registrant and we must comply with additional regulatory requirements.

Our professional fees will fluctuate commensurate with our strategic objectives and potential acquisitions, and certain recurring accounting

advisory, audit and tax expenses are expected to increase as our Company has become an SEC registrant and we must comply with additional regulatory requirements.

General, administrative and other includes occupancy, travel and entertainment, technology, insurance and other general costs associated with operating our business.

4 unchanged sentences

Interest expense also includes the effects of the imputed interest on certain non-interest-bearing notes payable.

Income Tax Expense

Income tax expense is comprised of current and deferred tax expense.

Current income tax expense represents our estimated taxes to be paid or refunded for the current period.

Income Tax Expense/Benefit

Income tax expense/benefit is comprised of current and deferred tax expense/benefit.

Current income tax expense/benefit represents our estimated taxes to be paid or refunded for the current period.

In accordance with ASC 740, Income Taxes (“ASC 740”), we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards.

3 unchanged sentences

FPAUM reflects the assets from which we earn management and advisory fees.

Our private credit vehicles earn management fees on deployed capital.

Our vehicles typically earn management and advisory fees based on committed capital, and in certain cases, net invested capital, depending on the fee terms.

1 unchanged sentence

Results of Operations

For the three months ended March 31, 2022 and March 31, 2021.

For the three and six months ended June 30, 2022 and June 30, 2021.

For the Three Months Ended

For the Six Months Ended

(in thousands)

Management and advisory fees

17 unchanged sentences

Income tax expense

Three Months Ended March 31, 2022 and March 31, 2021

Our revenue is composed almost entirely of recurring management and advisory fees, with the vast majority of fees earned on committed capital that is typically subject to ten to fifteen year lock up agreements, therefore our average fee rates have remained stable at approximately 1% for the three months ended March 31, 2022 and March 31, 2021.

For the three months ended March 31, 2022 compared to the three months ended March 31, 2021, revenues increased $10.5 million or 32% due to higher management fees primarily from the impact of organic growth of $6.7 million across RCP, TrueBridge, and Five Points as well as $3.8 million driven by the acquisition of Hark and Bonaccord in 2021.

Management and advisory fees increased $10.5 million, or 32%, to $43.0 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 due primarily to organic growth at RCP, TrueBridge, and Five Points of $6.7 million driven by increases in FPAUM, primarily from capital raised and additional fund closings.

The acquisitions of Bonaccord and Hark on September 30, 2021, contributed management fee and advisory revenues of $3.8 million.

Catch up fees for the three months ended March 31, 2022 were $0.7 million associated with the fund closings at TrueBridge and RCP.

Other revenues, which represent ancillary elements of our business, increased by $0.1 million or 30% to $0.3 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 driven primarily by an increase of $0.1 million of interest income in other revenue.

Three Months Ended June 30, 2022 and June 30, 2021

For the three months ended June 30, 2022 compared to the three months ended June 30, 2021, revenues increased $12.8 million or 38% due to both higher management fees primarily from the impact of organic 2022 growth as well as 2021 acquisitions of Hark and Bonaccord.

Management fees increased $12.9 million, or 39%, to $46.5 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 due primarily to organic growth efforts in 2022, which contributed management fee and advisory revenues of $9.1 million.

This growth is driven by increases in FPAUM, primarily from additional fund closings and capital raised.

The remaining increase of $3.8 million represents an increase in the Company’s management fees due to the acquisitions of Hark and Bonaccord in September 2021.

Catch up fees during the second quarter of 2022 were $1.8 million associated with the fund closings at TrueBridge and RCP.

Catch up fees were $0.3 million during the second quarter of 2021.

Other revenues, which represent ancillary elements of our business, decreased by $0.2 million or 39% to $0.3 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 driven primarily by ad hoc referral fees.

Six Months Ended June 30, 2022 and June 30, 2021

Total revenues increased $23.3 million, or 35%, to $90.0 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, due to higher management and advisory fees, largely attributable to organic growth as well as our acquisitions, partially offset by a small decrease in other revenues.

Management fees increased by $23.4 million, or 35%, to $89.5 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 due primarily to organic growth of FPAUM, which contributed $15.8 million to management fee and advisory revenues, in total.

Revenue also increased by $7.6 million due to the acquisitions of Hark and Bonaccord in September 2021.

Catch up fees for the six months ended June 30, 2022 were $2.5 million associated with the fund closings at TrueBridge and RCP.

Catch up fees were $1.2 million during the six months ended June 30, 2021.

Other revenues decreased by $0.1 million, or 19% to $0.5 million, from the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This decrease was primarily attributable to a decrease in ad hoc referral fees.

For the Three Months Ended

For the Six Months Ended

OPERATING EXPENSES

(in thousands)

Compensation and benefits

6 unchanged sentences

Operating Expenses

For the Three Months Ended March 31, 2022 and March 31, 2021

Total operating expenses increased by $7.5 million, or 31%, to $31.7 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

This increase was primarily due to increases in compensation and benefits as well as general, administrative, and other offset by fully amortized intangible assets at RCP and declining amortization expense of intangibles at ECG.

Compensation and benefits expense increased by $6.6 million, or 55%, to $18.5 million, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The increase was driven by a number of factors.

The acquisitions of Hark and Bonaccord on September 30, 2021 added $2.2 million of compensation expense in the first quarter of 2022.

Five Points made a $1.7 million one time payment to buyout the employment contracts for the prior partners during the first quarter of 2022.

Stock compensation expense increased by $1.1 million, due to RSUs and stock options issued to employees during the first quarter of 2022 as well as RSAs issued in late 2021.

There was a $0.7 million increase associated with the build out of P10 back office to meet the compliance needs of a public company.

Three Months Ended June 30, 2022 and June 30, 2021

Total operating expenses increased by $5.4 million, or 21%, to $31.0 million, for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily driven by increases in compensation and benefits and general and administrative expenses associated with the growth of P10 since acquiring Hark and Bonaccord in September 2021 and

D&O insurance driven by the IPO transaction at the end of 2021.

Compensation and benefits expense increased by $5.5 million, or 44%, to $17.8 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

The acquisition of Hark and Bonaccord in September 2021 brought an additional $1.9 million of compensation expense.

The remaining $3.6 million increase is recognized across the existing entities.

Stock compensation accounts for $2.2 million of the $3.6 million increase.

This was driven by RSUs and stock options granted to employees during the first quarter of 2022 as well as RSAs granted in late 2021.

There was a $0.5 million increase associated with the build out of P10 back office to meet compliance needs of a public company.

The final driver is a $1.0 million increase associated with an increase in headcount across all subsidiaries.

Professional fees decreased by $0.7 million, or 20% to $2.7 million.

The similar expense for the three months ended March 31, 2022 compared to 2021 due to the slower acquisition activity in both first quarters.

The primary cost in professional fees for the three months ended March 31, 2022 and 2021 are audit fees incurred associated with year end reporting.

General, administrative and other increased by $2.1 million, or 102% to $4.1 million, due primarily to the increase of $0.7 million in D&O insurance driven by the IPO transaction at the end of 2021, $0.3 million due to the acquisitions of Hark and Bonaccord, and $0.3 million of additional rent expense for the three months ended March 31, 2022 as compared to the

three months ended March 31, 2021.

The remaining $0.5 million increase was individually insignificant increases in cost at each subsidiary driven by an additional leased office space, insurance costs, and general operations.

Contingent consideration expense increased $0.1 million, to $0.1 million, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

This was driven by remeasurement during the first quarter of 2022 of the contingent consideration payable in connection with the acquisitions of Hark and Bonaccord.

Amortization of intangibles decreased by $1.3 million, or (17)%, to $6.2 million, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

The decrease is due to $1.8 million less in expense in the first quarter of 2022 as compared to 2021 at RCP due to fully amortized intangible assets and at ECG due to declining amortization expense.

This was offset by an addition of $0.5 million in amortization expense driven by the acquisitions of Hark and Bonaccord on September 30, 2021.

This is primarily driven by timing of acquisitions.

The acquisition of Enhanced occurred so late in 2020 that the Company incurred professional fees well into 2021.

Whereas, the acquisitions of Hark and Bonaccord were the only acquisitions of 2021 and did not close until the last day of the third quarter.

General, administrative and other increased by $2.0 million, or 92% to $4.3 million and was primarily due to the increase of insurance expense as noted above in D&O insurance driven by the IPO transaction at the end of 2021.

This added an additional $0.7 million of expense compared to the second quarter of 2021.

The acquisitions of Hark and Bonaccord brought an additional $0.5 million of expense.

The Company entered into two new leases since June 30, 2021 which added an additional $0.3 million of expense.

The remaining $0.5 million of additional general and administrative expense is derived from additional IT expenses and increased travel since last year.

Amortization of intangibles decreased by $1.3 million, or 18% to $6.2 million, for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

The decrease is driven by a fully amortized intangible asset at RCP and less amortization at ECG in 2022 than in 2021 driven by unique syndication fee contracts.

This is offset by added intangible assets at Bonaccord and Hark following their acquisitions in September 2021.

The SAA at Bonaccord added an additional $0.2 million of expense in the second quarter of 2022.

Six Months Ended June 30, 2022 and June 30, 2021

Total operating expenses increased by $12.9 million, or 26%, to $62.6 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This increase was primarily due to increases in compensation and benefits and general and administrative expenses and offset by a decrease in amortization expense of intangible assets.

This is primarily driven by increases in stock compensation associated with RSU, RSA and stock option grants at the end of 2021 and beginning of 2022 as well as insurance expense associated with D&O insurance driven by the IPO transaction at the end of 2021.

The acquisitions of Hark and Bonaccord in September 2021 also contributed to these increases.

Compensation and benefits expense increased by $12.0 million, or 50%, to $36.3 million, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The acquisitions of Hark and Bonaccord made up $4.2 million of this increase.

Another $3.2 million consisted of stock compensation expense related to RSUs and stock options issued to employees during the first quarter of 2022 as well as RSAs issued in late 2021.

There was a $1.6 million increase associated with the build out of P10 back office to meet compliance needs of a public company.

An additional $1.6 million related to increases in headcount across all subsidiaries.

Finally, Five Points made a $1.7 million one time payment to buyout the employment contracts for the prior partners during the first quarter of 2022.

Professional fees decreased by $0.8 million, or 13%, to $5.4 million primarily due to timing of acquisitions as we had less acquisition-related professional fees in the first half of 2022 as compared to 2021.

General, administrative and other increased by $4.1 million, or 97% to $8.4 million.

The acquisitions of Hark and Bonaccord added an additional $0.8 million of expense for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

As previously mentioned, D&O insurance added an additional $1.3 million of expense related to the IPO transaction.

Additional office space in New York added $0.6 million of rent expense.

The additional $1.4 million of expense relates to increased costs associated with expanded headcount and increased travel expenses.

Amortization of intangibles decreased by $2.6 million, or 18%, to $12.3 million, for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

The decrease is driven by a fully amortized intangible asset at RCP and less amortization at ECG in 2022 than in 2021 driven by unique syndication fee contracts.

This is offset by added intangible assets at Bonaccord and Hark following their acquisitions in September 2021.

The SAA at Bonaccord added an additional $0.3 million of expense in 2022.

Other Income (Expense)

For the Three Months Ended December 31, 2021 and December 31, 2020

Other expenses decreased by $4.1 million, or (80)%, to $1.1 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

This decrease was primarily driven by the early extinguishment of the credit and guaranty facility on December 22, 2021.

Three Months Ended June 30, 2022 and June 30, 2021

Other expenses decreased $4.5 million, or 86%, to $0.7 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

This decrease was primarily due to a $3.7 million decrease in interest expense related to the extinguishment and replacement of the credit and guaranty facility with the revolver and term loan facility.

The credit and guaranty facility incurred interest at a rate of 7%.

This was replaced with the revolving credit facility and term loan which incurs interest at a base rate of 2.1% plus SOFR.

The decline in interest expense for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 is a function both of lower interest rates as well as $65.1 million less in outstanding interest-bearing principal as of March 31, 2022.

The decline in interest expense for the three months ended June 30 2022, as compared to the three months ended June 30, 2021 is a function both of lower interest rates as well as $65.1 million less in outstanding interest-bearing principal as of June 30, 2022.

The lower principal balance was a result of the paydown of debt with IPO proceeds and operating cash flow during the last year.

Income Tax Expense

For the Three Months Ended March 31, 2022 and March 31, 2021

Income tax expense increased by $2.1 million to $2.8 million for the three months ended March 31, 2022 compared to an expense of $0.7 million for the three months ended March 31, 2021.

The increase was primarily due to the increase of pre-tax income during 2022.

The following table provides a period-to-period roll-forward of our fee paying assets under management on a pro forma basis as if Hark and Bonaccord were acquired on January 1, 2021.

P10 completed an additional pay down of $12 million of principal on the revolving credit facility in July 2022.

There was also a $0.5 million increase in income from unconsolidated subsidiaries at ECG.

Six Months Ended June 30, 2022 and June 30, 2021

Other expenses decreased by $8.6 million, or 83%, to $1.8 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

This decrease was primarily due to a $7.6 million decrease in interest expense related to the debt refinance mentioned in the above paragraph that took place in December 2021.

Other income increased by $0.6 million driven by ECG’s increase income from unconsolidated subsidiaries in the first six months of 2021.

Income Tax/Benefit Expense

Three Months Ended June 30, 2022 and June 30, 2021

Income tax expense increased by $3.1 million to $3.9 million for the three months ended June 30, 2022 compared to the three months ended June 30, 2021 due primarily to higher net income during the 2022 period.

Six Months Ended June 30, 2022 and June 30, 2021

Income tax expense increased by $5.2 million to $6.6 million for the six months ended June 30, 2022 compared to a benefit of $1.5 million for the six months ended June 30, 2021.

The increase was primarily due to higher net income during 2022.

The following table provides a period-to-period roll-forward of our fee earning AUM on a pro forma basis as if Hark and Bonaccord were acquired on January 1, 2021.

For the Three Months Ended

For the Six Months Ended

(in millions)

Balance, Beginning of Period

8 unchanged sentences

(3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis.

The following table provides a period-to-period roll-forward of our fee paying assets under management on an actual basis.

The following table provides a period-to-period roll-forward of our fee-earning AUM on an actual basis.

For the Three Months Ended

For the Six Months Ended

(in millions)

Balance, Beginning of Period

8 unchanged sentences

(3) Net asset value change consists primarily of the impact of market value appreciation (depreciation) from funds that earn fees on a net asset value basis.

FPAUM as of March 31, 2022

FPAUM increased $0.3 billion, or 1.9%, to $17.6 billion on a pro forma basis and $0.3 billion or 1.9% to $17.6 billion on an actual basis for the three months ended March 31, 2022, due primarily to an increase in capital raised and deployed from our private equity and venture capital solutions of $720 million offset by $395 million of step downs and expirations at RCP and TrueBridge.

Our FPAUM growth and concentration across solutions and vehicles has been relatively consistent over time but can vary in particular periods due to the systematic fundraising cycles of new funds, which typically lasts 12-24 months.

We expect to continue to expand our fundraising efforts and grow FPAUM with the launch of new specialized investment vehicles and asset class solutions.

FPAUM as of March 31, 2021

FPAUM increased $0.5 billion, or 3.9%, to $13.9 billion on a pro forma basis for the three months ended March 31, 2021, due primarily to an increase in capital raised from our private equity, venture capital and impact investment solutions.

FPAUM increased $0.4 billion, or 3.0%, to $13.1 billion on an actual basis for the three months ended March 31, 2021, due primarily to an increase in capital raised and deployed from our private equity and venture capital investment solutions of $424 million offset by $44 million in step downs and expirations.

FPAUM as of June 30, 2022

FPAUM increased $0.8 billion, or 4.9%, to $18.5 billion on a pro forma basis and actual basis for the three months ended June 30, 2022.

This increase is due primarily to an increase in capital raised from our private equity and venture capital solutions.

FPAUM increased $1.2 billion, or 6.9%, to $18.5 billion on a pro forma basis and $1.2 billion or 6.9% to $18.5 billion on an actual basis for the six months ended June 30, 2022, due primarily to an increase in capital raised from our private

equity and venture capital solutions.

12 unchanged sentences

The cost of financing our business,

Losses associated with extinguishing debt outstanding,

Acquisition-related expenses which reflects the actual costs incurred during the period for the acquisition of new businesses, which primarily consists of fees for professional services including legal, accounting, and advisory,

2 unchanged sentences

Adjusted Net Income in 2021 reflects the cash payments made for interest, which differs significantly from total interest expense that includes non-cash interest on the non-interest-bearing Seller Notes related to our acquisitions of RCP 2 and RCP 3 that existed.

Similarly, the cash income taxes paid during the periods differ significantly from the net income tax expense, which is primarily comprised of deferred tax expense as described in the results of operations.

Similarly, the cash income taxes paid during the 2022 and 2021 periods differ significantly from the net income tax expense, which is primarily comprised of deferred tax expense as described in the results of operations.

For the Three

For the Six Months

(in thousands)

Add back (subtract):

15 unchanged sentences

Stockholders’

There was a decrease in cash and cash equivalents of $17.3 million from December 31, 2021 to $23.7 million as of March 31, 2022 primarily due to the paydown of $25 million on the revolving credit facility principal balance in February 2022.

There was a decrease in goodwill and intangible assets of $6.2 million due to amortization of intangibles during the three months ended March 31, 2022.

There was a decrease in cash from $40.9 million as of December 31, 2021 to $23.6 million as of June 30, 2022 due to the paydown of $25 million on the revolving credit facility principal balance in February 2022 and a $3.5 million dividend payment in June 2022 offset by excess operating cash flows.

There was a decrease in goodwill and intangible assets of $12.3 million due to amortization of intangibles during the six months ended June 30, 2022.

Remaining total assets increased in the same period by $8.3 million.

The increase of $2.7 million is driven by an increase in accounts receivable from related parties which is entirely due to ECG's Advisory

Agreement with Enhanced PC and Crossroads.

Debt obligations declined by $24.8 million which is driven by a $25.0 million principal pay down in February 2022 on the revolving credit facility which is offset by additional debt issuance costs.

This was primarily driven by amounts due to related parties increased by $12.7 million due to the Advisory Agreement between ECG and Enhanced PC that is discussed in Note 13 of our consolidated financial statements.

Historical Liquidity and Capital Resources

12 unchanged sentences

The Revolving Credit Facility has no contractual principal repayments until maturity, which is December 22, 2025 for both facilities.

As of June 30, 2022, the Term Loan is incurring interest at a SOFR rate of 2.61%.

As of June 30, 2022, the Revolver Facility is split into three tranches.

The first tranche has a principal balance of $12.0 million and incurs interest at a SOFR rate of 1.59% for a one month period through July 2022.

The second tranche has a principal balance of $40.0 million and incurs interest at a SOFR rate of 1.43% for a three month period through August 2022.

The third tranche has a principal balance of $13.9 million and incurs interest at a SOFR rate of 2.10% for a three month period through September 2022.

The Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum leverage ratio.

As of March 31, 2022, P10 was in compliance with its financial covenants required under the facility.

As of June 30, 2022, P10 was in compliance with its financial covenants required under the facility.

In February 2022, the Company repaid $25 million of the principal balance outstanding on the revolving credit facility.

As of March 31, 2022, the balance drawn on the revolving credit facility is $65.9 million and on the term loan, the balance is $125.0 million.

For the three months ended March 31, 2022 and March 31, 2021, $0.9 million and $0 interest expense was incurred, respectively.

Three Months Ended March 31, 2022 Compared to the Three Months Ended March 31, 2021

The following table reflects our cash flows for the three months ended March 31, 2022 and 2021:

For the Three Months

Ended March 31,

As of June 30, 2022, the balance drawn on the revolving credit facility is $65.9 million and on the term loan, the balance is $125.0 million.

For the three and six months ended June 30, 2022 and June 30, 2021, $2.5 million and $0 and $1.6 million and $0 interest expense was incurred, respectively.

On July 27, 2022, the $12.0 million tranche of debt on the Revolver Facility incurring interest on a one month period was repaid in full.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021

The following table reflects our cash flows for the six months ended June 30, 2022 and 2021:

For the Six Months

Ended June 30,

(in thousands)

5 unchanged sentences

Operating Activities

Three Months Ended March 31, 2022 and March 31, 2021

Cash from operating activities decreased $1.9 million or (20)%, to $7.6 million for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The components of this net decrease primarily consisted of the following changes in operating assets and liabilities:

An increase of $5.0 million in net income driven primarily by organic growth;

An increase in stock based compensation expense of $1.1 million;

An increase in due from related parties of $5.7 million, primarily attributable to ECG's advisory agreement with Enhanced PC;

A decrease in due to related parties of $1.8 million;

Cash from operating activities increased $5.6 million or 32%, to $23.2 million for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The components of this net increase primarily consisted of a $13.8 million increase in net income and the following changes in operating assets and liabilities:

An increase of $5.8 million in due from related parties driven primarily by the receivable from the Advisory Agreement between ECG and ECP as further discussed in Note 13;

An increase in expense for deferred taxes of $5.6 million primarily driven by reduction of deferred tax assets;

An increase of $4.0 million in accounts receivable driven by closing of new funds at the end of the quarter and collections in arrears;

A decrease in amortization of intangibles of $2.6 million driven by a fully amortized intangible asset at RCP and less amortization at ECG in 2022 than in 2021 driven by unique syndication fee contracts.

This is offset by added intangible assets at Bonaccord and Hark following their acquisitions in September 2021.

Investing activities

Three Months Ended March 31, 2022 and March 31, 2021

The cash used in investing activities decreased by $0.8 million, or (64)% to ($0.4) million, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

This decrease in cash used was due almost entirely to the 2021 post-closing adjustment to the ECG working capital.

There was no acquisition activity at the end of 2021 to carry over into 2022.

The cash used in investing activities increased by $0.3 million, or (50)% to $0.3 million, for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

This increase in the cash used was due almost entirely to the increased note receivable balance as discussed in Note 6 coupled with an increase of purchases in property and equipment attributable to leasehold improvements on the newly rented spaces in New York and North Carolina.

Financing Activities

Three Months Ended March 31, 2022 and March 31, 2021

We recorded a net $25.0 million for the three months ended March 31, 2022 for cash used in financing activities, as compared to cash used in financing activities of $7.7 million for the three months ended March 31, 2021.

The $25.0 million of cash used in 2022 was entirely driven by the pay down in principal on the revolving credit facility in February 2022.

We used a net $41.0 million of cash for the six months ended June 30, 2022 for financing activities, as compared to cash used in financing activities of $10.6 million for the six months ended June 30, 2021 due primarily to the pay down of $25.0 million on the Revolving Facility in the first quarter of 2022.

We also settled 1.1 million stock options from a grantee with a fair market value option price of $11.83, less a negotiated discount of 2.5%, totaling $12.5 million and paid a dividend of $3.5 million.

Future Sources and Uses of Liquidity

5 unchanged sentences

In the ordinary course of business, we enter contractual arrangements that require future cash payments.

The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of March 31, 2022:

The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of June 30, 2022:

(in thousands)

4 unchanged sentences

2) Debt obligations presented in the table reflect scheduled principal payments related to the various debt instruments of the Company.

Critical Accounting Policies and Estimates

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S.

8 unchanged sentences

The accompanying Consolidated Financial Statements are prepared in accordance with GAAP.

Management believes it has made all necessary adjustments so that the Consolidated Financial Statements are presented fairly and that estimates

made in preparing the Consolidated Financial Statements are reasonable and prudent.

Management believes it has made all necessary adjustments so that the Consolidated Financial Statements are presented fairly and that estimates made in preparing the Consolidated Financial Statements are reasonable and prudent.

The Consolidated Financial Statements include the accounts of the Company, its wholly owned or majority-owned subsidiaries and entities in which the Company is deemed to have a direct or indirect controlling financial interest based on either a variable interest model or voting interest model.

11 unchanged sentences

This assessment involves identifying the activities that most significantly impact the VIE’s economic performance and determine whether we, or another party, has the power to direct those activities.

When evaluating whether we are the primary beneficiary of a VIE, we perform a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties.

When evaluating whether we are the primary beneficiary of a VIE, we perform

a qualitative analysis that considers the design of the VIE, the nature of our involvement and the variable interests held by other parties.

See Note 7 for further information.

38 unchanged sentences

Interest Rate Risk

As of March 31, 2022, we had $190.9 million in outstanding principal under our Term Loan and Revolving Credit Facility.

As of June 30, 2022, we had $190.9 million in outstanding principal under our Term Loan and Revolving Credit Facility.

The annual interest rate on the Term Loan is based on SOFR, subject to a floor of 0.10%, plus 2.00%.

On March 31, 2022, the interest rate on these borrowings was 2.1% + SOFR.

On June 30, 2022, the interest rate on these borrowings was 2.10% + SOFR.

We estimate that a 100-basis point increase in the interest rate would result in an approximately $0.5 million increase in interest expense related to the loan over the next 12 months.

3 unchanged sentences

In other circumstances, availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.

Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

In designing disclosure controls and procedures, our management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

The design of any disclosure controls and procedures also is based in part upon certain assumptions about likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives.

Our management, under the supervision and with the participation of our Co-Chief Executive Officers and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report.

Based on that evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective to provide reasonable assurance that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Legal Proceedings.

The information required with respect to this item can be found under “Contingencies”

in Note 14, Commitments and Contingencies, to our consolidated financial statements included elsewhere in this annual report, and such information is incorporated by reference into this Item 1.

Risk Factors.

There have been no material changes from the risk factors previously disclosed in “Risk Factors”

included in our annual report on Form 10-K for the year ended December 31, 2021.

Unregistered Sales of Equity Securities and Use of Proceeds .

Not applicable.

Defaults Upon Senior Securities.

Not applicable.

Mine Safety Disclosures.

Not applicable.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis