What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-08-15 · 132 added, 119 removed, 420 unchanged (37% of the section changed)

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Net proceeds from the sale of our Class A common stock, after deducting underwriting discounts and commissions but before expenses was approximately $129.4 million.

Of the proceeds, $86.8 million was used to pay down outstanding term loan debt, $12.4 million was used to pay off RCP Seller's Notes, $1.1 million was used to cash settle certain option awards, $1.0 million was used to fund the dividend on P10 Intermediate's preferred stock and $4.5 million was used to pay expenses incurred in connection with the offering.

Of the proceeds, $86.8 million was used to pay down outstanding term loan debt, $12.4 million was used to pay off Seller's Notes, $1.1 million was used to cash settle certain option awards, $1.0 million was used to fund the dividend on P10 Intermediate's preferred stock and $4.5 million was used to pay expenses incurred in connection with the offering.

Following the reorganization and IPO, P10 has two classes of common stock, Class A common stock and Class B common stock.

Each share of Class B common stock is entitled to ten votes while each share of Class A common stock is entitled to one vote.

On December 22, 2021, P10 entered into a $250 million credit agreement with a syndicate of banks, including JP Morgan Chase Bank and Texas Capital Bank as joint lead arrangers and bookrunners, which provided for the Term Loan in an aggregate principal amount of $125 million and Revolver Facility in an aggregate principal amount of $125 million with a four year term and an additional $125 million accordion feature.

The variable interest rate is 210 basis points over the SOFR.

The variable interest rate is 210 basis points over SOFR.

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 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:

The outstanding balance as of September 30, 2022 was $174.9 million.

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

Private Equity Solutions (PES) .

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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, 9,800 funds, 44,000 individual transactions, 29,000 private companies and 276,000 financial metrics.

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

As of September 30, 2022, PES managed $10.6 billion of Fee Paying Assets Under Management ("FPAUM").

Venture Capital Solutions (VCS).

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

As of September 30, 2022, VCS managed $5.2 billion of FPAUM.

Impact Investing Solutions (IIS).

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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 .

As of September 30, 2022, IIS managed $1.8 billion of FPAUM .

Private Credit Solutions (PCS).

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We currently maintain 50+ active sponsor relationships and have 70+ platform investments.

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

As of September 30, 2022, PCS managed $1.4 billion of FPAUM.

Sources of Revenue

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

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

Our primary funds comprise approximately $11.5 billion of our FPAUM as of September 30, 2022.

Direct and Co-Investment Funds.

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

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

Our direct investing platform comprises approximately $6.2 billion of our FPAUM as of September 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.

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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 June 30, 2022.

Our secondary funds comprise approximately $1.4 billion of our FPAUM as of September 30, 2022.

Operating Segments

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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 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.

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:

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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.

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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.

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Results of Operations

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

For the three and nine months ended September 30, 2022 and September 30, 2021.

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(in thousands)

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Income tax expense

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

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

For the three months ended September 30, 2022 compared to the three months ended September 30, 2021, revenues increased $11.9 million or 31% due to higher management fees, primarily from the impact of organic 2022 growth.

Management fees increased $11.5 million, or 30%, to $49.5 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 due to organic growth efforts in 2022.

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.

Catch up fees during the third quarter of 2022 were $0.8 million associated with fund closings at TrueBridge and RCP.

Catch up fees were $1.7 million during the third quarter of 2021 also associated with Truebridge and RCP.

Other revenues, which represent ancillary elements of our business, increased by $0.3 million or 151% to $0.5 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 driven primarily by fund interest income, subscription revenues and ad hoc referral fees.

Nine Months Ended September 30, 2022 and September 30, 2021

Total revenues increased $35.1 million, or 33%, to $140.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, due to higher management and advisory fees, largely attributable to organic growth as well as the acquisitions of Hark and Bonaccord on September 30, 2021.

Management fees increased by $34.9 million, or 34%, to $139.0 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 due primarily to organic growth of FPAUM, which contributed $27.3 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.

Catch up fees for the nine months ended September 30, 2022 were $3.3 million associated with the fund closings at TrueBridge and RCP.

Catch up fees were $2.9 million during the nine months ended September 30, 2021 also associated with TrueBridge and RCP.

Other revenues increased by $0.2 million, or 21% to $1.1 million, from the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This increase was primarily attributable to fund interest income.

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

OPERATING EXPENSES

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Operating Expenses

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.

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

Total operating expenses increased by $12.7 million, or 47%, to $39.7 million, for the three months ended September 30, 2022 as compared to the three months ended September 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 $9.9 million, or 71%, to $24.0 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Stock compensation accounts for $7.3 million of the $9.9 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.

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

The Bonaccord and Hark Units discussed in Note 16 account for $4.5 million of the stock compensation expense.

There was a $1.1 million increase associated with the acquisitions of Hark and Bonaccord on the last day of the third quarter in 2021.

The final driver is a $1.5 million increase associated with an increase in headcount across all subsidiaries.

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

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.

Professional fees increased by $1.2 million, or 40% to $4.1 million.

This is primarily driven by differences in the acquisition structures that were completed in 2021 as compared to 2022.

General, administrative and other increased by $1.4 million, or 51% to $4.0 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 added an additional $0.7 million of expense compared to the third quarter of 2021.

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

The remaining $0.4 million of additional general and administrative expense is derived from additional information technology 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 September 30, 2022 as compared to the three months ended September 30, 2021.

The decrease is driven by an intangible asset that fully amortized in 2021 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.

Contingent consideration increased by $1.4 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

This increase is driven by the quarterly revaluations of Hark and Bonaccord contingent consideration, which was part of the acquisition in September 2021.

The SAA at Bonaccord added an additional $0.1 million of expense in the third quarter of 2022.

Refer to Note 5 for further discussion.

Nine Months Ended September 30, 2022 and September 30, 2021

Total operating expenses increased by $25.5 million, or 33%, to $102.4 million for the nine months ended September 30, 2022 compared to the nine months ended September 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.

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 and the third quarter 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.

Compensation and benefits expense increased by $22.0 million, or 57%, to $60.3 million, for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The acquisitions of Hark and Bonaccord made up $5.3 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.

Another $11.3 million consisted of stock compensation expense related to RSUs and stock options issued to employees during the fourth quarter of 2021 and the first and third quarters of 2022 as well as RSAs issued in late 2021 and the third quarter of 2022.

Of the $11.3 million of stock compensation expense, $4.5 million relates to the Bonaccord and Hark Units discussed in Note 16.

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

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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.

Professional fees increased by $0.4 million, or 4%, to $9.4 million primarily due to differences in the acquisition structures that were completed in 2021 as compared to 2022.

General, administrative and other increased by $5.5 million, or 79% to $12.4 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.

The acquisitions of Hark and Bonaccord added an additional $2.3 million of expense for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

As previously mentioned, D&O insurance added an additional $1.9 million of expense related to the IPO transaction.

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The additional $0.5 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.

Amortization of intangibles decreased by $4.0 million, or 18%, to $18.5 million, for the nine months ended September 30, 2022 as compared to the nine months ended September 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.

Contingent consideration increased by $1.2 million to $1.4 million for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

This increase is driven by the quarterly revaluations of Hark and Bonaccord contingent consideration, which was part of the acquisition in September 2021.

The SAA at Bonaccord added an additional $0.4 million of expense in 2022.

Refer to Note 5 for further discussion.

Other Income (Expense)

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.

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

Other expenses decreased $3.1 million, or 58%, to $2.2 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021.

This decrease was primarily due to a $2.9 million decrease in interest expense related to the extinguishment and replacement of the credit and guaranty facility with the revolver and term loan facility.

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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 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 decline in interest expense for the three months ended September 30 2022, as compared to the three months ended September 30, 2021 is a function both of lower interest rates as well as $111.9 million less in outstanding interest-bearing principal as of September 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.

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.

Nine Months Ended September 30, 2022 and September 30, 2021

Other expenses decreased by $11.7 million, or 75%, to $4.0 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

This decrease was primarily due to a $10.5 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.

Other income increased by $0.5 million driven by ECG’s increased income from unconsolidated subsidiaries in the first nine 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.

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

Income tax expense increased by $0.7 million to $2.5 million for the three months ended September 30, 2022 compared to the three months ended September 30, 2021 due primarily to higher expected future net income during the 2022 period.

Nine Months Ended September 30, 2022 and September 30, 2021

Income tax expense increased by $5.9 million to $9.1 million for the nine months ended September 30, 2022 compared to an expense of $3.2 million for the nine months ended September 30, 2021.

The increase was primarily due to higher expected future 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.

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(in millions)

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(in millions)

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(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 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.

FPAUM as of September 30, 2022

FPAUM increased $0.5 billion, or 2.7%, to $19.0 billion on a pro forma basis and actual basis for the three months ended September 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.

FPAUM increased $1.7 billion, or 9.8%, to $19.0 billion on a pro forma basis and $1.7 billion or 9.8% to $19.0 billion on an actual basis for the nine months ended September 30, 2022, due primarily to an increase in capital raised from our private equity and venture capital solutions.

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

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For the Three

For the Six Months

For the Nine Months

September 30,

(in thousands)

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Selected Statements of Financial Position

September 30,

(in thousands)

Cash and cash equivalents

Cash and cash equivalents (including restricted cash)

Goodwill and other intangibles

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Stockholders’

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.

There was a decrease in cash from $40.9 million as of December 31, 2021 to $20.1 million as of September 30, 2022 due to the paydown of $41 million on the revolving credit facility principal balance through September 30, 2022 and a $3.5 million dividend payment in June and September 2022 offset by excess operating cash flows.

There was a decrease in goodwill and intangible assets of $18.4 million due to amortization of intangibles during the nine months ended September 30, 2022.

Remaining total assets increased in the same period by $11.3 million.

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The term loan provides for a $125.0 million facility and the revolving credit facility provides for an additional $125.0 million.

There is also a $125 million accordion feature available in the credit agreement.

There is also a $125 million accordion feature available in the credit agreement, which we exercised in September 2022.

Both facilities are Term SOFR Loans.

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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 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 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,

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

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

The first tranche has a principal balance of $20.0 million and incurs interest at a SOFR rate of 2.91% for a three month period through November 2022.

The second tranche has a principal balance of $20.0 million and incurs interest at a SOFR rate of 3.64% for a three month period through December 2022.

The third tranche has a principal balance of $9.9 million and incurs interest at a SOFR rate of 3.13% for a one month period through October 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 of less than or equal to 3.50.

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

As of September 30, 2022, the balance drawn on the revolving credit facility is $49.9 million and on the term loan, the balance is $125.0 million.

For the three and nine months ended September 30, 2022, $2.1 million and $4.6 interest expense was incurred, respectively.

For the three and nine months ended September 30, 2021, and $0 and $0 interest expense was incurred, respectively.

In September 2022, the Company exercised its option to the accordion feature of the Credit Agreement.

There were no draws made until the fourth quarter of 2022.

However, the Company incurred $1.4 million of up front fees during the third quarter of 2022 which are reflected as debt obligations on the Consolidated Balance Sheets.

In October 2022, in accordance with the acquisition discussed in the subsequent event footnote, the Company drew on the accordion feature of the Credit Agreement.

The $125 million accordion was exercised in $87.5 million of term loan and $6.0 million of revolver.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

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

For the Nine Months

Ended September 30,

(in thousands)

1 unchanged sentence

Net cash used in investing activities

Net cash used in financing activities

Net cash (used in) provided by financing activities

Increase (decrease) in cash and cash equivalents and

1 unchanged sentence

Operating Activities

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.

Cash from operating activities increased $3.2 million or 8%, to $43.9 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

The components of this net increase primarily consisted of a $15.8 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.

An increase of $17.4 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 of our Consolidated Financial Statements;

A decrease of $7.4 million in other liabilities primarily driven by timing of cash held for investment projects at Enhanced;

A decrease in accounts receivable of $2.3 million as a function of timing of collections primarily at Enhanced.

Investing activities

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.

The cash used in investing activities decreased by $45.3 million, or 97% to $1.6 million, for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

This decrease in the cash used was due almost entirely to the acquisitions of Hark and Bonaccord in September 2021.

Financing Activities

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.

We used a net $65.1 million of cash for the nine months ended September 30, 2022 for financing activities, as compared to cash provided by financing activities of $21.5 million for the nine months ended September 30, 2021 due primarily to the pay down of $41.0 million on the Revolving Facility during 2022.

Future Sources and Uses of Liquidity

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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 June 30, 2022:

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

(in thousands)

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Interest Rate Risk

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

As of September 30, 2022, we had $174.9 million in outstanding principal under our Term Loan and Revolving Credit Facility.

The annual interest rate on the Term Loan is based on SOFR, plus 0.10%, plus 2.00%.

On September 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 $1.8 million increase in interest expense related to the loan over the next 12 months.

4 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis