What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-08 compared with 2025-05-08 · 189 added, 101 removed, 386 unchanged (43% of the section changed)

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As investors entrust us with additional capital, our relationships with our fund managers are strengthened, which drives additional investment opportunities, sources more data, enables portfolio optimization and enhances returns, and in turn attracts new investors.

As of March 31, 2025, our private market solutions were comprised of the following:

As of June 30, 2025, 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.

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

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

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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 6,270 investment firms, 59,300 funds, 68,400 individual transactions, 34,250 private companies and 529,500 financial metrics.

As of March 31, 2025, PES has raised a total of $21.7 billion assets under management ("AUM"), of which $15.0 billion are Fee-Paying Assets Under Management ("FPAUM").

As of June 30, 2025, PES has raised a total of $23.9 billion assets under management ("AUM"), of which $16.9 billion are Fee-Paying Assets Under Management ("FPAUM").

AUM reflects the assets that we manage, and is calculated as the sum of:

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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 March 31, 2025, VCS has raised a total of $9.8 billion AUM, of which $6.5 billion are FPAUM.

As of June 30, 2025, VCS has raised a total of $10.6 billion AUM, of which $6.6 billion of FPAUM.

• Private Credit Solutions (PCS).

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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 630 credit opportunities annually.

We are further synergistically strengthened by our PCS network of fund managers, characterized by more than 700 credit opportunities annually.

We currently maintain 90+ active sponsor relationships and have 120+ platform investments.

Within PCS, the Company has investments that target renewable energy development and historic building renovation projects, as well as provide capital to small businesses that are woman or minority owned or operated in underserved communities.

Within PCS, the Company has investments that target historic building preservation, brownfield remediation, and renewable energy projects, as well as provide capital to small businesses in underserved communities.

These investments are differentiated in both the breadth of impact areas served, the type of capital deployed and the duration of the impact investing track record.

As of March 31, 2025, PCS has raised a total of $6.8 billion AUM, of which $4.8 billion are FPAUM.

As of June 30, 2025, PCS has raised a total of $7.4 billion AUM, of which $5.4 billion are FPAUM.

Of the total AUM, impact assets represent $4.3 billion supporting investments in over 1,000 projects and businesses across 40 states, Washington DC, and Puerto Rico, not including investments made by non-impact affiliates.

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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 $14.6 billion of our FPAUM as of March 31, 2025.

Our primary funds comprise approximately $15.6 billion of our FPAUM as of June 30, 2025.

• 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 $10.1 billion of our FPAUM as of March 31, 2025.

Our direct investing platform comprises approximately $10.7 billion of our FPAUM as of June 30, 2025.

• Secondary 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 secondary funds comprise approximately $1.6 billion of our FPAUM as of March 31, 2025.

Our secondary funds comprise approximately $2.6 billion of our FPAUM as of June 30, 2025.

Operating Segments

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Trends Affecting Our Business

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 and attract capital.

Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions in the North American and European 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 and attract capital.

Despite higher interest rates and the global economy outlook remaining uncertain, we continue to see investors turning towards alternative investments to achieve asset class diversification, superior investment returns, and participation in access constrained investment opportunities.

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Our scalable business model is well positioned to expand and grow our footprint as we develop our position within the private markets ecosystem to further leverage our synergistic solutions offering.

We currently have a leading presence in North America, but believe that expanding our investor presence into international markets can be a significant growth driver for our business as investors continue to seek geographically diverse private market exposure.

We currently have a leading presence in North America and now with the acquisition of Qualitas, a presence in Europe.

We believe that expanding our investor presence into international markets will be a significant growth driver for our business as investors continue to seek geographically diverse private market exposure.

Further, expanding into additional asset class solutions can enable us to further enhance our integrated network effect across private markets by, among other benefits, fostering deeper manager relationships.

We believe that the growing number of private markets focused fund managers increases the operational burden on investors and will lead to a greater reliance on highly trusted advisors to help investors navigate the complexity associated with multi- asset class manager selection.

• Increasing regulatory requirements and political uncertainty.

The complex regulatory and tax environment carries the potential to restrict our operations and our business activities, as well as subject us to increased compliance and administrative burdens.

In addition, there is additional uncertainty around potential legal,

regulatory, and tax changes, which may impact our profitability or impact our ability to operate and grow our business.

• Political uncertainty, foreign currency exposure, and increasing regulatory requirements.

There is uncertainty in fluctuation around potential legal, regulatory, currency exchange rates and tax changes, which may impact our profitability or impact our ability to operate and grow our business.

Additionally, the complex regulatory and tax

environment carries the potential to restrict our operations and our business activities, as well as subject us to increased compliance and administrative burdens.

• Our ability to raise capital in order to fund acquisitions and strategic growth initiatives.

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Referral fee revenue is recognized upon closing of opportunities where we have referred credit opportunities that do not match our investment criteria.

Incentive fees consists of carried interest income from an uncommon pre-acquisition legacy managed fund and incremental incentive revenues earned as a part of an advisory agreement between ECG and Crossroads Impact Corp.

Incentive fees consists of carried interest income from a pre-acquisition legacy managed fund and incremental incentive revenues earned as a part of an advisory agreement between ECG and Crossroads Impact Corp.

The Company recognizes an accrued contingent liability and contingent payments to customers in our Consolidated Balance Sheets for agreements between ECG and third parties.

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Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple.

The options are exercisable starting in July 2025.

The options became exercisable in July 2025.

The Company believes it is probable that the third parties will exercise their options to sell back the revenue share and has recognized liabilities on the Consolidated Balance Sheets.

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

Strategic alliance expense is included in operating expenses.

This expense is driven by the Strategic Alliance Agreement that Bonaccord entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings.

Strategic alliance expense was included in operating expenses.

This expense was driven by the Strategic Alliance Agreement that Bonaccord entered into with an investor at the time Bonaccord was acquired in exchange for a portion of net management fee earnings.

Other (Expense)/ Income

Interest expense, net includes interest paid and accrued on our outstanding debt, along with the amortization of deferred financing costs.

Other income includes any (loss)/income from unconsolidated subsidiaries, interest income earned from bank accounts across management companies, remeasurement of the contingent loss related to the Clifford guarantee, and accrued expenses related to litigation and regulatory activity as necessary, which would be discussed in Note 13 of our Consolidated Financial Statements.

Other income (loss) includes any (loss)/income from unconsolidated subsidiaries, interest income earned from bank accounts across management companies, the loss recognized for the conversion of the right to receive 15% of net management fee earnings to a 15% equity interest in Bonaccord, remeasurement of the contingent loss related to the Clifford guarantee, and accrued expenses related to litigation and regulatory activity as necessary, which would be discussed in Note 14 of our Consolidated Financial Statements.

Income Tax Expense

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Results of Operations

For the three months ended March 31, 2025 and March 31, 2024.

For the three months ended March 31,

For the three and six months ended June 30, 2025 and June 30, 2024.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands)

Management and advisory fees

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Interest expense, net

Other (loss)/income

Total other (expense)

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Income tax expense

Three Months Ended March 31, 2025 and March 31, 2024

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% of average FPAUM for the three months ended March 31, 2025 and March 31, 2024.

For the three months ended March 31, 2025 compared to the three months ended March 31, 2024, revenues increased by $1.6 million or 2% due to higher management and advisory fees across the Company.

Management and advisory fees increased by $1.6 million, or 2%, to $66.7 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to continued fundraising and deployed capital and 10% growth in average FPAUM across the Company.

Catch up fees for the three months ended March 31, 2025 were $2.8 million.

Catch up fees are associated with the fund closings at RCP, TrueBridge, and WTI.

Other revenues, which represent ancillary elements of our business, decreased by $0.1 million or 6% to $0.9 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 driven primarily by a decrease of $0.2 million in interest income earned from certain funds offset slightly by an increase of $0.1 million of income associated with one-time ancillary services performed for certain funds in other revenue.

For the three months ended March 31,

For the Three Months Ended June 30, 2025 and June 30, 2024

For the three months ended June 30, 2025 compared to the three months ended June 30, 2024, revenues increased by $1.6 million or 2% due to higher management and advisory fees across the Company.

Management and advisory fees increased by $3.0 million, or 4%, to $71.5 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The growth in management and advisory fees is attributable to continued success in fundraising and deploying capital.

Furthermore, the Qualitas acquisition added to our fee base.

Catch-up fees for the three months ended June 30, 2025 were $1.7 million.

Catch up fees are primarily associated with the fund closings at Qualitas, RCP, and TrueBridge.

Other revenues, which represent ancillary elements of our business, decreased by $1.4 million or 54% to $1.2 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 driven primarily by a decrease of $1.8 million of recognized carried interest income in other revenue from a pre-acquisition legacy managed fund

in the three months ended June 30, 2024.

This decrease was offset slightly by an increase of $0.3 million in income associated with ancillary services performed for certain funds in other revenue.

For the Six Months Ended June 30, 2025 and June 30, 2024

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 six months ended June 30, 2025 and June 30, 2024.

For the six months ended June 30, 2025 compared to the six months ended June 30, 2024, revenues increased by $3.2 million or 2% primarily due to higher management and advisory fees across the Company.

Management and advisory fees increased by $4.7 million, or 3%, to $138.3 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

The growth in management and advisory fees is attributable to continued success in fundraising and deploying capital.

Furthermore, the Qualitas acquisition added to our fee base.

Catch-up fees for the six months ended June 30, 2025 were $4.5 million associated with the fund closings at Qualitas, RCP, and TrueBridge.

Other revenues decreased by $1.5 million or 41% to $2.1 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 primarily driven by a decrease of $1.8 million of recognized carried interest income from a pre-acquisition legacy managed fund in other revenue offset slightly by an increase of $0.4 million of income associated with ancillary services performed for certain funds in other revenue.

For the Three Months Ended June 30,

For the Six Months Ended June 30,

OPERATING EXPENSES

(in thousands)

Compensation and benefits

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Operating Expenses

For the Three Months Ended March 31, 2025 and March 31, 2024

Total operating expenses increased by $2.4 million, or 4%, to $56.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

This increase was primarily due to increases in professional fees and general, administrative and other expenses offset slightly by decreases in amortization expense of intangibles.

Compensation and benefits expense remained flat at $37.1 million, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Professional fees increased by $2.7 million, or 73%, to $6.5 million primarily driven by an increase in legal and professional services associated with the Qualitas acquisition.

General, administrative and other increased by $0.8 million, or 13%, to $6.8 million, due primarily to increases in marketing efforts, insurance and compliance expenses, rent and office repairs and maintenance as well as ongoing enhancements to infrastructure, technology, and security.

Amortization of intangibles decreased by $1.1 million, or 17%, to $5.3 million, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This is due to decreases at ECG, Five Points, RCP, TrueBridge, and WTI.

The decrease at ECG is driven by unique syndicate contracts and advisory contracts' amortization schedule, which is based on projected revenues at the time of acquisition.

For the Three Months Ended June 30, 2025 and June 30, 2024

Total operating expenses increased by $0.7 million, or 1%, to $55.0 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

This increase was primarily due to increases in professional fees, general, administrative, and other expenses, and contingent consideration expense.

This increase was offset by decreases in compensation and benefits expense, amortization of intangibles, and strategic alliance expense.

Compensation and benefits expense decreased by $4.1 million, or 11%, to $32.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

This was driven by a $9.6 million decrease in compensation expense due to the second tranche of the WTI earn-out no longer being probable of achievement in the three months ended June 30, 2025.

This decrease was offset by a $4.4 million increase in stock compensation, which consists of a $3.5 million increase related to the 2025 grant of Bonaccord Units and an increase of $0.9 million for management stock awards.

This decrease was also offset slightly by a $0.6 million increase in general compensation expense in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Professional fees increased by $3.2 million, or 91%, to $6.7 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

This was primarily driven by an increase of $2.2 million in legal and professional services associated with acquisition activity and other strategic transactions during the three months ended June 30, 2025, as well as an increase of $1.1 million in audit, SEC Rule 404(b) implementation, tax, and compliance services provided to the Company.

Contingent consideration expense increased by $1.0 million to $1.1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

This was primarily driven by the remeasurement of the Qualitas earnout, related to the Qualitas acquisition in April 2025.

General, administrative, and other increased by $1.8 million, or 26%, to $8.8 million, due primarily to increases in ongoing enhancements to infrastructure, technology, and security, expanding operations with the Qualitas acquisition, and additional rent expense as well as associated office maintenance.

Amortization of intangibles decreased by $0.3 million, or 4%, to $6.2 million, for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

This was due to decreases at ECG, Five Points, RCP, TrueBridge, and WTI.

The decrease at ECG is driven by unique syndication contracts and advisory contracts' amortization schedule, which is based on projected revenues at the time of acquisition.

The decreases at Five Points, RCP, TrueBridge, and WTI are driven by asset management fee contracts' amortization schedule, which is based on projected revenues at the time of acquisition.

Other Expense

For the Three Months Ended March 31, 2025 and March 31, 2024

Other expense increased by $1.2 million, or 23%, to $6.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

This increase was driven by an increase in interest expense of $0.6 million on the debt facility due to a larger outstanding balance on the term loan for the first three months ended March 31, 2025.

Additionally, other income decreased by $0.5 million primarily due to a $0.3 million decrease in income from unconsolidated subsidiaries as well as a $0.2 million loss related to the guarantee for the Clifford incremental fee.

These decreases were offset by the additional intangible asset amortization associated with the Qualitas acquisition in April 2025.

Strategic alliance expense decreased by $0.9 million, or 100%, to $0 for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

This decrease was due to the conversion of the SAA to an equity interest in Bonaccord, which was effective on April 1, 2025.

For the Six Months Ended June 30, 2025 and June 30, 2024

Total operating expenses increased by $3.2 million, or 3%, to $111.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This increase was due to increases in professional fees, general, administrative and other expense, as well as contingent consideration offset by the decrease in compensation and benefits, amortization of intangibles and strategic alliance expense.

Compensation and benefits expense decreased by $4.1 million, or 6%, to $69.2 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This was driven by a $9.6 million decrease in compensation expense due to the second tranche of the WTI earn-out no longer being probable of achievement in the six months ended June 30, 2025.

This decrease was offset by a $4.4 million increase in stock compensation, which consists of a $3.5 million increase related to the second grant of Bonaccord Units and an increase of $0.9 million for management stock awards.

This decrease was offset slightly by a $0.6 million increase in general compensation expense in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Professional fees increased by $6.0 million, or 82%, to $13.3 million.

The primary driver for the increase in professional fees for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was an increase of $5.1 million in professional and legal expenses associated with acquisition activity and other strategic transactions during the six months ended June 30, 2025 as well as normal course of business such as filings and due diligence for acquisitions.

Additionally fees related to audit, SEC Rule 404(b) implementation, tax, and compliance services provided to the Company increased by $0.9 million.

Contingent consideration expense increased by $1.0 million to $1.1 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This was primarily driven by the remeasurement of the Qualitas earnout, related to the Qualitas Acquisition in April 2025.

General, administrative and other increased by $2.6 million, or 20%, to $15.6 million, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This was primarily driven by ongoing enhancements to infrastructure, technology, and security, expanding operations with the acquisition of Qualitas, and additional rent expense as well as associated office maintenance.

Amortization of intangibles decreased by $1.4 million, or 11%, to $11.5 million, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

This was due to decreases at ECG, RCP, and TrueBridge.

The decrease at ECG was driven by unique syndication contracts and advisory contracts' amortization schedule, which is based on projected revenues at the time of acquisition.

The decreases at RCP and TrueBridge were driven by asset management fee contracts' amortization schedules, which are based on projected revenues at the time of acquisition.

These decreases were offset by the additional intangible asset amortization associated with the Qualitas acquisition in April 2025.

Strategic alliance expense decreased by $0.8 million, or 54%, to $0.7 million for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

This decrease was due to the conversion of the SAA to an equity interest in Bonaccord, which was effective on April 1, 2025.

Other (Expense)/Income

For the Three Months Ended June 30, 2025 and June 30, 2024

Other expense increased by $6.4 million, or 112%, to $12.2 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

This increase was driven by an increase in interest expense of $0.7 million on the debt facility due to a larger outstanding debt balance for the three months ended June 30, 2025.

Additionally, other (loss)/income increased expense by $5.7 million primarily due to a $6.5 million loss recognized for the conversion of the right to receive 15% of net management fee earnings to a 15% equity interest in Bonaccord offset slightly by a $0.7 million increase in income from unconsolidated subsidiaries.

For the Six Months Ended June 30, 2025 and June 30, 2024

Other expense increased by $7.6 million, or 70%, to $18.4 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

This increase was driven by $6.3 million increase in expenses included other income/(losses) related to a loss recognized for the conversion of the right to receive 15% of net management fee earnings to a 15% equity interest in Bonaccord as well as a $0.2 million loss related to the guarantee for the Clifford incremental fee offset slightly by a $0.4 million increase in income from unconsolidated subsidiaries.

Additionally interest expense increased by $1.3 million due to a larger average outstanding debt balance for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Income Tax Expense

For the Three Months Ended March 31, 2025 and March 31, 2024

Income tax expense was $0.3 million for the three months ended March 31, 2025, a decrease of $1.5 million from $1.8 million for the three months ended March 31, 2024.

This reduction was mainly due to lower pre-tax income and the recognition of a higher discrete windfall tax benefit related to RSU vesting and options exercised in the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

For the Three Months Ended June 30, 2025 and June 30, 2024

Income tax expense was $1.4 million for the three months ended June 30, 2025, a decrease of $2.3 million from $3.7 million for the three months ended June 30, 2024.

This reduction was mainly due to lower pre-tax income and an increase in the stock-based compensation-related tax benefit in the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

For the Six Months Ended June 30, 2025 and June 30, 2024

Income tax expense decreased by $3.8 million to $1.6 million for the six months ended June 30, 2025 compared to an expense of $5.5 million for the six months ended June 30, 2024.

The decrease was primarily due to a decrease in income and an increase in stock-based compensation-related tax benefit in the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

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

For the three months

ended March 31,

ended June 30,

For the six months

ended June 30,

(in millions)

Balance, Beginning of Period

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Net Asset Value Change (3)

Impact of exchange rate movements

Scheduled fee base stepdowns

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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 March 31, 2025

FPAUM increased by $0.6 billion, or 3%, to $26.3 billion for the three months ended March 31, 2025, due primarily to an increase in capital raised and capital deployed from our private equity and venture capital solutions, which was offset by a decline of fees related to scheduled fee stepdowns and expirations of fees.

FPAUM as of June 30, 2025

FPAUM increased by $2.6 million to $28.9 million for the three months ended June 30, 2025, due primarily to an increase in capital raised and capital deployed from our private equity and private credit as well as the FPAUM acquired in the Qualitas acquisition, which was offset by a decline of fees related to scheduled fee stepdowns and expirations of fees.

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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Other companies may calculate these measures differently than we do, limiting their usefulness as a comparative measure.

We use Fee-Related Revenue ("FRR"), Fee-Related Earnings ("FRE"), and Adjusted Net Income, or ANI, to provide additional measures of profitability.

We use Adjusted Net Income ("ANI"), Fee-Related Revenue ("FRR"), and Fee-Related Earnings ("FRE") to provide additional measures of profitability.

We use the measures to assess our performance relative to our intended strategies, expected patterns of profitability, and budgets, and use the results of that assessment to adjust our future activities to the extent we deem necessary.

FRR is calculated as Total Revenues less any non-fee related revenue.

ANI reflects our actual cash flows generated by our core operations.

ANI is calculated as FRE, plus non-fee related income less actual cash paid for interest and federal and state income taxes.

In order to compute FRE, we adjust our GAAP net income for the following items:

ANI reflects an estimate of our cash flows generated by our core operations.

ANI is calculated as FRE, plus non-fee related income less strategic alliance noncontrolling interests expense, less actual cash paid for interest and federal and state income taxes.

In order to compute FRE, we adjust our GAAP net income for certain items, including the following:

• Expenses that typically do not require us to pay them in cash in the current period (such as depreciation, amortization and stock-based compensation);

• Earn out related compensation;

• The cost of financing our business;

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• Non-fee related income.

The cash income taxes paid during the three months ended March 31, 2025 and March 31, 2024 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 Months

Ended March 31,

The cash income taxes during the three months ended June 30, 2025 and June 30, 2024 as well as during the six months ended June 30, 2025 and June 30, 2024 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 Months Ended June 30,

For the Six Months Ended June 30,

(in thousands)

Depreciation & amortization

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Non-fee related income

Strategic alliance noncontrolling interests expense

Cash interest expense

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Debt obligations

There was an increase in cash and cash equivalents of $7.3 million from December 31, 2024 to $75.4 million as of March 31, 2025 primarily due to drawing on the revolver offset by Class A common stock repurchases and liabilities payment.

There was a decrease in goodwill and intangible assets of $5.3 million due to amortization of intangibles during the

three months ended March 31, 2025.

There was a decrease in cash and cash equivalents of $33.9 million from December 31, 2024 to $34.3 million as of June 30, 2025 primarily due to the share repurchases in the open market and the Qualitas acquisition.

There was an increase in goodwill and intangible assets of $74.1 million due to the Qualitas acquisition.

Remaining total assets increased in the same period by $15.2 million.

The increase is driven by an increase in accounts receivable from related parties which is primarily due to ECG's Advisory Agreement with Enhanced PC.

Additionally, there was an increase in right of use assets related to a new office lease as well as an increase in prepaid expenses and other assets associated with the purchase of allocable state tax credits.

Debt obligations increased by $37.4 million which is driven by revolver activity due to the Qualitas acquisition that closed in early April 2025.

Additionally, there was an increase in right of use assets related to new office leases as well as an increase in prepaid expenses and other assets associated with the purchase of allocable state tax credits.

Debt obligations increased by $53.2 million which is driven by revolver activity due to the Qualitas acquisition that closed in April 2025 and open market Class A share repurchases.

Liquidity and Capital Resources

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The New Revolving Facility has no contractual principal repayments until maturity, which is August 1, 2028 for both facilities.

As of March 31, 2025, the Term Loan with a balance of $325.0 million is incurring interest at a weighted average SOFR rate of 6.89%.

As of March 31, 2025, the New Revolving Facility is split into one tranche.

As of June 30, 2025, the Term Loan with a balance of $325.0 million is incurring interest at a weighted average SOFR rate of 6.85%.

As of June 30, 2025, the New Revolving Facility is split into four tranches.

The total principal outstanding is $52.5 million and the weighted-average SOFR rate amongst the tranches is 6.92%.

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The Amended and Restated Credit Agreement contains affirmative and negative covenants typical of such financing transactions, and specific financial covenants which require P10 to maintain a minimum FPAUM of the sum of $16.7 million plus 70% of the aggregate amount of FPAUM acquired or not constituted as organic growth as well as a minimum leverage ratio of less than or equal to 3.50.

As of March 31, 2025, P10 was in compliance with its financial and other covenants required under the facility.

The Company has incurred $6.0 million in interest expense for the three months ended March 31, 2025.

Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024

The following table reflects our cash flows for the three months ended March 31, 2025 and 2024:

For the Three Months

Ended March 31,

As of June 30, 2025, P10 was in compliance with its financial and other covenants required under the facility.

The Company has incurred $12.5 million in interest expense for the six months ended June 30, 2025.

Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

The following table reflects our cash flows for the six months ended June 30, 2025 and 2024:

For the Six Months

Ended June 30,

(in thousands)

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Net cash used in investing activities

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Operating Activities

Three Months Ended March 31, 2025 and March 31, 2024

Six Months Ended June 30, 2025 and June 30, 2024

The Company's operating activities generally reflect the Company's earnings in the respective periods after adjusting for significant non-cash activity, including income of unconsolidated subsidiaries, stock-based compensation, depreciation, amortization, and deferred tax expense, all of which are included in net income.

Cash from operating activities decreased by $15.7 million to $4.7 million used in operating activities for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

For the three months ended March 31, 2025 and 2024, our net cash (used in) provided by operating activities was driven primarily by receipts of management fees and advisory fees, offset by a purchase of allocable state tax credits and payment of operating expenses, which includes professional fees, compensation and benefits, as well as general, administrative and other expenses.

Cash from operating activities decreased by $37.1 million, or 81%, to $8.7 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

For the six months ended June 30, 2025 and 2024, our net cash provided by operating activities was driven primarily by receipts of management fees and advisory fees, offset by a purchase of allocable state tax credits and payment of operating expenses, which includes professional fees, compensation and benefits, as well as general, administrative and other expenses.

Investing activities

Three Months Ended March 31, 2025 and March 31, 2024

The cash used in investing activities increased by $1.0 million, or 388%, to ($1.3) million, for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

This increase in cash used in investing activities was due to purchases of additional property and equipment in the first quarter of 2025.

Six Months Ended June 30, 2025 and June 30, 2024

The cash used in investing activities increased by $41.8 million to $42.9 million, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

This increase in cash used in investing activities was due to Qualitas acquisition and the purchases of additional property and equipment during the six months ended June 30, 2025.

Financing Activities

Three Months Ended March 31, 2025 and March 31, 2024

Cash from financing activities for the three months ended March 31, 2025 was $13.3 million, as compared to cash used in financing activities of $12.7 million for the three months ended March 31, 2024.

The change is driven by less repurchases of common stock paired with an increase in net cash activity from the debt facility to prepare for the Qualitas acquisition.

Six Months Ended June 30, 2025 and June 30, 2024

Cash from financing activities for the six months ended June 30, 2025 was $0.4 million, as compared to cash used in financing activities of $44.5 million for the six months ended June 30, 2024.

The change is driven by net borrowing activity on the Company's credit facilities and the proceeds from the SAA 5% purchase option exercise of equity interests in Bonaccord during the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Future Sources and Uses of Liquidity

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The Board approved a program to repurchase shares of our Class A and Class B common stock.

As of March 31, 2025, the Board has approved $132.0 million since inception of the program, of which $40 million was approved during the three months ended March 31, 2025, for repurchase under the Share Repurchase Program.

As of June 30, 2025, the Board has approved $132.0 million since inception of the program, of which $40 million was approved for the six months ended June 30, 2025, for repurchase under the Share Repurchase Program.

These shares may be repurchased from time to time in the open market at prevailing market prices, in privately negotiated transactions, in block trades, in accordance with Rule 10b5-1 trading plans and/or through other legally permissible means.

The timing and amount of any repurchases pursuant to the program will depend on various factors including, the market price of our Class A common stock, trading volume, ongoing assessment of our working capital needs, general market conditions, and other factors.

As of March 31, 2025, $103.5 million has been spent to buy back shares since the inception of the program and there was $28.5 million remaining for authorized repurchases under this program.

As of June 30, 2025,

$129.7 million has been spent to buy back shares since the inception of the program and there was $2.3 million remaining for authorized repurchases under this program.

On August 5, 2025, the Board of Directors authorized an additional $25.0 million for repurchases under the Share Repurchase program.

Off Balance Sheet Arrangements

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Actual results could differ from those estimates.

We believe the following critical accounting policies could

potentially produce materially different results if we were to change the underlying assumptions, estimates, or judgments.

We believe the following critical accounting policies could potentially produce materially different results if we were to change the underlying assumptions, estimates, or judgments.

See Note 2 of our consolidated financial statements for a summary of our significant accounting policies.

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The estimate for the Enhanced PC Advisory Agreements require more judgment than other receivables due to the size of the outstanding receivable and the Company's reliance on reasonable and supportable forecasts on this particular receivable bucket.

Revenue Recognition of Management and Advisory Fees

Revenue Recognition of Management Fees and Advisory Fees

The Company earns management fees for asset management services provided to the Funds where the Company has discretion over investment decisions.

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The Company allocates a portion of consideration received under an arrangement to a financing component when it determines that a significant financing component exists.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component if, at each contract inception the Company expects that the

period between services being provided and cash collection would be less than one year.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component if, at each contract inception the Company expects that the period between services being provided and cash collection would be less than one year.

To the extent the Company determines that there is a significant financing component in a contract with a customer, it determines the impact of the time value of money in adjusting the transaction price to account for the income associated with the financing component by estimating the discount rate that would be reflected in a separate financing transaction between the customer and the Company at contract inception, based upon the credit characteristics of the customer receiving financing in the contract.

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The performance obligations related to these contracts are expected to be satisfied over the next 1-10 years as services are provided to the customer.

Catch-up fees are earned from investors that make commitments to previously launched fund after the first fund closing occurs, but during the fundraising period.

Catch-up fees are earned from investors that make commitments to the previously launched fund after the first fund closing occurs, but during the fundraising period.

Contractual terms require the investors to pay a catch-up fee as if they had committed to the fund at the first closing.

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The Company evaluates the probability of vesting at each reporting period.

Unvested RSUs are remeasured quarterly against performance metrics as a liability on the Consolidated Balance Sheets.

Unvested RSUs are remeasured quarterly against performance metrics as a liability or equity, in accordance with GAAP, on the Consolidated Balance Sheets.

Refer to Note 16 to the Consolidated Financial Statements for further discussion.

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Upon the achievement of $20.0 million, $22.5 million, and $25.0 million of EBTIDA, $35.0 million, $17.5 million, and $17.5 million are earned, respectively.

Of the total amount, $50.0 million can be earned by the sellers and the remaining $20.0 million would be allocated to employees of the Company at the time the earnout is earned.

Of the total amount, $50.0 million can be earned by the sellers and the remaining

$20.0 million would be allocated to employees of the Company at the time the earnout is earned.

Payment to both sellers and employees is contingent on continued employment and, therefore, these earnout payments are recorded as compensation and benefits expense on the Consolidated Statements of Operations.

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The Company will evaluate whether each earn-out hurdle is probable of occurring and recognize an expense over the period the hurdle is expected to be achieved.

As of March 31, 2025, the Company has determined that only the first two EBITDA hurdles are probable of being achieved.

As of December 31, 2024, the Company had determined that only the first two of three EBITDA hurdles are probable of being achieved.

As of June 30, 2025, the first EBITDA hurdle was achieved and the Company does not expect that the second and third EBITDA hurdle will be achieved.

No payments have been made on the earnout but payment for the achievement of the first hurdle is expected to be made in September 2025.

Additionally in connection with the acquisition of WTI, certain employees entered into employment agreements.

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The Company recognizes accrued contingent liabilities and contingent payments to customers asset in our Consolidated Balance Sheets for an agreement between ECG and various third parties.

The agreement requires ECG to share in certain

revenues earned with the third parties and also includes an option for the third parties to sell back the revenue share to ECG at a set multiple.

The agreement requires ECG to share in certain revenues earned with the third parties and also includes an option for the third parties to sell back the revenue share to ECG at a set multiple.

Additionally, ECG holds the option to buy back 50% of the revenue share at a set multiple.

The options to repurchase the revenue share are exercisable starting in July 2025.

The options to repurchase the revenue share became exercisable in July 2025.

The Company believes it is probable that the third parties will exercise its option to sell back the revenue share and has recognized a liability on the Consolidated Balance Sheets.

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Refer to Note 14 to the Consolidated Financial Statements for further discussion.

Business Acquisitions

In accordance with ASC 805, Business Combinations (“ASC 805”), the Company allocates the purchase price of an acquired business to its identifiable assets and liabilities based on the estimated fair values using the acquisition method.

The excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill.

The excess value of the net identifiable assets and liabilities acquired over the purchase price of an acquired business is recorded as a bargain purchase gain.

The Company uses all available information to estimate fair values of identifiable intangible assets and property acquired.

In making these determinations, the Company may engage an independent third-party valuation specialist to assist with the valuation of certain intangible assets and tax assets and liabilities.

The consideration for certain of our acquisitions may include liability classified contingent consideration, which is determined based on formulas stated in the applicable purchase agreements.

The amount to be paid under these arrangements is based on certain financial performance measures subsequent to the acquisitions.

The contingent consideration included in the purchase price is measured at fair value on the date of the acquisition.

The liabilities are remeasured at fair value on each reporting date, with changes in the fair value reflected in operating expenses on our Consolidated Statements of Operations.

For business acquisitions, the Company recognizes the fair value of goodwill and other acquired intangible assets, and estimated contingent consideration at the acquisition date as part of purchase price.

These non-recurring fair value measurement are based on unobservable (Level 3) inputs.

Qualitative and Quantitative Disclosures about Market Risk.

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Interest Rate Risk

As of March 31, 2025, we had $325.0 million in outstanding principal in Term Loans under our Term Loan and $37.0 million under our Revolving Credit Facility.

As of June 30, 2025, we had $325.0 million in outstanding principal in Term Loans under our Term Loan and $52.5 million under our Revolving Credit Facility.

The annual interest rate on the Term Loan is based on SOFR plus 2.6%.

The Company remains exposed to interest rate risk if three is a shift in the environment.

The Company remains exposed to interest rate risk if there is a shift in the environment.

We estimate that a 100-basis point increase in the interest rate would result in an approximately $3.3 million increase in interest expense related to the loan over the next 12 months.

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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.

Exchange Rate Risk

The Company and its underlying funds hold cash and investments that are denominated in foreign currencies that may be affected by movements in the rate of exchange between those currencies and the U.S.

Movements in the exchange rate between currencies impact the management fees earned by funds with FPAUM denominated in foreign currencies as well as by funds with FPAUM denominated in U.S.

dollars that hold investments denominated in foreign currencies.

Additionally, movements in the exchange rate impact operating expenses for our global offices that transact in foreign currencies and the revaluation of assets and liabilities denominated in non-functional currencies, including cash balances and investments.

We manage our exposure to exchange rate risks through our regular operating activities, wherein we utilize payments received in foreign currencies to fulfill obligations in foreign currencies.

A portion of our management fees and investments are denominated in foreign currencies that may be affected by movements in the rate of exchange between currencies.

We estimate that a hypothetical 10% decline in the rate of exchange of the Euro against the U.S.

dollar as of June 30, 2025 would not result in a material change to management fees or investments, and would be largely offset by the currency conversions of the expenses denominated in foreign currencies.

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 Securities Exchange Act of 1934 (as amended, 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 Chief Executive Officer 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 judgment in evaluating the cost-benefit relationship of possible 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 Securities Exchange Act of 1934 as amended (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 Chief Executive Officer 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 judgment 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.

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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, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On April 4, 2025, we completed our acquisition of Qualitas (See Note 3 for more information).

We are currently integrating Qualitas into our internal control framework and processes and, pursuant to the SEC's guidance that an assessment of a recently acquired business may be omitted from the scope of an assessment in the year of acquisition, the scope of our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025 will not include the operating results of Qualitas.

Except for the preceding changes, 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 June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

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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