What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-03 compared with 2020-04-30 · 206 added, 147 removed, 767 unchanged (32% of the section changed)

22 unchanged sentences

Preferred Stock, par value $ 0.01 , 10,000,000 shares authorized;

none issued and outstanding, as of March 31, 2020 and December 31, 2019

none issued and outstanding, as of June 30, 2020 and December 31, 2019

Class A common stock, par value $ 0.01 , 50,000,000 shares authorized;

9,505,765 and 9,329,879 issued and outstanding, as of March 31, 2020 and December 31, 2019, respectively

9,520,416 and 9,329,879 issued and outstanding, as of June 30, 2020 and December 31, 2019, respectively

Class B common stock, par value $ 0.01 , 25,000,000 shares authorized;

4,855,131 and 5,031,017 issued and outstanding, as of March 31, 2020 and December 31, 2019, respectively

4,851,922 and 5,031,017 issued and outstanding, as of June 30, 2020 and December 31, 2019, respectively

Additional Paid-In Capital

7 unchanged sentences

(In thousands, except share and per share data)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Management and advisory fees

4 unchanged sentences

Total expenses

Income before other income (expense), net

Other income (expense), net

Income before other (expense) income, net

Other (expense) income, net

Interest income

Interest expense

Total other income (expense), net

Total other (expense) income, net

Income before provision for income taxes

18 unchanged sentences

March 31, 2019

Distributions to partners

Repayment of notes receivable from partners

Equity-based compensation

Deferred tax, net of amounts payable under tax receivable agreement

Accrued interest on notes receivable from partners

Share conversion

Dividends paid on Class A common stock - $ 0.15 per share

June 30, 2019

See accompanying notes to condensed consolidated financial statements.

Silvercrest Asset Management Group Inc.

Condensed Consolidated Statements of Changes in Equity

(In thousands)

January 1, 2020

7 unchanged sentences

March 31, 2020

Distributions to partners

Repayment of notes receivable from partners

Equity-based compensation

Deferred tax, net of amounts payable under tax receivable agreement

Accrued interest on notes receivable from partners

Share conversion

Dividends paid on Class A common stock - $ 0.16 per share

June 30, 2020

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three months ended March 31,

Six months ended June 30,

Cash Flows From Operating Activities

30 unchanged sentences

Cash and cash equivalents, end of period

Three months ended March 31,

Six months ended June 30,

Supplemental Disclosures of Cash Flow Information

11 unchanged sentences

Notes to Condensed Consolidated Financial Statements

As of March 31, 2020 and December 31, 2019 and for the Three Months ended March 31, 2020 and 2019

As of June 30, 2020 and December 31, 2019 and for the Three and Six Months ended June 30, 2020 and 2019

(Dollars in thousands, except per share and par value data and as otherwise indicated)

31 unchanged sentences

The payments to be made pursuant to the tax receivable agreement are a liability of Silvercrest and not Silvercrest L.P.

As of March 31, 2020, this liability is estimated to be $ 9,915 and is included in deferred tax and other liabilities in the Condensed Consolidated Statements of Financial Condition.

As of June 30, 2020, this liability is estimated to be $ 9,936 and is included in deferred tax and other liabilities in the Condensed Consolidated Statements of Financial Condition.

Silvercrest expects to benefit from the remaining 15 % of cash savings realized, if any.

16 unchanged sentences

Basis of Presentation and Principles of Consolidation

The accompanying Condensed Consolidated Financial Statements include the accounts of Silvercrest and its wholly owned subsidiaries SLP, SAMG LLC, SFS, MCG, Silvercrest Investors LLC, Silvercrest Investors II LLC and Silvercrest Investors III LLC as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019.

The accompanying Condensed Consolidated Financial Statements include the accounts of Silvercrest and its wholly owned subsidiaries SLP, SAMG LLC, SFS, MCG, Silvercrest Investors LLC, Silvercrest Investors II LLC and Silvercrest Investors III LLC as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019.

All intercompany transactions and balances have been eliminated.

The Condensed Consolidated Statements of Financial Condition at December 31, 2019 was derived from the audited Consolidated Statements of Financial Condition at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

The results of operations for the three months ended March 31, 2020 and 2019 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2020 and 2019 or any future period.

The results of operations for the three and six months ended June 30, 2020 and 2019 are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2020 and 2019 or any future period.

The Condensed Consolidated Financial Statements of the Company included herein are unaudited and have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

12 unchanged sentences

At each reporting date, SLP assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly.

During the three months ended March 31, 2020 and 2019, each fund is deemed to be a VoIE and neither SLP nor Silvercrest consolidated any of the Silvercrest Funds.

During the three and six months ended June 30, 2020 and 2019, each fund is deemed to be a VoIE and neither SLP nor Silvercrest consolidated any of the Silvercrest Funds.

Non-controlling Interest

As of March 31, 2020, Silvercrest holds approximately 65.4 % of the economic interests in SLP.

As of June 30, 2020, Silvercrest holds approximately 66.2 % of the economic interests in SLP.

Silvercrest is the sole general partner of SLP and, therefore, controls the management of SLP.

18 unchanged sentences

The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment when the loss in value is deemed other than temporary.

The Company’s equity method investments approximate their fair value at March 31, 2020 and December 31, 2019.

The Company’s equity method investments approximate their fair value at June 30, 2020 and December 31, 2019.

The fair value of the equity method investments is estimated based on the Company’s share of the fair value of the net assets of the equity method investee.

No impairment charges related to equity method investments were recorded during the three months ended March 31, 2020 or 2019.

No impairment charges related to equity method investments were recorded during the three and six months ended June 30, 2020 or 2019.

Receivables and Due from Silvercrest Funds

25 unchanged sentences

The Company accounts for Goodwill under Accounting Standard Codification (“ASC”) No.

350, “Intangibles - Goodwill and Other,” which provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill.

In performing its qualitative assessment, an entity considers the extent to which

adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount.

350, “Intangibles - Goodwill and Other,” which provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than

not less than its carrying value, including goodwill.

In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount.

If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit.

The Company utilized this option when performing its annual impairment assessment in 201 9 and 201 8 and concluded that its single reporting unit’s fair value was more likely than not greater than its carrying value, including goodwill.

The Company has one reporting unit at March 31, 2020 and December 31, 2019.

No goodwill impairment charges were recorded during the three months ended March 31, 2020 and 2019.

The Company has one reporting unit at June 30, 2020 and December 31, 2019.

No goodwill impairment charges were recorded during the three and six months ended June 30, 2020 and 2019.

Intangible assets of the Company are reviewed for impairment whenever events or changes in circumstances indicate that the net carrying amount of the asset may not be recoverable.

85 unchanged sentences

Equity-based compensation cost relating to the issuance of share-based awards to employees is based on the fair value of the award at the date of grant, which is expensed ratably over the requisite service period, net of estimated forfeitures.

The forfeiture assumption is ultimately adjusted to the actual forfeiture rate.

The forfeiture assumption is

ultimately adjusted to the actual forfeiture rate.

Therefore, changes in the forfeiture assumptions may affect the timing of the total amount of expense recognized over the vesting period.

33 unchanged sentences

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company expects the adoption of this guidance will not have a material effect on the Company’s Condensed Consolidated Financial Statements.

The adoption of this ASU did not have a material effect on the Company’s Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract.” The ASU provides guidance for entities to evaluate the accounting for fees paid by a customer in a cloud computing arrangement which includes a software license.

5 unchanged sentences

On April 12, 2019, SAMG LLC and SLP entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Cortina Asset Management, LLC, a Wisconsin limited liability company (“Cortina”), and certain interest holders of Cortina (together, the “Principals of Cortina”) to acquire, directly or through a designated affiliate, substantially all of the assets of Cortina relating to Cortina’s business of providing investment management, investment advisory, and related services (the “Cortina Acquisition”).

Subject to the terms and conditions set forth in the Purchase Agreement, SAMG LLC agreed to pay to Cortina an aggregate maximum amount of $ 44,937 , 80 % of which was agreed to be paid in cash at closing by SAMG LLC, and 20 % of which was agreed to be paid by SLP in the form of issuance and delivery to certain Principals at closing of Class B Units in SLP, in each case subject to certain adjustments as described in the Purchase Agreement.

Subject to the terms and conditions set forth in the Purchase Agreement, SAMG LLC agreed to pay to Cortina an aggregate maximum amount of $ 44,937 , 80 % of which was agreed to be paid in cash at closing by SAMG LLC, and 20 % of which was agreed to be paid by SLP in the form of issuance and delivery to certain Principals of Cortina at closing of Class B Units in SLP, in each case subject to certain adjustments as described in the Purchase Agreement.

On July 1, 2019, the acquisition was completed pursuant to the Purchase Agreement.

At closing, SAMG LLC paid to Cortina an aggregate principal amount of $ 33,577 in cash, and SLP paid an additional $ 8,952 , in the form of issuance and delivery to certain Principals of 662,713 Class B Units in SLP.

The $33,577 paid in cash represented $ 35,072 in consideration, partially offset by net closing credits due to SAMG LLC for reimbursable expenses from Cortina.

In addition, the Purchase Agreement provides for up to an additional $ 26,209 to be paid 80 % in cash with certain Principals receiving the remaining 20 % in the form of Class B Units of SLP in potential earn-out payments over the next four years .

In addition, the Purchase Agreement provides for up to an additional $ 26,209 to be paid 80 % in cash with certain Principals of Cortina receiving the remaining 20 % in the form of Class B Units of SLP in potential earn-out payments over the next four years .

SAMG LLC determined that the preliminary fair value of contingent consideration pursuant to the terms of the Purchase Agreement whereby the sellers of Cortina are potentially entitled to two retention payments and one growth payment contingent upon the achievement of various revenue targets is $ 13,800 .

10 unchanged sentences

If revenue for the period is equal to 95% or less of the Acquired Revenue, there is no growth payment, and if revenue for the period is between 95% and 140%, the growth payment will be determined using linear interpolation between $ 0 and $ 17,222 .

A fair value adjustment to contingent purchase price consideration of ($ 6,000 ) was recorded at March 31, 2020 and is included in general and administrative expense in the Condensed Consolidated Statement of Operations for the quarter then ended.

SAMG LLC has a liability of $ 8,000 and $ 14,000 as of March 31, 2020 and December 31, 2019, respectively, related to earnout payments to be made in conjunction with the Cortina Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition for contingent consideration.

A fair value adjustment to contingent purchase price consideration of $ 3,800 and ($ 2,200 ) was recorded during the three and six months June 30, 2020, respectively, and is included in general and administrative expense in the Condensed Consolidated Statement of Operations for the quarter then ended.

SAMG LLC has a liability of $ 11,800 and $ 14,000 as of June 30 , 2020 and December 31, 2019, respectively, related to earnout payments to be made in conjunction with the Cortina Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition for contingent consideration.

In connection with their receipt of the equity consideration, the Principals of Cortina became subject to the rights and obligations set forth in the limited partnership agreement of SLP and are entitled to distributions consistent with SLP’s distribution policy.

In addition, the Principals of Cortina became parties to the Exchange Agreement, which governs the exchange of Class B Units for Class A common stock of the Company, the Resale and Registration Rights Agreement, which provides the Principals of Cortina with liquidity with respect to shares of Class A common stock of the Company received in exchange for Class B Units, and the TRA of the

Company, which entitles the Principals of Cortina to share in a portion of the tax benefit received by the Company upon the exchange of Class B Units for Class A common stock of the Company.

In addition, the Principals of Cortina became parties to the e xchange a greement between the Company and its principals , which governs the exchange of Class B Units for Class A common stock of the Company (the “Exchange Agreement”) , the r esale and r egistration r ights a greement between the Company and its principals , which provides the Principals of Cortina with liquidity with respect to shares of Class A common stock of the Company received in exchange for Class B Units (the “Resale and Registration Rights Agreement”) , and the TRA of the Company, which entitles the Principals of Cortina to share in a portion of the tax benefit received by the Company upon the exchange of Class B Units for Class A common stock of the Company.

The Purchase Agreement includes customary representations, warranties and covenants.

1 unchanged sentence

Furthermore, the Company gains investment professionals that have significant experience and knowledge of the industry and establishes a presence in the Midwest.

Cortina revenue and income before provision for income taxes for the three months ended March 31, 2020 that are included in the Condensed Consolidated Statement of Operations are $ 2,851 and $ 1,096 , respectively.

During the first three months of 2020, the Company incurred $ 72 in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Condensed Consolidated Statement of Operations.

Cortina revenue and income before provision for income taxes for the three months ended June 30 , 2020 that are included in the Condensed Consolidated Statement of Operations are $ 2,555 and $ 977 , respectively.

Cortina revenue and income before provision for income taxes for the six months ended June 30 , 2020 that are included in the Condensed Consolidated Statement of Operations are $ 5,406 and $ 2,073 , respectively.

During the three and six months ended June 30, 2020, the Company incurred $ 13 and $ 85 , respectively, in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Condensed Consolidated Statement of Operations.

Cash paid on date of acquisition

16 unchanged sentences

The pro forma information has been included for comparative purposes and is not indicative of results of operations of the Company had the acquisitions occurred as of January 1, 2019, nor is it necessarily indicative of future results.

Three Months Ended

March 31, 2019

Six Months Ended

June 30, 2019

On December 13, 2018, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SLP, SAMG LLC (the “Buyer”) and Neosho Capital LLC, a Delaware limited liability company (“Neosho” or the “Seller”), and Christopher K.

14 unchanged sentences

The discount rate applied to the projected revenue was determined based on the weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments.

The Company has a liability of $ 1,103 and $ 1,403 related to earnout payments to be made in conjunction with the Neosho Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition as of March 31, 2020 and December 31, 2019, respectively, for contingent consideration.

During the three months ended March 31, 2020, the Company made contingent purchase price payments to Neosho of $ 300 .

The Company has a liability of $ 1,103 and $ 1,403 related to earnout payments to be made in conjunction with the Neosho Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition as of June 30, 2020 and December 31, 2019, respectively, for contingent consideration.

During the six months ended June 30 , 2020, the Company made contingent purchase price payments to Neosho of $ 300 .

On December 15, 2015, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SLP, SAMG LLC (the “Buyer”) and Cappiccille & Company, LLC, a Delaware limited liability company (“Cappiccille” or the “Seller”), and Michael Cappiccille (the “Principal”), to acquire certain assets of Cappiccille.

7 unchanged sentences

The fair value of the contingent consideration was based on discounted cash flow models using projected revenue for each earnout period.

A fair value adjustment to contingent purchase price consideration of $ 83 was recorded at March 31, 2020 and is included in general and administrative expense in the Condensed Consolidated Statement of Operations for the quarter then ended.

The Company has a

liability of $ 70 and $ 101 related to earnout payments to be made in conjunction with the Cappiccille Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statement s of Financial Condition as of March 31, 2020 and December 31, 201 9 , respectively, for contingent consideration.

During the three months ended March 31, 2020 and 2019, the Company made contingent purchase price payments to Cappiccille of $ 113 and $ 105 , respectively.

The discount rate applied to the projected revenue was determined based on the

weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments.

A fair value adjustment to contingent purchase price consideration of $ 0 and $ 83 was recorded during the three and six months ended June 30, 2020, respectively, and is included in general and administrative expense in the Condensed Consolidated Statement of Operations for the quarter then ended.

The Company has a liability of $ 70 and $ 101 related to earnout payments to be made in conjunction with the Cappiccille Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition as of June 30, 2020 and December 31, 2019, respectively, for contingent consideration.

During the six months ended June 30 , 2020 and 2019, the Company made contingent purchase price payments to Cappiccille of $ 113 and $ 105 , respectively.

On March 30, 2015, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SLP, SAMG LLC (the “Buyer”) and Jamison Eaton & Wood, Inc., a New Jersey corporation (“Jamison” or the “Seller”), and Keith Wood, Ernest Cruikshank, III, William F.

10 unchanged sentences

The discount rate applied to the projected EBITDA was determined based on the weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments.

The Company has a liability of $ 418 as of March 31, 2020 and December 31, 2019, related to earnout payments to be made in conjunction with the Jamison Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition for contingent consideration.

During the three months ended March 31, 2020 and 2019, the Company made contingent purchase price payments to Jamison of $ 0 and $ 320 , respectively.

A fair value adjustment to contingent purchase price consideration of $ 70 was recorded during the three and six months ended June 30, 2020, respectively, and is included in general and administrative expense in the Condensed Consolidated Statement of Operations for the quarter then ended.

The Company has a liability of $ 160 and $ 418 as of June 30, 2020 and December 31, 2019, respectively, related to earnout payments to be made in conjunction with the Jamison Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition for contingent consideration.

During the six months ended June 30, 2020 and 2019, the Company made contingent purchase price payments to Jamison of $ 328 and $ 320 , respectively.

The six months ended June 30, 2020 represents the final measurement period of the Jamison contingent purchase price consideration.

In connection with their receipt of the Equity Consideration, the Principals of Jamison became subject to the rights and obligations set forth in the limited partnership agreement of SLP and are entitled to distributions consistent with SLP’s distribution policy.

6 unchanged sentences

INVESTMENTS AND FAIR VALUE MEASUREMENTS

Investments include $ 777 and $ 1,781 as of March 31, 2020 and December 31, 2019, respectively, representing the Company’s interests in the Silvercrest Funds which have been established and managed by the Company and its affiliates.

Investments include $ 777 and $ 1,781 as of June 30, 2020 and December 31, 2019, respectively, representing the Company’s interests in the Silvercrest Funds which have been established and managed by the Company and its affiliates.

The Company’s financial interest in these funds can range in amounts up to 2 % of the net assets of the funds.

1 unchanged sentence

During 2007, the Silvercrest Funds granted rights to the unaffiliated investors in each respective fund to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent of that fund or to accelerate the liquidation date of that fund in accordance with certain procedures.

At March 31, 2020 and December 31, 2019, the Company determined that none of the Silvercrest Funds were required to be consolidated.

At June 30, 2020 and December 31, 2019, the Company determined that none of the Silvercrest Funds were required to be consolidated.

The Company’s involvement with these entities began on the dates that they were formed, which range from July 2003 to July 2014.

11 unchanged sentences

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement.

In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of

input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

At March 31, 2020 and December 31, 2019, the Company did no t have any financial assets or liabilities that are recorded at fair value on a recurring basis, with the exception of the contingent consideration related to the acquisition earnouts.

At March 31, 2020 and December 31, 2019, financial instruments that are not held at fair value are categorized in the table below:

March 31, 2020

At June 30, 2020 and December 31, 2019, the Company did no t have any financial assets or liabilities that are recorded at fair value on a recurring basis, with the exception of the contingent consideration related to the acquisition earnouts.

At June 30, 2020 and December 31, 2019, financial instruments that are not held at fair value are categorized in the table below:

June 30, 2020

December 31, 2019

3 unchanged sentences

Borrowings under credit facility

Includes $ 1,395 and $ 1,392 of cash equivalents at March 31, 2020 and December 31, 2019, respectively, that fall under Level 1 in the fair value hierarchy.

Includes $ 1,397 and $ 1,392 of cash equivalents at June 30, 2020 and December 31, 2019, respectively, that fall under Level 1 in the fair value hierarchy.

Investments consist of the Company’s equity method investments in affiliated investment funds which have been established and managed by the Company and its affiliates.

2 unchanged sentences

RECEIVABLES, NET

The following is a summary of receivables as of March 31, 2020 and December 31, 2019:

The following is a summary of receivables as of June 30, 2020 and December 31, 2019:

December 31, 2019

5 unchanged sentences

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of March 31, 2020 and December 31, 2019:

The following is a summary of furniture, equipment and leasehold improvements, net as of June 30, 2020 and December 31, 2019:

Leasehold improvements

2 unchanged sentences

Furniture, equipment and leasehold improvements, net

Depreciation expense for the three months ended March 31, 2020 and 2019 was $ 273 and $ 163 , respectively.

During the three months ended March 31, 2019, the Company wrote off leased assets of $ 310 that were fully depreciated as of March 31, 2019.

The following is a summary of the changes to the carrying amount of goodwill for the three months ended March 31, 2020 and the year ended December 31, 2019:

Depreciation expense for the three months ended June 30, 2020 and 2019 was $ 287 and $ 385 , respectively.

Depreciation expense for the six months ended June 30, 2020 and 2019 was $ 559 and $ 548 , respectively.

During the three and six months ended June 30, 2020 and 2019, the Company wrote off leased assets of $ 131 and $ 310 , with accumulated depreciation of $ 102 and $ 310 , respectively.

The following is a summary of the changes to the carrying amount of goodwill for the six months ended June 30, 2020 and the year ended December 31, 2019:

Gross balance

5 unchanged sentences

INTANGIBLE ASSETS, NET

The following is a summary of intangible assets as of March 31, 2020 and December 31, 2019:

The following is a summary of intangible assets as of June 30, 2020 and December 31, 2019:

Relationships

Balance, January 1, 2020

Balance, March 31, 2020

Balance, June 30, 2020

Accumulated amortization

1 unchanged sentence

Amortization expense

Balance, March 31, 2020

Balance, June 30, 2020

Net book value

7 unchanged sentences

Net Book Value

Amortization expense related to intangible assets was $ 703 and $ 348 for the three months ended March 31, 2020 and 2019, respectively.

During the three months ended March 31, 2020, the Company wrote off other intangible assets related to a non-compete agreement with one of the principals of Jamison which was no longer in effect at March 31, 2020 with a cost of $ 6 and the related accumulated amortization of $ 5 .

Amortization expense related to intangible assets was $ 702 and $ 347 for the three months ended June 30, 2020 and 2019, respectively.

Amortization expense related to intangible assets was $ 1,405 and $ 695 for the six months ended June 30, 2020 and 2019, respectively.

During the six months ended June 30, 2020, the Company wrote off other intangible assets related to a non-compete agreement with one of the principals of Jamison which was no longer in effect at June 30, 2020 with a cost of $ 6 and the related accumulated amortization of $ 5 .

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:

8 unchanged sentences

and its subsidiaries.

The credit facility consists of a $ 7.5 million delayed draw term loan that was scheduled to mature on June 24, 2025 and a $ 7.5 million revolving credit facility that was scheduled to mature on June 21, 2019 .

On June 20, 2019, the revolving credit facility was extended to June 19, 2020 .

The credit facility consisted of a $ 7.5 million delayed draw term loan that was scheduled to mature on June 24, 2025 and a $ 7.5 million revolving credit facility that was scheduled to mature on June 21, 2019 .

On July 1, 2019, the credit facility was amended to increase the term loan by $ 18.0 million to $ 25.5 million, extend the draw date on the term loan facility to July 1, 2024 , extend the maturity date of the term loan to July 1, 2026 and increase the revolving credit facility by $ 2.5 million to $ 10.0 million.

On June 19, 2020, the revolving credit facility was further amended to extend the maturity date to June 19, 2021 .

The loan bears interest at either (a) the higher of the prime rate plus a margin of 0.25 percentage points and 2.5 % or (b) the LIBOR rate plus 2.75 percentage points, at the borrowers’ option .

On July 1, 2019, the term loan was amended to increase the facility by $ 18.0 million to $ 25.5 million, to extend the draw date to July 1, 2024 and to extend the maturity date to July 1, 2026 .

The borrowers are able to draw up to the full amount of the term loan through July 1, 2024.

Borrowings under the term loan on or prior to June 30, 2021 are payable in 20 equal quarterly installments.

3 unchanged sentences

The credit facility contains customary events of default, including the occurrence of a change in control which includes a person or group of persons acting together acquiring more than 30 % of the total voting securities of Silvercrest.

As of March 31, 2020 and December 31, 2019, the Company did no t have any outstanding borrowings under the revolving credit facility.

As of March 31, 2020 and December 31, 2019, the Company had $ 15,300 and $ 16,200 , respectively, outstanding under the term loan.

There was no accrued but unpaid interest as of March 31, 2020 or December 31, 2019.

Interest expense, which also includes amortization of deferred financing fees, incurred on the revolving credit facility and term loan for the three months ended March 31, 2020 and 2019 was $ 189 and $ 7 , respectively.

The Company was in compliance with the covenants under the credit facility as of June 30, 2020.

As of June 30, 2020 and December 31, 2019, the Company did no t have any outstanding borrowings under the revolving credit facility.

As of June 30, 2020 and December 31, 2019, the Company had $ 14,400 and $ 16,200 , respectively, outstanding under the term loan.

There was no accrued but unpaid interest as of June 30, 2020 or December 31, 2019.

Interest expense, which also includes amortization of deferred financing fees, incurred on the revolving credit facility and term loan for the three months ended June 30, 2020 and 2019 was $ 131 and $ 6 , respectively.

Interest expense, which also includes amortization of deferred financing fees, incurred on the revolving credit facility and term loan for the six months ended June 30, 2020 and 2019 was $ 320 and $ 13 , respectively.

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses.

Rent expense charged to operations for the three months ended March 31, 2020 and 2019 amounted to $ 1,595 and $ 1,529 , respectively.

The Company received sub-lease income from sub-tenants during the three months ended March 31, 2020 and 2019 of $ 38 and $ 32 , respectively.

Therefore, for the three months ended March 31, 2020 and 2019, net rent expense amounted to 1,557 and $ 1,497 , respectively, and is included in general and administrative expenses in the Condensed Consolidated Statements of Operations.

As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $ 506 as of March 31, 2020 and December 31, 2019.

Rent expense charged to operations for the three months ended June 30, 2020 and 2019 amounted to $ 1,585 and $ 1,529 , respectively.

The Company received sub-lease income from sub-tenants during the three months ended June 30, 2020 and 2019 of $ 38 and $ 38 , respectively.

Therefore, for the three months ended June 30, 2020 and 2019, net rent expense amounted to $ 1,547 and $ 1,491 , respectively, and is included in general and administrative expenses in the Condensed Consolidated Statements of Operations.

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses.

Rent expense charged to operations for the six months ended June 30, 2020 and 2019 amounted to $ 3,181 and $ 3,058 , respectively.

The Company received sub-lease income from sub-tenants during the six months ended June 30, 2020 and 2019 of $ 77 and $ 70 , respectively.

Therefore, for the six months ended June 30, 2020 and 2019, net rent expense amounted to $ 3,104 and $ 2,988 , respectively, and is included in general and administrative expenses in the Condensed Consolidated Statements of Operations.

As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $ 506 as of June 30, 2020 and December 31, 2019.

Furthermore, the Company maintains an $ 80 letter of credit in favor of its Boston landlord.

46 unchanged sentences

With the Cortina Acquisition, the Company assumed a lease agreement for office space in Milwaukee, WI.

The lease expires December 31, 2020 .

The lease was extended on June 17, 2020 and expires December 31, 2022 .

Monthly rent expense is $ 12 .

The components of lease expense for the three months ended March 31, 2020 and 2019 were as follows:

Ended March 31, 2020

Ended March 31, 2019

The components of lease expense for the three and six months ended June 30, 2020 and 2019 were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Operating Lease Cost

Finance Lease Cost:

Financing Lease Cost:

Amortization of ROU assets

8 unchanged sentences

The Company has finance leases for the following office equipment:

(i) a five-year finance lease agreement for two copiers totaling $ 152 with monthly minimum lease payments of $ 3 , which began on February 1,2017 and continue through January 31, 2022 , (ii) a three-year lease agreement for four copiers totaling $ 72 with monthly minimum payments of $ 2 , which began on July 1, 2017 and continue through June 30, 2020 , (iii) a three-year lease agreement for one copier totaling $ 11 with monthly minimum payments of $ 0.3 , which began on March 1, 2018 and continue through February 28, 2021 , (iv) a three-year lease agreement for one copier totaling $ 13 with monthly minimum payments of $ 0.4 , which began on March 1, 2019 and continue through February 28, 2022 , (v) a 39 -month lease agreement for one copier totaling $ 12 with monthly minimum lease payments of $ 0.4 , which began on March 1, 2019 and continue through May 31, 2022 , (vi) a lease agreement for one copier that was assumed as part of the Cortina Acquisition with monthly minimum lease payments of $ 1 , which began on July 1, 2019 and continue through November 30, 2021 and (vii) a three year lease agreement for two copiers totaling $ 51 with monthly minimum lease payments of $ 1 , which began on August 1, 2019 and continue through July 31, 2022 The aggregate principal balance of finance leases was $ 160 and $ 196 as of March 31, 2020 and December 31, 2019, respectively.

The assets relating to finance leases that are included in equipment as of March 31, 2020 and December 31, 2019 are as follows:

(i) a five-year finance lease agreement for two copiers totaling $ 152 with monthly minimum lease payments of $ 3 , which began on February 1, 2017 and continue through January 31, 2022 , (ii) a three-year lease agreement for four copiers totaling $ 72 with monthly minimum payments of $ 2 , which began on July 1, 2017 and continue through June 30, 2020 , (iii) a three-year lease agreement for one copier totaling $ 11 with monthly minimum payments of $ 0.3 , which began on March 1, 2018 and continue through February 28, 2021 , (iv) a three-year lease agreement for one copier totaling $ 13 with monthly minimum payments of $ 0.4 , which began on March 1, 2019 and continue through February 28, 2022 , (v) a 39 -month lease agreement for one copier totaling $ 12 with monthly minimum lease payments of $ 0.4 , which began on March 1, 2019 and continue through May 31, 2022 , (vi) a lease agreement for one copier that was assumed as part of the Cortina Acquisition with monthly minimum lease payments of $ 1 , which began on July 1, 2019 and continue through November 30, 2021 , (vii) a three year lease agreement for two copiers totaling $ 51 with monthly minimum lease payments of $ 1 , which began on August 1, 2019 and continue through July 31, 2022 , (viii) a five year lease agreement for a copier totaling $ 82 with monthly minimum lease payments of $ 1 , which began on May 1, 2020 and continue through April 30, 2025 and (ix) a three year lease agreement for a copier totaling $ 59 with minimum monthly lease payments of $ 2 , which began on June 1, 2020 and continue through May 31, 2023 .

The aggregate principal balance of finance leases was $ 233 and $ 196 as of June 30, 2020 and December 31, 2019, respectively.

The assets relating to finance leases that are included in equipment as of June 30, 2020 and December 31, 2019 are as follows:

Finance lease assets included in furniture and equipment

1 unchanged sentence

Accumulated depreciation and amortization

Depreciation expense relating to finance lease assets was $ 31 and $ 31 for the three months ended March 31, 2020 and 2019, respectively.

Depreciation expense relating to finance lease assets was $ 31 and $ 22 for the three months ended June 30, 2020 and 2019, respectively.

Depreciation expense relating to finance lease assets was $ 62 and $ 53 for the six months ended June 30, 2020 and 2019, respectively.

During the three and six months ended June 30, 2020 and 2019, the Company wrote off leased assets of $ 131 and $ 310 , with accumulated depreciation of $ 102 and $ 310 , respectively.

Future minimum lease payments under finance leases are as follows:

4 unchanged sentences

SLP historically made, and will continue to make, distributions of its net income to the holders of its partnership units for income tax purposes as required under the terms of its Second Amended and Restated Limited Partnership Agreement and also made, and will continue to make, additional distributions of net income under the terms of its Second Amended and Restated Limited Partnership Agreement.

Partnership distributions totaled $ 2,226 and $ 2,285 , for the three months ended March 31, 2020 and 2019, respectively.

Partnership distributions totaled $ 2,798 and $ 3,474 , for the three months ended June 30, 2020 and 2019, respectively.

Partnership distributions totaled $ 5,024 and $ 5,759 , for the six months ended June 30, 2020 and 2019, respectively.

Pursuant to SLP’s Second Amended and Restated Limited Partnership Agreement, partner incentive allocations are treated as distributions of net income.

1 unchanged sentence

Net income allocation is subject to the recovery of the allocated losses of prior periods.

Distributions of partner incentive allocations of net income for the three months ended March 31, 2020 and 2019 amounted to $ 27,245 and $ 27,199 , respectively.

The distributions are included in non-controlling interests in the Condensed Consolidated Statements of Financial Condition and Condensed Consolidated Statement of Changes in Equity for the three months ended March 31, 2020 and 2019.

Distributions of partner incentive allocations of net income for the six months ended June 30, 2020 and 2019 amounted to $ 27,240 and $ 27,199 , respectively.

The Company treats SLP’s partner incentive allocations as compensation expense and accrues such amounts when earned.

During the three months ended March 31, 2020 and 2019, SLP accrued partner incentive allocations of $ 7,377 and $ 5,178 , respectively.

During the three months ended June 30, 2020 and 2019, SLP accrued partner incentive allocations of $ 5,557 and $ 6,261 , respectively.

During the six months ended June 30, 2020 and 2019, SLP accrued partner incentive allocations of $ 12,934 and $ 11,651 , respectively.

Silvercrest—Equity

Silvercrest has the following authorized and outstanding equity:

Shares at March 31, 2020

Shares at June 30, 2020

Voting Rights

11 unchanged sentences

Class A common stockholders have 100 % of the rights of all classes of Silvercrest’s capital stock to receive dividends.

During 2020 and 2016 Silvercrest granted 8,242 and 10,582 restricted stock units, respectively, which will vest and settle in the form of Class A shares of Silvercrest, of which 10,138 remain unvested as of March 31, 2020.

During 2020 and 2016 Silvercrest granted 8,242 and 10,582 restricted stock units, respectively, which will vest and settle in the form of Class A shares of Silvercrest, of which 8,242 remain unvested as of June 30, 2020.

Each share of Class B common stock is entitled to one vote per share.

8 unchanged sentences

Silvercrest will fund dividends to its stockholders from its proportionate share of those distributions after provision for its income taxes and other obligations.

During the three months ended March 31, 2020, Silvercrest issued the following shares:

During the three and six months ended June 30, 2020, Silvercrest issued the following shares:

Class A Common Stock

5 unchanged sentences

Class B units to Class A common stock

Class A common shares outstanding – March 31, 2020

Issuance of Class A common stock upon conversion of

Class B units to Class A common stock

Issuance of Class A common stock upon vesting of restricted stock units

Issuance of Class A common stock upon conversion of

Class B units to Class A common stock

Class A common shares outstanding – June 30, 2020

Class B Common Stock

4 unchanged sentences

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Class B common shares outstanding – March 31, 2020

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Issuance of Class B common stock upon vesting of restricted stock units

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Class B common shares outstanding – June 30, 2020

In February 2020, the Company redeemed from certain existing partners 155,224 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement between the Company and its principals.

In March 2020, the Company redeemed from certain existing partners 20,662 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement between the Company and its principals.

In May 2020, the Company redeemed from certain existing partners 7,355 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement between the Company and its principals.

In May 2020, the Company issued 1,896 shares of Class A common stock and 9,546 shares of Class B common stock upon the vesting of restricted stock units.

In June 2020, the Company redeemed from certain existing partners 5,400 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the Resale and Registration Rights Agreement between the Company and its principals.

The total amount of shares of Class B common stock outstanding and held by principals equals the number of Class B units those individuals hold in SLP.

8 unchanged sentences

Notes receivable from partners are reflected as a reduction of non-controlling interests in the Condensed Consolidated Statements of Financial Condition.

Notes receivable from partners are as follows for the three months ended March 31, 2020 and the year ended December 31, 2019:

Notes receivable from partners are as follows for the six months ended June 30, 2020 and the year ended December 31, 2019:

Beginning balance

2 unchanged sentences

Ending balance

Full recourse notes receivable from partners as of March 31, 2020 and December 31, 2019 are $ 347 and $ 645 , respectively.

There were no limited recourse notes receivable from partners as of March 31, 2020 or December 31, 2019.

There is no allowance for credit losses on notes receivable from partners as of March 31, 2020 or December 31, 2019.

Full recourse notes receivable from partners as of June 30, 2020 and December 31, 2019 are $ 349 and $ 645 , respectively.

There were no limited recourse notes receivable from partners as of June 30, 2020 or December 31, 2019.

There is no allowance for credit losses on notes receivable from partners as of June 30, 2020 or December 31, 2019.

RELATED PARTY TRANSACTIONS

During the first three months of 2020 and 2019, the Company provided services to the following, which operate as feeder funds investing through master-feeder or mini-master feeder structures:

During the first six months of 2020 and 2019, the Company provided services to the following, which operate as feeder funds investing through master-feeder or mini-master feeder structures:

the domesticated Silvercrest Hedged Equity Fund, L.P.

28 unchanged sentences

Pursuant to agreements with the above entities, the Company provides investment advisory services and receives an annual management fee of 0 % to 1.75 % of assets under management and a performance fee or allocation of 0 % to 10 % of the above entities’ net appreciation over a high-water mark.

For the three months ended March 31, 2020 and 2019, the Company earned from the above activities management fee income, which is included in “Management and advisory fees” in the Condensed Consolidated Statements of Operations, of $ 1,218 and $ 1,263 , respectively.

As of March 31, 2020 and December 31, 2019, the Company was owed $ 1,891 and $ 1,697 , respectively, from its various funds, which is included in Due from Silvercrest Funds on the Condensed Consolidated Statements of Financial Condition.

For the three months ended March 31, 2020 and 2019, the Company earned management and advisory fees of $ 366 and $ 291 , respectively, from assets managed on behalf of certain of its employees.

As of March 31, 2020 and December 31, 2019, the Company is owed approximately $ 73 and $ 137 from certain of its employees, which is included in Receivables, net on the Condensed Consolidated Statements of Financial Condition.

As of March 31, 2020, the Company had net deferred tax assets of $ 11,031 , which is recorded as a deferred tax asset of $ 11,419 specific to Silvercrest which consists primarily of assets related to temporary differences between the financial statement and tax bases of intangible assets related to its acquisition of partnership units of SLP, a deferred tax liability of $ 319 specific to SLP which consists primarily of assets related to deferred rent expenses offset in part by amounts for differences in the financial statement and tax bases of intangible assets and a deferred tax liability of $ 69 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets.

Of the total net deferred taxes at March 31, 2020, $ 131 of the net deferred tax liabilities relate to non-controlling interests.

For the three months ended June 30, 2020 and 2019, the Company earned from the above activities management fee income, which is included in “Management and advisory fees” in the Condensed Consolidated Statements of Operations, of $ 1,103 and $ 1,305 , respectively.

For the six months ended June 30, 2020 and 2019, the Company earned from the above activities management fee income, which is included in “Management and advisory fees” in the Condensed Consolidated Statements of Operations, of $ 2,321 and $ 2,568 , respectively.

As of June 30, 2020 and December 31, 2019, the Company was owed $ 1,098 and $ 831 , respectively, from its various funds, which is included in Due from Silvercrest Funds on the Condensed Consolidated Statements of Financial Condition.

For the three months ended June 30, 2020 and 2019, the Company earned management and advisory fees of $ 299 and $ 384 , respectively, from assets managed on behalf of certain of its employees.

For the six months ended June 30, 2020 and 2019, the Company earned management and advisory fees of $ 665 and $ 675 , respectively, from assets managed on behalf of certain of its employees.

As of June 30, 2020 and December 31, 2019, the Company is owed approximately $ 14 and $ 137 , respectively, from certain of its employees, which is included in Receivables, net on the Condensed Consolidated Statements of Financial Condition.

As of June 30, 2020, the Company had net deferred tax assets of $ 11,407 , which is recorded as a deferred tax asset of $ 11,694 specific to Silvercrest which consists primarily of assets related to temporary differences between the financial statement and tax bases of intangible assets related to its acquisition of partnership units of SLP, a deferred tax liability of $ 223 specific to SLP which consists primarily of assets related to deferred rent expenses offset in part by amounts for differences in the financial statement and tax bases of intangible assets and a deferred tax liability of $ 64 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets.

Of the total net deferred taxes at June 30, 2020, $ 98 of the net deferred tax liabilities relate to non-controlling interests.

These amounts are included in prepaid expenses and other assets and deferred tax and other liabilities on the Condensed Consolidated Statement of Financial Condition, respectively.

As of December 31, 2019, the Company had a net deferred tax asset of $ 13,103 , which is recorded as a net deferred tax asset of $ 13,190 specific to Silvercrest, which consists primarily of net assets related to temporary differences between the financial statement and tax bases of intangibles related to its acquisition of partnership units of SLP, a net deferred tax liability of $ 14 specific to SLP which consists primarily of liabilities related to differences between the financial statement and tax bases of intangible assets, and a net deferred tax liability of $ 73 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets.

The current tax expense was $ 440 and $ 614 for the three months ended March 31, 2020 and 2019, respectively.

Of the amount for the three months ended March 31, 2020, $ 10 relates to Silvercrest’s corporate tax expense, $ 429 relates to SLP’s state and local liability and $ 1 relates to SFS’s corporate tax expense.

The deferred tax expense for the three months ended March 31, 2020 and 2019 was $ 2,306 and $ 409 , respectively.

When combined with current tax expense, the total income tax provision for the three months ended March 31, 2020 and 2019 is $ 2,746 and $ 1,023 , respectively.

The discrete tax expense for the three months ended March 31, 2020, was $ 1,096 .

The current tax expense was $ 801 and $ 408 for the three months ended June 30, 2020 and 2019, respectively.

Of the amount for the three months ended June 30, 2020, $ 425 relates to Silvercrest’s corporate tax expense, $ 375 relates to SLP’s state and local liability and $ 1 relates to SFS’s corporate tax expense.

The deferred tax expense for the three months ended June 30, 2020 and 2019 was ($ 348 ) and $ 750 , respectively.

When combined with current tax expense, the total income tax provision for the three months ended June 30, 2020 and 2019 is $ 453 and $ 1,158 , respectively.

The discrete tax expense for the three months ended June 30, 2020, was

This represents a reduction to tax expense associated with an unfavorable fair value adjustment to contingent purchase price consideration related to earnout payments to be made in conjunction with the Cortina Acquisition.

There was no material discrete tax expense for the six months ended June 30, 2019.

The current tax expense was $ 1,241 and $ 1,021 for the six months ended June 30, 2020 and 2019, respectively.

Of the amount for the six months ended June 30, 2020, $ 435 relates to Silvercrest’s corporate tax expense, $ 805 relates to SLP’s state and local liability and $ 1 relates to SFS’s corporate tax expense.

The deferred tax expense for the six months ended June 30, 2020 and 2019 was $ 1,958 and $ 1,160 , respectively.

When combined with current tax expense, the total income tax provision for the six months ended June 30, 2020 and 2019 is $ 3,199 and $ 2,181 , respectively.

The discrete tax expense for the six months ended June 30, 2020, was $ 296 .

This represents additional tax expense associated with a favorable fair value adjustment to contingent purchase price consideration related to earnout payments to be made in conjunction with the Cortina Acquisition.

There was no material discrete tax expense for the three months ended March 31, 2019.

The current tax expense decreased from the comparable period in 2019 mainly due to favorable timing differences related to various deferred assets recorded at SLP.

Of the total current tax expense for the three months ended March 31, 2020 and 2019, $ 150 and $ 163 , respectively, relates to non-controlling interests.

Of the deferred tax expense for the three months ended March 31, 2020 and 2019, $ 104 and ($ 7 ), respectively, relates to non-controlling interests.

When combined with current tax expense, the total income tax provision for the three months ended March 31, 2020 and 2019 related to non-controlling interests is $ 254 and $ 156 , respectively.

There was no material discrete tax expense for the six months ended June 30, 2019.

The current tax expense increased from the comparable period in 2019 mainly due to increased profitability.

Of the total current tax expense for the three months ended June 30, 2020 and 2019, $ 127 and $ 152 , respectively, relates to non-controlling interests.

Of the deferred tax expense for the three months ended June 30, 2020 and 2019, ($ 36 ) and $ 28 , respectively, relates to non-controlling interests.

When combined with current tax expense, the total income tax provision for the three months ended June 30, 2020 and 2019 related to non-controlling interests is $ 91 and $ 180 , respectively.

Of the total current tax expense for the six months ended June 30, 2020 and 2019, $ 277 and $ 315 , respectively, relates to non-controlling interests.

Of the deferred tax expense for the six months ended June 30, 2020 and 2019, $ 69 and $ 21 , respectively, relates to non-controlling interests.

When combined with current tax expense, the total income tax provision for the six months ended June 30, 2020 and 2019 related to non-controlling interests is $ 346 and $ 336 , respectively.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic.

6 unchanged sentences

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators.

As of March 31, 2020, the Company’s U.S.

As of June 30, 2020, the Company’s U.S.

federal income tax returns for the years 2016 through 2020 are open under the normal three-year statute of limitations and therefore subject to examination.

3 unchanged sentences

The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

Furthermore, the Company does not have any material uncertain tax positions at March 31, 2020 and 2019.

Furthermore, the Company does not have any material uncertain tax positions at June 30, 2020 and 2019.

REDEEMABLE PARTNERSHIP UNITS

4 unchanged sentences

A total of 1,687,500 shares were originally reserved and available for issuance under the 2012 Equity Incentive Plan.

As of March 31, 2020, 481,307 shares are available for grant.

As of June 30, 2020, 345,428 shares are available for grant.

The equity interests may be issued in the form of shares of the Company’s Class A common stock and Class B units of SLP.

8 unchanged sentences

During the period that any vesting restrictions apply, unless otherwise determined by the Compensation Committee, the recipient of awards that vest in the form of units of SLP will be eligible to participate in distributions of income from SLP.

In addition, before the

vesting conditions have been satisfied, the transferability of such units is generally prohibited and such units will not be eligible to be exchanged for cash or shares of our Class A common stock.

In addition, before the vesting conditions have been satisfied, the transferability of such units is generally prohibited and such units will not be eligible to be exchanged for cash or shares of our Class A common stock.

In August 2015, the Company granted 966,510 restricted stock units (“RSUs”) under the 2012 Equity Incentive Plan at a fair value of $ 13.23 per share to existing Class B unit holders.

16 unchanged sentences

One third of the NQOs will vest and become exercisable on each of the first, second and third anniversaries of the grant date.

In May 2019, the Company granted 60,742 non-qualified stock options (“NQOs”) under the 2012 Equity Incentive Plan to an existing Class B unit holder.

In May 2019, the Company granted 60,742 NQOs under the 2012 Equity Incentive Plan to an existing Class B unit holder.

The fair value of the NQOs has been derived using the Black-Scholes method with the following assumptions:

9 unchanged sentences

All of the RSUs granted vest on the third anniversary of the grant date .

For the three months ended March 31, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 108 and $ 842 , respectively, as part of total compensation expense in the Condensed Consolidated Statements of Operations for the period then ended.

As of March 31, 2020 and December 31, 2019, there was $ 933 and $ 945 , respectively, of unrecognized compensation expense related to unvested awards.

As of March 31, 2020 and December 31, 2019, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 1.63 and 1.62 years, respectively.

A summary of the RSU grants by the Company as of March 31, 2020 and 2019 is presented below:

In May 2020, the Company granted 86,764 NQOs under the 2012 Equity Incentive Plan to an existing Class B unit holder.

The fair value of the NQOs has been derived using the Black-Scholes method with the following assumptions:

Strike price of $ 10.18 , Risk Free rate of 0.64 % (10-year treasury rate), expiration of 10 years and volatility of 48.0 %.

Additionally, the calculation of the

compensation expense assumes a forfeiture rate of 1.0 %, based on historical experience.

These NQOs will vest and become exercisable into of Class B units of SLP.

One - third of the NQOs will vest and become exercisable on each of the first, second and third anniversaries of the grant date.

In May 2020, the Company granted 49,116 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 10.11 per share to an existing Class B unit holder.

These RSUs will vest and settle in the form of Class B shares of SLP.

Twenty-five percent of the RSUs granted vest and settle on each of the first, second, third and fourth anniversaries of the grant date .

For the three months ended June 30, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 155 and $ 879 , respectively, as part of total compensation expense in the Condensed Consolidated Statements of Operations for the period then ended.

For the six months ended June 30, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 263 and $ 1,721 , respectively, as part of total compensation expense in the Condensed Consolidated Statements of Operations for the period then ended.

As of June 30, 2020 and December 31, 2019, there was $ 1,766 and $ 945 , respectively, of unrecognized compensation expense related to unvested awards.

As of June 30, 2020 and December 31, 2019, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 2.54 and 1.62 years, respectively.

A summary of the RSU grants by the Company as of June 30, 2020 and 2019 is presented below:

Restricted Stock Units

2 unchanged sentences

13.19 – 14.54

Total granted at March 31, 2020

10.18 – 11.83

13.19 – 14.54

Total granted at June 30, 2020

10.18 – 14.54

Total granted at January 1, 2019

13.19 – 13.23

Total granted at March 31, 2019

Total granted at June 30, 2019

13.19 – 14.54

A summary of the NQO grants by the Company as of March 31, 2020 and 2019 is presented below:

A summary of the NQO grants by the Company as of June 30, 2020 and 2019 is presented below:

Non-Qualified Options

2 unchanged sentences

13.19 – 14.54

Total granted at March 31, 2020

Total granted at June 30, 2020

10.18 – 14.54

Total granted at January 1, 2019

Total granted at March 31, 2019

Total granted at June 30, 2019

13.97 – 14.54

DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

2 unchanged sentences

For employees who qualify under the terms of the Plan, on an annual basis Silvercrest matches dollar for dollar an employee’s contributions up to the first 4 % of compensation.

For the three months ended March 31, 2020 and 2019, Silvercrest made matching contributions of $ 22 and $ 22 , respectively, for the benefit of employees.

For the three months ended June 30, 2020 and 2019, Silvercrest made matching contributions of $ 22 and $ 22 , respectively, for the benefit of employees.

For the six months ended June 30, 2020 and 2019, Silvercrest made matching contributions of $ 44 and $ 44 , respectively, for the benefit of employees

SOFT DOLLAR ARRANGEMENTS

2 unchanged sentences

Section 28(e) of the Securities Exchange Act of 1934, as amended, provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services.

To rely on the safe harbor offered by Section 28(e), (i) the Company must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities.

To rely on the safe harbor offered by Section 28(e), (i) the Company must make a good-faith

determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities.

If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services.

For the three months ended March 31, 2020 and 2019, the Company utilized “soft dollar” credits of $ 155 and $ 193 , respectively.

SUBSEQUENT EVENT

COVID-19 Pandemic

The emergence of the coronavirus (COVID-19) pandemic around the world, and particularly in the United States, presents significant risks to the Company, not all of which the Company is able to fully evaluate or even to foresee at the current time.

While the COVID-19 pandemic did not materially affect the Company’s financial results and business operations in the first fiscal quarter ended March 31, 2020, economic and health conditions in the United States and across most of the globe have changed rapidly since the end of the quarter.

Demand for the Company’s services continues despite the current capital markets and overall economic environment.

Such current demand may not continue and/or demand may decrease from historical levels depending on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, additional governmental actions that may be taken and/or extensions of time for restrictions that have been imposed to date, and numerous other uncertainties.

The COVID-19 pandemic is affecting the Company’s operations in the second quarter, and may continue to do so indefinitely thereafter.

All of these factors may have far reaching impacts on the Company’s business, operations, and financial results and conditions, directly and indirectly, including without limitation impacts on the health of the Company’s management and employees, client behavior, and on the overall economy.

The scope and nature of these impacts, most of which are beyond the Company’s control, continue to evolve and the outcomes are uncertain.

The Company’s revenue is highly correlated to securities markets.

As a result, the Company expects that its assets under management and revenue levels will be negatively impacted, on an incremental basis, by the effect of the COVID-19 pandemic on securities markets.

The decrease in assets under management for the three months ended March 31, 2020 will have an impact on the Company’s revenue for the second quarter ended June 30, 2020 because most of the Company’s revenue is billed in advance based on the value of assets under management on the last day of the preceding calendar quarter.

The Company continues to fully operate with its management and employees working remotely and the Company has had business continuity plans in place which it was able to seamlessly activate upon actions taken by various governmental authorities suggesting that businesses recommend that their employees work from home as a result of the pandemic.

Due to the above circumstances and as described generally in this Form 10-Q, the Company’s results of operations for the three month period ended March 31, 2020 are not necessarily indicative of the results to be expected for the full fiscal year.

Management cannot predict the full impact of the COVID-19 pandemic on the Company’s earnings

and operations nor to economic conditions generally.

The ultimate extent of the effects of the COVID-19 pandemic on the Company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the pandemic might end.

For the three months ended June 30 , 2020 and 201 9 , the Company utilized “soft dollar” credits of $ 272 and $ 152 , respectively .

For the six months ended June 30, 2020 and 2019, the Company utilized “soft dollar” credits of $ 427 and $ 345 , respectively.

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 1. Financial Statements