What changed in this filing

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Item 1. Financial Statements

2020-11-05 compared with 2020-08-03 · 221 added, 161 removed, 812 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

September 30,

Cash and cash equivalents

17 unchanged sentences

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

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

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

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

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

9,544,607 and 9,329,879 issued and outstanding, as of September 30, 2020 and December 31, 2019, respectively

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

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

4,827,731 and 5,031,017 issued and outstanding, as of September 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 June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Management and advisory fees

9 unchanged sentences

Interest expense

Equity income from investments

Total other (expense) income, net

20 unchanged sentences

Distributions to partners

Repayment of notes receivable from partners

Equity-based compensation

4 unchanged sentences

June 30, 2019

Distributions to partners

Equity-based compensation

Issuance of Class B shares

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

September 30, 2019

See accompanying notes to condensed consolidated financial statements.

19 unchanged sentences

June 30, 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

September 30, 2020

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Six months ended June 30,

Nine months ended September 30,

Cash Flows From Operating Activities

Adjustments to reconcile net income to net cash used in operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Equity-based compensation

1 unchanged sentence

Deferred income taxes

Tax receivable agreement adjustment

Non-cash interest on notes receivable from partners

1 unchanged sentence

Distributions received from investment funds

Equity income from investments

Cash flows due to changes in operating assets and liabilities:

5 unchanged sentences

Deferred and other liabilities

Net cash used in operating activities

Net cash provided by operating activities

Cash Flows From Investing Activities

1 unchanged sentence

Acquisition of Neosho Capital, LLC

Acquisition of Cortina Asset Management, LLC

Net cash used in investing activities

1 unchanged sentence

Earn-outs paid related to acquisitions completed on or after January 1, 2009

Borrowings under credit facility

Repayments of notes payable

4 unchanged sentences

Payments from partners on notes receivable

Net cash used in financing activities

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents

1 unchanged sentence

Cash and cash equivalents, end of period

Six months ended June 30,

See accompanying notes to condensed consolidated financial statements.

Nine months ended September 30,

Supplemental Disclosures of Cash Flow Information

3 unchanged sentences

Earnout accrual for acquisition of Neosho Capital, LLC

Issuance of Class B shares of Silvercrest L.

in conjunction with the acquisition of Neosho

Earnout accrual for acquisition of Cortina Asset Management, LLC

Issuance of Class B shares of Silvercrest L.

in conjunction with the acquisition of Cortina

Issuance of Class B shares of Silvercrest L.

in conjunction with the acquisition of Cortina, par value $ 0.01

Assets acquired under finance lease

3 unchanged sentences

Finance lease liabilities (ASC 842 adoption)

Accrued dividends

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

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

As of September 30, 2020 and December 31, 2019 and for the Three and Nine Months ended September 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 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.

As of September 30, 2020, this liability is estimated to be $ 10,010 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 June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 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 September 30, 2020 and December 31, 2019 and for the three and nine months ended September 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 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 Statement of Financial Condition at December 31, 2019 was derived from the audited Consolidated Statement 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 and nine months ended September 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 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.

During the three and nine months ended September 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 June 30, 2020, Silvercrest holds approximately 66.2 % of the economic interests in SLP.

As of September 30, 2020, Silvercrest holds approximately 66.3 % of the economic interests in SLP.

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

12 unchanged sentences

Equity Method Investments

Entities and investments, the activities over which the Company exercises significant influence, but which do not meet the requirements for consolidation, are accounted for using the equity method of accounting, whereby the Company records its share of

the underlying income or losses of these entities.

Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest.

2 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 June 30, 2020 and December 31, 2019.

The Company’s equity method investments approximate their fair value at September 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 and six months ended June 30, 2020 or 2019.

No impairment charges related to equity method investments were recorded during the three and nine months ended September 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.

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.

1 unchanged sentence

The Company utilized this option when performing its annual impairment assessment in 2019 and 2018 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 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.

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

No goodwill impairment charges were recorded during the three and nine months ended September 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.

122 unchanged sentences

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

The Company elected to early adopt ASU 2017-04 relating to our impairment test performed during the year ended December 31, 2019.

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

23 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 $ 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.

A fair value adjustment to contingent purchase price consideration of $ 1,700 and ($ 500 ) was recorded during the three and nine months September 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 $ 13,500 and $ 14,000 as of September 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.

3 unchanged sentences

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 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.

Cortina revenue and income before provision for income taxes for the three months ended September 30 , 2020 and 2019 that are included in the Condensed Consolidated Statement of Operations are $ 3,020 and $ 1,355 , and $ 3,182 and $ 976 , respectively.

Cortina revenue and income before provision for income taxes for the nine months ended September 30 , 2020 and 2019 that are included in the Condensed Consolidated Statement of Operations are $ 8,426 and $ 3,428 , and $ 3,182 and $ 976 , respectively.

During the three and nine months ended September 30, 2020, the Company incurred $ 5 and $ 90 , respectively, in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Condensed Consolidated Statement of Operations.

During the three and nine months ended September 30, 2019, the Company incurred $ 1,147 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

8 unchanged sentences

The excess of the purchase price over the fair values of the assets acquired and liabilities assumed was allocated to goodwill and intangible assets.

Total fair value of tangible assets acquired and liabilities assumed

Total fair value of tangible assets acquired and

liabilities assumed

Customer relationships ( 15 years)

5 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.

Six Months Ended

June 30, 2019

Nine Months Ended

September 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 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 .

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 September 30, 2020 and December 31, 2019, respectively, for contingent consideration.

During the nine months ended September 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.

9 unchanged sentences

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.

A fair value adjustment to contingent purchase price consideration of $ 0 and $ 83 was recorded during the three and nine months ended September 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 September 30, 2020 and December 31, 2019, respectively, for contingent consideration.

During the nine months ended September 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.

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.

A fair value adjustment to contingent purchase price consideration of $ 0 and $ 70 was recorded during the three and nine months ended September 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 September 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 nine months ended September 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.

2 unchanged sentences

The Asset Purchase Agreement includes customary representations, warranties and covenants.

The strategic acquisition of Jamison, a long-standing and highly regarded investment boutique, strengthened the Company’s presence in the greater New York market and the Company gained investment managers that have significant experience and knowledge of the industry.

The strategic acquisition of Jamison, a long-standing and highly regarded investment boutique, strengthen ed the Company’s presence in the greater New York market and the Company gain ed investment managers that have significant experience and knowledge of the industry.

Jamison’s clients gained access to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services.

2 unchanged sentences

INVESTMENTS AND FAIR VALUE MEASUREMENTS

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.

Investments include $ 16 and $ 1,781 as of September 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 June 30, 2020 and December 31, 2019, the Company determined that none of the Silvercrest Funds were required to be consolidated.

At September 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.

10 unchanged sentences

Investments that are included in Level III generally include general and limited partnership interests in private equity and real estate funds, credit-oriented funds, certain over-the-counter derivatives, funds of hedge funds which use net asset value per share to determine fair value in which the Company may not have the ability to redeem its investment at net asset value at, or within three months of, the reporting date, distressed debt and non-investment grade residual interests in securitizations and collateralized debt obligations.

Liabilities that are included in Level III generally include contingent consideration related to the acquisition earnouts.

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 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

At September 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.

Contingent Consideration

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.

This fair value measurement is based on unobservable (Level 3) inputs.

The following table represents changes in the fair value of estimated contingent consideration for the year ended December 31, 2019 and the nine months ended September 30, 2020:

Balance at January 1, 2019

Additions to estimated contingent consideration

Payments of contingent consideration

Non-cash changes in fair value of estimated contingent consideration

Balance at December 31, 2019

Additions to estimated contingent consideration

Payments of contingent consideration

Non-cash changes in fair value of estimated contingent consideration

Balance at September 30, 2020

Estimated contingent consideration is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition.

Payments of contingent consideration are included in earn-outs paid related to acquisitions completed on or after January 1, 2009 in financing activities in the Condensed Consolidated Statements of Cash Flows.

In determining fair value of the estimated contingent consideration, the acquired business’ future performance is estimated using financial projections for the acquired business.

These financial projections, as well as alternative scenarios of financial performance, are measured against the performance targets specified in each respective acquisition agreement.

In addition, discount rates are established based on the cost of debt and the cost of equity.

The Company uses the Monte Carlo Simulation Model to determine the fair value of the Company’s estimated contingent consideration.

The significant unobservable inputs used in the fair value measurement of the Company’s estimated contingent consideration are the forecasted growth rates over the measurement period and discount rates.

Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.

Inputs used in the fair value measurement of estimated contingent consideration at September 30, 2020 and December 31, 2019 are summarized below:

Monte Carlo Simulation Model

September 30,

Forecasted growth rate

Discount rate

Please refer to Note 3.

Acquisitions for more details on contingent consideration related to acquisition earnouts.

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

September 30, 2020

December 31, 2019

3 unchanged sentences

Borrowings under credit facility

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.

Includes $ 1,397 and $ 1,392 of cash equivalents at September 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.

Fair value of investments is based on the net asset value of the affiliated investment funds which is a practical expedient for fair value, which is not included in the fair value hierarchy under GAAP.

The carrying value of borrowings under the revolving credit agreement and the contingent consideration related to acquisition earnouts approximate fair value, which is determined based on interest rates currently available to the Company for similar debt and the weighted average cost of capital of the Company.

The carrying value of borrowings under the revolving credit agreement approximates fair value, which is determined based on interest rates currently available to the Company for similar debt and the weighted average cost of capital of the Company.

RECEIVABLES, NET

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

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

September 30,

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 June 30, 2020 and December 31, 2019:

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

September 30,

Leasehold improvements

2 unchanged sentences

Furniture, equipment and leasehold improvements, net

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:

Depreciation expense for the three months ended September 30, 2020 and 2019 was $ 279 and $ 267 , respectively.

Depreciation expense for the nine months ended September 30, 2020 and 2019 was $ 838 and $ 815 , respectively.

During the nine months ended September 30, 2020 and 2019, the Company wrote off leased assets of $ 209 and $ 310 , with accumulated depreciation of $ 180 and $ 310 , respectively.

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

September 30,

Gross balance

5 unchanged sentences

INTANGIBLE ASSETS, NET

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

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

Relationships

Balance, January 1, 2020

Balance, June 30, 2020

Balance, September 30, 2020

Accumulated amortization

1 unchanged sentence

Amortization expense

Balance, June 30, 2020

Balance, September 30, 2020

Net book value

7 unchanged sentences

Net Book Value

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 expense related to intangible assets was $ 664 and $ 705 for the three months ended September 30, 2020 and 2019, respectively.

Amortization expense related to intangible assets was $ 2,069 and $ 1,401 for the nine months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 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 September 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:

17 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.

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.

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

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

As of September 30, 2020 and December 31, 2019, the Company had $ 13,500 and $ 16,200 , respectively, outstanding under the term loan.

There was no accrued but unpaid interest as of September 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 September 30, 2020 and 2019 was $ 117 and $ 237 , respectively.

Interest expense, which also includes amortization of deferred financing fees, incurred on the revolving credit facility and term loan for the nine months ended September 30, 2020 and 2019 was $ 437 and $ 250 , 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 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.

Rent expense charged to operations for the three months ended September 30, 2020 and 2019 amounted to $ 1,597 and $ 1,566 , respectively.

The Company received sub-lease income from sub-tenants during the three months ended September 30, 2020 and 2019 of $ 38 and $ 28 , respectively.

Therefore, for the three months ended September 30, 2020 and 2019, net rent expense amounted to $ 1,559 and $ 1,538 , 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.

Rent expense charged to operations for the nine months ended September 30, 2020 and 2019 amounted to $ 4,777 and $ 4,625 , respectively.

The Company received sub-lease income from sub-tenants during the nine months ended September 30, 2020 and 2019 of $ 115 and $ 98 , respectively.

Therefore, for the nine months ended September 30, 2020 and 2019, net rent expense amounted to $ 4,662 and $ 4,527 , 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 September 30, 2020 and December 31, 2019.

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

1 unchanged sentence

In March 2014, the Company entered into a lease agreement for additional office space in Richmond, VA.

The lease commenced on May 1, 2014 and expired July 31, 2019 .

The lease commenced on May 1, 2014 and had an original expiration date of July 31, 2019 .

The lease is subject to escalation clauses and provides for a rent-free period of three months .

7 unchanged sentences

In June 2015, the Company entered into a lease agreement for office space in Charlottesville, VA.

The lease commenced on June 30, 2015 and expired on June 30, 2018 .

The lease commenced on June 30, 2015 and expired, as amended, on June 30, 2019 .

On June 6, 2019, the Company extended this lease for three years , with the new term beginning on July 1, 2019 and expiring on June 30, 2022 .

34 unchanged sentences

Monthly rent expense is $ 12 .

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,

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

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating Lease Cost

10 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 , (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:

(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 , (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 , (x) a three year lease agreement for two copiers totaling $ 43 with minimum monthly lease payments of $ 1 , which began on August 20, 2020 and continue through August 19, 2023 and (xi) a three year lease agreement for two copiers totaling $ 39 with minimum monthly lease payments of $ 1 , which began on August 20, 2020 and continue through August 19, 2023 .

The aggregate principal balance of finance leases was $ 289 and $ 196 as of September 30, 2020 and December 31, 2019, respectively.

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

September 30,

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 $ 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.

Depreciation expense relating to finance lease assets was $ 26 and $ 25 for the three months ended September 30, 2020 and 2019, respectively.

Depreciation expense relating to finance lease assets was $ 88 and $ 78 for the nine months ended September 30, 2020 and 2019, respectively.

During the three and nine months ended September 30, 2020 and 2019, the Company wrote off leased assets of $ 209 and $ 310 , with accumulated depreciation of $ 180 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 $ 2,798 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.

Partnership distributions totaled $ 1,497 and $ 1,626 , for the three months ended September 30, 2020 and 2019, respectively.

Partnership distributions totaled $ 6,521 and $ 7,385 , for the nine months ended September 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 six months ended June 30, 2020 and 2019 amounted to $ 27,240 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 six months ended June 30, 2020 and 2019.

Distributions of partner incentive allocations of net income for the nine months ended September 30, 2020 and 2019 amounted to $ 27,236 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 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.

During the three months ended September 30, 2020 and 2019, SLP accrued partner incentive allocations of $ 7,121 and $ 7,115 , respectively.

During the nine months ended September 30, 2020 and 2019, SLP accrued partner incentive allocations of $ 20,055 and $ 18,766 , respectively.

Silvercrest—Equity

Silvercrest has the following authorized and outstanding equity:

Shares at June 30, 2020

Shares at September 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 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 and six months ended June 30, 2020, Silvercrest issued the following shares:

During the three and nine months ended September 30, 2020, Silvercrest issued the following shares:

Class A Common Stock

10 unchanged sentences

Class B units to Class A common stock

Class A common shares outstanding – June 30, 2020

Issuance of Class A common stock upon conversion of

Class B units to Class A common stock

Class A common shares outstanding – September 30, 2020

Class B Common Stock

Class B common stock outstanding - January 1, 2020

Issuance of Class B common stock in connection with the Neosho Acquisition

Cancellation of Class B common stock upon conversion of Class B units to Class A 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 – June 30, 2020

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

Class B common shares outstanding – September 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.

3 unchanged sentences

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.

In August 2020, the Company redeemed from certain existing partners 24,191 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 six months ended June 30, 2020 and the year ended December 31, 2019:

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

September 30,

Beginning balance

2 unchanged sentences

Ending balance

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.

Full recourse notes receivable from partners as of September 30, 2020 and December 31, 2019 are $ 350 and $ 645 , respectively.

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

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

RELATED PARTY TRANSACTIONS

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:

During the first nine 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 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.

For the three months ended September 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 $ 1,165 and $ 1,312 , respectively.

For the nine months ended September 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 $ 3,485 and $ 3,880 , respectively.

As of September 30, 2020 and December 31, 2019, the Company was owed $ 1,806 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 September 30, 2020 and 2019, the Company earned management and advisory fees of $ 330 and $ 387 , respectively, from assets managed on behalf of certain of its employees.

For the nine months ended September 30, 2020 and 2019, the Company earned management and advisory fees of $ 995 and $ 1,062 , respectively, from assets managed on behalf of certain of its employees.

As of September 30, 2020 and December 31, 2019, the Company is owed approximately $ 62 and $ 137 , respectively, from certain of its employees, which is included in Receivables, net on the Condensed Consolidated Statements of Financial Condition.

As of September 30, 2020, the Company had net deferred tax assets of $ 11,523 , which is recorded as a deferred tax asset of $ 11,646 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 $ 63 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 $ 60 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 September 30, 2020, $ 41 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 $ 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 six months ended June 30, 2019.

The current tax expense was $ 1,576 and $ 776 for the three months ended September 30, 2020 and 2019, respectively.

Of the amount for the three months ended September 30, 2020, $ 953 relates to Silvercrest’s corporate tax expense, $ 622 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 September 30, 2020 and 2019 was ($ 217 ) and $ 725 , respectively.

When combined with current tax expense, the total income tax provision for the three months ended September 30, 2020 and 2019 is $ 1,359 and $ 1,501 , respectively.

The discrete tax expense for the three months ended September 30, 2020, and 2019 was ($ 99 ) and $ 240 , respectively.

For 2020, 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.

The current tax expense was $ 2,817 and $ 1,798 for the nine months ended September 30, 2020 and 2019, respectively.

Of the amount for the nine months ended September 30, 2020, $ 1,388 relates to Silvercrest’s corporate tax expense, $ 1,427 relates to SLP’s state and local liability and $ 2 relates to SFS’s corporate tax expense.

The deferred tax expense for the nine months ended September 30, 2020 and 2019 was $ 1,741 and $ 1,885 , respectively.

When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2020 and 2019 is $ 4,558 and $ 3,682 , respectively.

The discrete tax expense for the nine months ended September 30, 2020 and 2019, was $ 197 and $ 240 , respectively.

For 2020 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.

For 2019 the discrete items are primarily attributable to adjustments to the value of deferred tax assets for Silvercrest as a result of changes in state apportionment resulting from the acquisition of Cortina.

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.

The assistance includes tax relief and government loans, grants and investments for entities in affected industries.

Key income tax provisions of the CARES Act include (i) business tax provisions which would eliminate the taxable income limit for certain net operating losses (“NOL”) and allow businesses to carry back NOLs arising in 2018, 2019, and 2020 to the five prior tax years;

(ii) generally loosen the business interest limitation under section 163(j) from 30 percent to 50 percent;

and (iii) fix the ‘retail glitch’ for qualified improvement property to allow for 100% bonus depreciation.

As a result of the change to qualified improvement property, the Company will receive accelerated tax deductions upon filing its 2019 tax return and current benefit of approximately $ 700 thousand has been recorded, along with a corresponding deferred tax liability.

There were no other material adjustments recorded.

Of the total current tax expense for the three months ended September 30, 2020 and 2019, $ 212 and $ 134 , respectively, relates to non-controlling interests.

Of the deferred tax expense for the three months ended September 30, 2020 and 2019, ($ 56 ) and $ 7 , respectively, relates to non-controlling interests.

When combined with current tax expense, the total income tax provision for the three months ended September 30, 2020 and 2019 related to non-controlling interests is $ 156 and $ 141 , respectively.

Of the total current tax expense for the nine months ended September 30, 2020 and 2019, $ 490 and $ 450 , respectively, relates to non-controlling interests.

Of the deferred tax expense for the nine months ended September 30, 2020 and 2019, $ 12 and $ 27 , respectively, relates to non-controlling interests.

When combined with current tax expense, the total income tax provision for the nine months ended September 30, 2020 and 2019 related to non-controlling interests is $ 502 and $ 477 , respectively.

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

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

As of September 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 June 30, 2020 and 2019.

Furthermore, the Company does not have any material uncertain tax positions at September 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 June 30, 2020, 345,428 shares are available for grant.

As of September 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.

42 unchanged sentences

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.

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.

3 unchanged sentences

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:

For the three months ended September 30, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 192 and $ 445 , respectively, as part of total compensation expense in the Condensed Consolidated Statements of Operations for the period then ended.

For the nine months ended September 30, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 456 and $ 2,166 , respectively, as part of total compensation expense in the Condensed Consolidated Statements of Operations for the period then ended.

As of September 30, 2020 and December 31, 2019, there was $ 1,543 and $ 945 , respectively, of unrecognized compensation expense related to unvested awards.

As of September 30, 2020 and December 31, 2019, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 1.91 and 1.62 years, respectively.

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

Restricted Stock Units

4 unchanged sentences

13.19 – 14.54

Total granted at June 30, 2020

Total granted at September 30, 2020

10.18 – 14.54

1 unchanged sentence

13.19 – 13.23

Total granted at June 30, 2019

13.19 – 13.23

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

Total granted at September 30, 2019

13.19 – 14.54

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

Non-Qualified Options

2 unchanged sentences

13.19 – 14.54

Total granted at June 30, 2020

Total granted at September 30, 2020

10.18 – 14.54

Total granted at January 1, 2019

Total granted at June 30, 2019

Total granted at September 30, 2019

13.97 – 14.54

3 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 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

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

For the nine months ended September 30, 2020 and 2019, Silvercrest made matching contributions of $ 66 and $ 66 , 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 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.

For the three months ended September 30, 2020 and 2019, the Company utilized “soft dollar” credits of $ 263 and $ 152 , respectively.

For the nine months ended September 30, 2020 and 2019, the Company utilized “soft dollar” credits of $ 690 and $ 554 , 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