Silvercrest Asset Management Group Inc. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended) at December 31, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at December 31, 2020. Internal Control over Financial Reporting There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic situation on our internal controls to minimize the impact on their design and operating effectiveness. Report of Management on Internal Control Over Financial Reporting Company management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States, and includes those policies and procedures that: (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Furthermore, the effectiveness of internal controls can change with circumstances. Company management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the 2013 version of the Internal Control - Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013) . Based on that assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020. Deloitte & Touche LLP, our independent registered public accounting firm, has audited and issued a report on our internal controls over financial reporting, which is included in Item 8 of this Annual Report on Form 10-K. PART III. Item 10. Directors, Executive Officers and Corporate Governance Information required by this item will be included in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders, which will be filed within 120 days of the end of our fiscal year ended December 31, 2020 (“2021 Proxy Statement”) and is incorporated herein by reference. Item 11. Executive Compensation Information required by this item will be included in the 2021 Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information required by this item will be included in the 2021 Proxy Statement and is incorporated herein by reference. 57 Item 13. Certain Relationships and Related Transactions, and Director Independence Information required by this item will be included in the 2021 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services Information required by this item will be included in the 2021 Proxy Statement and is incorporated herein by reference. 58 PART IV. Item 15. Exhibits, Financial Statement Schedules. (a) The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (i) Consolidated Statements of Financial Condition as of December 31, 2020 and 2019 (ii) Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 (iii) Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 (v) Notes to Consolidated Financial Statements (2) Financial Statement Schedules There are no Financial Statement Schedules filed as part of this Annual Report on 10-K, as the required information is not applicable. (b) Exhibit Index: Exhibit Number Description 3.1* Second Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 3.2* Bylaws of Silvercrest Asset Management Group Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 4.1* Specimen Stock Certificate for Shares of Class A Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 4.2* Exchange Agreement (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 4.3* Resale and Registration Rights Agreement (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 4.4*+ 2012 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013) . 4.5* Description of Capital Stock (incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10-K filed on March 5, 2019). 4.6* Eighth Amendment to Credit Agreement, dated as of June 19, 2020, among Silvercrest Asset Management Group LLC, Silvercrest Investors LLC, Silvercrest Investors II LLC and Silvercrest Financial Services, Inc., as borrowers, City National Bank, a national banking association, and acknowledged by Silvercrest L.P., as guarantor, initially filed as exhibit 4.1 on Form 8-K with the Securities and Exchange Commission on June 19, 2020 (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q filed on August 3, 2020). 10.1* Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P. (incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 10.2* Tax Receivable Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 10.3*+ Form of Indemnification Agreement with Directors (incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013). 10.5* Credit Agreement (incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed June 25, 2013). 10.6* First Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on December 23, 2016). 59 Exhibit Number Description 10.7*+ Form of 2012 Equity Incentive Plan Class B Restricted Stock Unit Award Agreement. (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-Q filed on August 6, 2015). 10.8* First Amendment to Lease, dated December 23, 2015, by and between RXR 1330 Owner LLC and Silvercrest Asset Management Group LLC (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-K filed on March 10, 2016). 10.9* Third Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed on December 21, 2017). 10.10* Fourth Amendment to Credit Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed on August 1, 2018). 10.11* + Employment agreement with Richard R. Hough III dated September 18, 2018 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed September 24, 2018). 10.12* Form of Option Agreement (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed September 24, 2018). 10.13* Sixth Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed June 25, 2019). 10.14* Seventh Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed July 2, 2019) . 10.15* Eighth Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed June 19, 2020). 10.16* Amendment to Restricted Stock Unit Award Agreement among Silvercrest Asset Management Group Inc. and Brian D. Dunn, dated July 28, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed on August 3, 2020). 10.17* + Employment agreement with J. Allen Gray dated July 29, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed on August 3, 2020). 21.1** List of subsidiaries 23.1** Consent of Deloitte & Touche LLP 24.1** Power of Attorney (included in the Form 10-K under “Signatures”). 31.1** Certification of the Company’s Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of the Company’s Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1*** Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2*** Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS** XBRL Instance Document 101.SCH** XBRL Taxonomy Extension Schema Document 101.CAL** XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB** XBRL Taxonomy Extension Label Linkbase Document 101.PRE** XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF** XBRL Taxonomy Extension Definition Linkbase Document 60 Exhibit Number Description 104** Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) * Previously filed ** Filed herewith *** Furnished herewith + Constitutes a management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary. None. 61 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, state of New York on March 4, 2021. SILVERCREST ASSET MANAGEMENT GROUP INC. By: /s/ Richard R. Hough III Richard R. Hough III Chairman, Chief Executive Officer and President By: /s/ Scott A. Gerard Scott A. Gerard Chief Financial Officer KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Richard R. Hough III and Scott A. Gerard his true and lawful attorneys-in-fact and agents, with full power to act separately and full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K for the year ended December 31, 2020 and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities indicated on the 4th day of March, 2021: Signature Title Date /s/ Richard R. Hough III Richard R. Hough III (Principal Executive Officer), Chairman and Director March 4, 2021 /s/ Scott A. Gerard Scott A. Gerard (Principal Financial and Accounting Officer) March 4, 2021 /s/ Albert S. Messina Albert S. Messina Managing Director, Portfolio Manager and Director March 4, 2021 /s/ Richard J. Burns Richard J. Burns Director March 4, 2021 /s/ Winthrop B. Conrad, Jr. Winthrop B. Conrad, Jr. Director March 4, 2021 /s/ Brian D. Dunn Brian D. Dunn Director March 4, 2021 62 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Silvercrest Asset Management Group Inc. Report of Independent Registered Public Accounting Firm F – 2 Consolidated Statements of Financial Condition as of December 31, 2020 and December 31, 2019 F – 5 Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 F – 6 Consolidated Statements of Changes in Equity for the years ended December 31, 2020, 2019 and 2018 F – 7 Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 F – 8 Notes to Consolidated Financial Statements F – 10 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Silvercrest Asset Management Group Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of Silvercrest Asset Management Group Inc. and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 4, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Cortina Contingent Consideration — Refer to Notes 2 and 3 to the financial statements Critical Audit Matter Description The Company completed the acquisition of Cortina Asset Management, LLC (“Cortina”) on July 1, 2019 for cash consideration of $33.577 million and $8.592 in Class B Units of Silvercrest L.P. In addition, the purchase agreement provides for up to $26.209 million of potential earn out payments (“contingent consideration”) over the next four years. The Company recognized the estimated contingent consideration for Cortina at fair value on the acquisition date in the amount of $13.8 million and at year end in the amount of $15.1 million, using the income approach. The fair value of earnout payments are based on a revenue growth, however the payoffs are nonlinear and path-dependent. Accordingly, the Monte Carlo Simulation model is used. Furthermore, the significant inputs used in establishing the fair value include revenue growth rate, discount rate, and volatility rate. These are unobservable and reflect the Company’s own judgements about the assumptions market participants would use in pricing the liability. Therefore, the valuation of the Cortina contingent consideration is considered complex and requires significant management judgment. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Cortina contingent consideration included the following: 1. We tested the effectiveness of controls over the Cortina contingent consideration, including controls over the valuation methodology for estimating the fair value and revenue forecasts. 2. We tested management’s methodology for establishing the fair value at year end related to the Cortina contingent consideration. 3. With the assistance of our fair value specialists, we validated the reasonableness of the unobservable inputs, and other key judgments made by management. We also assessed the appropriateness of the Monte Carlo simulation by utilizing the assistance of the fair value specialists in order to validate the discount rate and the volatility rate used within the simulation. We evaluated the reasonableness of management’s assumptions through independent analysis and comparison to external sources. 4. With the assistance of our fair value specialists, we assessed the mathematical accuracy of the overall Monte Carlo simulation by footing, cross-footing, and recalculating the contingent liability based on the relevant terms of the earn out. 5. We evaluated management’s ability to accurately forecast future revenues through independent analysis including a comparison of actual results to management’s historical forecasts. 6. We evaluated the reasonableness of management’s revenue forecasts by comparing the forecasts to: • Historical revenues • Internal communications to management and the Board of Directors • Forecasted information included in Company press releases, analyst and industry reports for the Company and certain of its peer companies /s/ Deloitte & Touche LLP New York, New York March 4, 2021 We have served as the Company’s auditor since 2006. F-3 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Silvercrest Asset Management Group Inc.: Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Silvercrest Asset Management Group Inc. and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 4, 2021, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP New York, New York March 4, 2021 F-4 Silvercrest Asset Management Group Inc. Consolidated Statements of Financial Condition (In thousands, except share data) December 31, 2020 December 31, 2019 Assets Cash and cash equivalents $ 62,498 $ 52,832 Investments 914 1,781 Receivables, net 8,341 8,958 Due from Silvercrest Funds 1,018 1,697 Furniture, equipment and leasehold improvements, net 5,523 6,015 Goodwill 63,675 63,675 Operating lease assets 30,068 33,485 Finance lease assets 254 198 Intangible assets, net 26,553 29,286 Deferred tax asset—tax receivable agreement 11,397 13,190 Prepaid expenses and other assets 3,563 3,132 Total assets $ 213,804 $ 214,249 Liabilities and Equity Accounts payable and accrued expenses $ 18,040 $ 18,527 Accrued compensation 33,849 32,252 Borrowings under credit facility 12,600 16,200 Operating lease liabilities 36,127 39,848 Finance lease liabilities 259 196 Deferred tax and other liabilities 9,530 9,419 Total liabilities 110,405 116,442 Commitments and Contingencies (Note 10) Equity Preferred Stock, par value $ 0.01 , 10,000,000 shares authorized; none issued and outstanding — — Class A Common Stock, par value $ 0.01 , 50,000,000 shares authorized; 9,650,692 and 9,329,879 issued and outstanding as of December 31, 2020 and 2019, respectively 96 93 Class B Common Stock, par value $ 0.01 , 25,000,000 shares authorized; 4,721,646 and 5,031,017 issued and outstanding as of December 31, 2020 and 2019, respectively 46 49 Additional Paid-In Capital 51,039 49,246 Retained earnings 19,498 15,648 Total Silvercrest Asset Management Group Inc.’s equity 70,679 65,036 Non-controlling interests 32,720 32,771 Total equity 103,399 97,807 Total liabilities and equity $ 213,804 $ 214,249 See accompanying notes to consolidated financial statements. F-5 Silvercrest Asset Management Group Inc. Consolidated Statements of Operations (In thousands, except share and per share data) For the year ended December 31, 2020 2019 2018 Revenue Management and advisory fees $ 103,775 $ 97,970 $ 94,675 Performance fees and allocations — 25 25 Family office services 4,208 4,157 3,973 Total revenue 107,983 102,152 98,673 Expenses Compensation and benefits 62,379 60,038 57,938 General and administrative 23,323 23,241 19,583 Total expenses 85,702 83,279 77,521 Income before other income (expense), net 22,281 18,873 21,152 Other income (expense), net Other income (expense), net 243 255 ( 15 ) Interest income 13 169 274 Interest expense ( 563 ) (481 ) ( 62 ) Equity income from investments 898 1,774 1,477 Total other income (expense), net 591 1,717 1,674 Income before provision for income taxes 22,872 20,590 22,826 Provision for income taxes ( 5,394 ) ( 5,178 ) ( 5,458 ) Net income 17,478 15,412 17,368 Less: net income attributable to non-controlling interests ( 7,518 ) ( 6,766 ) ( 7,738 ) Net income attributable to Silvercrest $ 9,960 $ 8,646 $ 9,630 Net income per share: Basic $ 1.05 $ 0.98 $ 1.16 Diluted $ 1.05 $ 0.98 $ 1.16 Weighted average shares outstanding: Basic 9,503,197 8,797,118 8,298,354 Diluted 9,510,720 8,799,643 8,302,768 See accompanying notes to consolidated financial statements. F-6 Silvercrest Asset Management Group Inc. Consolidated Statements of Changes in Equity (In thousands) Class A Common Stock Shares Class A Common Stock Amount Class B Common Stock Shares Class B Common Stock Amount Additional Paid-In Capital Retained Earnings Total Silvercrest Asset Management Group Inc.’s Equity Non- controlling Interest Total Equity December 31, 2017 8,142 $ 81 5,059 $ 49 $ 41,606 $ 7,359 $ 49,095 $ 23,024 $ 72,119 Distributions to partners — — — — — — — ( 6,773 ) ( 6,773 ) Issuance of Class B shares — — 6 — — — — 100 100 Issuance of notes receivable by partners — — — — — — — ( 100 ) ( 100 ) Equity-based compensation 2 — 243 3 25 — 28 3,247 3,275 Repayment of notes receivable from partners — — — — — — — 1,119 1,119 Net Income — — — — — 9,630 9,630 7,738 17,368 Deferred tax, net of amounts payable under tax receivable agreement — — — — ( 25 ) — ( 25 ) — ( 25 ) Accrued interest on notes receivable from partners — — — — — — — ( 25 ) ( 25 ) Share Conversion 374 4 ( 374 ) ( 4 ) 1,978 — 1,978 ( 1,978 ) — Dividends paid on Class A common stock - $ 0.56 per share — — — — — ( 4,659 ) ( 4,659 ) — ( 4,659 ) December 31, 2018 8,518 $ 85 4,934 $ 48 $ 43,584 $ 12,330 $ 56,047 $ 26,352 $ 82,399 Distributions to partners — — — — — — — ( 7,698 ) ( 7,698 ) Issuance of Class B shares — — 665 7 — — 7 8,965 8,972 Equity-based compensation 2 — 242 2 23 — 25 2,247 2,272 Repayment of notes receivable from partners — — — — — — — 291 291 Net Income — — — — — 8,646 8,646 6,766 15,412 Deferred tax, net of amounts payable under tax receivable agreement — — — — 1,500 — 1,500 — 1,500 Accrued interest on notes receivable from partners — — — — — — — ( 13 ) ( 13 ) Share Conversion 810 8 ( 810 ) ( 8 ) 4,139 — 4,139 ( 4,139 ) — Dividends paid on Class A common stock - $ 0.60 per share — — — — — ( 5,328 ) ( 5,328 ) — ( 5,328 ) December 31, 2019 9,330 $ 93 5,031 $ 49 $ 49,246 $ 15,648 $ 65,036 $ 32,771 $ 97,807 Distributions to partners — — — — — — — ( 6,297 ) ( 6,297 ) Equity-based compensation 3 — 9 — 106 — 106 585 691 Repayment of notes receivable from partners — — — — — — — 300 300 Net Income — — — — — 9,960 9,960 7,518 17,478 Deferred tax, net of amounts payable under tax receivable agreement — — — — ( 462 ) — ( 462 ) — ( 462 ) Accrued interest on notes receivable from partners — — — — — — — ( 8 ) ( 8 ) Share Conversion 318 3 ( 318 ) ( 3 ) 2,149 — 2,149 ( 2,149 ) — Dividends paid on Class A common stock - $ 0.64 per share — — — — — ( 6,110 ) ( 6,110 ) — ( 6,110 ) December 31, 2020 9,651 $ 96 4,722 $ 46 $ 51,039 $ 19,498 $ 70,679 $ 32,720 $ 103,399 See accompanying notes to consolidated financial statements. F-7 Silvercrest Asset Management Group Inc. Consolidated Statements of Cash Flows (In thousands) For the year ended December 31, 2020 2019 2018 Cash Flows From Operating Activities Net income $ 17,478 $ 15,412 $ 17,368 Adjustments to reconcile net income to net cash provided by operating activities: Equity-based compensation 659 2,272 3,275 Depreciation and amortization 3,968 3,191 2,432 Deferred rent — — 3,752 Deferred income taxes 2,229 1,575 570 Tax receivable agreement fair value adjustment ( 186 ) ( 200 ) 30 Non-cash interest on notes receivable from partners ( 8 ) ( 13 ) ( 25 ) Non-cash lease expense 3,417 — — Distributions received from investment funds 1,765 1,486 610 Equity income from investments ( 898 ) ( 1,774 ) ( 1,477 ) Other — — 37 Cash flows due to changes in operating assets and liabilities: Receivables and due from Silvercrest Funds 1,296 ( 3,647 ) 1,275 Prepaid expenses and other assets ( 815 ) ( 823 ) ( 2,665 ) Accounts payable and accrued expenses 63 514 512 Accrued compensation 1,597 782 3,196 Operating lease liabilities ( 3,721 ) — — Other liabilities 2 — ( 51 ) Interest payable on notes payable — — 18 Net cash provided by operating activities 26,846 18,775 28,857 Cash Flows From Investing Activities Acquisition of furniture, equipment and leasehold improvements $ ( 626 ) $ ( 3,812 ) $ ( 1,756 ) Acquisition of Neosho Capital, LLC — ( 399 ) — Acquisition of Cortina Asset Management, LLC — ( 35,169 ) — Net cash used in investing activities ( 626 ) ( 39,380 ) ( 1,756 ) Cash Flows From Financing Activities Earn-outs paid related to acquisitions $ ( 741 ) $ ( 425 ) $ ( 447 ) Borrowings under credit facility — 18,000 — Repayments of notes payable ( 3,600 ) ( 1,800 ) ( 758 ) Principal payments on financing leases ( 111 ) ( 107 ) ( 122 ) Operating lease liabilities — 1,221 — Distributions to partners ( 6,297 ) ( 7,698 ) ( 6,773 ) Dividends paid on Class A common stock ( 6,105 ) ( 5,328 ) ( 4,659 ) Payments from partners on notes receivable 300 291 1,119 Net cash (used in) provided by financing activities ( 16,554 ) 4,154 ( 11,640 ) Net increase (decrease) in cash and cash equivalents 9,666 ( 16,451 ) 15,461 Cash and cash equivalents, beginning of year 52,832 69,283 53,822 Cash and cash equivalents, end of year $ 62,498 $ 52,832 $ 69,283 See accompanying notes to consolidated financial statements. F-8 Silvercrest Asset Management Group Inc. Consolidated Statements of Cash Flows (continued) (In thousands) For the year ended December 31, 2020 2019 2018 Supplemental Disclosures of Cash Flow Information Net cash paid during the period for: Income taxes $ 3,129 $ 4,274 $ 5,953 Interest 523 439 39 Supplemental Disclosures of Non-cash Financing and Investing Activities Notes receivable from new partners issued for capital contributions to Silvercrest L.P. $ — $ — $ 100 Earnout accrual for acquisition of Neosho Capital, LLC — 1,403 — Issuance of Class B units of Silvercrest L. P. in conjunction with the acquisition of Neosho — 20 — Issuance of Class B shares of Silvercrest Asset Management Group Inc. in conjunction with the acquisition of Neosho, par value $ 0.01 — — — Earnout accrual for acquisition of Cortina Asset Management, LLC — 14,000 — Issuance of Class B units of Silvercrest L. P. in conjunction with the acquisition of Cortina — 8,945 — Issuance of Class B shares of Silvercrest Asset Management Group Inc. in conjunction with the acquisition of Cortina, par value $ 0.01 — 7 — Recognition of deferred tax assets as a result of share conversions 883 1,057 1,235 Assets acquired under capital leases 78 115 11 Operating lease assets (ASC 842 adoption) — 33,485 — Finance lease assets (ASC 842 adoption) — 198 — Operating lease liabilities (ASC 842 adoption) — 39,848 — Finance lease liabilities (ASC 842 adoption) — 196 — Accrued dividends 5 — — See accompanying notes to consolidated financial statements. F-9 Silvercrest Asset Management Group Inc. Notes to Consolidated Financial Statements As of and for the Years ended December 31, 2020, 2019 and 2018 (Dollars in thousands, except per share or per unit amounts) 1. ORGANIZATION AND BUSINESS Silvercrest Asset Management Group Inc. (“Silvercrest”), together with its consolidated subsidiary, Silvercrest L.P., a limited partnership, (collectively the “Company”), was formed as a Delaware corporation on July 11, 2011. Silvercrest is a holding company that was formed in order to carry on the business of Silvercrest L.P., the managing member of our operating subsidiary, and its subsidiaries. Effective on June 26, 2013, Silvercrest became the sole general partner of Silvercrest L.P. and its only material asset is the general partner interest in Silvercrest L.P., represented by 9,650,692 Class A units or approximately 66.6 % of the outstanding interests of Silvercrest L.P. Silvercrest controls all of the businesses and affairs of Silvercrest L.P. and, through Silvercrest L.P. and its subsidiaries, continues to conduct the business previously conducted by these entities prior to the reorganization. Silvercrest L.P., together with its consolidated subsidiaries (collectively “SLP”), provides investment management and family office services to individuals and families and their trusts, and to endowments, foundations and other institutional investors primarily located in the United States of America. The business includes the management of funds of funds and other investment funds, collectively referred to as the “Silvercrest Funds”. Silvercrest L.P. was formed on December 10, 2008 and commenced operations on January 1, 2009. On March 11, 2004, Silvercrest Asset Management Group LLC (“SAMG LLC”) acquired 100 % of the outstanding shares of James C. Edwards Asset Management, Inc. (“JCE”) and subsequently changed JCE’s name to Silvercrest Financial Services, Inc. (“SFS”). On December 31, 2004, SLP acquired 100 % of the outstanding shares of the LongChamp Group, Inc. (now SAM Alternative Solutions, Inc.) (“LGI”). Effective March 31, 2005, SLP entered into an Asset Contribution Agreement with and acquired all of the assets, properties, rights and certain liabilities of Heritage Financial Management, LLC (“HFM”). Effective October 3, 2008, SLP acquired 100 % of the outstanding limited liability company interests of Marathon Capital Group, LLC (“MCG”) through a limited liability company interest purchase agreement dated September 22, 2008. On November 1, 2011, SLP acquired certain assets of Milbank Winthrop & Co. (“Milbank”). On April 1, 2012, SLP acquired 100 % of the outstanding limited liability company interests of MW Commodity Advisors, LLC (“Commodity Advisors”). On March 28, 2013, SLP acquired certain assets of Ten-Sixty Asset Management, LLC (“Ten-Sixty”). On June 30, 2015, SLP acquired certain assets of Jamison, Eaton & Wood, Inc. (“Jamison”). On January 11, 2016, SLP acquired certain assets of Cappiccille & Company, LLC (“Cappiccille”). On January 1, 2019, SLP acquired certain assets of Neosho Capital LLC (“Neosho”). On July 1, 2019, SLP acquired substantially all assets of Cortina Asset Management (“Cortina”). See Notes 3, 7 and 8 for additional information related to the acquisition, goodwill and intangible assets arising from these acquisitions. Tax Receivable Agreement In connection with Silvercrest’s initial public offering (the “IPO”) and reorganization of SLP that was completed on June 23, 2013, Silvercrest entered into a tax receivable agreement (the “TRA”) with the partners of SLP that requires it to pay them 85 % of the amount of cash savings, if any, in U.S. federal, state and local income tax that it actually realizes (or is deemed to realize in the case of an early termination payment by it, or a change in control) as a result of the increases in tax basis and certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA or attributable to exchanges of shares of Class B common stock for shares of Class A common stock. The payments to be made pursuant to the tax receivable agreement are a liability of Silvercrest and not Silvercrest L.P. As of December 31, 2020 this liability is estimated to be $ 9,421 and is included in deferred tax and other liabilities in the Consolidated Statements of Financial Condition. Silvercrest expects to benefit from the remaining 15 % of cash savings realized, if any. The TRA was effective upon the consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless Silvercrest exercises its right to terminate the TRA for an amount based on an agreed upon value of the payments remaining to be made under the agreement. The TRA will automatically terminate with respect to Silvercrest’s obligations to a partner if a partner (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with Silvercrest or any of its subsidiaries or (iii) voluntarily resigns or retires and competes with Silvercrest or any of its subsidiaries in the 12-month period following resignation of employment or retirement, and no further payments will be made to such partner under the TRA. For purposes of the TRA, cash savings in income tax will be computed by comparing Silvercrest’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase in its share of the tax basis of the tangible and intangible assets of SLP. F-10 Estimating the amount of payments that Silvercrest may be required to make under the TRA is imprecise by nature, because the actual increase in its share of the tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including: ● the timing of exchanges of Silvercrest’s Class B units for shares of Silvercrest’s Class A common stock—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of SLP at the time of the exchanges; ● the price of Silvercrest’s Class A common stock at the time of exchanges of Silvercrest’s Class B units—the increase in Silvercrest’s share of the basis in the assets of SLP, as well as the increase in any tax deductions, will be related to the price of Silvercrest’s Class A common stock at the time of these exchanges; ● the extent to which these exchanges are taxable—if an exchange is not taxable for any reason (for instance, if a principal who holds Class B units exchanges units in order to make a charitable contribution), increased deductions will not be available; ● the tax rates in effect at the time Silvercrest utilizes the increased amortization and depreciation deductions; and ● the amount and timing of Silvercrest’s income—Silvercrest will be required to pay 85% of the tax savings, as and when realized, if any. If Silvercrest does not have taxable income, it generally will not be required to make payments under the TRA for that taxable year because no tax savings will have been actually realized. For the years ended December 31, 2020, 2019 and 2018, the valuation adjustment to the TRA related to the underlying deferred tax assets was $ 186 , $ 200 and ($ 30 ), respectively, and is included in Other income (expense), net in the Consolidated Statements of Operations. In addition, the TRA provides that, upon certain mergers, asset sales, other forms of business combinations or other changes of control, Silvercrest’s (or its successors’) obligations with respect to exchanged or acquired Class B units (whether exchanged or acquired before or after such transaction) would be based on certain assumptions, including that Silvercrest would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the TRA. Decisions made by the continuing partners of SLP in the course of running Silvercrest’s business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by an exchanging or selling principal under the TRA. For example, the earlier disposition of assets following an exchange or acquisition transaction will generally accelerate payments under the TRA and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase an existing owner’s tax liability without giving rise to any rights of a principal to receive payments under the TRA. Were the IRS to successfully challenge the tax basis increases described above, Silvercrest would not be reimbursed for any payments previously made under the TRA. As a result, in certain circumstances, Silvercrest could make payments under the TRA in excess of its actual cash savings in income tax. For the years ended December 31, 2020, 2019 and 2018, Silvercrest made TRA payments totaling $ 610 , $ 583 and $ 777 , respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The accompanying 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 and for the years ended December 31, 2020, 2019 and 2018. All intercompany transactions and balances have been eliminated. The Company evaluates for consolidation those entities it controls through a majority voting interest or otherwise, including those Silvercrest Funds over which the general partner or equivalent is presumed to have control, e.g. by virtue of the limited partners not being able to remove the general partner. The initial step in the Company’s determination of whether a fund for which SLP is the general partner is required to be consolidated is assessing whether the fund is a variable interest entity or a voting interest entity. F-11 SLP then considers whether the fund is a voting interest entity (“VoIE”) in which the unaffiliated limited partners have substantive “kick-out” rights that provide the ability to dissolve (liquidate) the limited partnership or otherwise remove the general partner without cause. SLP considers the “kick-out” rights to be substantive if the general partner for the fund can be removed by the vote of a simple majority of the unaffiliated limited partners and there are no significant barriers to the unaffiliated limited partners’ ability to exercise these rights in that among other things, (1) there are no conditions or timing limits on when the rights can be exercised, (2) there are no financial or operational barriers associated with replacing the general partner, (3) there are a number of qualified replacement investment advisors that would accept appointment at the same fee level, (4) each fund’s documents provide for the ability to call and conduct a vote, and (5) the information necessary to exercise the kick-out rights and related vote are available from the fund and its administrator. If the fund is a variable interest entity, SLP then determines whether it has a variable interest in the fund, and if so, whether SLP is the primary beneficiary. In determining whether SLP is the primary beneficiary, SLP evaluates its control rights as well as economic interests in the entity held either directly or indirectly by SLP. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that SLP is not the primary beneficiary, a quantitative analysis may also be performed. Amendments to the governing documents of the respective Silvercrest Funds could affect an entity’s status as a VIE or the determination of the primary beneficiary. At each reporting date, SLP assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. As of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018 , each fund is deemed to be a VoIE and neither SLP nor Silvercrest consolidated any of the Silvercrest Funds. Non-controlling interest As of December 31, 2020 and 2019, Silvercrest holds approximately 66.8 % and 64.8 %, respectively, of the economic interests in SLP. Silvercrest is the sole general partner of SLP and, therefore, controls the management of SLP. As a result, Silvercrest consolidates the financial position and the results of operations of SLP and its subsidiaries, and records a non-controlling interest, as a separate component of equity on its Consolidated Statement of Financial Condition for the remaining economic interests in SLP. The non-controlling interest in the income or loss of SLP is included in the Consolidated Statement of Operations as a reduction or addition to net income derived from SLP. Segment Reporting The Company views its operations as comprising one operating segment, the investment management industry. Each of the Company’s acquired businesses have similar economic characteristics and have been fully integrated upon acquisition. Furthermore, our chief operating decision maker, which is the Company’s Chief Executive Officer, monitors and reviews financial information at a consolidated level for assessing operating results and the allocation of resources. Use of Estimates The preparation of the Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues, expenses and other income reported in the Consolidated Financial Statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates and assumptions made by management include the fair value of acquired assets and liabilities, determination of equity-based compensation, accounting for income taxes, determination of the useful lives of long-lived assets and other matters that affect the Consolidated Financial Statements and related disclosures. Cash and Cash Equivalents The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents. 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. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero , unless guarantees or other funding obligations exist. F-12 The Company evaluates its equity method investments for impairment, whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. 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 December 31, 2020 and 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 years ended December 31, 2020, 2019 and 2018. Receivables and Due from Silvercrest Funds Receivables consist primarily of amounts for management and advisory fees, performance fees and allocations and family office service fees due from clients, and are stated as net realizable value. The Company maintains an allowance for doubtful receivables based on estimates of expected losses and specific identification of uncollectible accounts. The Company charges actual losses to the allowance when incurred. Furniture, Equipment and Leasehold Improvements Furniture, equipment and leasehold improvements consist primarily of furniture, fixtures and equipment, computer hardware and software and leasehold improvements and are recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the assets’ estimated useful lives, which for leasehold improvements is the lesser of the lease term or the life of the asset, generally 10 years, and 3 to 7 years for other fixed assets. Business Combinations The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The method for determining relative fair value varied depending on the type of asset or liability and involved management making significant estimates related to assumptions such as future growth rates used to produce financial projections and the selection of unobservable inputs and other assumptions. The inputs used in establishing the fair value are in most cases unobservable and reflect the Company's own judgments about the assumptions market participants would use in pricing the assets acquired and liabilities assumed. Contingent consideration is recorded as part of the purchase price when such contingent consideration is not based on continuing employment of the selling shareholders. Contingent consideration that is related to continuing employment is recorded as compensation expense. Payments made for contingent consideration recorded as part of an acquisition’s purchase price are reflected as financing activities in the Company’s Consolidated Statements of Cash Flows. The Company remeasures the fair value of contingent consideration at each reporting period using a probability-adjusted discounted cash flow method based on significant inputs not observable in the market and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in earnings. Contingent consideration payments that exceed the acquisition date fair value of the contingent consideration are reflected as an operating activity in the Consolidated Statements of Cash Flows. The excess of the purchase price over the fair value of the identifiable assets acquired, including intangibles, and liabilities assumed is recorded as goodwill. The Company generally uses valuation specialists to perform appraisals and assist in the determination of the fair values of the assets acquired and liabilities assumed. These valuations require management to make estimates and assumptions that are critical in determining the fair values of the assets and liabilities. During the measurement period, the Company may record adjustments to the assets acquired and liabilities assumed. Any adjustments to provisional amounts that are identified during the measurement period are recorded in the reporting period in which the adjustment amounts are determined. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Goodwill and Intangible Assets Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Goodwill is not amortized but is evaluated for impairment at least annually, on October 1 st of each year, or whenever events or circumstances indicate that impairment may have occurred. F-13 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. 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 20 20 , 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 December 31, 2020 and 2019. No goodwill impairment charges were recorded during the years ended December 31, 2020, 2019 and 2018. 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. In connection with such review, the Company also re-evaluates the periods of amortization for these assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Identifiable finite-lived intangible assets are amortized over their estimated useful lives ranging from 3 to 20 years. The method of amortization is based on the pattern over which the economic benefits, generally expected undiscounted cash flows, of the intangible asset are consumed. Intangible assets for which no pattern can be reliably determined are amortized using the straight-line method. Intangible assets consist primarily of the contractual right to future management, advisory and performance fees from customer contracts or relationships. Long-lived Assets Long-lived 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. In connection with such review, the Company also re-evaluates the periods of depreciation and amortization for these assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Partner Distributions Partner incentive allocations, which are determined by the general partner, can be formula-based or discretionary. Partner incentive allocations are treated as compensation expense and recognized in the period in which they are earned. In the event there is insufficient distributable cash flow to make incentive distributions, the general partner in its sole and absolute discretion may determine not to make any distributions called for under the partnership agreement. The remaining net income or loss after partner incentive allocations is generally allocated to unit holders based on their pro rata ownership. Redeemable Partnership Units If a principal of SLP is terminated for cause, SLP has the right to redeem all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the aggregate capital account balance in SLP of the principal and his or her permitted transferees or (ii) the purchase price paid by the terminated principal to first acquire the Class B units. SLP also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions. The profit distributions and tax distributions are accounted for as equity transactions. F-14 Class A Common Stock The Company’s Class A stockholders are entitled to one vote for each share held of record on all matters submitted to a vote of the Company’s stockholders. Also, Class A stockholders are entitled to receive dividends, when and if declared by the Company’s board of directors, out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Dividends consisting of shares of Class A common stock may be paid only as follows: (i) shares of Class A common stock may be paid only to holders of shares of Class A common stock and (ii) shares will be paid proportionately with respect to each outstanding share of the Company’s Class A common stock. Upon the Company’s liquidation, dissolution or winding-up, or the sale of all, or substantially all, of the Company’s assets, after payment in full of all amounts required to be paid to creditors and to holders of preferred stock having a liquidation preference, if any, the Class A stockholders will be entitled to share ratably in the Company’s remaining assets available for distribution to Class A stockholders. Class B units of SLP held by principals will be exchangeable for shares of the Company’s Class A common stock, on a one-for-one basis , subject to customary adjustments for share splits, dividends and reclassifications. Class B Common Stock Shares of the Company’s Class B common stock are issuable only in connection with the issuance of Class B units of SLP. When a vested or unvested Class B unit is issued by SLP, the Company will issue the holder one share of its Class B common stock in exchange for the payment of its par value. Each share of the Company’s Class B common stock will be redeemed for its par value and cancelled by the Company if the holder of the corresponding Class B unit exchanges or forfeits its Class B unit pursuant to the terms of the Second Amended and Restated Limited Partnership Agreement of SLP and the terms of the Silvercrest Asset Management Group Inc. 2012 Equity Incentive Plan (the “2012 Equity Incentive Plan”). The Company’s Class B stockholders will be entitled to one vote for each share held of record on all matters submitted to a vote of the Company’s stockholders. The Company’s Class B stockholders will not participate in any dividends declared by the Company’s board of directors. Upon the Company’s liquidation, dissolution or winding-up, or the sale of all, or substantially all, of its assets, Class B stockholders only will be entitled to receive the par value of the Company’s Class B common stock. Revenue Recognition The Company generates revenue from management and advisory fees, performance fees and allocations, and family office services fees. Management and advisory fees and performance fees and allocations are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds. Performance fees and allocations also relate to assets managed in external investment strategies in which the Company has a revenue sharing arrangement and in funds in which the Company has no partnership interest. Management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided. Income from performance fees and allocations is recorded at the conclusion of the contractual performance period when all contingencies are resolved. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The discretionary investment management agreements for the Company’s separately managed accounts do not have a specified term. Rather, each agreement may be terminated by either party at any time, unless otherwise agreed with the client, upon written notice of termination to the other party. The investment management agreements for the Company’s private funds are generally in effect from year to year, and may be terminated at the end of any year (or, in certain cases, on the anniversary of execution of the agreement) (i) by the Company upon 30 or 90 days’ prior written notice and (ii) after receiving the affirmative vote of a simple majority of the investors in the private fund that are not affiliated with the Company, by the private fund on 60 or 90 days’ prior written notice. The investment management agreements for the private funds may also generally be terminated effective immediately by either party where the non-terminating party (i) commits a material breach of the terms subject, in certain cases, to a cure period, (ii) is found to have committed fraud, gross negligence or willful misconduct or (iii) terminates, becomes bankrupt, becomes insolvent or dissolves. Each of the Company’s investment management agreements contains customary indemnification obligations from the Company to their clients. The management and advisory fees are primarily driven by the level of the Company’s assets under management. The assets under management increase or decrease based on the net inflows or outflows of funds into the Company’s various investment strategies and the investment performance of their clients’ accounts. In order to increase the Company’s assets under management and expand their business, the Company must develop and market investment strategies that suit the investment needs of their target clients and provide attractive returns over the long term. The Company’s ability to continue to attract clients will depend on a variety of factors including, among others: • the ability to educate the Company’s target clients about the Company’s classic value investment strategies and provide them with exceptional client service; F-15 • the relative investment performance of the Company’s investment strategies, as compared to competing products and market indices; • competitive conditions in the investment management and broader financial services sectors; • investor sentiment and confidence; and • The decision to close strategies when the Company deems it to be in the best interests of their clients. The majority of management and advisory fees that the Company earns on separately-managed accounts are based on the value of assets under management on the last day of each calendar quarter. Most of the management and advisory fees are billed quarterly in advance on the first day of each calendar quarter. The Company’s basic annual fee schedule for management of clients’ assets in separately managed accounts is generally: (i) for managed equity or balanced portfolios, 1 % of the first $ 10 million and 0.60 % on the balance, (ii) for managed fixed income only portfolios, 0.40 % on the first $ 10 million and 0.30 % on the balance, (iii) for the municipal value strategy, 0.65 %, (iv) for Cortina equity portfolios, 1.0 % on the first $ 25 million, 0.90 % on the next $ 25 million and 0.80 % on the balance and (v) for outsourced chief investment officer portfolios, 0.40 % on the first $ 50 million, 0.32 % on the next $ 50 million and 0.24 % on the balance . The Company’s fee for monitoring non-discretionary assets can range from 0.05 % to 0.01 %, but can also be incorporated into an agreed-upon fixed family office service fee. The majority of the Company’s client relationships pay a blended fee rate since they are invested in multiple strategies. Management fees earned on investment funds that the Company advises are calculated primarily based on the net assets of the funds. Some funds calculate investment fees based on the net assets of the funds as of the last business day of each calendar quarter, whereas other funds calculate investment fees based on the value of net assets on the first business day of the month. Depending on the investment fund, fees are paid either quarterly in advance or quarterly in arrears. For the Company’s private funds, the fees range from 0.25 % to 1.5 % annually. Certain management fees earned on investment funds for which the Company performs risk management and due diligence services are based on flat fee agreements customized for each engagement. The Company’s management and advisory fees may fluctuate based on a number of factors, including the following: • changes in assets under management due to appreciation or depreciation of their investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients; • allocation of assets under management among their investment strategies, which have different fee schedules; • allocation of assets under management between separately managed accounts and advised funds, for which the Company generally earn lower overall management and advisory fees; and • the level of their performance with respect to accounts and funds on which the Company is paid incentive fees. The Company’s performance fees and allocations may fluctuate based on performance with respect to accounts and funds on which the Company is paid incentive fees and allocations. The Company’s family office services capabilities enable us to provide comprehensive and integrated services to their clients. The Company’s dedicated group of tax and financial planning professionals provide financial planning, tax planning and preparation, partnership accounting and fund administration and consolidated wealth reporting among other services. Family office services income fluctuates based on both the number of clients for whom the Company performs these services and the level of agreed-upon fees, most of which are flat fees. Therefore, non-discretionary assets under management, which are associated with family office services, do not typically serve as the basis for the amount of family office services revenue that is recognized. Family office services fees are also typically billed quarterly in advance at the beginning of the quarter or in arrears after the end of the quarter based on a contractual percentage of the assets managed or upon a contractually agreed-upon flat fee arrangement. Revenue is recognized on a ratable basis over the period in which services are performed. The Company accounts for performance-based revenue in accordance with ASC 606 by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company records performance fees and allocations as a component of revenue once the performance fee which is recognized at a point in time upon crystallization of the performance fee. As a result, there is no estimate or variability in the consideration when revenue is recorded. F-16 Equity-Based Compensation Equity-based compensation costs relating to the issuance of share-based awards to employees are 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. Therefore, changes in the forfeiture assumptions may affect the timing of the total amount of expense recognized over the vesting period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that have the potential to be settled in cash at the election of the employee are classified as liabilities (“Liability Awards”) and are adjusted to fair value at the end of each reporting period. Leases In February 2016, the FASB established Topic 842, Leases, by issuing ASU No. 2016-02 (“ASC 842”), which required lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The standard established a right-of-use model (“ROU”) that required a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations. The standard became effective for the Company on January 1, 2019 and the Company adopted this standard on this date. A modified retrospective transition approach was required, applying the standard to all leases existing at the date of initial application. An entity could choose to use either (1) the effective date of the standard or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chose the second option, the transition requirements for existing leases also applied to leases entered into between the date of initial application and the effective date. The entity had to also recast its comparative period financial statements and provide the disclosures required by the standard for the comparative periods. The Company elected to use the effective date as its date of initial application. Consequently, financial information was not updated and the disclosures required under the standard were not provided for dates and periods prior to January 1, 2019. The standard provided a number of optional practical expedients as part of transition accounting. The Company elected the “package of practical expedients”, which allowed the Company to avoid reassessing its prior conclusions about lease identification, lease classification and initial direct costs under the standard. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements as these were not applicable to the Company. The standard had a material effect on the Company’s consolidated financial statements. The most significant changes related to (1) the recognition of ROU assets and lease liabilities on the Consolidated Statement of Financial Condition for its office equipment and real estate operating leases and (2) providing significant disclosures about the Company’s leasing activities. Upon adoption, the Company recognized additional operating liabilities of approximately $ 44.0 million, with corresponding ROU and other assets based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The Company determined if an arrangement was a lease at inception. The Company used an incremental borrowing rate based on the information available at the commencement date of the lease to determine the present value of lease payments. In determining the ROU asset and lease liability at lease inception, the lease terms could include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The standard also provided practical expedients for an entity’s ongoing accounting for leases. The Company elected the short-term lease recognition exemption for office equipment leases. For those current and prospective leases that qualify as short-term, the Company will not recognize ROU assets or lease liabilities. The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases. Income Taxes Silvercrest and SFS are subject to federal and state corporate income tax, which requires an asset and liability approach to the financial accounting and reporting of income taxes. SLP is not subject to federal and state income taxes, since all income, gains and losses are passed through to its partners. SLP is, however, subject to New York City unincorporated business tax. With respect to the Company’s incorporated entities, the annual tax rate is based on the income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Judgment is required in determining the tax expense and in evaluating tax positions. The F-17 tax effects of any uncertain tax position (“UTP”) taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes estimated accrued interest and penalties related to UTPs in income tax expense. The Company recognizes the benefit of a UTP in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination. Recent Accounting Developments In June 2016, the FASB issued ASU 2016-13, “Accounting for Credit Losses” which amends the Board’s guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. This amendment became effective for the Company on January 1, 2020 . The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements. In January 2017, The FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”. ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment testing. An entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for the Company in fiscal year 2021 and interim reporting periods within that year. 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 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. ASU 2018-15 became effective for the Company on January 1, 2020 . The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements. In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This ASU is effective for all public entities beginning March 12, 2020 through December 31, 2022. The Company expects the adoption of this guidance will not have a material effect on the Company’s Consolidated Financial Statements. 3. ACQUISITIONS Cortina: 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. F-18 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 . 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 . The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency. Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statements of Operations. The income approach was used to determine the fair value of these payments, by estimating a range of likely expected outcomes and payouts given these outcomes. The potential payouts were estimated using a Monte Carlo simulation and discounted back to their present values using a risk-free discount rate adjusted to account for SAMG LLC’s credit or counterparty risk to arrive at the present value of the contingent consideration payments. The discount rate for the contingent consideration payments was based on the revenue cost of capital for Cortina’s revenue. The first retention payment, due if revenue for the 12-month period from July 1, 2020 to June 30, 2021 is greater than or equal to 95% of the acquired revenue of $ 13,027 which represents Cortina’s annual revenue run-rate as of closing (“Acquired Revenue”), is equal to $ 3,370 . If revenue for the period is equal to 75% or less of the Acquired Revenue, there is no first retention payment, and if revenue for the period is between 75% and 95%, the first retention payment will be determined using linear interpolation between $ 0 and $ 3,370 . The second retention payment is based on revenue for the 12-month period from July 1, 2021 to June 30, 2022, with a revenue threshold between 85% and 105% of Acquired Revenue and a maximum retention payment of $ 5,617 . If revenue for the period is equal to 85% or less of the Acquired Revenue, there is no second retention payment, and if revenue for the period is between 85% and 105%, the second retention payment will be determined using linear interpolation between $ 0 and $ 5,617 . The growth payment is based on revenue for the 12-month period from July 1, 2022 to June 30, 2023, with a revenue threshold between 95% and 140% of Acquired Revenue and a maximum payment of $ 17,222 . 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 . Fair value adjustments to contingent purchase price consideration of $ 1,100 and $ 200 were recorded for the years ended December 31, 2020 and 2019, respectively, and are included in general and administrative expenses in the Consolidated Statement of Operations for the years then ended. SAMG LLC has a liability of $ 15,100 and $ 14,000 as of December 31, 2020 and 2019, respectively, for contingent consideration related to earnout payments to be made in conjunction with the Cortina Acquisition, which is included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition. 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. The Purchase Agreement includes customary representations, warranties and covenants. The strategic acquisition of Cortina, a long-standing innovative and high-caliber growth equity asset management firm, establishes a growth equity capability for the Company. 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 twelve months ended December 31, 2020 and 2019 that are included in the Consolidated Statement of Operations are $ 11,642 and $ 3,016 , and $ 6,241 and $ 1,923 , respectively. F-19 During 2020 and 2019, the Company incurred $ 90 and $ 1,148 , respectively, in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Consolidated Statement of Operations. Cash paid on date of acquisition $ 17,072 Term loan with City National Bank drawdown 18,000 Units issued 8,952 Contingent consideration 13,800 Total purchase consideration $ 57,824 The Company accounted for the acquisition under the acquisition method of accounting for business combinations. Accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values. The method for determining relative fair value varied depending on the type of asset or liability and involved management making significant estimates related to assumptions such as future growth rates used to produce financial projections for Cortina and the selection of unobservable inputs and other assumptions. The inputs used in establishing the fair value are in most cases unobservable and reflect the Company's own judgments about the assumptions market participants would use in pricing the assets acquired and liabilities assumed. The following table summarizes the amounts preliminarily allocated to acquired assets and assumed liabilities. The excess of the purchase price over the estimated 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 $ — Goodwill 36,324 Customer relationships ( 15 years) 21,500 Total purchase consideration $ 57,824 The purchase price allocations as presented above were finalized as of December 31, 2019. The Company believes the recorded goodwill is supported by the anticipated revenues and expected synergies of integrating the operations of Cortina into the Company. Most of the goodwill is expected to be deductible for tax purposes. The pro forma information below represents consolidated results of operations as if the acquisition of Cortina occurred on January 1, 2019. 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. Pro Forma Year Ended December 31, 2019 Revenue $ 108,345 Net Income $ 15,990 Neosho: 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. Richey, Alphonse I. Chan, Robert K. Choi and Vincent G. Pandes, each such individual a principal of Neosho (together, the “Principals of Neosho”), to acquire certain assets of Neosho. The transaction contemplated by the Asset Purchase Agreement closed on January 15, 2019 and is referred to herein as the “Neosho Acquisition”. Pursuant to the terms of the Asset Purchase Agreement, SAMG LLC acquired substantially all of the business and assets of the Seller, a provider of investment management and advisory services, including goodwill and the benefit of the amortization of goodwill related to such assets. In consideration of the purchased assets and goodwill, SAMG LLC paid to the Seller and the Principal an aggregate purchase price consisting of (1) a cash payment of $ 399 (net of cash acquired) and (2) Class B units of SLP issued to the Principals of Neosho with a value equal to $ 20 and an equal number of shares of Class B common stock of the Company, having voting rights but no economic interest. The Company determined that the acquisition-date fair value of the contingent consideration was $ 1,686 , based on the likelihood that the financial and performance targets described in the Asset Purchase Agreement will be F-20 achieved. SAMG LLC will make a payment of $ 300 to the Principals of Neosho on the first anniversary of the closing date. SAMG LLC will make earnout payments to the Principals of Neosho as soon as practicable following December 31, 2020, 2021, 2022 and 2023, in an amount equal to the greater of (i) $ 100 and (ii) the product obtained by multiplying (x) 50 % by (y) the revenue of Neosho as of such payment date less the revenue of Neosho as of the immediately preceding payment date for the prior year. Earnout payments will be paid 75 % in cash and 25 % in equity. The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency. Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statements of Operations. The fair value of the contingent consideration was based on discounted cash flow models using projected revenue for each earnout period. 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 with the contingent payments. Fair value adjustments to contingent purchase price consideration of ($ 75 ) and ($ 283 ) were recorded for the years ended December 31, 2020 and 2019, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for the years then ended. The Company has a liability of $ 1,028 and $ 1,403 for contingent consideration related to earnout payments to be made in conjunction with the Neosho Acquisition, which is included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition as of December 31, 2020 and 2019, respectively . During the year ended December 31, 2020, the Company made contingent purchase price payments to Neosho of $ 300 . Cappiccille: 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. The transaction contemplated by the Asset Purchase Agreement closed on January 11, 2016 and is referred to herein as the “Cappiccille Acquisition”. Pursuant to the terms of the Asset Purchase Agreement, SAMG LLC acquired (i) substantially all of the business and assets of the Seller, a provider of tax services, including goodwill and the benefit of the amortization of goodwill related to such assets, and (ii) the personal goodwill of the Principal. In consideration of the purchased assets and goodwill, SAMG LLC paid to the Seller and the Principal an aggregate purchase price consisting of a cash payment of $ 148 . The Company determined that the acquisition-date fair value of the contingent consideration was $ 354 , based on the likelihood that the financial and performance targets described in the Asset Purchase Agreement will be achieved. SAMG LLC will make earnout payments to the Principal as soon as practicable following December 31, 2016, 2017, 2018, 2019, and during 2020, in an amount equal to 19 % of the revenue attributable to the business and assets of Cappiccille, based on revenue gained or lost post-transaction during the twelve months ended on the applicable determination date, except that the earnout payment for 2016 shall be equal to 19% of the revenue attributable to the Cappiccille for the period between the closing date of the Cappiccille Acquisition and December 31, 2016 and the earnout payment for 2020 shall be equal to 19% of the revenue attributable to the Cappiccille Acquisition for the period between January 1, 2020 and the fifth anniversary of the closing date of the Cappiccille Acquisition. The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency. Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statement of Operations. The fair value of the contingent consideration was based on discounted cash flow models using projected revenue for each earnout period. 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. Fair value adjustments to contingent purchase price consideration of $ 126 , ($ 25 ) and $ 54 were recorded for the years ended December 31, 2020, 2019 and 2018, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for the year then ended. The Company has a liability of $ 114 and $ 101 for contingent consideration related to Cappiccille included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, the Company made contingent purchase price payments to Cappiccille of $ 113 and $ 105 , respectively. Jamison: 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. Gadsden and Frederick E. Thalmann, Jr., each such individual a principal of Jamison (together, the “Principals of Jamison”), to acquire certain assets of Jamison. The transaction contemplated by the Asset Purchase Agreement closed on June 30, 2015 and is referred to herein as the “Jamison Acquisition”. F-21 Pursuant to the terms of the Asset Purchase Agreement, SAMG LLC acquired (i) substantially all of the business and assets of the Seller, an investment adviser, including goodwill and the benefit of the amortization of goodwill related to such assets and (ii) the personal goodwill of the Principals of Jamison. In consideration of the purchased assets and goodwill, SAMG LLC paid to the Seller and the Principals of Jamison an aggregate purchase price consisting of (1) cash payments in the aggregate amount of $ 3,550 (the “Closing Cash Payment”), (2) a promissory note issued to the Seller in the principal amount of $ 394 , with an interest rate of 5 % per annum (the “Seller Note”), (3) promissory notes in varying amounts issued to each of the Principals of Jamison for an aggregated total amount of $ 1,771 , each with an interest rate of 5 % per annum (together, the “Principals of Jamison Notes”) and (4) Class B units of SLP (the “Class B Units”) issued to the Principals of Jamison with a value equal to $ 3,562 and an equal number of shares of Class B common stock of the Company, having voting rights but no economic interest (together, the “Equity Consideration”). The Company determined that the acquisition-date fair value of the contingent consideration was $ 1,429 , based on the likelihood that the financial and performance targets described in the Asset Purchase Agreement will be achieved. SAMG LLC will make earnout payments to the Principals of Jamison as soon as practicable following December 31, 2015, 2016, 2017, 2018, 2019 and during 2020, in an amount equal to 20 % of the EBITDA attributable to the business and assets of Jamison (the “Jamison Business”), based on revenue gained or lost post-transaction during the twelve months ended on the applicable determination date, except that the earnout payment for 2015 shall be equal to 20% of the EBITDA attributable to the Jamison Business for the period between the closing date of the Jamison Acquisition and December 31, 2015 and the earnout payment for 2020 shall be equal to 20% of the EBITDA attributable to the Jamison Business for the period between January 1, 2020 and the fifth anniversary of the closing date of the Jamison Acquisition. The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency. Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statement of Operations. The fair value of the contingent consideration was based on discounted cash flow models using projected EBITDA for each earnout period. The discount rate applied to the 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. 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. In addition, the Principals of Jamison 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 Jamison 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 Jamison 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 Asset Purchase Agreement includes customary representations, warranties and covenants. The strategic acquisition of Jamison, a long-standing and highly regarded investment boutique, strengthens the Company’s presence in the greater New York market and the Company obtains investment managers that have significant experience and knowledge of the industry. Jamison’s clients will gain 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. The Company believes the recorded goodwill is supported by the anticipated revenues and expected synergies of integrating the operations of Jamison into the Company. The goodwill is expected to be deductible for tax purposes. Fair value adjustments to contingent purchase price consideration of $ 70 , $ 214 and $ 52 were recorded for the years ended December 31, 2020, 2019 and 2018, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for each of the years then ended. The Company has a liability of $ 160 and $ 418 for contingent consideration related to Jamison included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 2020 and 2019, respectively. During the years ended December 31, 2020 and 2019, the Company made contingent purchase price payments to Jamison of $ 328 and $ 320 , respectively. F-22 4. INVESTMENTS AND FAIR VALUE MEASUREMENTS Investments include $ 914 and $ 1,781 as of December 31, 2020 and 2019, respectively, representing the Company’s equity method investments in affiliated investment funds which have been established and managed by the Company and its affiliates. The Company’s financial interest in these funds can range up to 2 %. Despite the Company’s insignificant financial interest, the Company exercises significant influence over these funds as the Company typically serves as the general partner, managing member or equivalent for these funds. 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 December 31, 2020 and 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. Fair Value Measurements GAAP establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices in an orderly market generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. • Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives. • Level II: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in Level II include corporate bonds and loans, less liquid and restricted equity securities, certain over-the counter derivatives, and certain fund of hedge funds investments in which the Company has the ability to redeem its investment at net asset value at, or within three months of, the reporting date. • Level III: Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. 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. 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 December 31, 2020 and 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 years ended December 31, 2019 and 2020: Balance at January 1, 2019 $ 755 Additions to estimated contingent consideration 15,417 Payments of contingent consideration ( 425 ) Non-cash changes in fair value of estimated contingent consideration 174 Balance at December 31, 2019 15,921 Additions to estimated contingent consideration — Payments of contingent consideration ( 741 ) Non-cash changes in fair value of estimated contingent consideration 1,222 Balance at December 31, 2020 $ 16,402 F-23 Estimated contingent consideration is included in accounts payable and accrued expenses in the 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 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 December 31, 2020 and 2019 are summarized below: Monte Carlo Simulation Model December 31, 2020 December 31, 2019 Fair Value Hierarchy Fair Value $ 16,402 $ 15,921 Level 3 Forecasted growth rate 16.4 % 18.6 % Discount rate 11.7 % 10.5 % Please refer to Note 3. Acquisitions for more details on contingent consideration related to acquisition earnouts. At December 31, 2020 and December 31, 2019, financial instruments that are not held at fair value are categorized in the table below: December 31, 2020 December 31, 2019 Carrying Amount Fair Value Carrying Amount Fair Value Fair Value Hierarchy Financial Assets: Cash and cash equivalents $ 62,498 $ 62,498 $ 52,832 $ 52,832 Level I (1) Investments $ 914 $ 914 $ 1,781 $ 1,781 N/A (2) Financial liabilities: Borrowings under credit facility $ 12,600 $ 12,600 $ 16,200 $ 16,200 Level II (3) (1) Includes $ 1,398 and $ 1,392 of cash equivalents at December 31, 2020 and 2019, respectively, that fall under Level I in the fair value hierarchy. (2) 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. (3) 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. 5. RECEIVABLES, NET The following is a summary of receivables as of December 31, 2020 and December 31, 2019: 2020 2019 Management and advisory fees receivable $ 3,780 $ 4,981 Unbilled receivables 5,107 4,596 Other receivables 2 2 Receivables 8,889 9,579 Allowance for doubtful receivables ( 548 ) ( 621 ) Receivables, net $ 8,341 $ 8,958 F-24 6. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET The following is a summary of furniture, equipment and leasehold improvements, net as of December 31, 2020 and December 31, 2019: 2020 2019 Leasehold improvements $ 7,936 $ 7,783 Furniture and equipment 7,275 6,541 Artwork 502 502 Total cost 15,713 14,826 Accumulated depreciation and amortization ( 10,190 ) ( 8,811 ) Furniture, equipment and leasehold improvements, net $ 5,523 $ 6,015 Depreciation and amortization expense for the years ended December 31, 2020, 2019 and 2018 was $ 1,117 , $ 978 , and $ 747 , respectively. During 2020, the Company wrote off leased assets with a cost of $ 209 and accumulated depreciation of $ 180 . During 2019, the Company wrote off leased assets of $ 310 that were fully depreciated as of December 31, 2019. 7. GOODWILL The following is a summary of the changes to the carrying amount of goodwill as of December 31, 2020 and December 31, 2019: 2020 2019 Beginning Gross balance $ 81,090 $ 42,583 Accumulated impairment losses ( 17,415 ) ( 17,415 ) Net balance 63,675 25,168 Acquisition of Neosho — 2,183 Acquisition of Cortina — 36,324 Ending Gross balance 81,090 81,090 Accumulated impairment losses ( 17,415 ) ( 17,415 ) Net balance $ 63,675 $ 63,675 F-25 8. INTANGIBLE ASSETS The following is a summary of intangible assets as of December 31, 2020 and December 31, 2019: Customer Relationships Other Intangible Assets Total Cost Balance, January 1, 2020 $ 44,060 $ 2,467 $ 46,527 Disposal — ( 6 ) ( 6 ) Balance, December 31, 2020 44,060 2,461 46,521 Useful lives 10-20 years 3-5 years Accumulated amortization Balance, January 1, 2020 ( 14,833 ) ( 2,408 ) ( 17,241 ) Amortization expense ( 2,674 ) ( 59 ) ( 2,733 ) Disposal — 6 6 Balance, December 31, 2020 ( 17,507 ) ( 2,461 ) ( 19,968 ) Net book value $ 26,553 $ — $ 26,553 Cost Balance, January 1, 2019 $ 22,560 $ 2,467 $ 25,027 Acquisition of Cortina 21,500 — 21,500 Balance, December 31, 2019 44,060 2,467 46,527 Useful lives 10-20 years 3-5 years Accumulated amortization Balance, January 1, 2019 ( 12,887 ) ( 2,247 ) ( 15,134 ) Amortization expense ( 1,946 ) ( 161 ) ( 2,107 ) Balance, December 31, 2019 ( 14,833 ) ( 2,408 ) ( 17,241 ) Net book value $ 29,227 $ 59 $ 29,286 Amortization expense related to intangible assets was $ 2,733 , $ 2,107 and $ 1,685 for the years ended December 31, 2020, 2019 and 2018, respectively. Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows: 2021 $ 2,629 2022 2,575 2023 2,416 2024 2,289 2025 2,193 Thereafter 14,451 Total $ 26,553 9. DEBT Credit Facility On June 24, 2013, the subsidiaries of Silvercrest L.P. entered into a $ 15.0 million credit facility with City National Bank. The subsidiaries of Silvercrest L.P. are the borrowers under such facility and Silvercrest L.P. guarantees the obligations of its subsidiaries under the credit facility. The credit facility is secured by certain assets of Silvercrest L.P. and its subsidiaries. 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 . Borrowings under the term loan on or prior to June 30, 2021 are payable in 20 equal quarterly installments. Borrowings under the term loan after June 30, 2021 will be payable in equal quarterly installments through the maturity date. The credit facility contains restrictions on, among other things, (i) incurrence of additional debt, (ii) creating liens on certain assets, (iii) making certain investments, (iv) consolidating, merging or otherwise disposing of substantially all of our assets, (v) the sale of certain assets, and (vi) entering into transactions with affiliates. In addition, the credit facility contains certain financial covenants including a test on discretionary assets under management, maximum debt to EBITDA and a fixed charge coverage ratio. 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 December 31, 2020 and 2019. F-26 As of December 31, 2020 and 2019, the Company did no t have any outstanding borrowings under the revolving credit loan. As of December 31, 2020 and 2019, the Company had $ 12.6 million and $ 16.2 million, respectively, outstanding under the term loan. There was no accrued but unpaid interest as of December 31, 2020 or 2019. Interest expense, which also includes amortization of deferred financing fees, incurred on the revolving credit and term loans was $ 548 , $ 460 and $ 21 for the years ended December 31, 2020, 2019 and 2018. 10. COMMITMENTS AND CONTINGENCIES Lease Commitments The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the years ended December 31, 2020, 2019 and 2018 amounted to $ 6,382 , $ 6,214 , and $ 5,779 , respectively. The Company received sub-lease income from subtenants during the years ended December 31, 2020, 2019 and 2018 of $ 154 , $ 106 , and $ 216 , respectively. Therefore, for the years ended December 31, 2020, 2019 and 2018, net rent expense amounted to $ 6,228 , $ 6,108 , and $ 5,563 , respectively, and is included in general and administrative expenses in the Consolidated Statement 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 December 31, 2020 and 2019. The letter of credit was collateralized by the Company’s revolving credit facility with City National Bank in 2020 and 2019. Furthermore, the Company maintains an $ 80 letter of credit in favor of its Boston landlord that is collateralized by the Company’s revolving credit facility with City National Bank. 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 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 . Monthly rent expense is $ 5 . The Company paid a refundable security deposit of $ 3 . In September 2016, the Company entered into Lease Amendment Number One (“Amendment Number One”) to expand its space and extend its lease. This expansion was to occur on or about October 1, 2017 , and the lease was extended to November 30, 2024 . This was further amended on January 16, 2018 (“Amendment Number Two”) to update the expansion date to January 12, 2018 and to extend the term of the lease to November 30, 2028 . The amended lease provides for a rent credit of $ 40 . Monthly rent expense under the amended lease is $ 10 . 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, 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 . Monthly rent expense is $ 2 . The Company paid a refundable security deposit of $ 2 . In connection with the Jamison Acquisition, the Company assumed lease agreements for office space in Bedminster and Princeton, NJ. The Bedminster lease, as extended, expires on March 31, 2022 . Monthly rent expense on the Bedminster lease is $ 11 . The Bedminster lease is subject to escalation clauses and provides for a rent-fee period of four months . The Princeton lease, as extended, expired on April 30, 2016 . In December 2015, the Company extended its lease related to its New York City office space. The amended lease commenced on October 1, 2017 and expires on September 30, 2028 . The lease is subject to escalation clauses, and provides for a rent-free period of twelve months and for tenant improvements of up to $ 2,080 . Monthly rent expense under this extension is $ 446 . In January 2016, the Company entered into a lease agreement for office space in Princeton, NJ. The lease commenced April 23, 2016 and expires on August 31, 2022 . This lease replaces the Princeton lease discussed above that expired on April 30, 2016. Monthly rent expense on this lease is $ 6 . The lease is subject to escalation clauses, and provides for a rent-free period of five months . With the Cappiccille Acquisition, the Company assumed a lease agreement for office space in Livingston, NJ. The lease was month-to-month. Monthly rent expense was $ 2 . This lease was terminated in January 2019 . F-27 In January 2018, the Company extended its lease related to its Boston, MA office space. The amended lease commenced on January 1, 2018 and expires on April 30, 2023 . The lease provides for a rent-free period of one month . Monthly rent expense under this extension is $ 33 . With the Neosho Acquisition, the Company assumed a lease agreement for office space in La Jolla, CA. The lease expired on January 31, 2020 . Monthly rent expense was $ 3 . On November 5, 2019, the Company entered into a lease agreement for office space in San Diego, CA. The lease commenced on February 1, 2020 and expires on June 30, 2025 . The lease is subject to escalation clauses and provides for a rent-free period of four months and for tenant improvements of up to $ 27 . Monthly rent expense under this lease is $ 12 . With the Cortina Acquisition, the Company assumed a lease agreement for office space in Milwaukee, WI. The lease was extended on June 17, 2020 and expires on December 31, 2022 . Monthly rent expense is $ 12 . The components of lease expense for the years ended December 31, 2020 and 2019 is as follows: Year ended December 31, Year Ended December 31, 2020 2019 Operating Lease Cost $ 6,123 $ 5,937 Financing Lease Cost: Amortization of ROU assets 118 106 Interest on lease liabilities 10 8 Total 128 114 Future minimum lease payments and rentals under lease agreements for office space which expire through 2028 are as follows: Minimum Lease Commitments Non-cancellable Subleases Minimum Net Rentals 2021 $ 6,500 $ ( 155 ) $ 6,345 2022 6,377 ( 35 ) 6,342 2023 5,928 ( 6 ) 5,922 2024 6,008 — 6,008 2025 5,933 — 5,933 Thereafter 16,134 — 16,134 46,880 ( 196 ) 46,684 Weighted-average remaining lease term – operating leases (months) 90.0 Weighted-average discount rate 4.3 % 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 , (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 $ 259 and $ 196 as of December 31, 2020 and 2019, respectively. F-28 The assets relating to finance leases that are included in equipment as of December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019 Finance lease assets included in furniture and equipment $ 417 $ 679 Less: Accumulated depreciation and amortization ( 163 ) ( 481 ) $ 254 $ 198 Depreciation expense relating to finance lease assets was $ 118 , $ 106 and $ 146 for the years ended December 31, 2020, 2019 and 2018, respectively. During 2020, the Company wrote off leased assets with a cost of $ 209 and accumulated depreciation of $ 180 . During 2019, the Company wrote off leased assets of $ 310 that were fully depreciated as of December 31, 2019. Future minimum lease payments under finance leases are as follows: Future Minimum Lease Commitments 2021 119 2022 77 2023 42 2024 16 2025 5 Thereafter — Total $ 259 Weighted-average remaining lease term – finance leases (months) 31.9 Weighted-average discount rate 4.0 % 11. EQUITY 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 $ 6,297 , $ 7,698 and $ 6,773 for the years ended December 31, 2020, 2019 and 2018, respectively. Distributions are included in non-controlling interests in the Consolidated Statements of Financial Condition. Pursuant to SLP’s Second Amended and Restated Limited Partnership Agreement, as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations was generally allocated to the partners based on their pro rata ownership. 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 years ended December 31, 2020, 2019 and 2018 amounted to $ 27,328 , $ 27,199 and $ 24,935 , respectively. The distributions are included in non-controlling interests in the Consolidated Statements of Financial Condition and Consolidated Statement of Changes in Equity for the years ended December 31, 2020, 2019 and 2018. The Company treats SLP’s partner incentive allocations as compensation expense and accrues such amounts when earned. During the years ended December 31, 2020, 2019 and 2018, SLP accrued partner incentive allocations of $ 27,467 , $ 27,229 and $ 27,197 , respectively. F-29 Silvercrest—Equity Silvercrest has the following authorized and outstanding equity: Shares at December 31, 2020 Authorized Outstanding Voting Rights Economic Rights Common shares Class A, par value $ 0.01 per share 50,000,000 9,650,692 1 vote per share (1), (2) All (1), (2) Class B, par value $ 0.01 per share 25,000,000 4,721,646 1 vote per share (3), (4) None (3), (4) Preferred shares Preferred stock, par value $ 0.01 per share 10,000,000 — See footnote (5) below See footnote (5) below (1) Each share of Class A common stock is entitled to one vote per share. Class A common stockholders have 100 % of the rights of all classes of Silvercrest’s capital stock to receive dividends. (2) During 2020, Silvercrest granted 8,242 restricted stock units which will vest and settle in the form of Class A shares of Silvercrest, of which 8,242 remain unvested as of December 31, 2020. (3) Each share of Class B common stock is entitled to one vote per share. (4) Each Class B unit of SLP held by a principal is exchangeable for one share of the Company’s Class A common stock. The principals collectively hold 4,721,646 Class B units, which represents the right to receive their proportionate share of the distributions made by SLP and 74,906 restricted stock units which will vest and settle in the form of Class B units of SLP. The 74,906 restricted stock units which have been issued to our principals entitle the holders thereof to participate in distributions from SLP as if the underlying Class B units are outstanding and thus are taken into account to determine the economic interest of each holder of units in SLP. However, because the Class B units underlying the deferred equity units have not been issued and are not deemed outstanding, the holders of deferred equity units have no voting rights with respect to those Class B units. Silvercrest will not issue shares of Class B common stock in respect of deferred equity units of SLP until such time that the underlying Class B units are issued. (5) Silvercrest’s board of directors has the authority to issue preferred stock in one or more classes or series and to fix the rights, preferences, privileges and related restrictions, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, or the designation of the class or series, without the approval of its stockholders. Silvercrest is dependent on cash generated by SLP to fund any dividends. Generally, SLP will distribute its profits to all of its partners, including Silvercrest, based on the proportionate ownership each holds in SLP. Silvercrest will fund dividends to its stockholders from its proportionate share of those distributions after provision for income taxes and other obligations. During the year ended December 31, 2020, Silvercrest issued the following shares: Class A Common Stock Transaction # of Date Shares Class A common stock outstanding - January 1, 2020 9,329,879 Issuance of Class A common stock upon conversion of Class B units to Class A common stock February 2020 155,224 Issuance of Class A common stock upon conversion of Class B units to Class A common stock March 2020 20,662 Issuance of Class A common stock upon conversion of Class B units to Class A common stock May 2020 7,355 Issuance of Class A common stock upon vesting of restricted stock units May 2020 1,896 Issuance of Class A common stock upon conversion of Class B units to Class A common stock June 2020 5,400 Issuance of Class A common stock upon conversion of Class B units to Class A common stock August 2020 24,191 Issuance of Class A common stock upon conversion of Class B units to Class A common stock November 2020 36,361 Issuance of Class A common stock upon conversion of Class B units to Class A common stock December 2020 69,724 Class A common shares outstanding - December 31, 2020 9,650,692 F-30 Class B Common Stock Transaction # of Date Shares Class B common stock outstanding - January 1, 2020 5,031,017 Cancellation of Class B common stock upon conversion of Class B units to Class A common stock February 2020 ( 155,224 ) Cancellation of Class B common stock upon conversion of Class B units to Class A common stock March 2020 ( 20,662 ) Cancellation of Class B common stock upon conversion of Class B units to Class A common stock May 2020 ( 7,355 ) Issuance of Class B common stock upon vesting of restricted stock units May 2020 9,546 Cancellation of Class B common stock upon conversion of Class B units to Class A common stock June 2020 ( 5,400 ) Cancellation of Class B common stock upon conversion of Class B units to Class A common stock August 2020 ( 24,191 ) Cancellation of Class B common stock upon conversion of Class B units to Class A common stock November 2020 ( 36,361 ) Cancellation of Class B common stock upon conversion of Class B units to Class A common stock December 2020 ( 69,724 ) Class B common shares outstanding - December 31, 2020 4,721,646 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. 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. In November 2020, the Company redeemed from certain existing partners 36,361 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 December 2020, the Company redeemed from certain existing partners 69,724 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. F-31 The total number of shares of Class B common stock outstanding and held by employee-principals equals the number of Class B units those individuals hold in SLP. Shares of Silvercrest’s Class B common stock are issuable only in connection with the issuance of Class B units of SLP. When a vested or unvested Class B unit is issued by SLP, Silvercrest will issue to the holder one share of its Class B common stock in exchange for the payment of its par value, subject to the holder’s agreement to be bound by the terms of a stockholders’ agreement amongst the Class B stockholders of the Company. Each share of Silvercrest’s Class B common stock will be redeemed for its par value and cancelled by Silvercrest if the holder of the corresponding Class B unit exchanges or forfeits its Class B unit pursuant to the terms of the Second Amended and Restated Limited Partnership Agreement of SLP, the terms of the 2012 Equity Incentive Plan of Silvercrest, or otherwise. 12. NOTES RECEIVABLE FROM PARTNERS Partner contributions to SLP are made in cash, in the form of five or six year interest-bearing promissory notes and/or in the form of nine year interest-bearing limited recourse promissory notes . Certain notes receivable are payable in annual installments and are collateralized by SLP’s units that are purchased with the note. Notes receivable from partners are reflected as a reduction of non-controlling interests in the Consolidated Statements of Financial Condition. Notes receivable from partners are as follows: December 31, 2020 December 31, 2019 Beginning balance $ 645 $ 924 Repayment of notes ( 300 ) ( 291 ) Interest accrued and capitalized on notes receivable 8 12 Ending balance $ 353 $ 645 Full recourse notes receivable from partners as of December 31, 2020 and 2019 are $ 353 and $ 645 , respectively. There were no limited recourse notes receivable from partners as of December 31, 2020 and 2019. There is no allowance for credit losses on notes receivable from partners as of December 31, 2020 and 2019. 13. RELATED PARTY TRANSACTIONS During 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. (formed in 2011 and formerly Silvercrest Hedged Equity Fund), • Silvercrest Hedged Equity Fund (International), Ltd. (which invests through Silvercrest Hedged Equity Fund, L.P.), • the domesticated Silvercrest Emerging Markets Fund, L.P. (formed in 2011 and formerly Silvercrest Emerging Markets Fund) (currently in liquidation), • Silvercrest Market Neutral Fund (currently in liquidation), • Silvercrest Market Neutral Fund (International) (currently in liquidation), • Silvercrest Municipal Advantage Master Fund LLC, • Silvercrest Municipal Advantage Portfolio A LLC, • Silvercrest Municipal Advantage Portfolio P LLC, • Silvercrest Municipal Advantage Portfolio S LLC (formed in 2015), • the Silvercrest Jefferson Fund, L.P. (formed in 2014), and • the Silvercrest Jefferson Fund, Ltd. (the Company took over as investment manager in 2014, formerly known as the Jefferson Global Growth Fund, Ltd.), which invests in Silvercrest Jefferson Master Fund, L.P. (formed in 2014). The Company also provides services to the following, which operate and invest separately as stand-alone funds: • the Silvercrest Global Opportunities Fund, L.P. (currently in liquidation), • Silvercrest Global Opportunities Fund (International), Ltd. (currently in liquidation), F-32 • Silvercrest Municipal Special Situations Fund LLC (merged into Silvercrest Municipal Advantage Portfolio S LLC in 2015), • Silvercrest Municipal Special Situations Fund II LLC (merged into Silvercrest Municipal Advantage Portfolio S LLC in 2015), • Silvercrest International Fund, L.P. (previously known as Silvercrest Global Fund, L.P.), • Silvercrest Special Situations Fund, L.P., and • Silvercrest Commodity Strategies Fund, L.P. (liquidated as of December 31, 2017). 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 years ended December 31, 2020, 2019 and 2018 the Company earned management fee income from the funds listed above, which is included in “Management and advisory fees” in the Consolidated Statement of Operations, of $ 4,633 , $ 5,104 , and $ 6,458 , respectively, and performance fees and allocations of $ 898 , $ 1,774 , and $ 1,477 , respectively, of which $ 898 , $ 1,774 and $ 1,477 , respectively, is included in equity income from investments in the Consolidated Statements of Operations. As of December 31, 2020 and 2019, the Company was owed $ 1,018 and $ 1,697 , respectively, from its various funds, which is included in the Due from Silvercrest Funds on the Consolidated Statements of Financial Condition. For the years ended December 31, 2020, 2019 and 2018, the Company earned advisory fees of $ 1,348 , $ 1,470 and $ 1,191 , respectively, from assets managed on behalf of certain of its partners. As of December 31, 2020 and 2019, the Company is owed approximately $ 10 and $ 137 , respectively, from certain of its partners, which is included in receivables, net on the Consolidated Statements of Financial Condition. 14. INCOME TAXES Year Ended December 31, 2020 2019 2018 Current Provision: Federal $ 1,309 $ 1,225 $ 1,835 State and local 1,856 2,378 3,053 Total Current Provision 3,165 3,603 4,888 Deferred Provision: Federal 1,513 1,014 465 State and local 716 561 105 Total Deferred Provision 2,229 1,575 570 Total Provision for Income Taxes $ 5,394 $ 5,178 $ 5,458 Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their bases for income tax purposes. As of December 31, 2020 and 2019, the Company had a net deferred tax asset of $ 11,305 and $ 13,103 , respectively. F-33 A summary of deferred tax assets and liabilities as follows: As of December 31, 2020 2019 Deferred tax assets Intangible assets $ 13,032 $ 14,064 Deferred leases 809 1,206 Total deferred tax assets $ 13,841 $ 15,270 Deferred tax liabilities Intangible assets $ 201 $ 245 Right of use assets 674 1,014 Investment on underlying SLP partnership 1,634 874 Other 27 34 Total deferred tax liabilities $ 2,536 $ 2,167 Net deferred tax assets (liabilities) $ 11,305 $ 13,103 The following table reconciles the provision for income taxes to the U.S. Federal statutory tax rate: Year Ended December 31, 2020 2019 2018 Statutory U.S. federal income tax rate 21.00 % 21.00 % 21.00 % Income passed through to Partners ( 7.10 )% ( 7.78 )% ( 8.29 )% State and local income taxes 9.32 % 12.01 % 11.73 % Permanent items ( 0.13 )% ( 0.44 )% ( 0.16 )% Discrete expenses due to Corporate Tax Reform — % — % ( 0.40 )% Other 0.49 % 0.36 % 0.03 % Effective income tax rate 23.58 % 25.15 % 23.91 % As of December 31, 2020, the Company had net tax receivables of $ 1,653 which consisted of net federal and state and local tax receivables of $ 949 and $ 704 , respectively. As of December 31, 2019, the Company had net tax receivables of $ 1,265 which consisted of net federal and state and local tax receivables of $ 939 and $ 326 , respectively. Of the total net deferred taxes at December 31, 2020 and 2019, $ 30 and $ 31 , respectively, of the net deferred tax liabilities relate to non-controlling interests. These amounts are included in deferred tax and other liabilities on the Consolidated Statement of Financial Position, respectively. In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of December 31, 2020, the Company’s U.S. federal income tax returns for the years 2017 through 2020 are open under the normal three-year statute of limitations and therefore subject to examination. The guidance for accounting for uncertainty in income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. 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 December 31, 2020 and 2019. 15. REDEEMABLE PARTNERSHIP UNITS If a principal of SLP is terminated for cause, SLP would have the right to redeem all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the aggregate capital account balance in SLP of the principal and his or her permitted transferees and (ii) the purchase price paid by the terminated principal to first acquire the Class B units. F-34 16. EQUITY-BASED COMPENSATION Restricted Stock Units and Stock Options On November 2, 2012, the Company’s board of directors adopted the 2012 Equity Incentive Plan. A total of 1,687,500 shares were originally reserved and available for issuance under the 2012 Equity Incentive Plan. As of December 31, 2020 and 2019, 345,428 and 489,549 shares, respectively, were available for grant. The equity interests may be issued in the form of shares of the Company’s Class A common stock and/or Class B units of SLP. (All references to units or interests of SLP refer to Class B units of SLP and accompanying shares of Class B common stock of Silvercrest.) The purposes of the 2012 Equity Incentive Plan are to (i) align the long-term financial interests of our employees, directors, consultants and advisers with those of our stockholders; (ii) attract and retain those individuals by providing compensation opportunities that are consistent with our compensation philosophy; and (iii) provide incentives to those individuals who contribute significantly to our long-term performance and growth. To accomplish these purposes, the 2012 Equity Incentive Plan provides for the grant of units of SLP. The 2012 Equity Incentive Plan also provides for the grant of stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock units, performance-based stock awards and other stock-based awards (collectively, stock awards) based on our Class A common stock. Awards may be granted to employees, including officers, members, limited partners or partners who are engaged in the business of one or more of our subsidiaries, as well as non-employee directors and consultants. The Compensation Committee may impose vesting conditions and awards may be forfeited if the vesting conditions are not met. 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 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. These RSUs will vest and settle in the form of Class B units 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. In May 2016, the Company granted 3,791 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 13.19 per share to existing Class B unit holders. These RSUs will vest and settle in the form of Class B units 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. In May 2016, the Company granted 3,000 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 13.19 per share to certain members of the Board of Directors. These RSUs will vest and settle in the form of Class A shares of Silvercrest. One hundred percent of the RSUs granted vest and settle on the first anniversary of the grant date. In May 2016, the Company granted 7,582 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 13.19 per share to an employee. These RSUs will vest and settle in the form of Class A shares of Silvercrest. Twenty-five percent of the RSUs granted vest and settle on each of the first, second, third and fourth anniversaries of the grant date . In October 2018, the Company granted 105,398 non-qualified stock options (“NQOs”) under the 2012 Equity Incentive Plan to an existing Class B unit holder. The fair value of the NQOs have been derived using the Black-Scholes method with the following assumptions: Strike price of $ 13.97 , Risk Free rate of 2.94 % (5-year treasury rate), expiration of 5 years and volatility of 32.7 %. Additionally, the calculation of the compensation expense assumes a forfeiture rate of 1.0 %, based on historical experience. These NQOs will vest and settle in the form of Class B units of SLP. One third of the NQOs will vest and settle 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. The fair value of the NQOs has been derived using the Black-Scholes method with the following assumptions: Strike price of $ 14.54 , Risk Free rate of 2.32 % (5-year treasury rate), expiration of 5 years and volatility of 34.2 %. 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 2019, the Company granted 34,388 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 14.54 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 . F-35 In March 2020, the Company granted 8,242 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 11.83 per share to a Board member. These RSUs will vest and settle in the form of Class A shares of Silvercrest. All of the RSUs granted vest on the third anniversary of the grant date . 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 . A summary of the NQO grants by the Company as of December 31, 2020 and 2019 is presented below: Non-Qualified Options Granted Units Fair Value per unit Total granted at January 1, 2019 105,398 $ 13.97 Granted in May 2019 60,742 14.54 Total granted at December 31, 2019 166,140 $ 13.97 – 14.54 Granted in May 2020 86,764 10.18 Total granted at December 31, 2020 252,904 $ 10.18 – 14.54 A summary of the RSU grants by the Company as of December 31, 2020 and 2019 is presented below: Restricted Stock Units Granted Units Fair Value per unit Total granted at January 1, 2019 247,316 $ 13.19 – 13.23 Granted in May 2019 34,388 14.54 Vested in May 2019 ( 2,843 ) ( 13.19 ) Vested in August 2019 ( 241,627 ) ( 13.23 ) Total granted at December 31, 2019 37,234 $ 13.19 – 14.54 Granted in March 2020 8,242 11.83 Granted in May 2020 49,116 10.18 Vested in May 2020 ( 11,442 ) (13.19 –14.54 ) Total granted at December 31, 2020 83,150 $ 10.18 – 14.54 For the years ended December 31, 2020 and 2019, the Company recorded compensation expense related to such RSUs and NQOs of $ 659 and $ 2,272 , respectively, as part of total compensation expense in the Consolidated Statements of Operations for the years then ended. As of December 31, 2020 and 2019, there was $ 1,342 and $ 945 , respectively, of unrecognized compensation expense related to unvested awards. As of December 31, 2020 and 2019, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 1.44 and 1.62 years , respectively. 17. DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS SAMG LLC has a defined contribution 401(k) savings plan (the “Plan”) for all eligible employees who meet the minimum age and service requirements as defined in the Plan. The Plan is designed to be a qualified plan under sections 401(a) and 401(k) of the Internal Revenue Code. 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 years ended December 31, 2020, 2019 and 2018, Silvercrest made matching contributions of $ 160 , $ 87 and $ 86 , respectively, for the benefit of employees. F-36 18. SOFT DOLLAR ARRANGEMENTS The Company obtains research and other services through “soft dollar” arrangements. The Company receives credits from broker-dealers whereby technology-based research, market quotation and/or market survey services are effectively paid for in whole or in part by “soft dollar” brokerage arrangements. 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. 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 years ended December 31, 2020, 2019 and 2018, the Company utilized “soft dollar” credits of $ 824 , $ 997 and $ 772 , respectively. 19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the quarterly results of operations of the Company for the years ended December 31, 2020 and 2019. 2020 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 28,365 $ 24,021 $ 27,182 $ 28,415 Income before other income (expense), net $ 12,614 $ 1,357 $ 4,949 $ 3,361 Net income $ 9,690 $ 782 $ 3,480 $ 3,526 Net income attributable to Silvercrest $ 5,532 $ 490 $ 2,059 $ 1,879 Net income per share/unit - basic $ 0.59 $ 0.05 $ 0.21 $ 0.20 Net income per share/unit - diluted $ 0.59 $ 0.05 $ 0.21 $ 0.20 Weighted average shares/units outstanding - basic 9,391,367 9,511,767 9,532,362 9,576,169 Weighted average shares/units outstanding - diluted 9,396,072 9,520,655 9,540,604 9,584,411 2019 First Quarter Second Quarter Third Quarter Fourth Quarter Revenue $ 22,572 $ 23,897 $ 27,845 $ 27,838 Income before other income (expense), net $ 3,999 $ 4,430 $ 6,301 $ 4,143 Net income $ 3,045 $ 3,351 $ 4,823 $ 4,193 Net income attributable to Silvercrest $ 1,709 $ 1,864 $ 2,653 $ 2,420 Net income per share/unit - basic $ 0.20 $ 0.22 $ 0.30 $ 0.26 Net income per share/unit – diluted $ 0.20 $ 0.22 $ 0.30 $ 0.26 Weighted average shares/units outstanding - basic 8,519,058 8,584,614 8,870,674 9,205,770 Weighted average shares/units outstanding - diluted 8,522,850 8,587,156 8,872,571 9,207,667 ***** F-37