TPG Inc. 10-K

Item 8. Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 162 Consolidated Statements of Financial Condition as of December 31, 202 3 and 202 2 166 Consolidated Statements of Operations for the Years Ended December 31, 202 3 , 202 2 and 202 1 167 Consolidated Statements of Changes in Equity for the Years Ended December 31, 202 3 , 202 2 and 202 1 168 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 171 Notes to Consolidated Financial Statements 172 161 Table of Contents Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of TPG Inc. Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial condition of TPG Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, 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 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. As described in Management's Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Angelo Gordon & Co, L.P., AG Funds L.P., and AG Partners Investments, L.P. (collectively, “Angelo Gordon”), which was acquired on November 1, 2023, and whose financial statements constitute 19.2% of the Company’s total assets and 9.8% of total revenues of the consolidated financial statement amounts as of and for the year ended December 31, 2023. Accordingly, our audit did not include the internal control over financial reporting at Angelo Gordon. Basis for Opinion The Company’s management is responsible for these financial statements, 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 Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 162 Table of Contents 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. Critical Audit Matter The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Fair Value — Underlying Investments Without Readily Determinable Fair Values Used in the Calculation of Performance Allocations — Refer to Notes 2 and 4 of the financial statements Critical Audit Matter Description The Company, as a general partner, is entitled to an allocation of income from certain TPG Funds (“TPG Funds”), assuming certain investment returns are achieved, referred to as “Performance Allocations”. Performance Allocations are accrued based on cumulative fund performance as of each reporting date, and after specified investment returns to the TPG Funds’ limited partners are achieved. The fair value of the underlying investments held by the TPG Funds is a significant input into this calculation. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as Performance Allocations to reflect either (a) positive performance resulting in an increase in the Performance Allocations or (b) negative performance that would cause the amount due to the general partner to be less than the amount previously recognized, resulting in a negative adjustment to Performance Allocations. In each case, Performance Allocations are calculated on a cumulative basis and cumulative results are compared to amounts previously recorded with a current period adjustment, positive or negative, recorded. Accrued but unpaid Performance Allocations as of the reporting date are reflected in Investments in the consolidated statements of financial condition. We identified the valuation of certain investments without readily determinable fair values used in the calculation of Performance Allocations as a critical audit matter because of the valuation techniques, assumptions, and subjectivity of the unobservable inputs used in the valuation, and changes in the fair value of these investments directly impacts the amount of Performance Allocations the Company accrues for the period. Auditing these inputs required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists who possess significant investment valuation expertise. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to valuation techniques, assumptions, and unobservable pricing inputs used by management to estimate the fair values of certain investments with unobservable inputs (“Level III”) included the following, among others: 163 Table of Contents • We involved more senior, more experienced audit team members to perform audit procedures. • We tested the effectiveness of internal controls over the determination of the fair value of certain Level III Investments. • We utilized our fair value specialists to assist in the evaluation of management’s valuation methodologies and valuation assumptions including the unobservable pricing inputs used to estimate fair value. Our fair value specialist procedures included testing the underlying source information of the assumptions, as well as developing a range of independent estimates and comparing those to the inputs used by management. • We assessed the consistency by which management applied its valuation process. • We evaluated management’s ability to accurately forecast future revenues and operating margins by comparing actual results to management’s historical forecasts. • We evaluated management’s ability to accurately estimate the fair value of Level III investments by comparing the previous estimates of fair value to subsequent market transactions. Intangible Assets - Valuation of Investment Management Agreement and Acquired Carried Interest Intangible Assets for the Angelo Gordon Acquisition – Refer to Note 3 of the financial statements Critical Audit Matter Description On November 1, 2023, the Company completed the acquisition of Angelo Gordon and its subsidiaries. The acquisition was accounted for as a business combination under ASC Topic 805, Business Combinations, with the assets acquired and liabilities assumed recorded at fair value, including identified intangible assets. The intangible assets included investment management agreements and acquired carried interest. Management, with the assistance of a third-party valuation specialist, estimated the fair value of the intangible assets by discounting the forecasted future cash flows. The determination of fair value of the identified intangible assets involves significant estimates and assumptions related to the forecasted future cash flows and the selection of the discount rates. We identified the valuation of the investment management agreement and acquired carried interest intangible assets as a critical audit matter because the fair value determination requires management to make significant valuation estimates and assumptions in determining the forecasted future cash flows and the selection of the respective discount rates. Performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the involvement of our fair value specialists who possess significant valuation expertise. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the forecasts of future cash flows and the selection of the discount rate for the investment management agreement and acquired carried interest intangible assets included the following, among others: • We involved more senior, more experienced audit team members to perform audit procedures. • We tested the effectiveness of controls over the valuation of the investment management agreement and acquired carried interest intangible assets, including management’s controls over forecasts of future cash flows and selection of the discount rate. • We assessed the knowledge, skill, ability, and objectivity of management’s valuation specialist and evaluated the work performed. • With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by: • Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation. 164 Table of Contents • Developing a range of independent estimates and comparing those to the discount rate selected by management. • We assessed the reasonableness of management’s forecasts of future cash flows by comparing the projections to governing documents, market data, industry data, and historical results, where applicable. • We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit, including the consideration of any contradictory evidence. /s/ DELOITTE & TOUCHE LLP Fort Worth, Texas February 23, 2024 We have served as the Company’s auditor since 2015. 165 Table of Contents TPG Inc. Consolidated Statements of Financial Condition (dollars in thousands, except share data) December 31, 2023 December 31, 2022 Assets Cash and cash equivalents $ 665,188 $ 1,107,484 Restricted cash (1) 13,183 13,166 Due from affiliates 418,977 202,639 Investments (includes assets pledged of $ 648,529 and $ 475,110 as of December 31, 2023 and December 31, 2022, respectively (1) ) 6,724,112 5,329,868 Intangible assets 649,508 136,187 Goodwill 436,079 230,194 Other assets 462,625 263,011 Assets of consolidated Public SPACs (1) : Cash and cash equivalents — 5,097 Assets held in Trust Accounts — 653,635 Other assets — 457 Total assets $ 9,369,672 $ 7,941,738 Liabilities, Redeemable Equity and Equity Liabilities Accounts payable and accrued expenses $ 171,796 $ 98,171 Due to affiliates 143,175 139,863 Debt obligations (1) 945,052 444,566 Accrued performance allocation compensation 4,096,052 3,269,889 Other liabilities 652,463 226,090 Liabilities of consolidated Public SPACs (1) : Derivative liabilities — 667 Deferred underwriting — 22,750 Other liabilities — 236 Total liabilities 6,008,538 4,202,232 Commitments and contingencies (Note 17) Redeemable equity attributable to consolidated Public SPACs (1) — 653,635 Equity Class A common stock $ 0.001 par value, 2,340,000,000 shares authorized ( 80,596,501 and 79,240,058 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 80 79 Class B common stock $ 0.001 par value, 750,000,000 shares authorized ( 281,657,626 and 229,652,641 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively) 282 230 Preferred stock, $ 0.001 par value, 25,000,000 shares authorized ( 0 issued and outstanding as of December 31, 2023 and December 31, 2022) — — Additional paid-in-capital 613,476 506,639 Retained (deficit) earnings ( 34,681 ) 2,724 Other non-controlling interests 2,781,977 2,576,199 Total equity 3,361,134 3,085,871 Total liabilities, redeemable equity and equity $ 9,369,672 $ 7,941,738 _________________ (1) The Company’s consolidated total assets and liabilities as of December 31, 2023 and December 31, 2022 include assets and liabilities of variable interest entities (“VIEs”). The assets can be used only to satisfy obligations of the VIEs, and the creditors of the VIEs have recourse only to these assets, and not to TPG Inc. These amounts include the assets and liabilities of consolidated Public SPACs, restricted cash, assets pledged of securitization vehicles, secured borrowings of securitization vehicles, and redeemable equity of consolidated Public SPACs. See Notes 2, 11, 12 and 15 to the Consolidated Financial Statements . See accompanying notes to Consolidated Financial Statements. 166 Table of Contents TPG Inc. Consolidated Statements of Operations (dollars in thousands, except share and per share data) Year Ended December 31, 2023 2022 2021 Revenues Fees and other $ 1,534,626 $ 1,246,635 $ 977,904 Capital allocation-based income 855,285 756,252 3,998,483 Total revenues 2,389,911 2,002,887 4,976,387 Expenses Compensation and benefits: Cash-based compensation and benefits 547,377 473,696 579,698 Equity-based compensation 654,922 627,714 — Performance allocation compensation 591,676 416,556 — Total compensation and benefits 1,793,975 1,517,966 579,698 General, administrative and other 482,574 368,915 278,590 Depreciation and amortization 47,673 32,990 21,223 Interest expense 38,528 21,612 16,291 Expenses of consolidated TPG Funds and Public SPACs: Interest expense — — 740 Other 1,053 3,316 20,024 Total expenses 2,363,803 1,944,799 916,566 Investment income (loss) Income (loss) from investments: Net gains (losses) from investment activities 6,564 ( 110,131 ) 353,219 Interest, dividends and other 42,622 9,168 6,460 Investment income of consolidated TPG Funds and Public SPACs: Net gains from investment activities — — 23,392 Unrealized gains on derivative liabilities of Public SPACs 667 12,382 211,822 Interest, dividends and other 7,692 6,741 10,321 Total investment income (loss) 57,545 ( 81,840 ) 605,214 Income (loss) before income taxes 83,653 ( 23,752 ) 4,665,035 Income tax expense 60,268 32,483 9,038 Net income (loss) 23,385 ( 56,235 ) 4,655,997 Net (loss) income attributable to redeemable equity in Public SPACs prior to Reorganization and IPO — ( 517 ) 155,131 Net income attributable to non-controlling interests in consolidated TPG Funds prior to Reorganization and IPO — — 19,287 Net income attributable to other non-controlling interests prior to Reorganization and IPO — 966 2,455,825 Net income attributable to TPG Group Holdings prior to Reorganization and IPO — 5,256 2,025,754 Net income attributable to redeemable equity in Public SPACs 12,044 15,165 — Net loss attributable to non-controlling interests in TPG Operating Group ( 92,411 ) ( 180,824 ) — Net income attributable to other non-controlling interests 23,662 11,293 — Net income attributable to TPG Inc. subsequent to Reorganization and IPO $ 80,090 $ 92,426 $ — Net income (loss) per share data: Net income (loss) available to Class A common stock per share Basic $ 0.89 $ 1.10 $ — Diluted $ ( 0.04 ) $ ( 0.19 ) $ — Weighted-average shares of Class A common stock outstanding Basic 80,334,871 79,255,411 — Diluted 317,944,496 308,908,052 — See accompanying notes to Consolidated Financial Statements. 167 Table of Contents TPG Inc. Consolidated Statements of Changes in Equity (dollars in thousands, except share data) Shares of TPG Inc. TPG Inc. Partners' Capital Class A Common Stock Class B Common Stock Class A Common Stock, at par value Class B Common Stock, at par value Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Total TPG Inc. Equity Other Non-Controlling Interests Total Partners' Capital/ Equity Balance at January 1, 2021 $ 2,460,868 — — $ — $ — $ — $ — $ — $ — $ 2,259,834 $ 4,720,702 Net income 2,025,754 — — — — — — — — 2,475,112 4,500,866 Capital contributions — — — — — — — — — 29,776 29,776 Capital distributions ( 1,230,510 ) — — — — — — — — ( 1,219,184 ) ( 2,449,694 ) Deconsolidation of previously consolidated entities 36,386 — — — — — — — — 61,151 97,537 Change in redemption value of redeemable non-controlling interest 35,157 — — — — — — — — 53,292 88,449 Acquisition of NewQuest — — — — — — — — — 301,189 301,189 Reorganization ( 1,721,062 ) — — — — — — — — 693,651 ( 1,027,411 ) Balance at December 31, 2021 $ 1,606,593 — — $ — $ — $ — $ — $ — $ — $ 4,654,821 $ 6,261,414 See accompanying notes to Consolidated Financial Statements. 168 Table of Contents TPG Inc. Consolidated Statements of Changes in Equity (dollars in thousands, except share data) Shares of TPG Inc. TPG Inc. Partners' Capital Class A Common Stock Class B Common Stock Class A Common Stock, at par value Class B Common Stock, at par value Additional Paid-In Capital Retained Earnings (Deficit) Accumulated Other Comprehensive Income (Loss) Total TPG Inc. Equity Other Non-Controlling Interests Total Partners' Capital/ Equity Balance at January 1, 2022 $ 1,606,593 — — $ — $ — $ — $ — $ — $ — $ 4,654,821 $ 6,261,414 Net income prior to Reorganization and IPO 5,256 — — — — — — — — 966 6,222 Change in redemption value of redeemable non-controlling interest prior to Reorganization and IPO ( 110 ) — — — — — — — — ( 407 ) ( 517 ) Effect of Reorganization and purchase of units in the Partnership ( 1,611,739 ) 48,984,961 229,652,641 49 230 271,780 ( 27 ) — 272,032 1,341,603 1,896 Issuance of common stock in IPO, net of underwriting discount and issuance costs — 28,310,194 — 28 — 784,611 — — 784,639 ( 25,426 ) 759,213 Purchase of Partnership Interests with IPO proceeds — — — — — — — — — ( 379,597 ) ( 379,597 ) Issuance of common stock from Underwriters' exercise of over-allotment option, net of underwriting discount and issuance costs — 1,775,410 — 2 — 49,754 — — 49,756 — 49,756 Equity reallocation between controlling and non-controlling interests prior to Reorganization and IPO — — — — — ( 654,129 ) — — ( 654,129 ) 654,129 — Acquisition of NewQuest — — — — — 33,584 — — 33,584 ( 33,584 ) — Deferred tax effect resulting from purchase of Class A Units, net of amounts payable under Tax Receivable Agreement — — — — — ( 13,232 ) — — ( 13,232 ) — ( 13,232 ) Liability-based performance allocation compensation — — — — — — — — — ( 3,525,767 ) ( 3,525,767 ) Net income (loss) subsequent to Reorganization and IPO — — — — — — 92,426 — 92,426 ( 169,531 ) ( 77,105 ) Shares issued for equity-based awards — 169,493 — 0 — 1,088 — — 1,088 ( 901 ) 187 Equity-based compensation subsequent to Reorganization and IPO — — — — — 31,841 — — 31,841 602,647 634,488 Capital contributions subsequent to Reorganization and IPO — — — — — — — — — 13,039 13,039 Dividends/Distributions — — — — — — ( 89,675 ) — ( 89,675 ) ( 576,955 ) ( 666,630 ) Change in redemption value of redeemable non-controlling interest subsequent to Reorganization and IPO — — — — — 1,342 — — 1,342 21,162 22,504 Balance at December 31, 2022 $ — 79,240,058 229,652,641 $ 79 $ 230 $ 506,639 $ 2,724 $ — $ 509,672 $ 2,576,199 $ 3,085,871 See accompanying notes to Consolidated Financial Statements. 169 Table of Contents TPG Inc. Consolidated Statements of Changes in Equity (dollars in thousands, except share data) Shares of TPG Inc. TPG Inc. Class A Common Stock Class B Common Stock Class A Common Stock, at par value Class B Common Stock, at par value Additional Paid-In Capital Retained Earnings (Deficit) Total TPG Inc. Equity Other Non-Controlling Interests Total Partners' Capital/ Equity Balance at January 1, 2023 79,240,058 229,652,641 $ 79 $ 230 $ 506,639 $ 2,724 $ 509,672 $ 2,576,199 $ 3,085,871 Net income (loss) — — — — — $ 80,090 80,090 ( 68,749 ) 11,341 Equity-based compensation — — — — 49,579 — 49,579 590,443 640,022 Capital contributions — — — — — — — 21,769 21,769 Dividends/distributions — — — — ( 117,495 ) ( 117,495 ) ( 539,309 ) ( 656,804 ) Change in redemption value of redeemable non-controlling interest — — — — 1,457 — 1,457 25,971 27,428 Shares issued for net settlement of equity-based awards 356,443 — 0 — 0 — — — — Withholding taxes paid on net settlement of equity-based awards — — — — ( 1,752 ) — ( 1,752 ) ( 5,126 ) ( 6,878 ) Deferred tax effects resulting from changes in equity — — — — ( 767 ) — ( 767 ) — ( 767 ) Exchange of Common Units to TPG Inc. Class A Common stock 1,000,000 ( 1,000,000 ) 1 ( 1 ) 1,085 — 1,085 — 1,085 Acquisition (see Note 3) — 53,004,985 — 53 ( 53 ) — — 238,067 238,067 Equity reallocation between controlling and non-controlling interest — — — — 57,288 — 57,288 ( 57,288 ) — Balance at December 31, 2023 80,596,501 281,657,626 $ 80 $ 282 $ 613,476 $ ( 34,681 ) $ 579,157 $ 2,781,977 $ 3,361,134 See accompanying notes to Consolidated Financial Statements. 170 Table of Contents TPG Inc. Consolidated Statements of Cash Flows (dollars in thousands) Year Ended December 31, 2023 2022 2021 Operating activities: Net income (loss) $ 23,385 $ ( 56,235 ) $ 4,655,997 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Equity-based compensation 654,922 627,714 — Performance allocation compensation 591,676 416,556 — Net (gains) losses from investment activities ( 6,564 ) 110,131 ( 353,219 ) Capital allocation-based income ( 855,285 ) ( 756,252 ) ( 3,998,483 ) Other non-cash activities 100,628 29,939 45,729 Unrealized gains from investment activities of consolidated TPG Funds and Public SPACs ( 667 ) ( 12,382 ) ( 235,214 ) Changes in operating assets and liabilities: Purchases of investments ( 303,118 ) ( 109,093 ) ( 173,885 ) Proceeds from investments 798,478 1,567,684 2,179,064 Due from affiliates 41,268 ( 42,378 ) ( 42,826 ) Other assets ( 44,475 ) ( 35,893 ) ( 22,586 ) Accounts payable and accrued expenses ( 231,542 ) ( 14,235 ) 51,148 Due to affiliates ( 161,833 ) ( 12,528 ) 11,129 Accrued performance allocation compensation ( 505,024 ) ( 672,375 ) — Other liabilities ( 40,283 ) ( 22,515 ) ( 26,931 ) Changes related to consolidated TPG Funds and Public SPACs: Purchases of investments — — ( 216,657 ) Proceeds from investments — — 218,695 Cash and cash equivalents 5,097 274 5,839 Assets held in Trust Accounts 653,635 346,392 ( 630,281 ) Other assets 457 18,611 ( 12,583 ) Other liabilities ( 237 ) ( 7,537 ) 19,884 Net cash provided by operating activities 720,518 1,375,878 1,474,820 Investing activities: Acquisitions, net of cash acquired (Note 3) ( 356,835 ) — 24,817 Repayments of notes receivable from affiliates — 14,937 23,282 Advances on notes receivable from affiliates — ( 15,500 ) ( 9,053 ) Purchases of fixed assets ( 16,728 ) ( 2,449 ) ( 1,791 ) Transfers related to Reorganization Activities — — ( 75,000 ) Net cash used in investing activities ( 373,563 ) ( 3,012 ) ( 37,745 ) Financing activities: Proceeds from issuance of common stock in IPO, net of underwriting and issuance costs — 770,865 — Proceeds from issuance of common stock from underwriters' exercise of over-allotment option, net of underwriting and issuance costs — 49,756 — Purchase of partnership interests with IPO proceeds — ( 379,597 ) — Reorganization activities — 2,124 — Proceeds from debt obligations 651,000 30,000 200,000 Repayment of debt obligations ( 150,000 ) ( 30,000 ) ( 50,000 ) Issuance costs on debt obligations ( 900 ) — ( 520 ) Withholding taxes paid on net settlement of equity-based awards ( 6,878 ) — — Contributions from holders of other non-controlling interests 21,769 7,822 4,636 See accompanying notes to Consolidated Financial Statements. 171 Table of Contents Year Ended December 31, 2023 2022 2021 Distributions to holders of other non-controlling interests prior to Reorganization and IPO — ( 318,942 ) ( 1,009,242 ) Dividends/Distributions ( 643,224 ) ( 662,812 ) — Distributions to partners prior to Reorganization and IPO — ( 355,282 ) ( 1,066,680 ) Changes related to TPG Funds and Public SPACs: Proceeds from SPAC IPOs — — 935,000 Payments of underwriting and offering costs — — ( 18,700 ) Redemption of redeemable equity ( 661,001 ) ( 352,014 ) ( 304,760 ) Contributions from holders of non-controlling interests — — 540 Distributions to holders of non-controlling interests — — ( 12,840 ) Net cash used in financing activities $ ( 789,234 ) $ ( 1,238,080 ) $ ( 1,322,566 ) Net change in cash, cash equivalents and restricted cash $ ( 442,279 ) $ 134,786 $ 114,509 Cash, cash equivalents and restricted cash, beginning of period 1,120,650 985,864 871,355 Cash, cash equivalents and restricted cash, end of period $ 678,371 $ 1,120,650 $ 985,864 Supplemental disclosures of other cash flow information: Cash paid for income taxes $ 51,130 $ 48,327 $ 8,548 Cash paid for interest 33,549 18,352 15,728 Supplemental disclosures of non-cash operating activities: Investment in equity method investments — — ( 3,138 ) In-kind proceeds from investments — — 36,334 Increase in due from affiliates — — ( 3,045 ) Supplemental disclosures of non-cash investing and financing activities: Reorganization — — ( 952,411 ) NewQuest contingent consideration — — 8,400 Equity interests transferred for NewQuest acquisition — — 24,600 Deferred underwriting related to Public SPACs 22,750 12,250 ( 35,441 ) Distributions in-kind to holders of other non-controlling interests — — ( 33,197 ) Distributions payable to partners — — 352,722 Distributions payable to holders of other non-controlling interests 17,779 3,964 355,282 Repayments of notes receivable to affiliates — — 3,045 Reconciliation of cash, cash equivalents and restricted cash, end of period: Cash and cash equivalents $ 665,188 $ 1,107,484 $ 972,729 Restricted cash 13,183 13,166 13,135 Cash, cash equivalents and restricted cash, end of period $ 678,371 $ 1,120,650 $ 985,864 See accompanying notes to Consolidated Financial Statements. 172 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 1. Organization TPG Inc., along with its consolidated subsidiaries (collectively “TPG,” or the “Company”) is a leading global alternative asset manager on behalf of third-party investors under the “TPG” brand name. TPG Inc. includes the consolidated accounts of management companies, general partners of pooled investment entities and variable interest entities, in which the Company is the primary beneficiary, held by TPG Operating Group II, L.P., a holding company (“TPG Operating Group”). Reorganization and IPO The owners of TPG Group Holdings and the TPG Operating Group completed a series of actions on January 12, 2022 as part of a corporate reorganization (the “Reorganization”), in conjunction with an initial public offering (“IPO”) that was completed on January 18, 2022. TPG Partners, LLC was created on August 4, 2021 to effectuate the IPO and acquire Common Units of the TPG Operating Group on behalf of public investors. TPG Partners, LLC was designed as a holding company, and its only business was to act as the owner of the entities serving as the general partner of the TPG Operating Group partnerships. The TPG Operating Group (and the entities through which its direct and indirect partners held their interests) was restructured and recapitalized. On December 31, 2021, the TPG Operating Group transferred certain assets to RemainCo and distributed the interests in RemainCo to the owners of the TPG Operating Group. Following the transfer of certain assets, the Company deconsolidated certain TPG Funds (“TPG Funds”) as of December 31, 2021 as the Company is no longer their primary beneficiary. On January 12, 2022, the following steps were completed: • TPG Group Holdings, the TPG Operating Group, and TPG Partners, LLC completed the remaining steps of the planned Reorganization. The TPG Operating Group created Common Units and issued them to the Company and the other non-controlling interest holders of the TPG Operating Group. Immediately following the Reorganization, the TPG Operating Group and its subsidiaries were controlled by the same parties and as such, the Reorganization is a transfer of interests under common control. Accordingly, the Company will carry forward the existing value of the members’ interests in the assets and liabilities in these Consolidated Financial Statements prior to the IPO into the financial statements following the IPO. • TPG Partners, LLC changed its name to TPG Inc. and converted to a corporation. • TPG Inc. offered 33,900,000 shares of Class A common stock at a price of $ 29.50 per share, including 5,589,806 shares sold by a non-controlling interest holder of the TPG Operating Group, in the IPO. Additionally, certain Pre-IPO Investors exchanged their interests in the TPG Operating Group for interests in TPG Inc. totaling 35,136,254 Class A voting and 8,258,901 Class A non-voting common stock. The IPO closed on January 18, 2022, and TPG Inc. received proceeds totaling $ 770.9 million, net of $ 41.8 million in underwriting discounts and commissions, as well as $ 22.5 million of issuance costs. Proceeds of $ 379.6 million were used to repurchase Common Units of the TPG Operating Group from certain existing non-controlling interest holders, acquire newly issued Common Units of the TPG Operating Group and the remaining net proceeds are available for general corporate purposes. As a result of the Reorganization and IPO, TPG Inc. only holds Common Units of the TPG Operating Group. On February 9, 2022, the Company and the selling stockholder sold an additional 1,775,410 and 1,614,590 Class A common stock, respectively, at the initial public offering price pursuant to the underwriters’ exercise of their option to purchase additional shares. TPG Inc. received additional net proceeds totaling approximately $ 49.8 million. The underwriters’ exercise of their option in addition to the IPO related transactions resulted in a total of 70,811,664 and 8,258,901 of Class A voting and Class A non-voting common stock outstanding, respectively. As of December 31, 2023, TPG Inc.’s legal ownership of the TPG Operating Group totaled approximately 22 % . 173 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements (the “Consolidated Financial Statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the Company’s Consolidated Financial Statements. All dollar amounts are stated in thousands unless otherwise indicated. All intercompany transactions and balances have been eliminated. Certain comparative amounts for the prior fiscal period have been reclassified to conform to the financial statement presentation as of and for the period ended December 31, 2023. The Consolidated Financial Statements include the accounts of TPG Inc., TPG Operating Group and their consolidated subsidiaries, management companies, the general partners of funds and entities that meet the definition of a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary. The financial statements for periods prior to the Reorganization and IPO present the consolidated accounts of TPG Group Holdings, which is considered the predecessor for accounting purposes. Following the completion of our IPO, TPG Inc. is the successor for accounting purposes. Prior to the Reorganization and IPO, the Company’s predecessor consolidated certain TPG Funds and Public SPACs (herein referred to as “consolidated TPG Funds and Public SPACs”) pursuant to U.S. GAAP, as the Company’s predecessor was considered the primary beneficiary. Following the Reorganization and IPO, the Company no longer has a controlling financial interest in certain TPG Funds. Public SPACs are consolidated pursuant to U.S. GAAP, and the accompanying Consolidated Financial Statements include the assets, liabilities, revenues, expenses and cash flows of the consolidated Public SPACs. The ownership interest in certain TPG Funds held by entities or persons outside of TPG are reflected as other non-controlling interests in the accompanying Consolidated Financial Statements for fiscal years beginning prior to January 1, 2022. All of the management fees and other amounts earned from the consolidated TPG Funds and Public SPACs are eliminated in consolidation. In addition, the equivalent expense amounts recorded by the consolidated TPG Funds and Public SPACs are also eliminated, with such reduction of expenses allocated to controlling interest holders. Accordingly, the consolidation of these entities has no net effect on net income attributable to TPG Inc. or net income attributable to other non-controlling interests. Use of Estimates The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of revenues, expenses, and investment income during the reporting periods. Actual results could differ from those estimates and such differences could be material to the Consolidated Financial Statements. Principles of Consolidation The types of entities TPG assesses for consolidation include subsidiaries, management companies, broker-dealers, general partners of investment funds, investment funds, SPACs and other entities. Each of these entities is assessed for consolidation on a case by case basis depending on the specific facts and circumstances surrounding that entity. TPG first considers whether an entity is considered a VIE and therefore whether to apply the consolidation guidance under the VIE model. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities (“VOE”) under the voting interest model. An entity is considered to be a VIE if any of the following conditions exist: (i) the equity investment at risk is not sufficient to finance the activities of the entity without additional subordinated financial support, (ii) as a group, the holders of the equity investment at risk lack the power to direct the activities that most significantly impact the entity’s economic 174 Table of Contents TPG Inc. Notes to Consolidated Financial Statements performance or the obligation to absorb the expected losses or right to receive the expected residual returns, and (iii) the voting rights of some holders of the equity investment at risk are disproportionate to their obligation to absorb losses or right to receive returns, and substantially all of the activities are conducted on behalf of the holder of equity investment at risk with disproportionately few voting rights. For limited partnerships, partners lack power if neither (i) a simple majority or lower threshold (including a single limited partner) with equity at risk is able to exercise substantive kick-out rights through voting interests over the general partner, nor (ii) limited partners with equity at risk are able to exercise substantive participating rights over the general partners. TPG consolidates all VIEs in which it is the primary beneficiary. An entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE. A controlling financial interest is defined as (i) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (i) whether an entity in which TPG holds a variable interest is a VIE and (ii) whether TPG’s involvement, through holding interest directly or indirectly in the entity or contractually through other variable interests, would give it a controlling financial interest. Performance of that analysis requires judgment. The analysis can generally be performed qualitatively; however, if it is not readily apparent that TPG is not the primary beneficiary, a quantitative analysis may also be performed. TPG factors in all economic interests including interests held through related parties, to determine if it holds a variable interest. Fees earned by TPG that are customary and commensurate with the level of effort required for the services provided, and where TPG does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered variable interests. TPG determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and continuously reconsiders that conclusion when facts and circumstances change. Entities that are determined not to be VIEs are generally considered to be VOEs and are evaluated under the voting interest model. TPG consolidates VOEs that it controls through a majority voting interest or through other means. Investments Investments consist of investments in private equity funds, real estate funds, hedge funds and credit funds, including our share of any performance allocations and equity method and other proprietary investments. Investments denominated in currencies other than the U.S. dollar are valued based on the spot rate of the respective currency at the end of the reporting period with changes related to exchange rate movements reflected in the Consolidated Financial Statements. Equity Method – Performance Allocations and Capital Interests Investments in which the Company is deemed to have significant influence, but not control, are accounted for using the equity method of accounting except in cases where the fair value option has been elected. The Company as general partner has significant influence over the TPG funds in which it invests but does not consolidate. The Company uses the equity method of accounting for these interests whereby it records both its proportionate and disproportionate allocation of the underlying profits or losses of these entities in revenues in the accompanying Consolidated Financial Statements. The carrying amounts of equity method investments are included in investments in the Consolidated Financial Statements. 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 and its estimated fair value is recognized as an impairment when the loss is deemed other than temporary. The TPG funds are considered investment companies under Accounting Standards Codification (“ASC”) Topic 946, Financial Services – Investment Companies (“ASC 946”). The Company, along with the TPG funds, applies the specialized accounting promulgated in ASC 946 and, as such, neither the Company nor the TPG funds consolidate wholly-owned, majority-owned and/or controlled portfolio companies. The TPG funds record all investments in the portfolio companies at fair value. Investments in publicly traded securities are generally valued at quoted market prices based upon the last sales price on the measurement date. Discounts are applied, where appropriate, to reflect restrictions on the marketability of the investment. When observable prices are not available for investments, the general partners use the market and income approaches to determine fair value. The market approach consists of utilizing observable market data, such as current trading or acquisition multiples of comparable companies, and applying it to key financial metrics, such as earnings before 175 Table of Contents TPG Inc. Notes to Consolidated Financial Statements interest, depreciation and taxes, of the portfolio company. The comparability of the identified set of comparable companies to the portfolio company, among other factors, is considered in the application of the market approach. The general partners, depending on the type of investment or stage of the portfolio company’s lifecycle, may also utilize a discounted cash flow analysis, an income approach, in combination with the market approach in determining fair value of investments. The income approach involves discounting projected cash flows of the portfolio company at a rate commensurate with the level of risk associated with those cash flows. In accordance with ASC Topic 820, Fair Value Measurement (“ASC 820”) market participant assumptions are used in the determination of the discount rate. In applying valuation techniques used in the determination of fair value, the general partners assume a reasonable period of time for liquidation of the investment and take into consideration the financial condition and operating results of the underlying portfolio company, the nature of the investment, restrictions on marketability, market conditions, foreign currency exposures and other factors. In determining the fair value of investments, the general partners exercise significant judgment and use the best information available as of the measurement date. Due to the inherent uncertainty of valuations, the fair values reflected in the accompanying Consolidated Financial Statements may differ materially from values that would have been used had a readily available market existed for such investments and may differ materially from the values that may ultimately be realized. Investments Held to Maturity The Company holds investments in the notes issued by CLO funds that are held to maturity. The Company has the intent and ability to hold these investments until maturity. Held to maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method. The effective interest method uses projected cash flows and includes uncertainties and contingencies that are difficult to predict and are subject to future events that may impact estimated interest income prospectively. Certain tranches of the notes were purchased at a discount and are being amortized back to par value until they mature at various dates between 2033 to 2035. If the Company failed to keep these investments as held to maturity it would be required to reclassify them as trading securities and would measure at fair value. Where applicable, impairment is recognized related to investments in the CLO funds in accordance with U.S. GAAP. The CLO funds evaluate securities for impairment on a security-by-security basis based on adverse changes in expected cash flows. Those investments were fair valued in purchase accounting as discussed in Note 3. Equity Method Investments – Other The Company holds non-controlling, limited partnership interests in certain other partnerships in which it has significant influence over their operations. The Company uses the equity method of accounting for these interests whereby it records its proportionate share of the underlying income or losses of these entities in net gains (losses) from investment activities in the accompanying Consolidated Financial Statements. The carrying amounts of equity method investments are included in investments in the Consolidated Financial Statements. 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 and its estimated fair value is recognized as an impairment when the loss is deemed other than temporary and recorded in net gains (losses) from investment activities within the Consolidated Financial Statements. Equity Method – Fair Value Option The Company elects the fair value option for certain investments that would otherwise be accounted for using the equity method of accounting. Such election is irrevocable and is applied on an investment-by-investment basis at initial recognition. The fair value of such investments is based on quoted prices in an active market. Changes in the fair value of these equity method investments are recognized in net gains (losses) from investment activities in the Consolidated Financial Statements. 176 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Equity Investments The Company holds non-controlling ownership interests in which it does not have significant influence over their operations. The Company records such investments at fair value when there is a readily determinable fair value. For certain nonpublic partnerships without readily determinable fair values, the Company has elected to measure those investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Impairment is evaluated when significant changes occur that may impact the investee in an adverse manner. Impairment, if any, is recognized in net gains (losses) from investment activities in the Consolidated Financial Statements. Non-Controlling Interests Non-controlling interests consists of ownership interests held by third-party investors in certain entities that are consolidated, but not 100% owned. The aggregate of the income or loss and corresponding equity that is not owned by the Company is included in non-controlling interests in the Consolidated Financial Statements. Allocation of income to non-controlling interest holders is based on the respective entities’ governing documents. Revenues Revenues consisted of the following (in thousands): Year Ended December 31, 2023 2022 2021 Management fees $ 1,187,947 $ 919,830 $ 718,344 Monitoring fees 10,866 14,330 14,324 Transaction fees 99,427 97,909 90,606 Incentive fees 2,815 5,183 — Expense reimbursements and other 233,571 209,383 154,630 Total fees and other 1,534,626 1,246,635 977,904 Performance allocations 808,248 720,106 3,792,861 Capital interests 47,037 36,146 205,622 Total capital allocation-based income 855,285 756,252 3,998,483 Total revenues $ 2,389,911 $ 2,002,887 $ 4,976,387 177 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Fees and Other Fees and other are accounted for as contracts with customers under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The guidance for contracts with customers provides a five-step framework that requires the Company to (i) identify the contract with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when the Company satisfies its performance obligations. In determining the transaction price, the Company includes variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. Revenue Streams Customer Performance Obligations satisfied over time or point in time (a) Variable or Fixed Consideration Revenue Recognition Classification of Uncollected Amounts (b) Management Fees TPG funds, limited partners and other vehicles Asset management services are satisfied over time (daily) because the customer receives and consumes the benefits of the advisory services daily Consideration is variable since over time the management fee varies based on fluctuations in the basis of the calculation of the fee Management fees are recognized each reporting period based on the value provided to the customer for that reporting period Due from affiliates – unconsolidated VIEs Monitoring Fees Portfolio companies In connection with the investment advisory services provided, the Company earns monitoring fees for providing oversight and advisory services to certain portfolio companies over time Consideration is variable when based on fluctuations in the basis of the calculation of the fee Consideration is fixed when based on a fixed agreed-upon amount Monitoring fees are recognized each reporting period based on the value provided to the customer for that reporting period Due from affiliates – portfolio companies Transaction Fees Portfolio companies, third-parties and other vehicles The company provides advisory services, debt and equity arrangements, and underwriting and placement services for a fee at a point in time Consideration is fixed and is based on a point in time Transaction fees are recognized on or shortly after the transaction is completed Due from affiliates – portfolio companies Other assets - other Incentive Fees TPG funds, limited partners and other vehicles Investment management services performed over a period of time that result in achievement of minimum investment return levels Consideration is variable since incentive fees are contingent upon the TPG Fund or vehicles achieving more than the stipulated investment threshold return Incentive fees are recognized at the end of the performance measurement period if the investment performance is achieved Due from affiliates – unconsolidated VIEs Expense Reimbursements and other TPG funds, portfolio companies and third-parties Expense reimbursements incurred at a point in time relate to providing investment, management and monitoring services. Other revenue is performed over time. Expense reimbursements and other are fixed consideration Expense reimbursements and other are recognized as the expenses are incurred or services are rendered Due from affiliates – portfolio companies and unconsolidated VIEs Other assets – other _________________ (a) There were no significant judgments made in evaluating when a customer obtains control of the promised service for performance obligations satisfied at a point in time. (b) See Note 1 4 to the Consolidated Financial Statements for amounts classified in due from affiliates. Management Fees The Company provides investment management services to the TPG funds, limited partners, SMAs and clients, and other vehicles in exchange for a management fee. Management fees also include catch-up fees, also known as out of period management fees, which are fees paid in any given period that relate to a prior period, usually as the result of a new limited partner coming into a fund in a subsequent close. Management fees are determined quarterly based on an annual rate and are generally based upon a percentage of capital committed, net funded capital commitments, cost of investments, Net Asset Value (“NAV”) or actively invested capital or as otherwise defined in the respective management agreements. Since some of the factors that cause management fees to fluctuate are outside of the Company’s control, management fees are considered constrained and are not included in the transaction price until the uncertainty relating to the constraint is subsequently resolved. After the contract is established, management does not make any significant judgments in determining the transaction price. 178 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Management fee rates generally range between the following: Management fee base Low High Committed capital 0.50 % 2.00 % Actively invested capital 0.25 % 2.00 % Net funded capital commitments 0.63 % 1.75 % Cost of investments 0.50 % 1.00 % NAV 0.50 % 1.50 % Under the terms of the management agreements with certain TPG funds, the Company is required to reduce management fees payable by funds by an agreed upon percentage of certain fees, including monitoring and transaction fees earned from portfolio companies. These amounts are generally applied as a reduction of the management fee that is otherwise billed to the investment fund and are recorded as a reduction of revenues in the Consolidated Statement of Operations. For the years ended December 31, 2023, 2022 and 2021, these amounts totaled $ 6.4 million, $ 11.5 million and $ 13.6 million, respectively. Amounts payable to investment funds are recorded in due to affiliates in the Consolidated Financial Statements. See Note 1 4 to the Consolidated Financial Statements. Management fees charged to consolidated Public SPACs are eliminated in consolidation. Monitoring Fees The Company provides monitoring services to certain portfolio companies in exchange for a fee, which is recognized over time as services are rendered. After the monitoring contract is established, there are no significant judgments made in determining the transaction price. Transaction Fees The Company provides capital structuring and other advice to portfolio companies, third parties and other vehicles generally in connection with debt and equity arrangements, as well as underwriting and placement services for a fee at a point in time when the underlying advisory services rendered are complete. Transaction fees are separately negotiated for each transaction and are generally based on the underlying transaction value. After the contract is established, management makes no significant judgments when determining the transaction price. Incentive Fees The Company provides investment management services to certain TPG funds and other vehicles in exchange for a management fee as discussed above and, in some cases, an incentive fee when the Company is not entitled to performance allocations, as further discussed below. Incentive fees are considered variable consideration in the scope of the revenue guidance as these fees are affected by changes in the fair value of investments over the performance period. The Company recognizes incentive fees only when these amounts are no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period. After the contract is established, there are no significant judgments made when determining the transaction price. Expense Reimbursements and Other In providing investment management and advisory services to TPG funds and monitoring services to the portfolio companies, TPG routinely contracts for services from third parties. In situations where the Company is viewed, for accounting purposes only, as having incurred these third-party costs on behalf of the TPG funds or portfolio companies, the cost of such services is presented net as a reduction of the Company’s revenues. In all other situations, the expenses and related reimbursements associated with these services are presented on a gross basis, which are classified as part of the Company’s expenses, and reimbursements of such costs are classified as expense reimbursements within revenues in the Consolidated Financial Statements. After the contract is established, there are no significant judgments made when determining the transaction price. 179 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Capital Allocation-Based Income (Loss) Capital allocation-based income (loss) is earned from the TPG funds when the Company has a general partner’s capital interest and is entitled to a disproportionate allocation of investment income (referred to hereafter as “performance allocations”). The Company records capital allocation-based income (loss) under the equity method of accounting assuming the fund was liquidated as of each reporting date pursuant to each TPG fund’s governing agreements. Accordingly, these general partner interests are accounted for outside of the scope of ASC 606. Other arrangements surrounding contractual incentive fees through an advisory contract are separate and distinct and accounted for in accordance with ASC 606. In these incentive fee arrangements, the Company’s economics in the entity do not involve an allocation of capital. See discussion above regarding “Incentive Fees”. Open-end funds can issue and redeem interests to investors on an on-going basis at the then-current net asset values subject to the fund’s policies as specified in governing documents. The Company generally receives performance allocations from its open-end funds based on a percentage of annual fund profits, reduced by minimum return hurdles, and subject to prior year loss carry-forwards. Performance allocations are either paid in the first quarter following the performance year or during the calendar year if there are investor redemptions and are generally not subject to repayment by the Company. Performance allocations attributed to certain non-liquid investments (“side pocket investments”) owned by open-end funds is paid when the associated side pocket investments are realized. Performance allocations for closed-end funds are allocated to the general partners based on cumulative fund performance as of each reporting date, and after specified investment returns to the funds’ limited partners are achieved. At the end of each reporting period, the TPG funds calculate and allocate the performance allocations that would then be due to the general partner for each TPG fund, pursuant to the TPG fund governing agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments (and the investment returns to the funds’ limited partners) varies between reporting periods, it is necessary to make adjustments to amounts recorded as performance allocations to reflect either (i) positive performance resulting in an increase in the performance allocations allocated to the general partner or (ii) negative performance that would cause the amount due to the general partner to be less than the amount previously recognized, resulting in a negative adjustment to performance allocations allocated to the general partner. In each case, performance allocations are calculated on a cumulative basis and cumulative results are compared to amounts previously recorded with a current period adjustment, positive or negative, recorded. The Company ceases to record negative performance allocations once previously recognized performance allocations for a TPG fund have been fully reversed, including realized performance allocations. The general partner is not obligated to make payments for guaranteed returns or hurdles of a fund and, therefore, cannot have negative performance allocations over the life of a fund. Accrued but unpaid performance allocations as of the reporting date are reflected in investments in the Company’s Consolidated Financial Statements. Performance allocations received by the general partners of the respective TPG funds are subject to clawback to the extent the performance allocations received by the general partner exceed the amount the general partner is ultimately entitled to receive based on cumulative fund results. Generally, the actual clawback liability does not become due until eighteen months after the realized loss is incurred; however, individual fund terms vary. For disclosures at December 31, 2023 related to clawback, see Note 1 7 to the Consolidated Financial Statements. Revenue related to performance allocations for consolidated TPG funds is eliminated in consolidation. The Company earns management fees, incentive fees and capital allocation-based income (loss) from investment funds and other vehicles whose primary focus is making investments in varying geographical locations and earns transaction and monitoring fees from portfolio companies located in varying geographies, including North America, Europe and Asia-Pacific. The primary geographic region in which the Company invests in is North America and the majority of its revenues from contracts with customers are also generated in North America. 180 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Investment Income Income from equity method investments The carrying value of equity method investments in proprietary investments where the Company exerts significant influence is generally determined based on the amounts invested, adjusted for the equity in earnings or losses of the investee allocated based on the Company’s ownership percentage, less distributions and any impairment. The Company records its proportionate share of investee’s equity in earnings or losses based on the most recently available financial information, which in certain cases may lag the date of TPG’s financial statements by up to three calendar months. Income from equity method investments is recorded in net gains (losses) from investment activities on the Consolidated Financial Statements. Income from equity method investments for which the fair value option was elected Income from equity method investments for which the fair value option was elected includes realized gains and losses from the sale of investments, and unrealized gains and losses from changes in the fair value during the period as a result of quoted prices in an active market. Discounts are applied, where appropriate, to reflect restrictions on the marketability of the investment. Income from equity method investments for which the fair value option was elected is recorded in net gains (losses) from investment activities on the Consolidated Financial Statements. Income from equity investments Income from equity investments, which represent investments held through equity securities of an investee that the Company does not hold significant influence over, includes realized gains from the sale of investments and unrealized gains and losses result from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Income from equity investments is recorded in net gains (losses) from investment activities on the Consolidated Financial Statements. Unrealized gains (losses) from derivative liabilities of Public SPACs Unrealized gains (losses) from derivative liabilities of Public SPACs includes unrealized gains and losses from changes in fair value of warrants and forward purchase agreements (“FPAs”). Interest, dividends and other Interest income is recognized as earned. Dividend income is recognized by the Company on the ex-dividend date, or in the absence of a formal declaration, on the date it is received. Compensation and Benefits Cash-based compensation and benefits includes (i) salaries and wages, (ii) benefits and (iii) discretionary cash bonuses. Bonuses are accrued over the service period to which they relate. Compensation expense related to the issuance of equity-based awards is measured at grant-date fair value. Compensation expense for awards that vest over a future service period is recognized over the relevant service period on a straight-line basis. Compensation expense for awards that do not require future service is recognized immediately. Compensation expense for awards that contain both market and service conditions is based on grant-date fair value that factors in the probability that the market conditions will be achieved and is recognized on a tranche by tranche basis using the accelerated attribution method. The requisite service period for those awards is the longer of the explicit service period and the derived service period. Compensation expense for awards that contain both performance and service conditions is recognized, if the Company deems it probable that the performance condition will be met, over the longer of the implicit or explicit service period. Compensation expense for awards to recipients with retirement eligibility provisions (allowing such recipient to continue vesting upon departure from TPG) is either expensed immediately or amortized to the retirement 181 Table of Contents TPG Inc. Notes to Consolidated Financial Statements eligibility date. The Company recognizes equity-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense. Performance allocation compensation expense and accrued performance allocation compensation is the portion of performance allocations that TPG allocates to certain of its employees and certain other advisors of the Company. Performance allocations due to our partners and professionals are accounted for as compensation expense in conjunction with the recognition of the related performance allocations and, until paid, are recognized as accrued performance allocation compensation. Accordingly, upon a reversal of performance allocations, the related compensation expense, if any, is also reversed. Net Income (Loss) Per Share of Class A Common Stock Basic income (loss) per share of Class A common stock is calculated by dividing net income (loss) attributable to TPG Inc. by the weighted-average shares of Class A common stock, unvested participating shares of Class A common stock outstanding for the period and vested deferred restricted shares of Class A common stock that have been earned for which issuance of the related shares of Class A common stock is deferred until future periods. Diluted income (loss) per share of Class A Common Stock reflects the impact of all dilutive securities. Unvested participating shares of common stock are excluded from the computation in periods of loss as they are not contractually obligated to share in losses. The Company applies the treasury stock method to determine the dilutive weighted-average common shares represented by the unvested restricted stock units. The Company applies the if-converted method to the TPG Operating Group partnership units to determine the dilutive impact, if any, of the exchange right included in the TPG Operating Group partnership units. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include cash on deposit with banks and other short-term investments with an initial maturity of 90 days or less. Restricted cash balances relate to cash balances reserved for the payment of interest on the Company’s secured borrowings. Cash and Cash Equivalents Held by Consolidated Public SPACs Cash and cash equivalents held by consolidated Public SPACs represent cash and cash equivalents that are held by consolidated Public SPACs and are not available to fund the general liquidity needs of the Company. Assets Held in Trust Accounts Proceeds from equity issued by certain consolidated Public SPACs had been deposited into trust accounts (“Trust Accounts”) and could only be utilized for specific purposes. Therefore, such cash and investments are reported separately in assets held in Trust Accounts on the Consolidated Financial Statements. As of December 31, 2023, TPG Pace Beneficial II Corp. (“YTPG”) had no assets held in Trust Accounts and held no cash. As of December 31, 2022, YTPG assets held in Trust Accounts were deposited into a non-interest-bearing U.S. based account. On April 17, 2023, YTPG used these funds to redeem all of its outstanding Class A ordinary shares, par value $ 0.0001 (the “YTPG Class A Ordinary Shares”). See Note 15 to the Consolidated Financial Statements. As of December 31, 2023, AfterNext HealthTech Acquisition Corp. (“AFTR”) had no assets held in Trust Accounts and held no cash. As of December 31, 2022, AFTR assets held in Trust Accounts were invested in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. On August 16, 2023, AFTR used these funds to redeem its outstanding Class A ordinary shares, par value $ 0.0001 (the “AFTR Class A Ordinary Shares”). See Note 15 to the Consolidated Financial Statements. 182 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Derivative Liabilities of Public SPACs Financial derivative assets and liabilities related to our consolidated Public SPACs’ investment activities consist of warrant liabilities and forward purchase agreements. The Company recognizes these derivative instruments as assets or liabilities at fair value in the accompanying Consolidated Financial Statements. Changes in the fair value of derivative contracts entered into by the Company are included in current period earnings. These derivative contracts are not designated as hedging instruments for accounting purposes. These derivatives were agreements in which a consolidated Public SPAC and a counterparty agreed to exchange cash flows based on agreed-upon terms. As a result of the derivative transaction, the Company was exposed to the risk that counterparties would have failed to fulfill their contractual obligations. To mitigate such counterparty risk, the applicable Public SPAC only entered into contracts with major financial institutions, all of which had investment grade ratings. Counterparty credit risk is evaluated in determining the fair value of the derivative instruments. In the normal course of business, the Company incurs commitments and is exposed to risks resulting from its investment and financing transactions, including derivative instruments. The value of a derivative instrument is based upon an underlying instrument. These instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, performance and operational risks. The Company manages these risks on an aggregate basis as part of its risk management policies and as such, does not distinguish derivative income or loss from any other category of instruments for financial statement presentation purposes. The leverage inherent in the Company’s derivative instruments increases the sensitivity of the Company’s earnings to market changes. Notional amounts often are used to express the volume of these transactions, but the amounts potentially subject to risk are much smaller. The Company routinely evaluates its contractual arrangements to determine whether embedded derivatives exist. Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host contract and the embedded derivative are not closely related, if a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative and if the combined instrument is not measured at fair value through profit or loss. For derivative contracts where an enforceable master netting agreement is in place, the Company has elected to offset derivative assets and liabilities, as well as cash that may have been received or pledged, as part of collateral arrangements with the respective counterparty in the Consolidated Financial Statements. The master netting agreements provide the Company and the counterparty the right to liquidate collateral and the right to offset each other’s obligations in the event of default by either party. Certain of the Company’s consolidated Public SPACs issued public warrants and FPAs in conjunction with their IPO. The Company accounts for warrants and FPAs of the consolidated Public SPAC’s ordinary shares that are not indexed to its own stock as liabilities at fair value on the balance sheet. These warrants and FPAs are subject to remeasurement at each balance sheet date and any change in fair value is recognized in the Company’s Consolidated Financial Statements. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants and FPAs that do not meet all the criteria for equity classification, the warrants and FPAs are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants and FPAs are recognized as a non-cash gain or loss on the Consolidated Financial Statements. Fair Value Measurement ASC 820 establishes a fair value hierarchy that prioritizes and ranks the level of observability of inputs used to measure the investments at fair value. The observability of inputs is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements). Investments with readily available quoted prices or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability and a lesser degree of judgment applied in determining fair value. 183 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The three levels of the fair value hierarchy under ASC 820 are as follows: Level I – Quoted prices (unadjusted) in active markets for identical investments at the measurement date are used. The types of investment generally included in Level I are publicly listed equities, debt and securities sold, not yet purchased. Level II – Pricing inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly. Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs that are derived principally from or corroborated by observable market data by correlation or other means. The types of investments generally included in Level II are restricted securities listed in active markets, corporate bonds and loans. Level III – Pricing inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used in determination of fair value require significant judgment and estimation. The types of investments generally included in Level III are privately held debt and equity securities. In some cases, the inputs used to measure fair value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment. Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency of the investment and does not necessarily correspond to the perceived risk of that investment. In certain instances, an investment that is measured and reported at fair value may be transferred into or out of Level I, II, or III of the fair value hierarchy. In certain cases, debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices, market transactions in comparable investments and various relationships between investments. When a security is valued based on dealer quotes, the Company subjects those quotes to various criteria in making the determination as to whether a particular investment would qualify for treatment as a Level II or Level III investment. Some of the factors considered include the number and quality of quotes, the standard deviations of the observed quotes and the corroboration of the quotes to independent pricing services. Level III investments may include common and preferred equity securities, corporate debt, and other privately issued securities. When observable prices are not available for these securities, one or more valuation techniques (e.g., the market approach and/or the income approach) for which sufficient and reliable data is available are used. Within Level III, the use of the market approach generally consists of using comparable market transactions or other data, while the use of the income approach generally utilizes the net present value of estimated future cash flows, adjusted, as appropriate, for liquidity, credit, market and other risk factors. Due to the inherent uncertainty of these valuations, the fair values reflected in the accompanying Consolidated Financial Statements may differ materially from values that would have been used had a readily available market for the investments existed and may differ materially from the values that may ultimately be realized. The period of time over which the underlying assets of the investments will be liquidated is unknown. Financial Instruments Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Except for secured borrowings, the fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, approximates the carrying amounts represented in the Consolidated Financial Statements due to their short-term nature. In the case of our senior unsecured term loan and senior unsecured revolving credit facility, the fair values approximate the carrying amounts represented in the Consolidated Financial Statements due to their variable rate nature. See Note 12 to the Consolidated Financial Statements. 184 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Due From and Due To Affiliates The Company considers current and former limited partners of funds and employees, including their related entities, entities controlled by the Company’s Founders but not consolidated by the Company, portfolio companies of TPG funds, and unconsolidated TPG funds to be affiliates (“Affiliates”). Receivables from and payables to affiliates are recorded at their expected settlement amount in due from and due to affiliates in the Consolidated Financial Statements. Business Combinations The Company accounts for business combinations using the acquisition method under ASC Topic 805, Business Combinations (“ASC 805”) under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Management’s determination of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances and may incorporate management’s own assumptions and involve a significant degree of judgment. Management uses its best estimates and assumptions to accurately assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to, future expected cash inflows and outflows, future fundraising assumptions, expected useful life, discount rates and income tax rates. Our estimates for future cash flows are based on historical data, various internal estimates and certain external sources, and are based on assumptions that are consistent with the plans and estimates we are using to manage the underlying assets acquired. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual results. For business combinations accounted for under the acquisition method, the purchase consideration, including the fair value of certain elements of contingent consideration as of the acquisition date, in excess of the fair value of net assets acquired is recorded as goodwill. Goodwill Goodwill represents the excess of the purchase price over the fair value of acquired identifiable net tangible and intangible assets. Goodwill is not amortized. Goodwill is reviewed for impairment at least annually utilizing a qualitative or quantitative approach, and more frequently if circumstances indicate impairment may have occurred. The impairment testing for goodwill under the qualitative approach is based first on a qualitative assessment to determine if it is more likely than not that the fair value of the Company’s reporting unit is less than its respective carrying value. If it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying value, the Company performs a quantitative analysis. When the quantitative approach indicates an impairment, an impairment loss is recognized to the extent by which the carrying value exceeds the fair value, not to exceed the total amount of goodwill. As of December 31, 2023, we believe it is more likely than not that the fair value of our reporting unit exceeds its carrying value. Intangible Assets The Company’s intangible assets primarily consist of the fair value of its interests in future promote of certain funds and the fair value of acquired investor relationships representing the fair value of management fees earned from existing investors in future funds. Finite-lived intangible assets are amortized over their estimated useful lives, which range from two to 20 years, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the intangible asset may not be recoverable. Amortization expense is included in depreciation and amortization expense in the Consolidated Financial Statements. Operating Leases At contract inception, the Company determines if an arrangement contains a lease by evaluating whether (i) an identified asset has been deployed in a contract explicitly or implicitly and (ii) the Company obtains substantially all the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. Additionally, at contract inception the Company will evaluate whether the lease is an operating or finance lease. Right-of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. To the extent these payments are fixed or determinable, they are included as part of the lease payments used to 185 Table of Contents TPG Inc. Notes to Consolidated Financial Statements measure the lease liability. The Company’s ROU assets are recognized as the initial measurement of the lease liabilities plus any initial direct costs and any prepaid lease payments less lease incentives received, if any. The lease terms may include options to extend or terminate the lease which are accounted for when it is reasonably certain that the Company will exercise that option. As the discount rate implicit to the lease is not readily determinable, incremental borrowing rates of the Company were used. The incremental borrowing rates are based on the information available including, but not limited to, collateral assumptions, the term of the lease, and the economic environment in which the lease is denominated at the commencement date. The Company elected the package of practical expedients provided under the guidance. The practical expedient package applies to leases commenced prior to the adoption of the new standard and permits companies not to reassess whether existing or expired contracts are or contain a lease, the lease classification, and any initial direct costs for any existing leases. The Company has elected to not separate the lease and non-lease components within the contract. Therefore, all fixed payments associated with the lease are included in the ROU asset and the lease liability. These costs often relate to the fixed payments for a proportionate share of real estate taxes, common area maintenance and other operating costs in addition to a base rent. Any variable payments related to the lease are recorded as lease expense when and as incurred. The Company has elected this practical expedient for all lease classes. The Company did not elect the hindsight practical expedient. The Company has elected the short-term lease expedient. A short-term lease is a lease that, as of the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For such leases, the Company will not apply the recognition requirements of ASC Topic 842, Leases (“ASC 842”) and instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. Additionally, the Company elected the practical expedient which allows an entity to not reassess whether any existing land easements are or contain leases. The Company’s leases primarily consist of operating leases for real estate, which have remaining terms of one to 10 years. Some of those leases include options to extend for additional terms ranging from one to 10 years. The Company’s other leases, including those for office equipment, vehicles, and aircrafts, are not significant. Additionally, the Company’s leases do not contain restrictions or covenants that restrict the Company from incurring other financial obligations. The Company also does not provide any residual value guarantees for the leases or have any significant leases that have yet to be commenced. From time to time, the Company enters into certain sublease agreements that have terms similar to the remaining terms of the master lease agreements between TPG and the landlord. Sublease income is recorded as an offset to general, administrative and other in the accompanying Consolidated Financial Statements. Operating lease expense is recognized on a straight-line basis over the lease term and is recorded within general, administrative and other in the accompanying Consolidated Financial Statements (see Note 1 6 to the Consolidated Financial Statements). Fixed Assets Fixed assets consist primarily of leasehold improvements, furniture, fixtures and equipment, computer hardware and software and other fixed assets which are recorded at cost, less accumulated depreciation. Leasehold improvements are amortized using the straight-line method, over the shorter of the respective estimated useful life or the lease term. Depreciation of furniture, fixtures, equipment and computer hardware and software is recorded over the estimated useful life of the asset, generally three to seven years , using the straight-line method. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. When evidence of loss in value has occurred, management compares the estimated undiscounted cash flows associated with the long-lived asset to its carrying value to determine whether an impairment has occurred. If the undiscounted cash flows are less than the carrying value, an impairment is recorded as the difference between the fair value of the long-lived asset and its carrying value. Fair value is based on estimated discounted cash flows associated with the long-lived asset. Foreign Currency The functional currency of the Company’s international subsidiaries is the U.S. Dollar. Non-U.S. dollar denominated assets and liabilities of foreign operations are remeasured at rates of exchange as of the end of the reporting period. Non-U.S. dollar revenues and expenses of foreign operations are remeasured at average rates of exchange during the period. Gains and losses resulting from remeasurement are included in general, administrative and other in the accompanying Consolidated Statements of Operations. Foreign currency gains and losses resulting from transactions in 186 Table of Contents TPG Inc. Notes to Consolidated Financial Statements currencies other than the functional currency are also included in general, administrative and other in the Consolidated Statements of Operations during the period the transaction occurred. Repurchase Agreements The Company, through its a subsidiary, has financed the purchase of certain investments in the debt tranches of certain CLO Funds through a repurchase agreement. The Company records these investments as an asset and the related borrowings under the repurchase agreements are recorded as a liability on the Consolidated Statements of Financial Condition. The amount borrowed is the amount equal to the debt investment outstanding in the CLO. Interest income earned and interest expense incurred on the repurchase obligation are reported on the Consolidated Statements of Operations. Accrued interest receivable on investments and accrued interest payable on repurchase agreements are included in accounts payable and accrued expenses on the Consolidated Statements of Financial Condition. Securities sold under agreements to repurchase are accounted for as collateralized financing transactions. The Company provides securities to counterparties to collateralize amounts borrowed under repurchase agreements on terms that permit the counterparties to repledge or resell the securities to others. Securities transferred to counterparties under repurchase agreements are included within investments in the Consolidated Statements of Financial Condition. Cash received under a repurchase agreement is recognized as a liability within other liabilities in the Consolidated Statements of Financial Condition. Interest expense is recognized on an effective yield basis and is included within interest expense in the Consolidated Statements of Operations. Redeemable Equity from Consolidated Public SPACs Redeemable equity from consolidated Public SPACs represents the shares issued by the Company’s consolidated Public SPACs that are redeemable for cash by the public shareholders in the event of an election to redeem by individual public shareholders at the time of the business combination. The Company accounts for redeemable equity in accordance with ASC Topic 480-10-S99, Distinguishing Liabilities from Equity (“ASC 480”), which states redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The redeemable non-controlling interests are initially recorded at their original issuance price and are subsequently allocated their proportionate share of the underlying gains or losses of the Public SPACs. The Company adjusts the redeemable equity to full redemption value on a quarterly basis. If a Public SPAC is unable to complete a business combination within the time period required by its governing documents, this equity becomes redeemable and is reclassified out of redeemable equity and into Public SPAC current redeemable equity in accordance with ASC 480 as the Public SPAC prepares for dissolution. Income Taxes The Company is treated as a corporation for U.S. federal and state income tax purposes. The Company is subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of taxable income generated by the TPG Operating Group partnerships. Prior to the Reorganization and the IPO, the Company was treated as a partnership for U.S. federal income tax purposes and therefore was not subject to U.S. federal and state income taxes except for certain consolidated subsidiaries that were subject to taxation in the U.S. (federal, state and local) and foreign jurisdictions as a result of their entity classification for tax reporting purposes. The provision for income taxes in the historical Consolidated Financial Statements consists of U.S. (federal, state and local) and foreign income taxes with respect to certain consolidated subsidiaries. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period in which the enactment date occurs. 187 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Under ASC Topic 740, Income Taxes , a valuation allowance is established when management believes it is more likely than not that a deferred tax asset will not be realized. The realization of deferred tax assets is dependent on the amount of our future taxable income. When evaluating the realizability of deferred tax assets, all evidence (both positive and negative) is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions including evaluating uncertainties. The Company reviews its tax positions quarterly and adjusts its tax balances as new information becomes available. The Company recognizes interest and penalties relating to unrecognized tax benefits as income tax expense (benefit) within the Consolidated Financial Statements. Segment The Company has identified its Chief Executive Officer as its chief operating decision maker (the “CODM”). The Company operates its business in a single operating and reportable segment, consistent with how the CODM reviews financial performance and allocates resources. The Company operates collaboratively across product lines with a single expense pool. Regulated Entities At December 31, 2023, the Company consolidates a registered broker-dealer subsidiary that is subject to the minimum net capital requirements of the SEC and FINRA which may restrict the Company’s ability to withdraw funds from the broker-dealer. The broker-dealer has continuously operated in excess of its minimum net capital requirements. Certain other U.S. and non-U.S. entities are subject to various investment adviser, commodity pool operator and trader regulations. This includes a number of U.S. entities that are registered as investment advisers with the SEC. 188 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Recent Accounting Pronouncements On December 14, 2023, the FASB issued Accounting Standards Update 2023-09 entitled Improvements to Income Tax Disclosures (ASU 2023-09) , which is primarily applicable to public companies and requires a significant expansion of the granularity of the income tax rate reconciliation as well as an expansion of other income tax disclosures. ASU 2023-09 requires a company to disclose specific income tax categories within the rate reconciliation table and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. There are also additional disclosures related to income taxes paid disaggregated by jurisdictions, and to income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024. The guidance will be applied on a prospective basis with the option to apply the standard retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of adoption of ASU 2023-09 on its Consolidated Financial Statements and disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU requires public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss and an amount and description of the composition of other segment items. The ASU also requires public entities to provide all annual disclosures about a reportable segments profit or loss and assets in interim periods. Further, if the CODM uses more than one measure of a segments profitability, the entity would be permitted to disclose those additional measures. All disclosure requirements under ASU 2023-07 are applicable to public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact of adoption of ASU 2023-07 on its Consolidated Financial statements and disclosures. On October 9, 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative , which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The ASU was issued in response to the SEC’s August 2018 final rule that updated and simplified disclosure requirements that the SEC believed were “redundant, duplicative, overlapping, outdated, or superseded.” The new guidance is intended to align U.S. GAAP requirements with those of the SEC and to facilitate the application of U.S. GAAP for all entities. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company does not expect the adoption of ASU 2023-06 to have a material impact on its Consolidated Financial Statements. Recently Adopted Accounting Guidance In June 2022, the FASB issued Accounting Standard Update (“ASU”) 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) which (1) clarifies the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and (2) requires specific disclosures related to such an equity security. Under current guidance, stakeholders have observed diversity in practice related to whether contractual sale restrictions should be considered in the measurement of the fair value of equity securities that are subject to such restrictions. The amendments in ASU 2022-03 should be applied to equity securities with a contract containing a sale restriction that is executed or modified on or after the adoption date. For equity securities with a contract containing a sale restriction that was executed before the adoption date, companies should continue to apply the historical accounting policy for measuring such securities until the contractual restriction expires or is modified. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted. The Company’s adoption of ASU 2022-03 on a prospective basis beginning January 1, 2023 did not have a material impact to its Consolidated Financial Statements. 189 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 3. Acquisitions Angelo Gordon Acquisition On November 1, 2023 (the “Acquisition Date”), the Company and certain of its affiliated entities (the “TPG Parties”) completed the acquisition (the “Acquisition”) of all of the voting interests and significant economics in Angelo, Gordon & Co., L.P., AG Funds L.P. and AG Partners, L.P. (collectively, “Angelo Gordon”) and certain of their affiliated entities (together with Angelo Gordon, the “Angelo Gordon Parties”), an alternative investment firm focused on credit and real estate investing, pursuant to the terms and conditions set forth in the Transaction Agreement (as amended, the “Transaction Agreement”), dated as of May 14, 2023, by and among the TPG Parties and Angelo Gordon Parties. As a result of the Acquisition, the Company expanded its platform diversity, with Angelo Gordon’s alternative investment focus on credit and real estate investing. The Acquisition was accounted for as a business combination under ASC Topic 805, Business Combinations (“ASC 805”) with assets acquired and liabilities assumed recorded at fair value. Pursuant to the Transaction Agreement, the Company acquired Angelo Gordon for both cash and non-cash consideration under U.S. GAAP equal to $ 1,145.9 million (“Purchase Price”) as described below. The Purchase Price includes a combination of: • $ 740.7 million in cash paid at closing; • $ 18.8 million in payable as of December 31, 2023 to the escrow agent on behalf of the sellers of Angelo Gordon, subject to adjustment; • 9.2 million vested Common Units (and an equal number of Class B common stock) and 43.8 million unvested Common Units which are deemed to be compensatory under U.S. GAAP; • the rights to an aggregate cash payment, payable in three payments of $ 50.0 million each, reflecting an aggregate of $ 150.0 million (the “Aggregate Annual Cash Holdback Amount”); and • the non-compensatory portion under U.S. GAAP of a total earnout payment of up to $ 400.0 million in value (the “Earnout Payment”), subject to the satisfaction of certain fee-related revenue (“FRR”) targets during the period beginning on January 1, 2026 and ending on December 31, 2026 (the “Measurement Period”). 190 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following table summarized the fair value of amounts recognized for the assets acquired and liabilities assumed and resulting goodwill as of the Acquisition Date (in thousands): November 1, 2023 Purchase Price Cash (1) $ 740,703 Amounts payable to seller (2) 18,845 Common Units (3) 233,894 Fair value of Aggregate Annual Cash Holdback Amount (4) 125,158 Fair value of Earnout Payment (5) 27,315 Total Purchase Price $ 1,145,915 Recognized amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents $ 383,868 Due from affiliates 184,252 Investments 1,046,375 Intangible assets 547,500 Other assets 172,282 Total assets 2,334,277 Accounts payable and accrued expenses 304,797 Due to affiliates 150,228 Accrued performance allocation compensation 744,903 Other liabilities 190,147 Total liabilities 1,390,075 Assets acquired/liabilities assumed 944,202 Total Purchase Price 1,145,915 Non-controlling interest of Angelo Gordon 4,172 Goodwill $ 205,885 (1) Represents the closing cash consideration of $ 740.7 million, which is comprised of $ 270.7 million of cash on hand and $ 470.0 million of proceeds from drawing on the Company’s Senior Unsecured Revolving Credit Facility. Out of the closing cash consideration of $ 740.7 million, $ 100.0 million was held in escrow on behalf of the sellers. (2) Represents the expected difference between the estimated cash consideration paid at closing and the final cash consideration to be determined no later than 120 days from closing in accordance with the terms of the Transaction Agreement. (3) Represents the fair value of approximately 9.2 million vested Common Units granted to the Angelo Gordon partners upon consummation of the Acquisition. The fair value of Common Units is based on a $ 28.18 closing price for the shares of Class A common stock on the Acquisition Date, adjusted for a discount for lack of marketability. Approximately 43.8 million unvested Common Units and 8.4 million RSUs available to be granted in connection with the Acquisition are considered compensatory under U.S. GAAP and are not part of the Purchase Price. Refer to Note 19 for details. (4) Represents the estimated fair value of the Aggregate Annual Cash Holdback Amount of $ 150.0 million, which is payable in three equal annual installments of $ 50.0 million, subject to the absence of promote shortfall in each respective calendar year (2024, 2025 and 2026). The estimated fair value of $ 125.2 million, reflected as contingent consideration, was determined using a present value approach. Inputs to fair value include the present value period and the discount rate applied to the annual payments. (5) Represents the estimated fair value of the non-compensatory portion of the Earnout Payment expected to be paid in the form of cash and vested Common Units to Angelo Gordon partners upon satisfaction of certain FRR targets during the Measurement Period. This amount, reflected as contingent consideration, was determined using a multiple probability simulation approach. Inputs to the fair value include probability adjusted FRR amounts and FRR target thresholds. The compensatory portion of the Earnout Payment to the Angelo Gordon partners is treated as post-combination compensation expense, as services are required from such partners post-Closing. See Note 19 for details. The total Purchase Price was allocated to the fair value of assets acquired and liabilities assumed as of the Acquisition Date, with the excess Purchase Price recorded as goodwill. A third-party valuation specialist assisted the Company with the fair value estimates for the assets acquired and liabilities assumed. As the Acquisition Date was close to 191 Table of Contents TPG Inc. Notes to Consolidated Financial Statements December, 31, 2023, the purchase accounting analysis is subject to subsequent adjustments that are identified through the measurement period, which is limited to one year from the Acquisition Date. The Company recorded $ 205.9 million of goodwill as of the Acquisition Date. Goodwill is primarily attributable to the scale, skill sets, operations and expected synergies that can be achieved subsequent to the Acquisition. The goodwill recorded is not expected to be deductible for tax purposes. The fair value and weighted average estimated useful lives of identifiable intangible assets acquired in the Acquisition consist of the following (in thousands): Fair Value Valuation Methodology Estimated Average Useful Life (in years) Investment management agreements $ 287,000 Multi-period excess earnings method ("MPEEM") 5 - 12.5 Acquired carried interest 199,000 Discounted cash flow analysis 6.5 Technology 46,000 Replacement cost analysis and relief from royalty analysis 4 Trade name 15,500 Relief from royalty method 5.5 Fair value of intangible assets acquired $ 547,500 During the year ended December 31, 2023, the Company incurred $ 73.4 million of acquisition related costs that were expensed and reported within general, administrative and other expenses in the Consolidated Statements of Operations. Angelo Gordon’s revenues and net income of $ 234.0 million and $ 38.7 million, respectively, are included in the Company’s Consolidated Statements of Operations from the Acquisition Date through December 31, 2023. The following unaudited pro forma information presents a summary of the Company’s Consolidated Statements of Operations for the years ended December 31, 2023 and 2022, as if the acquisition was completed as of January 1, 2022 (in thousands): Year Ended December 31, 2023 2022 Revenues $ 3,045,143 $ 2,600,420 Net income (loss) attributable to TPG Inc./controlling interest 66,550 ( 25,798 ) These pro forma amounts have been calculated after applying the following material adjustments that were directly attributable to the Acquisition: • adjustments to exclude amounts related to Angelo Gordon’s CLOs that were deconsolidated as of June 30, 2023 in accordance with the terms of the Transaction Agreement; • adjustments to include the impact of the additional amortization that would have been recorded assuming the fair value adjustments to intangible assets had been applied on January 1, 2022; • adjustments to interest expense for additional funding obtained by TPG in connection with the Acquisition; • adjustments to include additional equity-based compensation expense related to Common Units and RSUs issued to Angelo Gordon partners and professionals, as if the grants occurred on January 1, 2022; • adjustments for changes in the performance allocation compensation to Angelo Gordon partners in connection with the Acquisition; 192 Table of Contents TPG Inc. Notes to Consolidated Financial Statements • adjustments to allocation of net income to reflect the pro-rata economic ownership attributable to TPG post Acquisition; • adjustments to reflect the tax effects of the Angelo Gordon Acquisition and the related adjustments as if Angelo Gordon had been included in the Company’s results as of January 1, 2022; and • adjustments to include transaction costs in earnings as if the Acquisition occurred on January 1, 2022. NewQuest Acquisition In January 2022, the Company completed its acquisition of the remaining 33.3 % interest in NewQuest Holdings (Cayman) Limited (“NQ Manager”) in exchange for equity interests in the Company, which consisted of 1,638,866 shares of Class A common stock and 1,072,998 Common Units of the TPG Operating Group. All of the granted equity interests are subject to a three-year service vesting condition and as such, will be recognized on a straight-line basis as post-combination compensation expense. The effect of the acquisition was a reallocation of equity between controlling and non-controlling interest of $ 33.6 million . This transaction was an acquisition under common control in which no gain or loss was recognized. 4. Investments Investments consist of the following (in thousands): December 31, 2023 2022 Equity method - performance allocations $ 5,664,550 $ 4,677,017 Equity method - capital interests (includes assets pledged of $ 570,806 and $ 475,110 as of December 31, 2023 and December 31, 2022, respectively) 923,440 607,964 Investments held to maturity, at amortized cost (includes assets pledged of $ 77,723 as of December 31, 2023) 83,512 — Equity method - fair value option 36,171 20,907 Equity method - other 11,761 11,908 Equity investments 4,678 12,072 Total investments $ 6,724,112 $ 5,329,868 Net gains (losses) from performance allocations and capital interests are disclosed in the Revenue section of Note 2 to the Consolidated Statements of Operations. The following table summarizes net gains (losses) from investment activities (in thousands): Year Ended December 31, 2023 2022 2021 Net gains (losses) of equity method investments, fair value option (a) $ 15,264 $ ( 25,106 ) $ 45,435 Net (losses) gains of equity method investments - other (b) ( 1,306 ) 802 230,186 Net (losses) gains from equity investments (c) ( 7,394 ) ( 85,827 ) 77,598 Total net gains (losses) from investment activities $ 6,564 $ ( 110,131 ) $ 353,219 ___________ (a) In September 2021, TPG Pace Tech Opportunities Corp. (“PACE”) completed a business combination which resulted in a gain on deconsolidation of PACE in an amount of $ 122.7 million. (b) Includes pre-tax gain of $ 95.0 million for the year ended December 31, 2021 on remeasurement of the Company’s pre-existing equity investment in NewQuest at fair value prior to consolidation. (c) In December 2021, TPG PACE Solutions Corp. (“TPGS”) completed a business combination which resulted in a gain on deconsolidation of TPGS in an amount of $ 109.9 million. 193 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Investments Held to Maturity, at Amortized Cost In connection with the Acquisition described in Note 3, the Company acquired investments held to maturity, and the carrying value of these investments are included in investments on the Consolidated Statements of Financial Condition. The Company estimates an allowance for credit losses (“ACL”) on the investments classified as held to maturity securities. The fair value of investments held to maturity, excluding ACL of $ 1.9 million, is $ 83.8 million as of December 31, 2023. Equity Method Investments, Fair Value Option As of December 31, 2023, the Company held a 6.1 % beneficial ownership interest in Nerdy Inc. (“NRDY”), consisting of 10.5 million shares of Class A common stock, with an aggregate fair value of $ 36.2 million. In September 2023, the Company exchanged, in a non-cash transaction, 4.9 million warrants for 1.2 million shares of Class A common stock in NRDY and surrendered 2.4 million Class A earnout shares for cancellation, with the remaining 1.6 million Class A earnout shares no longer being subject to forfeiture. As of December 31, 2022, the Company held a 9.0 % beneficial ownership interest in NRDY, consisting of 7.7 million shares of Class A common stock, 4.0 million Class A earnout shares and 4.9 million warrants, with an aggregate fair value of $ 20.9 million. Equity Method Investments The Company evaluates its equity method investments in which it has not elected the fair value option for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. During the years ended December 31, 2023, 2022 and 2021, the Company did no t recognize any impairment losses on an equity method investment without a readily determinable fair value. Equity Investments Equity investments represent proprietary investment securities held by the Company. At December 31, 2023 and December 31, 2022, the Company held equity investments with readily determinable fair values of $ 4.7 million and $ 12.1 million, respectively. In December 2021, TPG PACE Solutions Corp. (“TPGS”) completed a business combination with Vacasa Holdings, LLC, a leading vacation rental management platform. The business combination was approved on November 30, 2021 by TPGS stockholders and closed on December 7, 2021. At the time of the business combination, a reconsideration event occurred whereby the Company no longer has power over TPGS. As a result, the Company deconsolidated TPGS and recorded a gain of $ 109.9 million, which is included in net gains (losses) from investment activities. Beginning December 7, 2021, Vacasa’s common stock started trading on the Nasdaq Stock Exchange under the ticker symbol “VCSA”. The Company concluded that it does not exercise significant influence over Vacasa’s operating and financial policies. As such, the Company accounts for its investment in VCSA as an equity investment. Summarized Financial Information TPG evaluates each of its equity method investments to determine if any are significant as defined in the regulations promulgated by the U.S. Securities and Exchange Commission (the "SEC"). As of and for the years ended December 31, 2023, 2022 and 2021, no individual equity method investment held by TPG met the significance criteria. As such, TPG is not required to present separate financial statements for any of its equity method investments. 194 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following table shows summarized financial information relating to the Consolidated Statements of Financial Condition for all of TPG’s equity method investments assuming 100 % ownership as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Total assets $ 138,435,777 $ 78,079,182 Total liabilities 25,778,711 14,299,814 Total equity 112,657,066 63,779,368 The following table shows summarized financial information relating to the Consolidated Statements of Operations for all of TPG’s equity method investments assuming 100 % ownership for the years ended December 31, 2023, 2022 and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Revenues $ 11,092,500 $ 5,838,155 $ 25,609,002 Expenses 4,134,838 1,855,509 1,871,086 Net income $ 6,957,662 $ 3,982,646 $ 23,737,916 Investment Activities of Consolidated TPG Funds As part of the Reorganization described in Note 1 to the Consolidated Financial Statements, all TPG Funds were deconsolidated as of December 31, 2021, thus the Company had no gains (losses) from investment activities of consolidated TPG Funds for the years ended December 31, 2023 and 2022. Net gains from investment activities of consolidated TPG Funds were $ 23.4 million for the year ended December 31, 2021. The following table presents the supplemental cash flow disclosures from activities related to deconsolidation of previously consolidated TPG Funds and Public SPACs during the year ended December 31, 2021 (in thousands): Cash and cash equivalents $ 491,523 Investments held in Trust Accounts 430,265 Other assets 3,696 Derivative liabilities of Public SPACs ( 50,898 ) Other liabilities ( 32,580 ) Accounts payable and accrued expenses ( 7,278 ) Notes payable to affiliates ( 2,000 ) Amounts due to shareholders ( 500,000 ) Redeemable equity ( 430,265 ) Controlling interests 36,386 Other non-controlling interests 61,151 5. Derivative Instruments The consolidated Public SPACs enter into derivative contracts in connection with their proprietary trading activities, including warrants and FPAs, which meet the definition of a derivative in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”). As a result of the use of derivative contracts, the consolidated Public SPACs are exposed to the risk that counterparties will fail to fulfill their contractual obligations and are exposed to the volatility of the underlying instruments. These warrants and FPAs are included in derivative liabilities of Public SPACs on the Consolidated Statements of Financial Condition. As of December 31, 2023 and December 31, 2022, the Company did not hold any FPAs. 195 Table of Contents TPG Inc. Notes to Consolidated Financial Statements As of December 31, 2023, the Company held no warrants. As of December 31, 2022, the fair value of the warrants totaled $ 0.7 million. There were no related offsets or cash collateral pledged or received for the warrants as of December 31, 2023 and December 31, 2022. For the years ended December 31, 2023, 2022 and 2021, the Company recorded unrealized gains on warrants and FPAs totaling $ 0.7 million, $ 12.4 million and $ 211.8 million, respectively. Net gains (losses) on derivative instruments are included in the Consolidated Statements of Operations as net gains (losses) from investment activities of consolidated TPG Funds and Public SPACs or unrealized gains (losses) on derivative liabilities of Public SPACs. The following are net gains recognized on derivative instruments of consolidated TPG Funds and Public SPACs (in thousands): Year Ended December 31, 2023 2022 2021 Realized losses, net on total return swaps $ — $ — $ ( 10,269 ) Realized losses, net on foreign currency forwards — — ( 175 ) Unrealized gains, net on total return swaps — — 10,068 Unrealized gains, net on foreign currency forwards — — 28 Total net losses on derivative instruments from investment activities of consolidated TPG Funds — — ( 348 ) Unrealized gains, net on public warrants 667 10,996 52,128 Unrealized gains, net on forward purchase agreements — 1,386 159,694 Total net gains on derivative instruments of Public SPACs 667 12,382 211,822 Net gains on derivative instruments $ 667 $ 12,382 $ 211,474 6. Fair Value Measurement The following tables summarize the valuation of the Company’s financial assets and liabilities that fall within the fair value hierarchy (in thousands): December 31, 2023 Level I Level II Level III Total Assets Equity method investments - fair value option $ 36,171 $ — $ — $ 36,171 Equity investments 4,678 — — 4,678 Total assets $ 40,849 $ — $ — $ 40,849 Liabilities Aggregate Annual Cash Holdback Amount (a) $ — $ — $ 126,779 $ 126,779 Earnout Payment (a) — — 29,520 29,520 Total liabilities $ — $ — $ 156,299 $ 156,299 _______________ (a) Contingent consideration related to the acquisition of Angelo Gordon described in Note 3 to the Consolidated Financial Statements. 196 Table of Contents TPG Inc. Notes to Consolidated Financial Statements December 31, 2022 Level I Level II Level III Total Assets Equity method investments - fair value option $ 20,907 $ — $ — $ 20,907 Equity investments 12,072 — — 12,072 Total assets $ 32,979 $ — $ — $ 32,979 Liabilities Liabilities of consolidated Public SPACs: Public warrants $ 667 $ — $ — $ 667 Total liabilities $ 667 $ — $ — $ 667 The valuation methodology used in the determination of the changes in fair value of financial instruments for which Level III inputs were used at December 31, 2023 included a combination of the present value approach and multiple probability simulation approach. The following tables summarize the changes in the fair value of financial instruments for which the Company has used Level III inputs to determine fair value (in thousands): Year Ended December 31, 2023 2022 Financial liabilities Balance, beginning of period $ — $ — Acquisition (a) 152,473 — Unrealized losses 3,826 — Balance, end of period $ 156,299 $ — Derivative liabilities Balance, beginning of period $ — $ 1,386 Unrealized gains — ( 1,386 ) Balance, end of period $ — $ — _______________ (a) Contingent consideration established in connection with the acquisition of Angelo Gordon described in Note 3 to the Consolidated Financial Statements. Total realized and unrealized gains and losses recorded for Level III financial liabilities and derivative liabilities are reported in interest, dividends and other and unrealized gains (losses) on derivative liabilities of Public SPACs, respectively, in the Consolidated Statements of Operations. The following tables provide qualitative information about instruments categorized in Level III of the fair value hierarchy as of December 31, 2023. In addition to the techniques and inputs noted in the table below, in accordance with the valuation policy, other valuation techniques and methodologies are used when determining fair value measurements. The below table is not intended to be all-inclusive, but rather provides information on the significant Level III inputs as they relate to the Company’s fair value measurements (fair value measurements in thousands): 197 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Fair Value December 31, 2023 Valuation Technique(s) Unobservable Input(s) (a) Range (Weighted Average) (b) Liabilities Aggregate Annual Cash Holdback Amount $ 126,779 Present value Discount rate 8.0 % Earnout Payment 29,520 Multiple probability simulation Estimated revenue volatility 22.8 % $ 156,299 _______________ (a) In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company-specific developments including exit strategies and realization opportunities. Management has determined that market participants would take these inputs into account when valuing the instruments. (b) Inputs weighted based on fair value of instruments in range. 7. Intangible Assets and Goodwill As discussed in Note 3 to the Consolidated Financial Statements, the Company completed the acquisition of Angelo Gordon on November 1, 2023, which resulted in the recognition of certain identifiable intangible assets and goodwill, which are presented as intangible assets and goodwill, respectively, on the Consolidated Statements of Financial Condition. Intangible Assets The following table summarizes the carrying values of intangible assets as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value Contractual performance fee allocations (a) $ 331,600 $ ( 54,707 ) $ 276,893 $ 132,600 $ ( 30,009 ) $ 102,591 Management contracts (a) 307,000 ( 20,553 ) 286,447 20,000 ( 9,375 ) 10,625 Technology (a) 46,000 ( 1,917 ) 44,083 — — — Investor relationships 25,000 ( 5,208 ) 19,792 25,000 ( 3,125 ) 21,875 Trade name (a) 15,500 ( 500 ) 15,000 — — — Other intangible assets (b) 8,494 ( 1,201 ) 7,293 1,494 ( 398 ) 1,096 Total intangible assets $ 733,594 $ ( 84,086 ) $ 649,508 $ 179,094 $ ( 42,907 ) $ 136,187 _______________ (a) Includes intangible assets with a net carrying value of $ 540.4 million as of December 31, 2023 related to the acquisition of Angelo Gordon described in Note 3 to the Consolidated Financial Statements. (b) Includes infinite-lived intangible assets of $ 1.0 million as of December 31, 2023 and 2022. No impairment losses on intangible assets were recorded during the years ended December 31, 2023, 2022 and 2021. Intangible asset amortization expense was $ 41.2 million, $ 28.4 million and $ 19.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. 198 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following table presents estimated remaining amortization expense for finite-lived intangible assets that existed as of December 31, 2023 (in thousands): 2024 $ 110,220 2025 105,239 2026 99,949 2027 96,149 2028 76,244 Thereafter 160,713 Total $ 648,514 Goodwill The following table summarizes the carrying value of the Company’s goodwill as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Goodwill Balance, beginning of period $ 230,194 $ 230,194 Acquisition 205,885 — Balance, end of period $ 436,079 $ 230,194 No impairment losses on goodwill were recorded during the years ended December 31, 2023, 2022 and 2021. 8. Other Assets Other assets consist of the following (in thousands): December 31, 2023 2022 Fixed assets, net: Leasehold improvements $ 142,545 $ 39,946 Computer hardware and software 33,955 8,874 Furniture, fixtures and equipment 13,728 6,878 Other fixed assets 31,350 11,347 Accumulated depreciation ( 139,900 ) ( 42,992 ) Total fixed assets, net 81,678 24,053 Right-of-use assets 227,610 130,357 Prepaid expenses 56,398 23,809 Other 96,939 84,792 Other assets $ 462,625 $ 263,011 199 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 9. Accounts Payable and Accrued Expenses, and Other Liabilities Accounts payable and accrued expenses consist of the following (in thousands): December 31, 2023 2022 Trade accounts payable $ 42,565 $ 44,186 Accrued expenses 129,231 53,985 Accounts payable and accrued expenses $ 171,796 $ 98,171 Other liabilities consist of the following (in thousands): December 31, 2023 2022 Lease obligation $ 235,537 $ 147,887 Clawback liability (see Note 17) 58,317 58,317 Contingent consideration 156,299 — Repurchase agreements 83,336 — Other 118,974 19,886 Other liabilities $ 652,463 $ 226,090 Contingent Consideration In connection with the Acquisition described in Note 3, the Company recorded contingent consideration liabilities of $ 152.5 million to reflect the estimated fair value of the contingent consideration for the Earnout Payment and Aggregate Annual Cash Holdback Amount as of the Acquisition Date. Contingent consideration is included in other liabilities on the Consolidated Statements of Financial Condition. Contingent consideration is remeasured at each reporting period, and any changes in fair value are recognized as interest, dividends and other in the Consolidated Statements of Operations. As of December 31, 2023, other liabilities include $ 156.3 million related to contingent consideration. Repurchase Agreements In connection with the Acquisition described in Note 3, the Company holds various investments in CLO funds. Northwoods European Management, LLC (“ECLO”), a consolidated subsidiary of the Company has a master repurchase agreement with NWCC Cayman LLC (“Nearwater”) with respect to the Company’s investment in the debt tranches of various CLO Funds. The repurchase agreement extends a facility of a maximum of 100,000 Euros to ECLO for future investment in the debt issued by CLO Funds. The repurchase agreement bears interest at a rate of 0.5 % spread above the interest earned by ECLO on the tranches of notes subject to the master repurchase agreement. The weighted average interest rate for the period December 31, 2023 is 6.1 %. ECLO had outstanding borrowings under the repurchase agreement with Nearwater as of December 31, 2023 to finance its investments in the debt of three CLO Funds with maturity dates ranging from November 25, 2033 through March 15, 2034. At December 31, 2023, $ 62.8 million of borrowings are outstanding on the facility which is recorded in other liabilities on the Consolidated Statements of Financial Condition. ECLO pledges as collateral its investments in the debt of the CLO Funds fully collateralizing all outstanding borrowings drawn under the repurchase agreement. All outstanding borrowings drawn from the repurchase agreement mature in a period greater than 90 days. ECLO entered into an additional master repurchase agreement with Citibank, N.A. on December 22, 2021, to finance the purchase of the Company’s investment in one of the CLO funds managed by the entity. The repurchase agreement bears interest at a rate of 0.5 % spread above the interest earned by ECLO on the tranches of notes subject to the master repurchase agreement. The weighted average interest rate for the periods ended December 31, 2023 is 6.3 %. ECLO had outstanding borrowings under the repurchase agreement as of December 31, 2023 to finance the investment in the debt of one CLO Fund with a maturity date of October 15, 2035. As of December 31, 2023, $ 20.5 million of borrowings are 200 Table of Contents TPG Inc. Notes to Consolidated Financial Statements outstanding on the repurchase agreement which is recorded in other liabilities on the Consolidated Statements of Financial Condition. ECLO pledges as collateral its investments in the debt of the CLO Funds fully collateralizing all outstanding borrowings drawn under the repurchase agreement. All outstanding borrowings drawn from the repurchase agreement mature in a period greater than 90 days. 10. Credit and Market Risk The Company holds substantially all of its excess cash in bank deposits at highly rated banking corporations or investments in highly rated money market funds, which are included in cash and cash equivalents, restricted cash, investments held in Trust Accounts and cash and cash equivalents held by consolidated TPG Funds and Public SPACs in the Consolidated Financial Statements. The Company continually monitors the risk associated with these deposits and investments. Management believes the carrying values of these assets are reasonable taking into consideration credit and market risks along with estimated collateral values, payment histories and other information. In the normal course of business, TPG encounters market and credit risk concentrations. Market risk reflects changes in the value of investments due to changes in interest rates, credit spreads or other market factors. The TPG Funds are subject to credit risk to the extent any counterparty is unable to deliver cash balances, securities, or the fair value of swaps, or clear security transactions on the TPG Funds’ behalf. The settlement, clearing and depository operations for the TPG Funds’ securities trading activities are performed pursuant to agreements with counterparties, which are primarily global financial institutions. The TPG Funds manage this risk by monitoring daily the financial condition and credit quality of the parties with which the TPG Funds conduct business, but in the event of default by any of the TPG Funds’ counterparties, the loss to the TPG Funds could be material. The Company is subject to potential concentration risk related to the investors’ commitments to TPG Funds. At December 31, 2023, no individual investor accounted for more than 10% of the total committed capital to TPG’s active funds. Furthermore, certain of the TPG Funds’ investments are made in private companies and there are generally no public markets for the underlying securities at the current time. The TPG Funds’ ability to liquidate their publicly-traded investments are often subject to limitations, including discounts that may be required to be taken on quoted prices due to the number of shares being sold. Subordinate investments held by TPG may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market and the small size of the issue (relative to issues of comparable interests). As a result, the TPG Funds may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. Other limitations for TPG to dispose of an investment and realize value include currency fluctuations and natural disasters. The TPG Funds make investments outside of the United States. Investments outside the United States may be subject to less developed bankruptcy, corporate, partnership and other laws (which may have the effect of disregarding or otherwise circumventing the limited liability structures potentially causing the actions or liabilities of one fund or a portfolio company to adversely impact the TPG Funds or an unrelated fund or portfolio company). Non-U.S. investments are subject to the same risks associated with the TPG Funds’ U.S. investments as well as additional risks, such as fluctuations in foreign currency exchange rates, unexpected changes in regulatory requirements, heightened risk of political and economic instability, difficulties in managing non-U.S. investments, potentially adverse tax consequences and the burden of complying with a wide variety of foreign laws. Furthermore, TPG is exposed to economic risk concentrations related to certain large investments as well as concentrations of investments in certain industries and geographies. TPG is exposed to economic risk concentrations insofar as the Company is dependent on the ability of the TPG Funds that it manages to compensate it for the services it provides to these TPG Funds. Further, the incentive income component of this compensation is based on the ability of such TPG Funds to generate returns above certain specified thresholds. Additionally, TPG is exposed to interest rate risk. TPG has debt obligations that have variable rates. Interest rate changes may therefore affect the amount of interest payments, future earnings and cash flows. 201 Table of Contents TPG Inc. Notes to Consolidated Financial Statements TPG’s derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. Some of the markets in which the Company may effect its transactions are “over-the-counter” or “interdealer” markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight unlike members of exchange-based markets. This exposes the Company to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Company to suffer losses. Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Company has concentrated its transactions with a single or small group of counterparties. TPG attempts to minimize this risk by limiting its counterparties to major financial institutions with strong credit ratings. 11. Variable Interest Entities TPG consolidates VIEs in which it is considered the primary beneficiary as described in Note 2 to the Consolidated Financial Statements. TPG’s investment strategies differ by TPG fund; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance allocations. The Company does not provide performance guarantees and has no other financial obligation to provide funding to consolidated VIEs other than its own capital commitments. The assets of consolidated VIEs may only be used to settle obligations of these consolidated VIEs. In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities. The Company holds variable interests in certain VIEs which are not consolidated as it is determined that the Company is not the primary beneficiary. The Company’s involvement with such entities is in the form of direct equity interests and fee arrangements. The fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance allocations. Accordingly, disaggregation of TPG’s involvement by type of VIE would not provide more useful information. TPG may have an obligation as general partner to provide commitments to unconsolidated VIEs. For the years ended December 31, 2023 and 2022, TPG did not provide any amounts to unconsolidated VIEs other than its obligated commitments. The maximum exposure to loss represents the loss of assets recognized by TPG relating to non-consolidated entities and any amounts due to non-consolidated entities. The assets and liabilities recognized in the Company’s Consolidated Statements of Financial Condition related to its interest in these non-consolidated VIEs and its maximum exposure to loss relating to non-consolidated VIEs were as follows (in thousands): December 31, 2023 December 31, 2022 Investments (includes assets pledged of $ 570,806 and $ 475,110 as of December 31, 2023 and December 31, 2022, respectively) $ 903,119 $ 607,964 Due from affiliates 293,233 88,847 Potential clawback obligation 1,910,247 1,869,395 Due to affiliates 56,262 47,572 Maximum exposure to loss $ 3,162,861 $ 2,613,778 Additionally, cumulative performance allocations of $ 5.7 billion and $ 4.7 billion as of December 31, 2023 and 2022, respectively, are subject to reversal in the event of future losses. RemainCo In conjunction with the Reorganization described in Note 1 to the Consolidated Financial Statements, the TPG Operating Group and RemainCo entered into certain agreements to effectuate the go-forward relationship between the entities. The arrangements discussed below represent the TPG Operating Group’s variable interests in RemainCo, which do not provide the TPG Operating Group with the power to direct the activities that most significantly impact RemainCo’s performance and operations. As a result, RemainCo represents a non-consolidated VIE. 202 Table of Contents TPG Inc. Notes to Consolidated Financial Statements RemainCo Performance Earnings Agreement In accordance with the TPG Operating Group’s agreement with RemainCo (the “RemainCo Performance Earnings Agreement”), RemainCo is entitled to distributions in respect of performance allocations from TPG funds as described below. For certain existing TPG funds that are advanced in their life cycles, which we refer to as the “Excluded Funds,” RemainCo is generally entitled to receive distributions of performance allocations not previously designated for partners and employees or unaffiliated third parties, and the TPG Operating Group is not entitled to further performance allocations from the Excluded Funds. For TPG funds of a more recent vintage and for future TPG funds, which we collectively refer to as the “Included Funds,” RemainCo is entitled to a base performance allocation ranging from 10 % to 15 % (subject to limited exceptions, including TPG funds acquired in a business combination or formed with meaningful participation by the counterparty of such business combination) depending upon the Included Fund (the “Base Entitlement”). With respect to any TPG Fund that holds a first closing involving non-affiliated investors (a “First Closing”) on or after the fifth anniversary of the IPO, the Base Entitlement will step down ratably for each annual period following the fifth anniversary of the IPO through the fifteenth anniversary. RemainCo will not be entitled to distributions of performance allocations with respect to TPG funds that have not held a First Closing on or prior to the fifteenth anniversary of the IPO. Once determined, RemainCo’s entitlement to the performance allocation percentage with respect to any TPG Fund will remain in effect for the life of the applicable fund. RemainCo is obligated to fund its pro rata share of clawback obligations with respect to any TPG fund (in proportion to the Base Entitlement with respect to such TPG fund) either directly or through indemnity or similar obligations to the TPG Operating Group. In the event that the underlying assets of RemainCo are not sufficient to cover the clawback amount, the TPG Operating Group is obligated to cover any shortfall of the clawback. This shortfall covered by the TPG Operating Group would be required to be repaid by RemainCo out of future distributions. Further, in the calendar years 2022, 2023 and 2024, if the amount otherwise available under the new discretionary performance allocation program is less than $ 110.0 million, $ 120.0 million and $ 130.0 million, respectively, our Chief Executive Officer can determine to increase the performance allocations available under such performance allocation program by an amount equal to the shortfall plus $ 10.0 million (which we refer to as “Performance Allocation Increases”), by allocating amounts to the holders of Promote Units that would have otherwise been distributable to RemainCo. The maximum Performance Allocation Increase in any year is $ 40.0 million. In the calendar year 2023, the Performance Allocation Increase to the holders of Promote Units was $ 29.2 million. In the calendar year 2022, there was no Performance Allocation Increase. RemainCo Administrative Services Agreement The TPG Operating Group has entered into an administrative services agreement with RemainCo whereby the TPG Operating Group provides RemainCo with certain administrative services, including maintaining RemainCo’s books and records, tax and financial reporting and similar support which began on January 1, 2022. In exchange for these services, RemainCo pays the TPG Operating Group an annual administration fee in the amount of 1 % per annum of the net asset value of RemainCo’s assets, with such amount payable quarterly in advance and recorded in expense reimbursements and other within revenues in the Consolidated Statements of Operations. Securitization Vehicles During 2018, certain subsidiaries of the Company issued $ 200.0 million in privately placed securitization notes. Certain equity interests of these subsidiaries serve as collateral for the notes. The Company used one or more special purpose entities that are considered VIEs to issue notes to third-party investors in the securitization transactions. The notes issued by these VIEs are backed by the cash flows related to the Company’s equity method investments (“Participation Rights”) in certain funds. The Company determined that it is the primary beneficiary of the securitization vehicles because (i) its servicing responsibilities for the Participation Rights give the Company the power to direct the activities that most significantly impact the performance of the VIEs, and (ii) its variable interests in the VIEs give the Company the obligation to absorb losses and the right to receive residual returns that could potentially be significant. In 2019, certain subsidiaries of the Company issued an additional $ 50.0 million in privately placed securitization notes. 203 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The transfer of Participation Rights to the special purpose entities are considered sales for legal purposes. However, the Participation Rights and the related debt remain on the Company’s Consolidated Statements of Financial Condition. The Company recognizes interest expense on the secured borrowings issued by the special purpose entities. The Participation Rights of the VIEs, cash and restricted cash serve as the sole source of repayment for the notes issued by these entities. Investors in the notes issued by the VIEs do not have recourse to the Company or to its other assets. Additionally, the Participation Rights and other assets directly held by the VIEs are not available to satisfy the general obligations of the Company. As the primary beneficiary of these entities, the Company is exposed to credit, interest rate and market risk from the Participation Rights in the VIEs. However, the Company’s exposure to these risks did not change as a result of the transfer of Participation Rights to the VIEs. The Company may also be exposed to interest rate risk arising from the secured notes issued by the VIEs. As of December 31, 2023 and December 31, 2022, the carrying amount of secured notes issued by the VIEs was $ 245.6 million and $ 245.3 million, respectively, and is shown in the Company’s Consolidated Statements of Financial Condition as debt obligations, net of unamortized issuance costs of $ 4.4 million and $ 4.7 million, respectively. The following table depicts the total assets and liabilities related to VIE securitization transactions included in the Company’s Consolidated Statements of Financial Condition (in thousands): December 31, 2023 December 31, 2022 Cash and cash equivalents $ 6,057 $ 33,612 Restricted cash 13,183 13,166 Participation rights receivable (a) 570,806 475,110 Due from affiliates 434 436 Total assets $ 590,480 $ 522,324 Accrued interest $ 191 $ 191 Due to affiliates and other 5,484 280 Secured borrowings, net 245,567 245,259 Total liabilities $ 251,242 $ 245,730 _______________ (a) Participation rights receivable related to VIE securitization transactions are included in investments in the Company’s Consolidated Statements of Financial Condition . 204 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 12. Debt Obligations The following table summarizes the Company’s and its subsidiaries’ debt obligations (in thousands): As of December 31, 2023 As of December 31, 2022 Debt Origination Date Maturity Date Borrowing Capacity Carrying Value Interest Rate Carrying Value Interest Rate Senior Unsecured Revolving Credit Facility (a) March 2011 September 2028 $ 1,200,000 $ 501,000 6.45 % $ — 5.46 % Senior Unsecured Term Loan (b) December 2021 March 2026 200,000 198,485 6.45 % 199,307 5.46 % Secured Borrowings - Tranche A (c) May 2018 June 2038 200,000 196,434 5.33 % 196,186 5.33 % Secured Borrowings - Tranche B (c) October 2019 June 2038 50,000 49,133 4.75 % 49,073 4.75 % 364-Day Revolving Credit Facility (d) April 2023 April 2024 150,000 — 7.35 % — — % Subordinated Credit Facility (e) August 2014 August 2025 30,000 — 7.70 % — 6.71 % Total debt obligations $ 1,830,000 $ 945,052 $ 444,566 _______________ (a) The Senior Unsecured Revolving Credit Facility, as amended, has aggregate revolving commitments of $ 1.2 billion and is scheduled to mature on September 26, 2028. Dollar-denominated principal amounts outstanding under the Amended Senior Unsecured Revolving Credit Facility accrue interest, at the option of the applicable borrower, either (i) at a base rate plus applicable margin not to exceed 0.25 % per annum or (ii) at a term SOFR rate plus a 0.10 % per annum adjustment and an applicable margin not to exceed 1.25 %. The Senior Unsecured Revolving Credit Facility contains customary representations, covenants and events of default. Financial covenants consist of a maximum leverage ratio and a requirement to keep a minimum amount of fee-earning assets under management, each tested quarterly. At December 31, 2023, the Company is in compliance with these covenants and conditions. During the year ended December 31, 2023, the Company borrowed $ 470.0 million from the Senior Unsecured Revolving Credit Facility to partially fund the cash consideration of the Acquisition, and an additional $ 31.0 million for working capital purposes. (b) The Senior Unsecured Term Loan is scheduled to mature on March 31, 2026. Principal amounts outstanding under the Senior Unsecured Term Loan Agreement accrue interest, at the option of the borrower, either (i) at a base rate plus an applicable margin of 0.00 % or (ii) at a term SOFR rate plus a 0.10 % per annum adjustment and an applicable margin of 1.00 %. (c) The Company’s secured borrowings are issued using on-balance sheet securitization vehicles, as further discussed in Note 11 to the Consolidated Financial Statements. The secured borrowings are repayable only from collections on the underlying securitized equity method investments and restricted cash. The secured borrowings are separated into two tranches. Tranche A secured borrowings were issued in May 2018 at a fixed rate of 5.33 % with an aggregate principal balance of $ 200.0 million due June 21, 2038, with interest paid semiannually. Tranche B secured borrowings were issued in October 2019 at a fixed rate of 4.75 % with an aggregate principal balance of $ 50.0 million due June 21, 2038, with interest paid semiannually. The secured borrowings contain an optional redemption feature giving the Company the right to call the notes in full or in part. If the secured borrowings are not redeemed on or prior to June 20, 2028, the Company is required to pay additional interest equal to 4.00 % per annum. The secured borrowings contain covenants and conditions customary in transactions of this nature, including negative pledge provisions, default provisions and operating covenants, limitations on certain consolidations, mergers and sales of assets. At December 31, 2023, the Company is in compliance with these covenants and conditions. (d) On April 14, 2023, a consolidated subsidiary of the Company entered into a 364 -day revolving credit facility (the “364-Day Credit Facility”) with Mizuho Bank, Ltd., acting as administrative agent, to provide the subsidiary with revolving borrowings of up to $ 150.0 million. Borrowings under the 364 -Day Credit Facility are subject to one of three interest rates depending on the type of drawdown requested. Alternate Base Rate (“ABR”) loans are denominated in US Dollars and subject to a variable interest rate computed daily as the higher of the Federal Funds Rate plus 0.50 % or the one-month Term SOFR plus 1.00 %, plus an applicable margin of between 1.00 % and 2.00 %, depending on the term of the loan. Term Benchmark Loans may be denominated in US Dollars or Euros, and are subject to a fixed interest rate computed as the SOFR rate for a period comparable to the term of the loan in effect two business days prior to the date of borrowing, plus an applicable margin of between 2.00 % and 3.00 %, depending on the term of the loan. Risk-Free Rate (“RFR”) loans are denominated in Sterling and subject to a fixed interest rate computed daily as the Sterling Overnight Index Average (“SONIA”) in effect five business days prior to the date of borrowing, plus an applicable margin of between 2.00 % and 3.00 %, depending on the term of the loan. The subsidiary is also required to a pay a quarterly facility fee equal to 0.30 % per annum of the total facility capacity of $ 150.0 million, as well as certain customary fees for any issued loans. The Company entered into an equity commitment letter in connection with the 364 -Day Credit Facility, committing to provide capital contributions, if and when required, to the consolidated subsidiary throughout the life of the facility. (e) A consolidated subsidiary of the Company entered into two $ 15.0 million subordinated revolving credit facilities (collectively, the “Subordinated Credit Facility”), for a total commitment of $ 30.0 million. The Subordinated Credit Facility is available for direct borrowings and is guaranteed by certain members of the TPG Operating Group. In August 2023, the subsidiary extended the maturity date of the Subordinated Credit Facility from August 2024 to August 2025. The interest rate for borrowings under the Subordinated Credit Facility is calculated at a term SOFR rate plus a 0.10 % per annum adjustment and 2.25 %. 205 Table of Contents TPG Inc. Notes to Consolidated Financial Statements During the years ended December 31, 2023, 2022 and 2021, the Company incurred interest expense of $ 31.8 million, $ 19.0 million and $ 14.3 million, respectively, on its debt obligations. At December 31, 2023 and 2022, the fair value of the Company’s senior unsecured term loan was $ 200.0 million and $ 199.2 million, respectively, which approximates its carrying amount represented in the Consolidated Statements of Financial Condition due to its variable rate nature. At December 31, 2023 and 2022, the estimated fair value of the secured borrowings based on current market rates and credit spreads for debt with similar maturities was $ 240.7 million and $ 231.5 million, respectively, and the carrying value, excluding unamortized issuance costs, was $ 250.0 million at December 31, 2023 and 2022. During January 2024, the Company drew $ 58.5 million under its Senior Unsecured Revolving Credit Facility. 13. Income Taxes As a result of the Reorganization, the Company is treated as a corporation for U.S. federal and state income tax purposes. The Company is subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to its allocable share of taxable income generated by the TPG Operating Group. Prior to the Reorganization, the Company was treated as a partnership for U.S. federal income tax purposes and therefore was not subject to U.S. federal and state income taxes except for certain consolidated subsidiaries that were subject to taxation in the U.S. (federal, state and local) and in foreign jurisdictions. The income (loss) before income taxes includes the following components (in thousands): Year Ended December 31, 2023 2022 2021 Income (loss) before income taxes United States $ 18,303 $ 80,872 $ 3,171,385 International 65,350 ( 104,624 ) 1,493,650 $ 83,653 $ ( 23,752 ) $ 4,665,035 The Company has provided U.S. federal, foreign and state and local corporate income tax for certain consolidated subsidiaries. The provision for income taxes consists of the following (in thousands): Year Ended December 31, 2023 2022 2021 Current income taxes (benefit) Federal $ 24,314 $ 44,714 $ 1,950 State and local 6,680 9,466 1,954 International 9,198 5,443 5,010 40,192 59,623 8,914 Deferred income taxes (benefit) Federal 18,258 ( 21,639 ) ( 223 ) State and local 1,570 ( 4,769 ) ( 105 ) International 248 ( 732 ) 452 20,076 ( 27,140 ) 124 Income tax expense (benefit) $ 60,268 $ 32,483 $ 9,038 206 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Income taxes are provided at the applicable statutory rates. The tax effects of temporary differences resulted in the following deferred tax assets and liabilities (in thousands): December 31, 2023 2022 Deferred tax assets Investment in TPG Operating Group $ 86,571 $ 99,018 Accruals 1,245 2,063 Fixed Assets 629 369 Straight line rent — 6 Net operating loss carryforwards 25 — Equity based compensation 20,021 10,674 Lease liability 2,029 12,638 Foreign tax credit 1,830 — Other 5,797 603 118,147 125,371 Less: valuation allowance ( 92,599 ) ( 80,340 ) Deferred tax assets, net $ 25,548 $ 45,031 Deferred tax liabilities Accruals $ — $ 42 Right-of-use assets 1,890 11,157 Fixed assets — 155 Intangibles 6,989 218 Deferred tax liabilities, net $ 8,879 $ 11,572 As of December 31, 2023 and 2022, the Company has recognized net deferred tax assets before the considerations of valuation allowances in the amount of $ 109.3 million and $ 113.8 million, respectively, which primarily relate to excess income tax basis versus book basis differences in connection with the Company’s investment in the TPG Operating Group. The excess of income tax basis in the TPG Operating Group was primarily due to the Reorganization which resulted in a step-up in the tax basis of certain assets to the Company that will be recovered as those underlying assets are sold or the tax basis is amortized. At December 31, 2023, the Company has foreign tax credits available in the U.S., in the amount of $ 1.8 million, which will begin to expire in 2032, if not utilized. The Company does not have any U.S. federal, state or foreign net operating loss carryforwards, net of valuation allowance, for the period ended December 31, 2023. The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation allowance when it is more-likely-than-not that all or a portion of the deferred tax asset may not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. In projecting its taxable income, the Company begins with historic results and incorporates assumptions of the amount of future pretax operating income. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that the Company uses to manage its business. The Company’s projections of future taxable income that include the effects of originating and reversing temporary differences, including those for the tax basis intangibles, indicate that it is more likely than not that the benefits from our deferred tax assets will be realized. As of December 31, 2023 and 2022, the Company has recognized a valuation allowance of $ 92.6 million and $ 80.3 million, respectively, which primarily relates to the Company’s investment in the TPG Operating Group. In evaluating the realizability of the deferred tax asset related to the Company’s investment in the TPG Operating Group, the Company determined that the excess income tax basis in the TPG Operating Group will only reverse upon a sale of the Company’s interest in the TPG Operating Group which is not expected to occur in the foreseeable future. 207 Table of Contents TPG Inc. Notes to Consolidated Financial Statements In addition, the Company has recognized valuation allowances against certain foreign tax credits available for use in the U.S., in the amount of $ 0.9 million, which are expected to expire, as well as a valuation allowance of $ 5.1 million against certain foreign deferred tax assets as it is more-likely-than not that this portion of our deferred tax assets is not realizable. The current year net increase in our valuation allowance, as compared to the prior year, was $ 12.3 million of which a $ 18.7 million increase was charged to income tax expense, a $ 12.1 million decrease was recognized through equity and a $ 5.7 million increase was recognized through Goodwill in connection with the Acquisition. Additionally, the Company recorded a payable pursuant to the Tax Receivable Agreement within other liabilities in the Consolidated Statements of Financial Condition of $ 24.6 million, related to the Reorganization and subsequent exchanges of TPG Operating Group partnership units for common stock. The following table reconciles the U.S. federal statutory tax rate to the effective income tax rate of the Company’s income tax expense: Year Ended December 31, 2023 2022 2021 U.S. federal taxes at statutory rate 21.0 % 21.0 % 21.0 % Income passed through to partners 9.6 ( 136.2 ) ( 20.1 ) State and local income taxes 12.0 ( 25.9 ) — Foreign Taxes, net of U.S. foreign tax credits 7.7 ( 17.3 ) ( 0.8 ) Equity based compensation ( 1.3 ) 2.0 — Change in TPG Operating Group tax basis estimate — 21.7 — Return to Provision ( 0.9 ) 3.9 — Change in valuation allowance 20.8 ( 4.3 ) — Change in tax status of statutory subsidiaries 2.9 — — Other reconciling items 0.2 ( 1.7 ) — Effective income tax rate 72.0 % ( 136.8 %) 0.2 % The Company’s effective tax rate was 72.0 %, ( 136.8 %) and 0.2 % for the years ended December 31, 2023, 2022, and 2021, respectively. The Company’s effective tax rate is dependent on many factors, including the estimated amount of income subject to tax. Consequently, the effective tax rate can vary from period to period. The Company’s overall effective tax rate in each of the periods described above deviates from the statutory rate because (i) the Company was not subject to U.S. federal taxes prior to the Reorganization and (ii) the portion of income and losses that are allocated to non-controlling interests, as the tax liability on such income or loss is borne by the holders of such non-controlling interests. In addition, during the year ended December 31, 2023, the Company recognized additional income tax expense due to the increase in valuation allowance as a result of the pre-closing reorganization transactions of certain TPG Parties (the “Pre-Closing TPG Transactions”). Further, for the year ended December 31, 2022, an additional income tax benefit was recognized in connection with certain changes in estimate of the income tax basis of the Company's investments in the TPG Operating Group at the time of the Reorganization. 208 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following is a tabular reconciliation of unrecognized tax benefits, excluding interest and penalties (in thousands): Year Ended December 31, 2023 2022 2021 Unrecognized tax benefits - January 1 $ 2,024 $ 1,965 $ 1,760 Additions related to current year positions 711 259 359 Additions related to prior year positions — — — Reductions for tax positions of prior years ( 360 ) — ( 119 ) Settlements — — — Lapse of statute of limitations ( 386 ) — — Exchange rate fluctuations ( 2 ) ( 200 ) ( 35 ) Unrecognized tax benefits - December 31 $ 1,987 $ 2,024 $ 1,965 The Company recognizes interest accrued on uncertain tax benefits in income tax expense. For the years ended December 31, 2023, 2022 and 2021, the Company recognized interest of $ 0.9 million, $ 1.1 million and $ 0.9 million, respectively. The Company recognized penalties of $ 1.1 million, $ 1.3 million and $ 1.3 million for the years ended December 31, 2023, and 2022 and 2021, respectively. As of December 31, 2023, the Company has unrecognized tax benefits of $ 4.0 million, which, if recognized, would impact the effective tax rate. The Company does not believe that it has any tax position for which it is reasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months. The Company applies the provisions of ASC 740, which clarifies the accounting and disclosure for uncertainty in tax positions. The Company analyzed its tax filing positions for all federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. In the normal course of business, the Company is subject to examination by U.S. federal and certain state, local and foreign tax regulators. At December 31, 2023, U.S. federal tax returns related to 2022 and predecessor entities for the years 2020 through 2021 are generally open under the normal statute of limitations and therefore subject to examination. State and local tax returns of our predecessor entities are generally open to audit for tax years between 2019 to 2021. In addition, certain foreign subsidiaries’ tax returns from 2010 to 2022 are also open for examination by various regulators. The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any current or future audit will have a material adverse effect on the Company’s Consolidated Financial Statements. 209 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 14. Related Party Transactions Due From and Due To Affiliates Due from affiliates and due to affiliates consist of the following (in thousands): Year Ended December 31, 2023 2022 Portfolio companies $ 60,227 $ 57,492 Partners and employees 2,293 2,270 Other related entities 63,224 54,030 Unconsolidated VIEs 293,233 88,847 Due from affiliates $ 418,977 $ 202,639 Portfolio companies $ 8,461 $ 10,367 Partners and employees 51,647 60,309 Other related entities 26,805 21,615 Unconsolidated VIEs 56,262 47,572 Due to affiliates $ 143,175 $ 139,863 Affiliate receivables and payables historically have been settled in the normal course of business without formal payment terms, generally do not require any form of collateral and do not bear interest. Fund Investments Certain of the Company’s investment professionals and other individuals have made investments of their own capital in the TPG funds. These investments are generally not subject to management fees or performance allocations at the discretion of the general partner. Investments made by these individuals during the years ended December 31, 2023 and 2022 totaled $ 267.0 million and $ 154.8 million, respectively. Fee Income from Affiliates Substantially all revenues are generated from TPG funds, limited partners of TPG funds, or portfolio companies. The Company disclosed revenues in Note 2 to the Consolidated Financial Statements. Loans to Affiliates From time to time, the Company may enter into transactions in which it arranges short-term funding for affiliates, such as portfolio companies, as part of the Company’s capital markets activities. Under this arrangement, the Company may draw all or substantially all of its availability for borrowings under the 364-Day Credit Facility. Borrowings made under this facility are generally expected to be repaid promptly as these short-term fundings are intended to be syndicated to third parties. Notes Receivable from Affiliates From time to time, the Company makes loans to its employees and other affiliates. Certain of these loans are collateralized by underlying investment interests of the borrowers. The outstanding balance of these notes was $ 0.1 million and $ 1.6 million as of December 31, 2023 and 2022, respectively, which is included in other assets in the Consolidated Statements of Financial Condition. These notes generally incur interest at floating rates, and such interest, which is included in interest, dividends and other in the Consolidated Statements of Operations, totaled less than $ 0.1 million for each of the years ended December 31, 2023 and 2022, and $ 0.5 million for the year ended December 31, 2021. 210 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Aircraft Services The Company terminated its leases of aircraft owned by entities controlled by certain partners of the Company in January 2022. The termination of the leases resulted in the derecognition of a right-of-use asset and a corresponding lease liability of $ 13.6 million. RemainCo Administrative Services Agreement In exchange for services provided by TPG Operating Group, RemainCo pays TPG Operating Group an annual administration fee in the amount of 1 % per annum of the net asset value of RemainCo’s assets, with such amount payable quarterly in advance. The fees earned by the Company for the years ended December 31, 2023 and 2022 were $ 17.8 million and $ 19.8 million, respectively, and recorded in fees and other in the Consolidated Statements of Operations. Other Related Party Transactions The Company has entered into contracts to provide services or facilities for a fee with certain related parties. A portion of these fees are recognized as fees and other in the Consolidated Statements of Operations in the amount of $ 28.9 million, $ 23.5 million and $ 21.8 million for the years ended December 31, 2023, 2022 and 2021 respectively. During the years ended December 31, 2023, 2022 and 2021, these related parties have made payments associated with these arrangements of $ 35.8 million, $ 26.2 million and $ 27.9 million, respectively. 15. Redeemable Equity Investment in SPACs The Company has invested in and sponsored SPACs which were formed for the purposes of effecting a merger, asset acquisition, stock purchase, reorganization or other business combination. In the IPO of each of these SPACs, either common shares or units (which include one Class A ordinary share and, in some cases, a fraction of a redeemable public warrant which entitled the holder to purchase one share of Class A ordinary shares at a fixed exercise price) were sold to investors. Each SPAC provided its public shareholders the option to redeem their shares either (i) in connection with a shareholder meeting to approve the business combination or (ii) by means of a tender offer. Assets held in Trust Accounts relate to gross proceeds received from the IPO and can only be used for the initial business combination and any possible investor redemptions. If the SPAC is unable to complete a business combination within a specified time frame, typically within 24 months of the IPO close date, the SPACs will redeem all public shares. The ownership interest in each SPAC which is not owned by the Company is reflected as redeemable equity attributable to Public SPACs in the accompanying Consolidated Financial Statements. As of August 16, 2023, the Company no longer had any investment in consolidated Public SPACs. The Company consolidates these SPACs during the period before the initial business combination, and therefore the Class F ordinary shares, Class G ordinary shares, private placement shares, private placement warrants and FPAs with consolidated related parties are eliminated in consolidation. In August 2021, AFTR, a SPAC, completed an initial public offering. AFTR sold 25,000,000 units at a price of $ 10.00 per unit for total IPO proceeds of $ 250.0 million. Each unit consisted of one Class A ordinary share of AFTR at $ 0.0001 par value and one-third of one warrant. On August 16, 2023, AFTR redeemed all of its AFTR Class A Ordinary Shares at a per-share redemption price of approximately $ 10.41 , because AFTR did not consummate an initial business combination within the time period required by its Amended and Restated Memorandum and Articles of Association. As of August 16, 2023, the AFTR Class A Ordinary Shares were deemed cancelled and represented only the right to receive the redemption amount, and there were no redemption rights or liquidating distributions with respect to AFTR’s warrants, which expired with no value. After August 16, 2023, AFTR ceased all operations except for those required to wind up its business. In April 2021, YTPG, a SPAC, completed an initial public offering. YTPG sold 40,000,000 shares at a price of $ 10.00 per share for total IPO proceeds of $ 400.0 million. Each share consisted of one YTPG Class A Ordinary Share of YTPG at $ 0.0001 par value. 211 Table of Contents TPG Inc. Notes to Consolidated Financial Statements On April 17, 2023, YTPG redeemed all of its YTPG Class A Ordinary Shares at a per-share redemption price of approximately $ 10.00 , because YTPG did not consummate an initial business combination within the time period required by its Amended and Restated Memorandum and Articles of Association. As of April 17, 2023, the YTPG Class A Ordinary Shares were deemed cancelled and represented only the right to receive the redemption amount. FPAs entered into by YTPG at the time of its IPO were terminated on April 17, 2023. After April 17, 2023, YTPG ceased all operations except for those required to wind up its business. In October 2020, TPG PACE Beneficial Finance Corp. (”TPGY”), a SPAC, completed an initial public offering. TPGY sold 35,000,000 units at a price of $ 10.00 per unit for a total IPO price of $ 350.0 million. Each unit consisted of one Class A ordinary share of TPGY at $ 0.0001 par value and one-fifth of one warrant. On October 11, 2022, TPGY redeemed all of its Class A Shares at a per-share redemption price of approximately $ 10.06 , because TPGY did not consummate an initial business combination within the time period required by its Amended and Restated Memorandum and Articles of Association. As of October 11, 2022, the Class A Shares were deemed cancelled and represented only the right to receive the Redemption Amount. There will be no redemption rights or liquidating distributions with respect to the TPGY’s warrants, which expired with no value. FPAs entered into by TPGY at the time of its IPO were terminated on October 11, 2022. After October 11, 2022, TPGY ceased all operations except for those required to wind up its business. Redeemable Equity from Consolidated Public SPACs Redeemable equity from consolidated Public SPACs represents the shares issued by the Company’s consolidated Public SPACs that are redeemable for cash in the event of an election to redeem by individual public shareholders at the time of the business combination. Additionally, these shares become automatically redeemable with the Public SPAC’s failure to complete a business combination, tender offer or stockholder approval provisions. The ownership interest in each SPAC which is not owned by the Company is reflected as redeemable equity from consolidated Public SPACs in the accompanying Consolidated Financial Statements. Offering costs related to Class A ordinary shares issued by SPACs consisted of legal, accounting, underwriting fees and other costs incurred that are directly related to the IPO. Offering costs for the year ended December 31, 2021 totaled approximately $ 54.1 million, inclusive of $ 32.7 million in deferred underwriting commissions, and were charged to redeemable equity. The Company had no such activity during the years ended December 31, 2023 and 2022. As of December 31, 2023, the Company held no redeemable equity. As of December 31, 2022, the redeemable equity consisted of 65.0 million outstanding Class A ordinary shares, and these interests were classified outside of partners’ capital totaling $ 653.6 million, which represented the full redemption value and equaled the assets held in Trust Accounts. The following table summarizes the adjustments to redeemable equity (in thousands): Year Ended December 31, 2023 2022 2021 Beginning balance $ 653,635 $ 1,000,027 $ 800,011 IPO share proceeds — — 935,000 Current and deferred offering costs 22,750 12,959 ( 54,141 ) Bifurcation of warrant liabilities — — ( 12,500 ) Net income attributable to redeemable equity 12,044 14,648 155,131 Redemptions / withdrawals ( 661,001 ) ( 352,014 ) ( 304,760 ) Deconsolidation — — ( 430,265 ) Change in redemption value of redeemable non-controlling interest ( 27,428 ) ( 21,985 ) ( 88,449 ) Total redeemable equity $ — $ 653,635 $ 1,000,027 212 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 16. Operating Leases The following tables summarize the Company’s lease cost, cash flows, and other supplemental information related to its operating leases. The components of lease expense were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Lease cost (a) : Operating lease cost $ 29,878 $ 26,371 $ 37,330 Short-term lease costs 587 562 416 Variable lease cost 8,089 6,381 5,067 Sublease income ( 3,400 ) ( 3,947 ) ( 5,807 ) Total lease cost $ 35,154 $ 29,367 $ 37,006 Weighted-average remaining lease term 6.7 7.1 7.4 Weighted-average discount rate 5.09 % 4.11 % 4.11 % ___________ (a) Office rent expense for the years ended December 31, 2023, 2022 and 2021 was $ 29.7 million, $ 26.1 million and $ 32.0 million, respectively. Supplemental Consolidated Statements of Cash Flows information related to leases were as follows (in thousands): Year Ended December 31, 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities $ 34,492 $ 28,458 $ 29,224 Right-of-use assets obtained in the Acquisition (see Note 3) 107,716 — — Other non-cash changes in right-of-use assets 13,057 6,311 5,634 Non-cash right-of-use assets and lease liability termination ( 743 ) ( 13,375 ) — The following table shows the undiscounted cash flows on an annual basis for operating lease liabilities as of December 31, 2023 (in thousands): Year Due Lease Amount 2024 $ 43,553 2025 39,221 2026 37,353 2027 37,581 2028 36,321 Thereafter 88,273 Total future undiscounted operating lease payments 282,302 Less: imputed interest ( 46,765 ) Present value of operating lease liabilities $ 235,537 213 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 17. Commitments and Contingencies Guarantees Certain of the Company’s consolidated entities have guaranteed debt or obligations. At December 31, 2023 and 2022, the maximum obligations guaranteed under these agreements totaled $ 1,789.3 million and $ 1,120.8 million, respectively. At December 31, 2023, the guarantees had expiration dates as follows (in thousands): Maturity Date Guarantee Amount April 2024 $ 150,000 August 2025 30,000 March 2026 200,000 June 2026 60,000 December 2026 116,284 September 2028 1,200,000 June 2030 32,972 Total $ 1,789,256 At December 31, 2023 and 2022, the outstanding amount of debt on obligations related to these guarantees was $ 807.6 million and $ 327.8 million, respectively. Letters of Credit The Company had $ 0.5 million in letters of credit outstanding for each of the years ended December 31, 2023 and 2022. Commitments As of August 16, 2023, the Company no longer had any investment in or commitments to consolidated Public SPACs. See Note 15. At December 31, 2023, the TPG Operating Group had unfunded investment commitments of $ 521.3 million to the investment funds that the Company manages and other strategic investments. Contingent Obligations (Clawback) With Affiliates The governing agreements of the TPG funds that pay performance allocations generally include a clawback provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Performance allocations received by the general partners of the respective TPG funds are subject to clawback to the extent the performance allocations received by the general partners exceeds the amount the general partners are ultimately entitled to receive based on cumulative fund results. At December 31, 2023, if all investments held by the TPG funds were liquidated at their current unrealized fair value, there would be clawback of $ 58.3 million, net of tax, for which a performance fee reserve was recorded within other liabilities in the Consolidated Statements of Financial Condition. At December 31, 2023, if all remaining investments were deemed worthless, a possibility management views as remote, the amount of performance allocations subject to potential clawback would be $ 1,910.2 million. During the year ended December 31, 2023, the general partners made no payments on the clawback liability. 214 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Legal Actions and Other Proceedings From time to time, the Company is involved in legal proceedings, litigation and claims incidental to the conduct of our business, including with respect to acquisitions, bankruptcy, insolvency and other types of proceedings. Such lawsuits may involve claims against our portfolio companies that adversely affect the value of certain investments owned by TPG’s funds. The Company’s business is also subject to extensive regulation, which has and may result in the Company becoming subject to examinations, inquiries and investigations by various U.S. and non-U.S. governmental and regulatory agencies, including but not limited to the SEC, Department of Justice, state attorneys general, Financial Industry Regulatory Authority and the U.K. Financial Conduct Authority. Such examinations, inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings or fines against the Company or its personnel. The Company accrues a liability for legal proceedings in accordance with U.S. GAAP. In particular, the Company establishes an accrued liability for loss contingencies when a settlement arising from a legal proceeding is both probable and reasonably estimable. If the matter is not probable or reasonably estimable, no such liability is recorded. Examples of this include: (i) the proceedings may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved or (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties. Consequently, management is unable to estimate a range of potential loss, if any, related to such matters. Even when the Company accrues a liability for a loss contingency in such cases, there may be an exposure to loss in excess of any amounts accrued. Loss contingencies may be, in part or in whole, subject to insurance or other payments such as contributions and/or indemnity, which may reduce any ultimate loss. Based on information presently known by management, the Company has not recorded a potential liability related to any pending legal proceeding and is not subject to any legal proceedings that we expect to have a material impact on our operations, financial positions or cash flows. It is not possible, however, to predict the ultimate outcome of all pending legal proceedings, and the claimants in the matter discussed below seek potentially large and indeterminate amounts. As such, although we do not consider such an outcome likely, given the inherent unpredictability of legal proceedings, it is possible that an adverse outcome in the matter described below or certain other matters could have a material effect on the Company’s financial results in any particular period. Since 2011, a number of TPG-related entities and individuals, including David Bonderman and Jim Coulter, have been named as defendants/respondents in a series of lawsuits in the United States, United Kingdom, and Luxembourg concerning an investment TPG held from 2005-2007 in a Greek telecommunications company, known then as TIM Hellas (“Hellas”). Entities and individuals related to Apax Partners, a London based investment firm also invested in Hellas at the time, are named in the suits as well. The cases all allege generally that a late 2006 refinancing of the Hellas group of companies was improper. To date, most of the lawsuits filed in New York Federal and State courts against TPG and Apax-related defendants have been dismissed, with those dismissals upheld on appeal, or the appeal period has passed. A lawsuit pending in the District Court of Luxembourg against two former TPG partners and two individuals related to Apax involved in the investment has been decided after trial in their favor on all claims and is now on appeal. In February 2018, a High Court case in London against a number of TPG and Apax-related parties and individuals was abandoned by the claimants in the early days of a scheduled six-week trial with costs of $ 9.5 million awarded to the TPG and Apax-related parties, of which $ 3.4 million was awarded to TPG. In addition to the Luxembourg appeal, two cases in New York state court are active against TPG and Apax-related parties concerning the Hellas investment. Motions to dismiss by all defendants were made in both actions with the Court now having granted and denied in part those motions, paring back the parties, claims and amounts at issue. Appeals are pending as to the dismissal ruling in one matter (with immediate appeals possible as to the dismissal ruling in the other). The court has ruled on summary judgment motions in one case, further paring back the parties and claims in the case. Appeals are pending as to those summary judgment rulings as well. There is no pending trial date in either action. The prior noted stayed federal actions have now been dismissed by court order and stipulation. The Company believes that the suits related to the Hellas investment are without merit and intends to continue to defend them vigorously. 215 Table of Contents TPG Inc. Notes to Consolidated Financial Statements In October 2022, the Company received a document request from the SEC focusing on the use and retention of business-related electronic communications, which, as has been publicly reported, is part of an industry-wide review. The Company is cooperating with the SEC’s request. Indemnifications In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties that provide general indemnifications. In addition, certain of the Company’s funds have provided certain indemnities relating to environmental and other matters and has provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each in connection with the financing of certain real estate investments that the Company has made. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects the risk of material loss to be remote. 18. Net Income (Loss) Per Class A Common Share The Company calculates its basic and diluted income (loss) per share using the two-class method for all periods presented, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines income per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all income (distributed and undistributed) is allocated to common shares and participating securities based on their respective rights to receive dividends. In computing the dilutive effect that the exchange of TPG Operating Group partnership units would have on net income available to Class A common stock per share, TPG considered that net income (loss) available to holders of shares of Class A common stock would increase due to the elimination of non-controlling interests in the TPG Operating Group, inclusive of any tax impact. The hypothetical conversion may be dilutive to the extent there is activity at the TPG Inc. level that has not previously been attributed to the non-controlling interests or if there is a change in tax rate as a result of a hypothetical conversion. Basic and diluted net income (loss) per share of Class A common stock for the year ended December 31, 2022 is presented from January 13, 2022 through December 31, 2022, the period following the Reorganization and IPO. There were no shares of Class A common stock outstanding prior to January 13, 2022, therefore no income per share information has been presented for any period prior to that date. 216 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted net income (loss) per share of Class A common stock (in thousands, except share and per share data): Year Ended December 31, 2023 2022 Numerator: Net income (loss) $ 23,385 $ ( 56,235 ) Less: Net loss attributable to redeemable equity in Public SPACs prior to IPO — ( 517 ) Net income attributable to other non-controlling interests prior to Reorganization and IPO — 966 Net income attributable to TPG Group Holdings prior to Reorganization and IPO — 5,256 Net income (loss) subsequent to IPO 23,385 ( 61,940 ) Less: Net income attributable to redeemable equity in Public SPACs subsequent to IPO 12,044 15,165 Net loss attributable to non-controlling interests in TPG Operating Group subsequent to IPO ( 92,411 ) ( 180,824 ) Net income attributable to other non-controlling interests subsequent to IPO 23,662 11,293 Net income attributable to Class A Common Stockholders prior to distributions 80,090 92,426 Reallocation of earnings to unvested participating restricted stock units (a) ( 8,872 ) ( 4,994 ) Net income attributable to Class A Common Stockholders - Basic 71,218 87,432 Net loss assuming exchange of non-controlling interest ( 82,900 ) ( 147,133 ) Reallocation of income from participating securities assuming exchange of Common Units — 132 Net (loss) income attributable to Class A Common Stockholders - Diluted $ ( 11,682 ) $ ( 59,569 ) Denominator: Weighted-Average Shares of Common Stock Outstanding - Basic 80,334,871 79,255,411 Exchange of Common Units to Class A Common Stock 237,609,625 229,652,641 Weighted-Average Shares of Common Stock Outstanding - Diluted 317,944,496 308,908,052 Net income (loss) available to Class A common stock per share Basic $ 0.89 $ 1.10 Diluted $ ( 0.04 ) $ ( 0.19 ) Dividends declared per share of Class A Common Stock (b) $ 1.40 $ 1.09 ___________ (a) No undistributed losses were allocated to unvested participating restricted stock units during the year ended December 31, 2023 and the year ended December 31, 2022, as the holders do not have a contractual obligation to share in the losses of the Company with common stockholders. (b) Dividends declared reflects the calendar date of the declaration for each distribution. The fourth quarter dividends were declared on February 13, 2024 and are payable on March 8, 2024. 217 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 19. Equity-Based Compensation Restricted Stock Awards Under the Company’s 2021 Omnibus Equity Incentive Plan (the “Omnibus Plan”), the Company is permitted to grant equity awards representing ownership interests in TPG Inc.’s Class A common stock. On January 13, 2022, the Omnibus Plan became effective and the Company authorized for issuance 30,694,780 shares of TPG Inc.’s Class A common stock. On January 6, 2023, additional 12,797,983 shares of Class A common stock were registered, increasing the share reserve to 30,889,270 of which 14,245,386 may be issued as of December 31, 2023. In conjunction with the IPO in 2022, TPG employees, certain of the Company’s executives and certain non-employees received one-time grants of equity-based awards in the form of restricted stock units which entitle the holder to one share of Class A common stock upon vesting. In conjunction with the Angelo Gordon Acquisition, described in Note 3, the Company granted 7.0 million of RSUs (the “Acquisition Service Awards”) to former Angelo Gordon employees to promote retention post closing. These units generally vest over a term of five years . There are approximately 1.4 million of Angelo Gordon Service Awards to be granted at a later date. Further, in the ordinary course of business the Company also grants equity awards that are subject to either service conditions (“Service Awards”), a combination of service and performance conditions (“Performance Condition Awards”) or a combination of service and market conditions (“Market Condition Awards”). The following table summarizes the outstanding restricted stock unit awards as of December 31, 2023 (in millions, including share data): Units Outstanding as of December 31, 2023 Compensation Expense for the Year Ended Unrecognized Compensation Expense as of December 31, 2023 December 31, 2023 December 31, 2022 Restricted Stock Units Special Purpose Awards: IPO Service Awards 9.3 $ 61.0 $ 75.2 $ 158.6 IPO Market Condition Awards 1.1 6.5 5.2 6.5 Acquisition Service Awards 7.0 12.8 — 189.0 Executive Service Awards 2.6 1.9 — 88.9 Executive Market Condition Awards 3.9 2.3 — 79.8 Ordinary Awards: Service Awards 4.4 44.3 2.8 103.4 Performance Condition Awards 0.1 1.0 0.6 2.0 Total Restricted Stock Units 28.4 $ 129.8 $ 83.8 $ 628.2 For the years ended December 31, 2023 and 2022, the Company recorded total restricted stock unit compensation expense o f $ 129.8 million and $ 83.8 million, respectively. The expense associated with awards granted to certain non-employees of the Company is recognized in general, administrative and other in our Consolidated Statements of Operations and tota led $ 3.7 million and $ 7.1 million for the years ended December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, the Company had 562,790 and 169,493 restricted stock units vest at a fair value of $ 18.5 million and $ 4.6 million, respectively (excluding vested, but unsettled units). The restricted stock units were settled by issuing 356,443 shares of TPG Inc. Class A Common stock, net of withholding tax of $ 6.9 million for the year ended December 31, 2023 (excluding vested, but unsettled units) and by issuing 169,493 shares of TPG Inc. Class A Common stock for the year ended December 31, 2022. 218 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Service Awards For the year ended December 31, 2023, the Company issued 7.0 million of Acquisition Service Awards and 13.6 million of Ordinary Service Awards. The grant date fair value of the Acquisition Awards was the closing public share price of the Company’s Class A common stock on November 1, 2023 of $ 28.18 , and for the Ordinary Service Awards the public share price on their respective grant date. The following table presents the rollforward of the Company’s unvested Service Awards for the year ended December 31, 2023 (awards in millions): Service Awards Weighted-Average Grant Date Fair Value Balance at December 31, 2022 11.2 $ 30.68 Granted 13.6 31.51 Vested ( 0.6 ) 29.29 Forfeited ( 0.9 ) 30.11 Balance at December 31, 2023 23.3 $ 30.62 As of December 31, 2023, there was approximately $ 539.8 million of total estimated unrecognized compensation expense related to unvested Service Awards, which is expected to be recognized over the weighted average remaining requisite service period of 3.7 years. In January 2024, the Company issued 2.4 million shares of Class A common stock in connection with the first vesting of both IPO and Ordinary Service Awards. In January 2024, the Company granted 3.6 million in Ordinary Service Awards and 0.9 million in Acquisition Service Awards. The units vest in equal tranches over a period of three to five years . Performance Condition Awards In 2022 the Company also granted 0.1 million of Ordinary Performance Condition Awards. The weighted-average grant date fair value per share was $ 26.93 for these awards. The Company recorded equity-based compensation expense of $ 1.0 million and $ 0.6 million for the years ended December 31, 2023 and 2022, respectively. Further, as of December 31, 2023, there was approximately $ 2.0 million of total estimated unrecognized compensation expense related to unvested Ordinary Performance Condition Awards, which is expected to be recognized over the weighted average remaining requisite service period of 2.1 years. Market Condition Awards IPO Awards Under the Omnibus Plan, the Company also granted 2.2 million of Executive Awards in order to incentivize and retain key members of management and further their alignment with our shareholders in conjunction with the IPO. The Executive Awards include awards of (i) 1.1 million restricted stock units subject to service-based vesting over a five-year service period beginning with the second anniversary of the grant date (included in IPO Service Awards) and (ii) 1.1 million market and service based restricted stock units (“IPO Market Condition Awards”). Each IPO Market Condition Award is comprised of two parts: (i) a time-based component requiring a five-year service period and (ii) a market price component with a target Class A common stock share price at either $ 44.25 within five years or $ 59.00 within eight years. Dividend equivalents are paid on vested and unvested Executive Service Awards when the dividend occurs. Dividend equivalents accrue for vested and unvested IPO Market Condition Awards and are paid only when both the applicable service and performance conditions are satisfied. Compensation expense for Executive Service Awards is recognized on a straight-line basis and for the IPO Market Condition Awards using the accelerated attribution method on a tranche by tranche basis. Executive Awards Under the Omnibus Plan, the Company granted a long-term performance incentive award to the Company’s Chief Executive Officer, Jon Winkelried, on November 30, 2023. The award comprised of 2.6 million Executive Service Awards 219 Table of Contents TPG Inc. Notes to Consolidated Financial Statements and 3.9 million Executive Market Condition Awards and is intended to incentivize Mr. Winkelried to drive shareholder value in a manner that is aligned with stockholder interests, reward him for organic and inorganic Company growth, and bring his compensation in-line with peer competitors in order to promote and ensure retention. The Service Awards vest ratably over a term of five years . The Market Condition Awards are scheduled to service vest ratably over a period of five years , and are only earned upon achievement of a stock price vesting condition that will be met when the 30-day volume weighted average trading price of a share of Class A common stock meets or exceeds certain stock price hurdles. 25 % of each service vesting tranche of the Market Condition Awards are eligible to be earned and vest following achievement of each of the following Class A common stock prices: $ 52.50 (“Type I”), $ 58.45 (“Type II”), $ 64.05 (“Type III”) and $ 70.00 (“Type IV”). These stock price hurdles represent a premium of 150 %, 167 %, 183 % and 200 % of the closing price of a share of Class A common stock on the date of grant. The first market hurdle must be achieved by January 13, 2029, and the remaining hurdles by January 13, 2030. If the applicable market hurdles are not achieved by the specified periods, the applicable Market Condition Awards will be forfeited. Dividend equivalents are paid on vested and unvested Service Awards when the dividend occurs. Dividend equivalents accrue for vested and unvested Market Condition Awards and are paid only if and when both the applicable service and market conditions are satisfied. The fair value of the Executive Service Awards is based on the grant date fair value, which considers the public share price of the Company’s Class A common stock. Compensation expense for those awards is recognized on a straight-line basis. The grant date fair value of the Executive Market Condition Awards made during the year ended December 31, 2023 was based on a Monte-Carlo simulation valuation model. Compensation expense for those awards is recognized using the accelerated attribution method on a tranche by tranche basis. Below is a summary of the grant date fair value based on the Monte-Carlo simulation valuation model. Vesting Condition Grant Date Fair Value Type I $ 23.48 Type II $ 22.24 Type III $ 20.32 Type IV $ 18.37 Significant Assumptions Type I Type II Type III Type IV TPG Class A common stock share price as of valuation date $ 35.00 $ 35.00 $ 35.00 $ 35.00 Volatility 38.0 % 36.9 % 36.9 % 36.9 % Dividend Yield 4.5 % 4.5 % 4.5 % 4.5 % Risk-free rate 4.27 % 4.3 % 4.3 % 4.3 % The following table presents the roll forwards of the Company’s unvested Market Condition Awards for the year ended December 31, 2023 (awards in millions): Market Condition Awards Weighted Average Grant Date Fair Value Balance at December 31, 2022 1.1 $ 16.58 Granted 3.9 21.10 Vested — — Forfeited — — Balance at December 31, 2023 5.0 $ 20.10 As of December 31, 2023 , there was approximately $ 86.3 million of total estimated unrecognized compensation expense related to unvested Market Condition Awards, which is expected to be recognized over the weighted average remaining requisite service period of 3.2 years. 220 Table of Contents TPG Inc. Notes to Consolidated Financial Statements Other Awards As a result of the Reorganization and the IPO in 2022, the Company’s current partners hold restricted indirect interests in Common Units through TPG Partner Holdings and indirect economic interests through RemainCo. TPG Partner Holdings and RemainCo are presented as non-controlling interest holders within the Company’s Consolidated Financial Statements. The interests in TPG Partner Holdings (“TPH Units”) and indirectly in RemainCo (“RPH Units”) are generally subject to service, or, in certain cases, to both service and performance conditions. Holders of these interests participate in distributions regardless of the vesting status. Additionally, as a result of the Reorganization, the IPO and the acquisition of the final 33.3 % of NQ Manager in 2022 discussed in Note 3 to the Consolidated Financial Statements, certain TPG partners and NewQuest principals were granted Common Units directly at TPG Operating Group and Class A common stock subject to both service and performance conditions, which are deemed probable of achieving. In conjunction with the Angelo Gordon Acquisition, as described in Note 3, the Company granted 43.8 million of unvested Common Units to former Angelo Gordon partners (the “Acquisition Common Units”), which are considered compensatory under ASC 718. The grant fair value of the Acquisition Common Units was based on a $ 28.18 closing price for the Class A Shares on November 1, 2023, applying an applicable discount for lack of marketability. These units generally vest over a term of five years and participate in distributions at the TPG Operating Group along with all vested equity. The following table summarizes the outstanding Other Awards as of December 31, 2023 (in millions, including share data): Unvested Units/Shares Outstanding as of December 31, 2023 Compensation Expense for the Year Ended Unrecognized Compensation Expense as of December 31, 2023 December 31, 2023 December 31, 2022 TPH and RPH Units TPH units 37.2 $ 363.3 $ 426.9 $ 847.1 RPH units 0.3 73.3 81.7 133.9 Total TPH and RPH Units 37.5 $ 436.6 $ 508.6 $ 981.0 Common Units and Class A Common Stock Common Units 1.6 $ 17.5 $ 24.3 $ 18.5 Class A Common Stock 1.1 17.6 17.1 17.7 Acquisition Common Units 43.8 37.4 — 1,073.0 Total TOG Units and Class A Common Stock 46.5 $ 72.5 $ 41.4 $ 1,109.2 TPH and RPH Units The Company accounts for the TPH Units and RPH Units as compensation expense in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The unvested TPH and RPH Units are recognized as equity-based compensation subject to primarily service vesting conditions and in certain cases performance conditions, which are currently deemed probable of achieving. The Company recognized compensation expense of $ 436.6 million and $ 508.6 million for the years ended December 31, 2023 and 2022, respectively. There is no additional dilution to our stockholders related to these interests. Contractually these units are only related to non-controlling interest holders of the TPG Operating Group, and there is no impact to the allocation of income and distributions to TPG Inc. Therefore, the Company has allocated these expense amounts to its non-controlling interest holders. 221 Table of Contents TPG Inc. Notes to Consolidated Financial Statements The following table presents the roll forwards of the Company’s unvested TPH Units and RPH Units for the year ended December 31, 2023 (units in millions): TPH Units RPH Units Partnership Units Grant Date Fair Value Partnership Units Grant Date Fair Value Balance at December 31, 2022 50.3 $ 24.38 0.4 $ 457.10 Reallocated 0.7 28.41 — — Vested ( 13.1 ) 24.13 ( 0.1 ) 457.10 Forfeited ( 0.7 ) 24.79 ( 0.0 ) 457.10 Balance at December 31, 2023 37.2 24.54 0.3 457.10 TPH Units, which were forfeited by certain holders upon termination, were reallocated to certain existing unit holders in accordance with the applicable governing documents. The grant date fair value of the reallocated awards was determined based on the fair value of TPG’s common stock at the time of reallocation. As of December 31, 2023, there was approximately $ 981.0 million of total estimated unrecognized compensation expense related to outstanding unvested awards, of which TPH Units and RPH Units represe nted $ 847.1 million and $ 133.9 million, respectively. Common Units and Class A Common Stock In accordance with ASC 718, all Other Awards are also recognized as equity-based compensation. The expense for totaled $ 72.5 million and $ 41.4 million for the years ended December 31, 2023 and 2022, respectively. As TPG Operating Group holders would accrete pro-rata or benefit directly upon forfeiture of those awards, this compensation expense was allocated pro-rata to all controlling and non-controlling interest holders of TPG Inc. The following table presents the roll forwards of the Company’s unvested TOG Units and Class A Common Stock Awards for the year ended December 31, 2023 (awards in millions): Common Units Class A Common Stock Partnership Units Grant Date Fair Value Partnership Units Grant Date Fair Value Balance at December 31, 2022 2.2 $ 27.29 1.7 $ 29.50 Granted 43.8 25.36 — — Vested ( 0.6 ) 27.29 ( 0.6 ) 29.50 Forfeited — — — — Balance at December 31, 2023 45.4 25.43 1.1 29.50 Total unrecognized compensation expense related to outstanding unvested awards as of December 31, 2023 was $ 1,109.2 million, of which the TOG Units and Class A common stock represented $ 1,091.5 million and $ 17.7 million, respectively. Other Liability-Classified Awards In conjunction with the Acquisition discussed in Note 3, the Company granted liability-classified Common Unit awards with a grant date fair value of $ 206.6 million to Angelo Gordon partners. Those awards represent the compensatory portion of the Earnout Payment under ASC 718 and as such, require both continuous service over a period of five years and the satisfaction of the FRR targets during the Measurement Period defined in Note 3. These liability-classified awards will be settled with a variable number of both vested and unvested Common Units upon the satisfaction of the FRR targets and do not participate in TPG Operating Group distributions before settlement. The fair value of these awards will be remeasured every reporting period and is based on the satisfaction of the respective FRR targets. During the year ended December 31, 2023, the Company recognized compensation expense of $ 12.4 million related to its liability-classified awards with a corresponding increase in Other liabilities. Compensation expense for those 222 Table of Contents TPG Inc. Notes to Consolidated Financial Statements awards is recognized using the accelerated attribution method on a tranche by tranche basis. Total unrecognized compensation expense related to these awards as of December 31, 2023 was $ 194.1 million. TRTX Awards Certain employees of the Company receive awards (“TRTX Awards”) from TPG RE Finance Trust, Inc. (“TRTX”), a publicly traded real estate investment trust, externally managed and advised by TPG RE Finance Trust Management, L.P., a wholly-owned subsidiary of the Company, for services provided to TRTX. Generally, the TRTX Awards vest over four years for employees and at grant date for directors of TRTX. The TRTX Awards granted to certain employees of the Company are recorded in other assets and due to affiliates in the Consolidated Statements of Financial Condition. The grant date fair value of the asset is amortized through compensation and benefits expense on a straight-line basis over the vesting period in the Consolidated Statements of Operations. Compensation and benefits expense is offset by related management fees earned by the Company from TRTX. During the year ended December 31, 2023 the Company recognized $ 7.2 million of management fees and compensation and benefits expense. During the year ended December 31, 2022 the Company recognized le ss than $ 0.01 million of such expense. Other Compensation Matters TPG provides voluntary defined contribution plans for its U.S. and U.K. employees who meet certain eligibility requirements. The current defined contribution plan for U.S. employees is a 401(k) profit-sharing plan that was adopted in May 1996. The current defined contribution plan for U.K. employees is a pension plan that was adopted in January 2010. Employees may elect to make contributions up to legally established limits. Both plans provide for employer contributions at the Company’s discretion. The Company’s contribution expenses were $ 15.2 million, $ 12.7 million and $ 10.9 million, for the years ended December 31, 2023, 2022 and 2021, respectively. Compensation includes a significant performance-based component in the form of discretionary bonuses. The Company incurred discretionary bonus expense of $ 220.7 million, $ 205.4 million and $ 340.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. 223 Table of Contents TPG Inc. Notes to Consolidated Financial Statements 20. Equity The Company has three classes of common stock outstanding, Class A common stock, nonvoting Class A common stock and Class B common stock. Class A common stock is traded on the Nasdaq Global Select Market. The Company is authorized to issue 2,240,000,000 shares of Class A common stock with a par value of $ 0.001 per share, 100,000,000 shares of nonvoting Class A common stock, 750,000,000 shares of Class B common stock with a par value of $ 0.001 per share, and 25,000,000 shares of preferred stock, with a par value of $ 0.001 per share. Each share of the Company’s Class A common stock entitles its holder to one vote, and each share of our Class B common stock entitles its holder to ten votes. Holders of Class A common stock and Class B common stock generally vote together as a single class on all matters presented to the Company’s stockholders for their vote or approval. The nonvoting Class A common stock have the same rights and privileges as, rank equally and share ratably with, and are identical in all respects as to all matters to, the Class A common stock, except that the nonvoting Class A common stock have no voting rights other than such rights as may be required by law. Holders of Class A common stock are entitled to receive dividends when and if declared by the board of directors. Holders of the Class B common stock are not entitled to dividends in respect of their shares of Class B common stock. In connection with the Acquisition described in Note 3, the Company issued 9.2 million Common Units where all Common Units issued are accompanied by an equal number of Class B common stock. As of December 31, 2023, 72,337,600 shares of Class A common stock and 8,258,901 shares of nonvoting Class A common stock were outstanding, 281,657,626 shares of Class B common stock were outstanding, and there were no shares of preferred stock outstanding. Dividends and distributions are reflected in the Consolidated Statements of Changes in Equity when declared by the board of directors. Dividends are made to Class A common stockholders and distributions are made to holders of non-controlling interests in subsidiaries. The table below presents information regarding the quarterly dividends on the Class A common stock, which were made at the sole discretion of the Board of Directors of the Company. Date Declared Record Date Payment Date Dividend per Class A Common Share May 10, 2022 May 20, 2022 June 3, 2022 $ 0.44 August 9, 2022 August 19, 2022 September 2, 2022 0.39 November 9, 2022 November 21, 2022 December 2, 2022 0.26 February 15, 2023 February 27, 2023 March 10, 2023 0.50 Total 2022 Dividend Year $ 1.59 May 15, 2023 May 25, 2023 June 5, 2023 $ 0.20 August 8, 2023 August 18, 2023 September 1, 2023 0.22 November 7, 2023 November 17, 2023 December 1, 2023 0.48 February 13, 2024 February 23, 2024 March 8, 2024 0.44 Total 2023 Dividend Year (through Q4 2023) $ 1.34 Exchange of Common Units Pursuant to the exchange agreement entered into at the time of our IPO (the “Exchange Agreement”), on March 30, 2023 a pre-IPO Investor exchanged 1,000,000 Common Units of each TPG Operating Group partnership for 1,000,000 shares of Class A common stock. This exchange resulted in the issuance of 1,000,000 shares of Class A common stock and the cancellation of 1,000,000 shares of Class B common stock for no additional consideration. 21. Subsequent Events Other than the events noted in Notes 12, 19 and 20 to the Consolidated Financial Statements, there have been no additional events since December 31, 2023 that require recognition or disclosure in the Consolidated Financial Statements. 224 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.