What changed in this filing

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Item 1. Financial Statements

2022-05-10 compared with 2021-11-09 · 180 added, 222 removed, 422 unchanged (49% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(in thousands, except share data) September 30,

(in thousands, except share data) March 31,

2022 December 31,

28 unchanged sentences

Common stock, $ 0.01 par value, 1,000,000,000 shares authorized;

11,906,487 shares issued and 7,587,757 shares outstanding at September 30, 2021;

11,998,877 shares issued and 7,472,829 shares outstanding at March 31, 2022;

and 11,906,747 shares issued and 7,506,151 shares outstanding at December 31, 2021

2 unchanged sentences

Accumulated other comprehensive income (loss) ( 30 ) 20

Treasury stock, at cost, 4,318,730 and 4,207,403 shares at September 30, 2021 and December 31, 2020, respectively

Treasury stock, at cost, 4,526,048 and 4,400,596 shares at March 31, 2022 and December 31, 2021, respectively

( 539,248 ) ( 509,248 )

8 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share data) 2022 2021

9 unchanged sentences

Operating expenses of consolidated investment products ("CIP") 740 559

Restructuring and severance — 735 — 1,155

Depreciation expense 935 1,098

27 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

1 unchanged sentence

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment, net of tax of $ 6 and $( 6 ) for the three months ended September 30, 2021 and 2020, respectively, and $ 4 and $ 3 for the nine months ended September 30, 2021 and 2020, respectively

( 17 ) 17 ( 11 ) ( 9 )

Foreign currency translation adjustment, net of tax of $ 73 and $ — for the three months ended March 31, 2022 and 2021, respectively.

Other comprehensive income (loss) ( 50 ) 6

6 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

(in thousands) 2022 2021

7 unchanged sentences

Equity in earnings of equity method investments ( 410 ) ( 1,028 )

(Gain) loss on extinguishment of debt — ( 705 )

Realized and unrealized (gains) losses on investments, net 2,983 ( 889 )

Distributions from equity method investments 3,133 921

Sales (purchases) of investments, net ( 7,917 ) ( 25 )

7 unchanged sentences

Sales of investments by CIP 209,644 377,388

Net proceeds (purchases) of short term investments by CIP 16,176 1,434

(Purchases) sales of securities sold short by CIP, net ( 11 ) 267

Change in other assets of CIP 223 ( 2,039 )

Change in liabilities of CIP ( 540 ) ( 3,472 )

Amortization of discount on notes payable of CIP — 11,169

Net proceeds (purchases) of short-term investments and securities sold short by CIP ( 14 ) 16,716

Change in other assets and liabilities of CIP 1,145 ( 683 )

Net cash provided by (used in) operating activities ( 81,775 ) 150,151

1 unchanged sentence

Capital expenditures and other asset purchases ( 2,510 ) ( 2,560 )

Acquisition of businesses, net of cash acquired of $ 8,443

Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net ( 292 ) ( 48 )

1 unchanged sentence

Cash Flows from Financing Activities:

Refinancing of credit agreement 81,155 —

Payment of long-term debt ( 687 ) ( 5,913 )

Payment of deferred financing costs ( 7,039 ) —

Common stock dividends paid ( 12,663 ) ( 7,117 )

Preferred stock dividends paid — ( 2,084 )

Repurchases of common shares ( 32,499 ) ( 25,000 )

Repurchase of common shares ( 30,000 ) ( 4,999 )

Stock options exercised — 66

Payment of contingent consideration ( 33,036 ) —

Taxes paid related to net share settlement of restricted stock units ( 13,416 ) ( 15,163 )

2 unchanged sentences

Payments on borrowings by CIP ( 52,241 ) ( 35,543 )

Borrowings by CIP — 781,147

Net cash provided by (used in) financing activities ( 145,777 ) ( 87,673 )

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 56 ) —

Net increase (decrease) in cash, cash equivalents and restricted cash ( 250,183 ) 59,870

6 unchanged sentences

Common stock dividends payable $ 11,259 $ 6,219

Conversion of preferred stock to common stock $ — $ 115,000

(in thousands) September 30,

(in thousands) March 31,

2022 December 31, 2021

6 unchanged sentences

Virtus Investment Partners, Inc.

Condensed Consolidated Statements of Changes in Equity

Condensed Consolidated Statements of Changes in Stockholders' Equity

Permanent Equity Temporary Equity

9 unchanged sentences

(in thousands, except per share data) Shares Par Value Shares Amount

Balances at June 30, 2020 7,664,272 $ 118 $ 1,303,036 $ ( 208,222 ) $ ( 17 ) 4,113,460 $ ( 436,749 ) $ 658,166 $ 8,345 $ 666,511 $ 90,687

Net income (loss) — — — 29,648 — — — 29,648 977 30,625 10,309

Foreign currency translation adjustments — — — — 17 — — 17 — 17 —

Net subscriptions (redemptions) and other — — — — — — — — ( 340 ) ( 340 ) ( 1,719 )

Cash dividends declared ($ 0.82 per common share)

— — ( 6,695 ) — — — — ( 6,695 ) — ( 6,695 ) —

Repurchases of common shares ( 53,867 ) — — — — 53,867 ( 7,500 ) ( 7,500 ) — ( 7,500 ) —

Issuance of common shares related to employee stock transactions 2,749 0 49 — — — — 49 — 49 —

Taxes paid on stock-based compensation — — ( 124 ) — — — — ( 124 ) — ( 124 ) —

Stock-based compensation — — 5,469 — — — — 5,469 — 5,469 —

Balances at September 30, 2020 7,613,154 $ 118 $ 1,301,735 $ ( 178,574 ) $ 0 4,167,327 $ ( 444,249 ) $ 679,030 $ 8,982 $ 688,012 $ 99,277

Balances at June 30, 2021 7,651,606 $ 119 $ 1,280,667 $ ( 35,704 ) $ 35 4,254,236 $ ( 464,248 ) $ 780,869 $ 8,968 $ 789,837 $ 131,525

Net income (loss) — — — 58,736 — — — 58,736 374 59,110 13,401

Foreign currency translation adjustments — — — — ( 17 ) — — ( 17 ) — ( 17 ) —

Net subscriptions (redemptions) and other — — — — — — — — ( 529 ) ( 529 ) ( 13,257 )

Cash dividends declared ($ 1.50 per common share)

— — ( 12,015 ) — — — — ( 12,015 ) — ( 12,015 ) —

Repurchases of common shares ( 64,494 ) — — — — 64,494 ( 20,000 ) ( 20,000 ) — ( 20,000 ) —

Issuance of common shares related to employee stock transactions 645 0 — — — — — — — — —

Taxes paid on stock-based compensation — — ( 148 ) — — — — ( 148 ) ( 148 ) —

Stock-based compensation — — 4,872 — — — — 4,872 — 4,872 —

Balances at September 30, 2021 7,587,757 $ 119 $ 1,273,376 $ 23,032 $ 18 4,318,730 $ ( 484,248 ) $ 812,297 $ 8,813 $ 821,110 $ 131,669

Permanent Equity Temporary Equity

Common Stock Preferred Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Income (Loss) Treasury Stock Total

Attributed To

Virtus Investment Partners, Inc.

Interests Total

Equity Redeemable

(in thousands, except per share data) Shares Par Value Shares Amount Shares Amount

Balances at December 31, 2020 7,583,466 $ 118 $ 1,298,002 $ ( 135,259 ) $ 29 4,207,403 $ ( 451,749 ) $ 711,141 $ 9,799 $ 720,940 $ 115,513

2 unchanged sentences

Net subscriptions (redemptions) and other — — — — — — — — ( 557 ) ( 557 ) ( 18,582 )

Conversion of preferred stock 912,806 9 ( 1,150,000 ) ( 110,843 ) 110,834 — — — — — — — —

Cash dividends declared ($ 0.82 per common share)

4 unchanged sentences

Stock-based compensation — — 8,435 — — — — 8,435 — 8,435 —

Balances at September 30, 2020 7,613,154 $ 118 — $ — $ 1,301,735 $ ( 178,574 ) $ 0 4,167,327 $ ( 444,249 ) $ 679,030 $ 8,982 $ 688,012 $ 99,277

Balances at March 31, 2021 7,649,679 $ 119 $ 1,284,643 $ ( 98,671 ) $ 35 4,227,315 $ ( 456,748 ) $ 729,378 $ 9,317 $ 738,695 $ 112,482

Balances at December 31, 2021 7,506,151 $ 119 $ 1,276,424 $ 60,962 $ 20 4,400,596 $ ( 509,248 ) $ 828,277 $ 8,350 $ 836,627 $ 138,965

8 unchanged sentences

Stock-based compensation — — 10,793 — — — — 10,793 — 10,793 —

Balances at September 30, 2021 7,587,757 $ 119 — $ — $ 1,273,376 $ 23,032 $ 18 4,318,730 $ ( 484,248 ) $ 812,297 $ 8,813 $ 821,110 $ 131,669

Balances at March 31, 2022 7,472,829 $ 120 $ 1,273,802 $ 81,783 $ ( 30 ) 4,526,048 $ ( 539,248 ) $ 816,427 $ 7,806 $ 824,233 $ 138,738

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

The Company provides investment management and related services to individuals and institutions.

The Company’s retail investment management services are provided to individuals through products consisting of U.S.

1940 Act mutual funds and Undertaking for Collective Investment in Transferable Securities ("UCITS" or "offshore funds" and collectively, with U.S.

1940 Act mutual funds, "open-end funds"), exchange traded funds ("ETFs"), closed-end funds (collectively, with open-end funds and ETFs, "funds") and retail separate accounts.

The Company’s retail investment management services are provided to individuals through products consisting of:

mutual funds registered pursuant to the Investment Company Act of 1940 ("U.S.

retail funds"), as amended;

Undertaking for Collective Investment in Transferable Securities ("UCITS") and Qualifying Investor Funds ("QIFs"), collectively "global funds" and collectively with mutual funds, exchange traded funds ("ETFs"), and variable insurance funds, the "open-end funds";

closed-end funds (collectively, with open-end funds, the "funds");

and retail separate accounts.

Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients.

5 unchanged sentences

In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations.

Operating results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.

Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 ("2021 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC").

The Company’s significant accounting policies, which have been consistently applied, are summarized in its 2021 Annual Report on Form 10-K.

New Accounting Standards Implemented

In January 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-01, Investments - Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

This standard clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323 and the accounting for certain forward contracts and purchased options in Topic 815.

The Company adopted this standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, Income Taxes, and improves consistent application by clarifying and amending existing guidance.

The Company adopted this standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers.

Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed.

The net asset values from which investment management, distribution and service, and administration and shareholder service fees are calculated are variable in nature and subject to factors outside of the Company's control such as additional investments, withdrawals and market performance.

Because of this, these fees are considered constrained until the end of the contractual

measurement period (monthly or quarterly), which is when asset values are generally determinable.

The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's control, such as additional investments, withdrawals and market performance.

Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable.

Revenue Disaggregated by Source

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2022 2021

5 unchanged sentences

Structured products 906 1,259

Other products 433 611 1,159 1,961

Total investment management fees $ 206,817 $ 173,269

Business Combinations

AllianzGI Strategic Partnership

On February 1, 2021, the Company completed the actions necessary to finalize its strategic partnership with Allianz Global Investors ("AllianzGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AllianzGI's open-end, closed-end and retail separate account assets.

Additionally, as part of the strategic partnership, AllianzGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ").

Assets acquired in connection with the transaction primarily consisted of definite-lived intangible assets representing open-end, closed-end and retail separate account investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ.

The revenues and operating income of NFJ were not material to the Company's results of operations for the three and nine months ended September 30, 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets adopted under the transaction.

Payments are to be made annually around the anniversary of the closing date of the transaction over the next seven years .

The estimate of these future revenue participation payments of $ 137.7 million at September 30, 2021 has been recorded as a liability and included as Contingent Consideration on the Company's Condensed Consolidated Balance Sheet.

In addition, the Company capitalized $ 7.7 million of costs associated with certain assets acquired.

The following table summarizes the identified acquired assets:

February 1, 2021

(in thousands) Approximate Fair Value Weighted Average Useful Life

Stone Harbor Investment Partners

On January 1, 2022, the Company completed the acquisition of Stone Harbor Investment Partners, LLC ("Stone Harbor"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").

The initial transaction consideration of $ 29.4 million was allocated to the assets acquired and liabilities assumed, based upon their estimated fair values at the date of the acquisition, as well as goodwill of $ 8.8 million and definite-lived intangible assets of $ 10.8 million.

The Company expects $ 19.6 million of the purchase price to be tax deductible over 15 years.

The transaction consideration allocation is based upon preliminary information and is subject to change if additional information becomes available.

The final fair value of the net assets acquired may result in adjustments to certain assets and liabilities, including goodwill.

The revenues and operating income of Stone Harbor were not material to the Company's results of operations for the three months ended March 31, 2022.

Transaction consideration consisted of $ 28.2 million in cash paid at closing and $ 1.2 million in contingent consideration recorded at fair value, which represents future potential earn-out payments based on pre-established performance metrics related to revenue retention and revenue growth rates.

Future contingent consideration will be paid, if earned, in 2023, 2026 and 2027.

The contingent consideration has been accounted for as a liability within contingent consideration on the Company's Condensed Consolidated Balance Sheet.

The following table summarizes the identified acquired assets and liabilities assumed as of the Stone Harbor acquisition date:

January 1, 2022

(in thousands)

Cash and cash equivalents

Intangible assets

Accounts payable and accrued liabilities

Total liabilities

Total Net Assets Acquired

Identifiable Intangible Assets Acquired

The Company identified and recorded the following intangible assets as a result of the Stone Harbor acquisition:

January 1, 2022

Approximate Fair Value

( in thousands)

Weighted Average of Useful Life

Definite-lived intangible assets:

Open-end and closed-end fund investment contracts $ 101,447 13 years

Retail separate account investment contracts 17,000 6 years

Trade name 1,941 8 years

Investment management agreements $ 6,000 7.3

Trade names 1,000 6.0

Software 3,800 4.0

Total definite-lived intangible assets $ 10,800

Goodwill 25,000

Total assets acquired $ 145,388

Intangible Assets, Net

The fair value of investment management agreements was estimated using a discounted cash flow method, the fair value of the trade names was estimated using a royalty savings method, and the fair value of the software was estimated using a royalty savings method and replacement cost approach.

The Stone Harbor fair value estimates were prepared with the assistance of an independent valuation firm.

Westchester Capital Management

On October 1, 2021, the Company completed the acquisition of Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805.

The total transaction consideration of $ 169.3 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition.

Goodwill of $ 23.0 million and intangible assets of $ 144.4 million were recorded as a result of the acquisition.

The Company expects $ 155.6 million of the purchase price to be tax deductible over 15 years.

The revenues and operating income of Westchester were not material to the Company's results of operations for the three months ended March 31, 2022.

Transaction consideration consisted of $ 156.8 million in cash and contingent consideration accounted for as a liability on the Company's Condensed Consolidated Balance sheet, which represents future potential earn-out payments based on pre-established performance metrics related to revenue growth rates.

Future contingent consideration payments will be made, if earned, in 2025 and 2026.

As of March 31, 2022, the contingent consideration balance was $ 12.5 million.

AllianzGI Strategic Partnership

On February 1, 2021, the Company finalized a strategic partnership with Allianz Global Investors U.S.

LLC ("AllianzGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AllianzGI's open-end, closed-end and retail separate account assets.

This transaction was classified as an asset acquisition and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values.

Additionally, as part of the strategic partnership, AllianzGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ").

The addition of NFJ was classified as a business combination under ASC 805 and assets acquired were recorded at fair value.

Assets acquired primarily consisted of definite-lived intangible assets representing investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ.

The revenues and operating income of NFJ were not material to the Company's results of operations for the three months ended March 31, 2022 or 2021.

Payments are to be made annually on the anniversary of the closing date of the transactions over seven years .

Contingent payment obligations related to the NFJ acquisition, which were accounted for in accordance with ASC 805 are remeasured at fair value as of each reporting period-end, with the change in fair value recorded within the Condensed Consolidated Statement of Operations.

An estimate of these future payments has been recorded as a liability and included as contingent consideration on the Company's Condensed Consolidated Balance Sheet.

A payment of $ 33.0 million was made in the first quarter of 2022.

The estimated value of future revenue participation payments at March 31, 2022 was $ 117.0 million.

Goodwill and Intangible Assets, Net

Activity in goodwill was as follows:

(in thousands)

Balance at December 31, 2021 $ 338,406

Acquisitions 9,017

Balance at March 31, 2022 $ 347,423

Below is a summary of intangible assets, net:

4 unchanged sentences

Intangible amortization — ( 14,662 ) ( 14,662 ) — ( 14,662 )

Balances of September 30, 2021 $ 609,958 $ ( 283,041 ) $ 326,917 $ 43,516 $ 370,433

Balances of March 31, 2022 $ 766,376 $ ( 311,965 ) $ 454,411 $ 42,298 $ 496,709

Definite-lived intangible asset amortization for the remainder of fiscal year 2022 and succeeding fiscal years is estimated as follows:

5 unchanged sentences

Investments consist primarily of investments in the Company's sponsored products.

The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 16, at September 30, 2021 and December 31, 2020 were as follows:

(in thousands) September 30, 2021 December 31, 2020

The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 16, at March 31, 2022 and December 31, 2021 were as follows:

(in thousands) March 31, 2022 December 31, 2021

Investment securities - fair value $ 88,421 $ 80,335

5 unchanged sentences

Investment Securities - fair value

Investment securities - fair value consist of investments in the Company's sponsored funds, separately managed accounts and trading debt securities.

Investment securities - fair value consist of investments in the Company's sponsored funds and separately managed accounts.

The composition of the Company’s investment securities - fair value was as follows:

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

(in thousands) Cost Fair Value Cost Fair Value

2 unchanged sentences

Equity securities 10,676 12,699 10,659 14,009

Debt securities 7 6 7 3

Total investment securities - fair value $ 85,038 $ 88,421 $ 73,749 $ 80,335

For the three and nine months ended September 30, 2021, the Company recognized realized gains of $ 0.2 million and $ 2.0 million, respectively, on the sale of its investment securities - fair value.

For the three and nine months ended September 30, 2020, the Company recognized realized gains of $ 4.5 million and $ 4.2 million, respectively, on the sale of its investment securities - fair value.

For the three months ended March 31, 2022 and March 31, 2021, the Company recognized realized gains of $ 0.1 million and $ 0.8 million, respectively, on the sale of its investment securities - fair value.

Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of September 30, 2021 and December 31, 2020 by fair value hierarchy level were as follows:

September 30, 2021

The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 16, as of March 31, 2022 and December 31, 2021 by fair value hierarchy level were as follows:

March 31, 2022

(in thousands) Level 1 Level 2 Level 3 Total

3 unchanged sentences

Equity securities 12,699 — — 12,699

Debt securities — 6 — 6

Nonqualified retirement plan assets 12,701 — — 12,701

Total assets measured at fair value $ 268,433 $ — $ — $ 268,433

Contingent consideration $ — $ — $ 70,080 $ 70,080

Total liabilities measured at fair value $ — $ — $ 70,080 $ 70,080

December 31, 2021

4 unchanged sentences

Equity securities 14,009 — — 14,009

Debt securities — 3 — 3

Nonqualified retirement plan assets 13,321 — — 13,321

Total assets measured at fair value $ 400,933 $ — $ — $ 400,933

Contingent consideration $ — $ — $ 88,400 $ 88,400

Total liabilities measured at fair value $ — $ — $ 88,400 $ 88,400

The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:

4 unchanged sentences

The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets and are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Debt securities represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2.

Nonqualified retirement plan assets represent mutual funds within a nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Nonqualified retirement plan assets represent mutual funds within the Company's nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Contingent consideration represents liabilities associated with the Company's business combinations.

See Note 4 for a discussion of the transactions.

The estimated fair values are measured using a simulation model using unobservable market data inputs prepared with the assistance of an independent valuation firm.

These liabilities are categorized as Level 3.

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

The Company had no Level 3 investments for the three- and nine-month periods ended September 30, 2021 and 2020, respectively.

The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

Three Months Ended

(in thousands) 2022 2021

Contingent consideration, beginning of period $ 88,400 $ —

Additions for acquisition 1,200 63,500

Reduction for payments made ( 19,520 ) —

Contingent consideration, end of period $ 70,080 $ 63,500

Equity Transactions

Dividends Declared

On August 18, 2021, the Company declared a quarterly cash dividend of $ 1.50 per common share to be paid on November 12, 2021 to stockholders of record at the close of business on October 29, 2021.

On February 23, 2022, the Company declared a quarterly cash dividend of $ 1.50 per common share to be paid on May 13, 2022 to stockholders of record at the close of business on April 29, 2022.

Common Stock Repurchases

During the three and nine months ended September 30, 2021, the Company repurchased 64,494 and 111,327 common shares, respectively, at a weighted average price of $ 310.07 and $ 291.90 per share, respectively, for a total cost, including fees and expenses, of $ 20.0 million and $ 32.5 million, respectively, under its share repurchase program.

As of September 30, 2021, 611,315 shares remained available for repurchase.

During the three months ended March 31, 2022, the Company repurchased 125,452 common shares, at a weighted average price of $ 239.10 per share, for a total cost, including fees and expenses, of $ 30.0 million, under its share repurchase program.

As of March 31, 2022, 403,997 shares remained available for repurchase.

Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions.

1 unchanged sentence

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2021 and 2020 were as follows:

(in thousands) Foreign

The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2022 and 2021 were as follows:

Foreign Currency

Translation Adjustments

(in thousands)

Balance at December 31, 2021 $ 20

Foreign currency translation adjustments, net of tax of $ 4

Net current-period other comprehensive income (loss) (1) ( 50 )

Balance at September 30, 2021 $ 18

(in thousands) Foreign

Balance at March 31, 2022 $ ( 30 )

Foreign Currency

Translation Adjustments

(in thousands)

Balance at December 31, 2020 $ 29

Foreign currency translation adjustments, net of tax of $ 3

Net current-period other comprehensive income (loss) (1) 6

Balance at September 30, 2020 $ 0

Balance at March 31, 2021 $ 35

(1) Consists of foreign currency translation adjustments, net of tax of $ 73 and $ — for the three months ended March 31, 2022 and 2021, respectively

Stock-Based Compensation

Pursuant to the Company's Omnibus Incentive and Equity Plan (the "Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock.

At September 30, 2021, 805,875 shares of common stock remained available for issuance of the 3,370,000 shares that are authorized for issuance under the Plan.

Pursuant to the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock.

At March 31, 2022, 645,198 shares of common stock remain available for issuance of the 3,370,000 shares that are authorized for issuance under the Omnibus Plan.

Stock-based compensation expense is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

(in thousands) 2022 2021

3 unchanged sentences

RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after performance measurement is complete and generally vest in one to three years .

Shares that are issued upon vesting are newly issued shares from the Plan and are not issued from treasury stock.

RSU activity, inclusive of PSUs, for the nine months ended September 30, 2021 is summarized as follows:

Shares that are issued upon vesting are newly issued shares from the Omnibus Plan and are not issued from treasury stock.

RSU activity, inclusive of PSUs, for the three months ended March 31, 2022 is summarized as follows:

of Shares Weighted Average

3 unchanged sentences

Settled ( 153,989 ) $ 117.39

Outstanding at September 30, 2021 433,060 $ 138.00

For the nine months ended September 30, 2021 and 2020, a total of 72,795 and 63,566 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations.

The Company paid $ 19.4 million and $ 5.6 million for the nine months ended September 30, 2021 and 2020, respectively, in minimum employee tax withholding obligations related to RSUs withheld for the net share settlements.

During the nine months ended September 30, 2021, the Company granted 26,425 PSUs that contain performance-based metrics in addition to a service condition.

Outstanding at March 31, 2022 439,214 $ 166.24

For the three months ended March 31, 2022 and 2021, a total of 61,859 and 57,885 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations.

The Company paid $ 13.4 million and $ 15.2 million for the three months ended March 31, 2022 and 2021, respectively, in minimum employee tax withholding obligations related to RSUs withheld for the net share settlements.

These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

During the three months ended March 31, 2022, the Company granted 30,516 PSUs that contain performance-based metrics in addition to a service condition.

Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

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Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.

As of September 30, 2021, unamortized stock-based compensation expense for unvested RSUs and PSUs was $ 30.8 million, with a weighted-average remaining contractual life of 1.2 years.

As of March 31, 2022, unamortized stock-based compensation expense for unvested RSUs and PSUs was $ 41.1 million with a weighted-average remaining contractual life of 1.3 years.

Earnings (Loss) Per Share

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by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including:

(i) shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method and (ii) shares issuable upon the conversion of the Company's previously outstanding mandatory convertible preferred stock ("MCPS"), as determined under the if-converted method.

For purposes of calculating diluted EPS, preferred stock dividends have been subtracted from net income (loss) in periods in which utilizing the if-converted method would be anti-dilutive.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method.

The computation of basic and diluted EPS is as follows:

Three Months Ended September 30, Nine Months Ended

September 30,

Three Months Ended March 31,

(in thousands, except per share amounts) 2022 2021

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$ 33,059 $ 36,588

Shares (in thousands):

Weighted-average number of shares outstanding 7,546 7,633

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The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive.

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2022 2021

Restricted stock units and options 5 1 2 —

Restricted stock units 21 10

Total anti-dilutive securities 21 10

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The provision for income taxes reflected U.S.

federal, state and local taxes at an estimated effective tax rate of 24.0 % and 33.9 % for the nine months ended September 30, 2021 and 2020, respectively.

The comparatively lower estimated effective tax rate for the nine months ended September 30, 2021 was primarily due to valuation allowances recorded in the prior year period for the tax effects of unrealized losses on certain Company investments.

Credit Agreement Refinancing

On September 28, 2021, the Company completed a refinancing of its credit agreement through an amended and restated credit agreement dated September 28, 2021 (the "Credit Agreement").

The Credit Agreement provides for (a) a $ 275.0 million term loan with a seven-year term (the "Term Loan") and (b) a $ 175.0 million revolving credit facility with a five-year term.

A portion of the proceeds from the refinancing was used to pay $ 194.0 million outstanding on the previous term loan.

At September 30, 2021, $ 275.0 million was outstanding under the Term Loan, and the Company had no outstanding borrowings under its revolving credit facility.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented in the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $ 8.3 million as of September 30, 2021.

Because the debt instruments are not substantially different, the refinancing was treated as a debt modification for accounting purposes.

Amounts outstanding under the Credit Agreement bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves) for interest periods of one, three or six months (or, solely in the case of the revolving credit facility, if agreed to by each relevant Lender, twelve months) or an alternate base rate, in either case plus an applicable margin.

The applicable margins are 2.25 %, in the case of LIBOR-based loans, and 1.25 %, in the case of alternate

base rate loans.

Interest is payable quarterly in arrears with respect to alternate base rate loans and on the last day of each interest period with respect to LIBOR-based loans (but, in the case of any LIBOR-based loan with an interest period of more than three months, at three-month intervals).

The Credit Agreement contains LIBOR and other subsequent benchmark successor provisions.

Under the terms of the Credit Agreement, the Company is required to pay a quarterly commitment fee on the average unused amount of the revolving credit facility, which fee is initially set at 0.50 % and will, following the first delivery of certain financial reports required under the Credit Agreement, range from 0.375 % to 0.50 %, based on the secured net leverage ratio of the Company as of the last day of the preceding fiscal quarter, as reflected in such financial reports.

The term loans will amortize at the rate of 1.00 % per annum payable in equal quarterly installments on the last day of each March, June, September and December (commencing on December 31, 2021).

In addition, the Credit Agreement requires that the term loans be mandatorily prepaid with (a) 50 % of the Company’s excess cash flow on an annual basis, stepping down to 25 % if the Company’s secured net leverage ratio declines to 2 :1 or below and stepping down to 0 % if the Company’s secured net leverage ratio declines below 1.5 :1;

(b) 50 % of the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;

and (c) 100 % of the proceeds of any indebtedness incurred to refinance the term loans or other refinancing indebtedness as well as indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.

At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the facility in minimum specified increments or prepay loans in whole or in part, subject to the payment of breakage fees with respect to LIBOR-based loans and, in the case of any term loans that are prepaid in connection with a “repricing transaction” occurring within the six-month period following the closing date of the Credit Agreement, a 1.00 % premium.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains a financial performance covenant that is only applicable when greater than 35 % of the revolving credit facility is outstanding, requiring a maximum leverage ratio, as of the last day of each of the four fiscal quarter periods, of no greater than the levels set forth in the Credit Agreement.

Future minimum Term Loan payments (exclusive of any mandatory excess cash flow repayments) as of September 30, 2021 are as follows:

(in thousands)

Remainder of 2021 $ 687.5

2026 and thereafter 263,312.5

Total $ 275,000.0

federal, state and local taxes at an estimated effective tax rate of 30.0 % and 22.5 % for the three months ended March 31, 2022 and 2021, respectively.

The comparatively higher estimated effective tax rate for the three months ended March 31, 2022 was primarily due to valuation allowances recorded in the current year for the tax effects of unrealized losses on certain Company investments.

Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $ 275.0 million seven-year term loan (the "Term Loan") expiring in September 2028, and (ii) a $ 175.0 million revolving credit facility with a five-year term expiring in September 2026.

During the three months ended March 31, 2022, the Company repaid $ 0.7 million outstanding under its Term Loan.

At March 31, 2022, $ 273.6 million was outstanding under the Term Loan, and the Company had no outstanding borrowings under its revolving credit facility.

Commitments and Contingencies

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The Company is involved from time to time in litigation and arbitration, as well as examinations, inquiries and investigations by various regulatory bodies, including the SEC, involving its compliance with, among other things, securities laws, client investment guidelines, laws governing the activities of broker-dealers and other laws and regulations affecting its products and other activities.

Legal and regulatory matters of this nature involve or may involve but are not limited to the Company's activities as an employer, issuer of securities, investor, investment adviser, broker-dealer or taxpayer.

In addition, in

the normal course of business, the Company discusses matters with its regulators raised during regulatory examinations or is otherwise subject to their inquiry.

Legal and regulatory matters of this nature involve or may involve but are not limited to the

Company's activities as an employer, issuer of securities, investor, investment adviser, broker-dealer or taxpayer.

In addition, in the normal course of business, the Company discusses matters with its regulators raised during regulatory examinations or is otherwise subject to their inquiry.

These matters could result in censures, fines, penalties or other sanctions.

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Redeemable Noncontrolling Interests

Redeemable noncontrolling interests represent third-party investments in the Company's CIP and minority interests held in a consolidated majority-owned affiliate.

Redeemable noncontrolling interests represent third-party investments in the Company's CIP and minority interests held in a consolidated affiliate.

Minority interests held in the affiliate are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value.

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The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity.

Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests in the Company's Condensed Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded in the Condensed Consolidated Statements of Operations within noncontrolling interests.

Redeemable noncontrolling interests for the nine months ended September 30, 2021 included the following amounts:

Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests on the Company's Condensed Consolidated Balance Sheets, and any changes in the estimated redemption value are recorded on the Condensed Consolidated Statements of Operations within noncontrolling interests.

Redeemable noncontrolling interests for the three months ended March 31, 2022 included the following amounts:

(in thousands) CIP Affiliate Noncontrolling Interests Total

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Net subscriptions (redemptions) and other ( 2,234 ) ( 4,110 ) ( 6,344 )

Balances at September 30, 2021 $ 12,808 $ 118,861 $ 131,669

Balances at March 31, 2022 $ 9,433 $ 129,305 $ 138,738

(1) Relates to noncontrolling interests redeemable at other than fair value.

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The Company evaluates any variable interest entities ("VIEs") in which the Company has a variable interest for consolidation.

A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) where as a group, the holders of the equity investment at risk do not

possess (x) the power through voting or similar rights to direct the activities that most significantly impact the entity’s economic performance;

(y) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;

or (z) proportionate voting and economic interests and where substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.

A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support;

or (ii) where as a group, the holders of the equity investment at risk do not possess (x) the power through voting or similar rights to direct the activities that most significantly impact the entity's

economic performance, (y) the obligation to absorb expected losses or the right to receive expected residual returns of the entity, or (z) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.

If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary.

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CIP includes both VOEs, made up primarily of open-end funds in which the Company holds a controlling financial interest, and VIEs, which primarily consist of CLOs of which the Company is considered the primary beneficiary.

The consolidation and deconsolidation of these investment products have no impact on net income (loss) attributable to stockholders.

The consolidation and deconsolidation of these investment products have no impact on net income (loss) attributable to Virtus Investment Partners, Inc.

The Company's risk with respect to these investment products is limited to its beneficial interests in these products.

The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees generated from, these products.

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020:

September 30, 2021 December 31, 2020

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

VOEs VIEs VOEs VIEs

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The majority of the Company's CIP that are VIEs are CLOs.

At September 30, 2021, the Company consolidated six CLOs.

The financial information of certain CLOs is included on the Company's condensed consolidated financial statements on a one-month lag based upon the availability of the fund's financial information.

At March 31, 2022, the Company consolidated six CLOs.

The financial information of certain CLOs is included on the Company's condensed consolidated financial statements on a one-month lag based upon the availability of their financial information.

A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included.

Investments of CLOs

The CLOs held investments of $ 2.1 billion at September 30, 2021 consisting of bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.

The CLOs held investments of $ 2.0 billion at March 31, 2022 consisting of bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.

These bank loan investments mature at various dates between 2022 and 2029 and pay interest at LIBOR plus a spread of up to 10.0 %.

The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and March 2025, depending on the CLO.

The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and October 2026, depending on the CLO.

Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note obligations.

At September 30, 2021, the fair value of the senior bank loans was less than the unpaid principal balance by $ 36.9 million.

At September 30, 2021, there were no material collateral assets in default.

At March 31, 2022, the fair value of the senior bank loans was less than the unpaid principal balance by $ 52.4 million.

At March 31, 2022, there were no material collateral assets in default.

Notes Payable of CLOs

The CLOs held notes payable with a total value, at par, of $ 2.3 billion at September 30, 2021, consisting of senior secured floating rate notes payable with a par value of $ 2.0 billion and subordinated notes with a par value of $ 225.9 million.

The CLOs held notes payable with a total value, at par, of $ 2.2 billion at March 31, 2022, consisting of senior secured floating rate notes payable with a par value of $ 2.0 billion and subordinated notes with a par value of $ 233.7 million.

These note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 0.8 % to 8.9 %.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to January 2033.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to October 2034.

The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees.

The secured notes of the consolidated CLOs have contractual recourse only to the related assets of the CLO and are classified as financial liabilities.

Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("ASU 2014-13"), results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at September 30, 2021, as shown in the table below:

Although these beneficial

interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("ASU 2014-13") results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at March 31, 2022, as shown in the table below:

(in thousands)

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The following table represents income and expenses of the consolidated CLOs included on the Company’s Condensed Consolidated Statements of Operations for the period indicated:

(in thousands) Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

(in thousands)

Realized and unrealized gain (loss), net $ ( 7,675 )

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As summarized in the table below, the application of the measurement alternative as prescribed by ASU 2014-13 results in the consolidated net income summarized above to be equivalent to the Company’s own economic interests in the consolidated CLOs, which are eliminated upon consolidation:

(in thousands) Nine Months Ended September 30, 2021

Distributions received and unrealized gains (losses) on the subordinated notes $ 8,720

Three Months Ended March 31, 2022

(in thousands)

Distributions received and unrealized gains (losses) on the subordinated notes held by the Company $ ( 3,042 )

Investment management fees 2,131

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Fair Value Measurements of CIP

The assets and liabilities of CIP measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 by fair value hierarchy level were as follows:

As of September 30, 2021

The assets and liabilities of CIP measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 by fair value hierarchy level were as follows:

As of March 31, 2022

(in thousands) Level 1 Level 2 Level 3 Total

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Equity investments 26,111 2,961 462 29,534

Derivatives 858 1,227 — 2,085

Total assets measured at fair value $ 231,576 $ 2,110,697 $ 3,157 $ 2,345,430

Notes payable $ — $ 2,033,617 $ — $ 2,033,617

Derivatives 714 757 — 1,471

Short sales 515 — — 515

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Level 3 investments include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security.

Derivative assets and liabilities represent futures contracts, swaps contracts, option contracts and forward contracts held in CIP.

Derivative instruments in an asset position are classified as other assets of CIP on the Condensed Consolidated Balance Sheets.

Derivative instruments in a liability position are classified as liabilities of CIP within the Condensed Consolidated Balance Sheets.

The change in fair value of such derivatives is recorded in realized and unrealized gain (loss) on investments of CIP, net, on the Condensed Consolidated Statements of Operations.

Depending on the nature of the inputs, these derivative assets and liabilities are classified as Level 1, 2 or 3 within the fair value measurement hierarchy.

In connection with entering into these derivative contracts, these CIP may be required to pledge an amount of cash equal to the appropriate "initial margin" requirements.

The cash pledged or on deposit is recorded on the Condensed Consolidated Balance Sheets of the Company as Cash pledged or on deposit of CIP.

The fair value of such derivatives at December 31, 2020, was immaterial.

There were no derivative assets or liabilities held at September 30, 2021.

Notes payable represent notes issued by CIP CLOs and are measured using the measurement alternative in ASU 2014-13.

Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the fair value of the beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

compensation for services.

The fair value of the beneficial interests held by the Company is based on third-party pricing information without adjustment.

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Short sales are recorded on the Condensed Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

The securities purchase payable at September 30, 2021 and December 31, 2020 approximated fair value due to the short-term nature of the instruments.

The securities purchase payable at March 31, 2022 and December 31, 2021 approximated fair value due to the short-term nature of the instruments.

The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value:

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands)

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The Company has determined that the investment management fees it receives for serving as collateral manager for these CDOs did not represent a variable interest since (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CDOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CDOs' expected losses or receive more than an insignificant amount of the CDOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.

The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary

beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance .

At September 30, 2021, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was $ 30.6 million.

Subsequent Event

Westchester Capital Management

On October 1, 2021, the Company completed its previously announced acquisition of Westchester Capital Management ("Westchester").

The initial purchase price payment of $ 135.0 million was made at closing and an additional $ 20.0 million payment is due near year end, subject to retention of revenue levels, which is expected.

Due to the limited time since the closing, the related acquisition accounting is incomplete at this time.

The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance.

At March 31, 2022, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was $ 31.3 million .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements