Business Context and Reporting Period
This Form 8-K Current Report, dated March 30, 2015, discloses that Silvercrest Asset Management Group Inc. (the "Company") entered into a Material Definitive Agreement. The Company, through its wholly owned subsidiary Silvercrest Asset Management Group LLC ("SAMG"), agreed to acquire substantially all of the business and assets of Jamison Eaton & Wood, Inc. ("Jamison"), an investment adviser, along with the personal goodwill of Jamison's principals.
Key Financial Metrics and Transaction Structure
The total consideration for the "Jamison Acquisition" consists of cash, promissory notes, and equity. The filing does not provide the Company's consolidated revenue, profit, or cash flow metrics for the period, as this report focuses solely on the transaction.
- Closing Cash Payment: $3,550,344 (subject to adjustments).
- Seller Note: $611,955 principal amount at 5% annual interest.
- Principals Notes: $1,771,034 total principal amount at 5% annual interest.
- Equity Consideration: Class B units of Silvercrest L.P. and Class B common stock of the Company valued at $3,966,667.
- Total Initial Consideration Value: Approximately $9,899,999 (sum of cash, notes, and equity).
Material Changes and Future Obligations
The transaction introduces significant future contingent liabilities in the form of earnout payments. The Company is obligated to make payments to the Principals annually from 2015 through 2020.
- Earnout Formula: 20% of the EBITDA attributable to the Jamison Business.
- Basis: Calculated on revenue gained or lost post-transaction during the twelve months ended on the applicable determination date.
- Timing: Payments are due as soon as practicable following December 31 of each year (2015–2020).
Guidance, Risks, and Unusual Items
The filing does not provide updated financial guidance or management commentary regarding the Company's overall outlook. However, it highlights specific risks and conditions associated with the acquisition:
- Conditions Precedent: The Asset Purchase Agreement is subject to the satisfaction of customary conditions precedent before closing.
- Unregistered Securities: The Equity Consideration was issued pursuant to Section 4(2) of the Securities Act of 1933 as an exemption for accredited investors; these securities are not registered and cannot be resold without registration or an applicable exemption.
- Tax Receivable Agreement: The Principals will be entitled to share in a portion of the tax benefits the Company receives upon the exchange of Class B Units for Class A common stock.
Investor Verification Checklist
- Verify the closing date of the Jamison Acquisition to determine the start of the earnout calculation period.
- Review the full text of the Asset Purchase Agreement (Exhibit 10.1) for specific definitions of "EBITDA" and "revenue gained or lost" used in the earnout formula.
- Assess the impact of the $9.9 million initial consideration and potential future earnout payments on the Company's liquidity and leverage ratios.
- Confirm the status of the conditions precedent to ensure the transaction is not subject to further regulatory or internal hurdles.