Business Context and Reporting Period
Company: Evercore Partners Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: August 3, 2014
Event: Entry into a Material Definitive Agreement to acquire International Strategy & Investment (ISI).
Key Financial Metrics
This filing is a Current Report (8-K) regarding a corporate transaction and does not contain periodic financial statements. Consequently, specific values for revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Transaction Consideration: The acquisition of ISI and the buyout of the remaining interest in Evercore's Institutional Equities business will be settled through the issuance of partnership interests (Units) in Evercore LP, rather than cash. Up to 2,600,541 Base Units and 5,463,490 Performance Units may be issued in aggregate for these two transactions.
Material Changes and Transaction Details
- Acquisition of ISI: Evercore entered into a Contribution and Exchange Agreement (CEA) to acquire the operating businesses of ISI, a leading independent research-driven equity sales and agency trading firm.
- Business Combination: Post-closing, ISI's business will combine with Evercore's existing Institutional Equities business to form "Evercore ISI Institutional Equities" (the EST Business).
- Full Ownership of Institutional Equities: Concurrently, Evercore LP agreed to acquire the approximately 40% interest in its Institutional Equities business it did not previously own from existing unitholders (including River Birch Capital Partners, LP and employees).
- Founder Commitment: Edward S. Hyman (Founder) entered into a five-year employment agreement with Evercore.
Guidance, Outlook, and Risks
Performance Targets and Vesting
The transaction includes performance-based equity components tied to the financial success of the combined EST Business:
- Class G Interests: Vest in installments (2016-2018) based on achieving targeted EBIT margins through calendar year 2017.
- Class H Interests: Vest in installments (2018-2020) based on EBIT growth and targeted EBIT margins through calendar year 2019.
Risks and Contingencies
- Closing Conditions: The transaction is subject to customary conditions, including governmental approvals and the truthfulness of representations and warranties.
- Termination Rights: Either party may terminate the agreement if closing does not occur within nine months (extendable to one year for regulatory delays) or in the event of a material breach.
- Indemnification: Recipients of Units must indemnify Evercore against liabilities related to the ISI business. Evercore may restrict the exchange of Units to satisfy potential indemnity claims.
- Employment Termination: Termination of non-Founder employees for specified reasons (e.g., without cause) accelerates Base Unit vesting but results in forfeiture of unvested Performance Units, unless the Executive Committee decides otherwise.
Investor Verification Checklist
- Verify the final closing date and confirmation that all governmental approvals have been received.
- Review the full text of the Contribution and Exchange Agreement (Exhibit 10.1) for specific representations and warranties regarding ISI's financial condition.
- Monitor the press release (Exhibit 99.1) and subsequent filings for details on the exact number of Units issued and the final ownership structure.
- Assess the impact of the new "Evercore ISI Institutional Equities" brand on market positioning and competitive landscape.
- Track the vesting schedules and performance targets (EBIT margins and growth) for the Class G and Class H Interests to understand future dilution risks.