SILVERCREST ASSET MANAGEMENT GROUP INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

0

Forward-looking statements

This report contains forward-looking statements relating to present or future
trends or factors that are subject to risks and uncertainties. These risks
include, but are not limited to: specific and overall impacts of the coronavirus
(COVID-19) pandemic on our financial condition and results of operations; our
ability to achieve our business objectives; our ability to successfully achieve
the anticipated results of strategic transactions, including the integration of
the operations of acquired assets and businesses; the retention and development
of clients and other business relationships; disruptions or delays in our
business operations, including without limitation disruptions or delays arising
from political unrest, war, labor strikes, natural disasters, public health
crises such as the coronavirus pandemic, and other events and circumstances
beyond our control; our ability to control costs; general economic conditions;
fluctuation in operating results; changes in the securities markets; our ability
to maintain compliance with the terms of our credit facility; the availability,
integration and effective operation of information systems and other technology,
and the potential interruption of such systems or technology; risks related to
data security of privacy breaches; and other risks detailed from time to time in
our filings with the SEC. Our future financial performance could differ
materially from the expectations of management contained herein. Additionally,
many of these risks and uncertainties are currently elevated by and may or will
continue to be elevated by the COVID-19 pandemic. It is not possible to predict
or identify all such risks, but may become material in the future. We undertake
no obligation to release revisions to these forward-looking statements after the
date of this report.

Overview

We are a full-service wealth management firm focused on providing financial
advisory and related family office services to ultra-high net worth individuals
and institutional investors. In addition to a wide range of investment
capabilities, we offer a full suite of complementary and customized family
office services for families seeking a comprehensive oversight of their
financial affairs. During the three months ended June 30, 2022, our assets under
management decreased by 8.0% from $31.2 billion to $28.7 billion. During the six
months ended June 30, 2022, our assets under management decreased by 11.1% from
$32.3 billion to $28.7 billion.

The business includes the management of funds of funds, and other investment
funds, collectively referred to as the "Silvercrest Funds." As of June 30, 2022,
Silvercrest L.P. has issued Restricted Stock Units exercisable for 120,772 Class
B units which entitle the holders thereof to receive distributions from
Silvercrest L.P. to the same extent as if the underlying Class B units were
outstanding. Net profits and net losses of Silvercrest L.P. will be allocated,
and distributions from Silvercrest L.P. will be made, to its current partners
pro rata in accordance with their respective partnership units (and assuming the
Class B units underlying all restricted stock units are outstanding).

The historical results of operations discussed in this Management's Discussion
and Analysis of Financial Condition and Results of Operations include those of
Silvercrest L.P. and its subsidiaries. As the general partner of Silvercrest
L.P., we control its business and affairs and, therefore, consolidate its
financial results with ours. The interests of the limited partners' collective
31.8% partnership interest in Silvercrest L.P. as of June 30, 2022 are reflected
in non-controlling interests in our Condensed Consolidated Financial Statements.

Covid-19 pandemic

The emergence of the coronavirus (COVID-19) around the world, and particularly
in the United States, presents significant risks to us, not all of which we are
able to fully evaluate or foresee at the current time. While the COVID-19
pandemic has not materially affected us to date, economic and health conditions
in the United States and across the globe have changed rapidly since the end of
2020. Although demand for our services has continued despite the current capital
markets and overall economic environment, such current demand may not continue
and/or demand may decrease from historical levels depending on the duration and
severity of the COVID-19 pandemic, the length of time it takes for normal
economic and operating conditions to resume, additional governmental actions
that may be taken and/or extensions of time for restrictions that have been
imposed to date, and numerous other uncertainties.

The COVID-19 pandemic affected our operations in each of the nine quarters
during the period April 1, 2020 through June 30, 2022 and may continue to do so
indefinitely thereafter. All of these factors may have far reaching impacts on
our business, operations, and financial results and conditions, directly and
indirectly, including without limitation impacts on the health of our management
and employees, client behavior, and on the overall economy. The scope and nature
of these impacts, most of which are beyond our control, continue to evolve, and
the outcomes of these impacts are uncertain.
                                       31
--------------------------------------------------------------------------------


Our revenue is highly correlated to securities markets. As a result, we expect
that our assets under management and revenue levels will be negatively impacted,
on an incremental basis, by the effect of the COVID-19 pandemic on securities
markets. We continue to fully operate with our management and employees working
remotely and we have had business continuity plans in place which we were able
to seamlessly activate upon actions taken by various governmental authorities
suggesting that businesses recommend that their employees work from home as a
result of the pandemic.

Due to the above circumstances and as described generally in this Form 10-Q,
management cannot predict the full impact of the COVID-19 pandemic on the
Company's earnings and operations nor to economic conditions generally. The
ultimate extent of the effects of the COVID-19 pandemic on the Company is highly
uncertain and will depend on future developments, and such effects could exist
for an extended period of time even after the pandemic might end.

Key performance indicators

When we review our performance, we focus on the indicators described below:

                                              For the Three Months          

For the six months

                                                 Ended June 30,                Ended June 30,
(in thousands except as indicated)            2022            2021           2022          2021
Revenue                                    $    32,173      $  33,101     $   65,683     $  64,338
Income before other income (expense),
net                                        $    11,900      $   7,342     $   27,339     $  13,030
Net income                                 $     9,473      $   5,661     $   21,869     $   9,996
Net income margin                                 29.4 %         17.1 %         33.3 %        15.5 %
Net income attributable to Silvercrest     $     5,770      $   3,335     $   13,338     $   5,887
Adjusted EBITDA (1)                        $     9,163      $  10,429     $   19,413     $  20,085
Adjusted EBITDA margin (2)                        28.5 %         31.5 %         29.6 %        31.2 %
Assets under management at period end
(billions)                                 $      28.7      $    31.0     $     28.7     $    31.0
Average assets under management
(billions) (3)                             $      30.0      $    30.0     $     30.5     $    29.4



(1)
EBITDA, a non-GAAP measure of earnings, represents net income before provision
for income taxes, interest income, interest expense, depreciation and
amortization. We define Adjusted EBITDA as EBITDA without giving effect to items
including, but not limited to, professional fees associated with acquisitions or
financing transactions, gains on extinguishment of debt or other obligations
related to acquisitions, losses on disposals or abandonment of assets and
leaseholds, severance and other similar expenses, but including partner
incentive allocations, prior to our initial public offering, as an expense. We
use this non-GAAP financial measure to assess the strength of our business.
These adjustments and the non-GAAP financial measures that are derived from them
provide supplemental information to analyze our business from period to period.
Investors should consider these non-GAAP financial measures in addition to, and
not as a substitute for, financial measures in accordance with GAAP. See
"Supplemental Non-GAAP Financial Information" for a reconciliation of non-GAAP
financial measures.

(2)

Adjusted EBITDA margin, a non-GAAP measure of earnings, is calculated by dividing Adjusted EBITDA by total revenue.

(3)

We have calculated average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period.

Revenue

We generate revenue from management and advisory fees, performance fees and
allocations, and family office services fees. Our management and advisory fees
are generated by managing assets on behalf of separate accounts and acting as
investment adviser for various investment funds. Our performance fees and
allocations relate to assets managed in external investment strategies in which
we have a revenue sharing arrangement and in funds in which we have no
partnership interest. Our management and advisory fees and family office
services fees income is recognized through the course of the period in which
these services are provided. Income from performance fees and allocations is
recorded at the conclusion of the contractual performance period when all
contingencies are resolved. In certain arrangements, we are only entitled to
receive performance fees and allocations when the return on assets under
management exceeds certain benchmark returns or other performance targets.
                                       32
--------------------------------------------------------------------------------


The discretionary investment management agreements for our separately managed
accounts do not have a specified term. Rather, each agreement may be terminated
by either party at any time, unless otherwise agreed with the client, upon
written notice of termination to the other party. The investment management
agreements for our private funds are generally in effect from year to year, and
may be terminated at the end of any year (or, in certain cases, on the
anniversary of execution of the agreement) (i) by us upon 30 or 90 days' prior
written notice and (ii) after receiving the affirmative vote of a specified
percentage of the investors in the private fund that are not affiliated with us,
by the private fund on 60 or 90 days' prior written notice. The investment
management agreements for our private funds may also generally be terminated
effective immediately by either party where the non-terminating party (i)
commits a material breach of the terms subject, in certain cases, to a cure
period, (ii) is found to have committed fraud, gross negligence or willful
misconduct or (iii) terminates, becomes bankrupt, becomes insolvent or
dissolves. Each of our investment management agreements contains customary
indemnification obligations from us to our clients. The tables below set forth
the amount of assets under management, the percentage of management and advisory
fees revenues, the amount of revenue recognized, and the average assets under
management for discretionary managed accounts and for private funds for each
period presented.

Discretionary Managed Accounts

                                             As of and for the Three Months             As of and for the Six Months
                                                     Ended June 30,                            Ended June 30,
(in billions)                                  2022                   2021               2022                   2021
AUM concentrated in Discretionary
Managed Accounts                          $         19.9         $         22.4     $         19.9         $         22.4
Average AUM For Discretionary Managed
Accounts                                  $         21.6         $         21.9     $         22.3         $         21.3
Discretionary Managed Accounts Revenue
(in millions)                             $         30.0         $         30.7     $         61.2         $         59.7
Percentage of management and advisory
fees revenue                                          96 %                   96 %               96 %                   96 %


Private Funds
                                           As of and for the Three Months  

From and for Six Months

                                                   Ended June 30,                          Ended June 30,
(in billions)                                2022                  2021              2022                  2021

AUM concentrated in private funds $0.5 $0.5 $0.5 $0.5 Average AUM of private funds

            $         0.5         $         0.5     $         0.5         $         0.5
Private Funds Revenue (in millions)      $         1.1         $         1.2     $         2.3         $         2.4
Percentage of management and advisory
fees revenue                                         4 %                   4 %               4 %                   4 %


Our management and advisory fees are primarily driven by the level of our assets
under management. Our assets under management increase or decrease based on the
net inflows or outflows of funds into our various investment strategies and the
investment performance of our clients' accounts. In order to increase our assets
under management and expand our business, we must develop and market investment
strategies that suit the investment needs of our target clients and provide
attractive returns over the long term. Our ability to continue to attract
clients will depend on a variety of factors including, among others:

our ability to educate our target clients on our traditional value-oriented investment strategies and provide them with exceptional client service;

the relative investment performance of our investment strategies, compared to competing market products and indices;

competitive conditions in the broader investment management and financial services industries;

investor sentiment and confidence; and

our decision to close strategies when we believe it is in the best interests of our clients.

The majority of management and advisory fees that we earn on separately managed
accounts are based on the value of assets under management on the last day of
each calendar quarter. Most of our management and advisory fees are billed
quarterly in advance on the first day of each calendar quarter. Our basic annual
fee schedule for management of clients' assets in separately managed accounts
is: (i) for managed equity or balanced portfolios, 1% of the first $10 million
and 0.60% on the balance, (ii) for managed fixed income only portfolios, 0.40%
on the first $10 million and 0.30% on the balance, (iii) for the municipal value
strategy, 0.65%, (iv) for Cortina's equity portfolios, 1% on the first $25
million, 0.90% on the next $50 million and 0.80% on the balance and (v) for
outsourced chief investment officer portfolios, 0.40% on the first $50 million,
0.32% on the next $50 million and 0.24% on the balance. Our fee for monitoring
non-discretionary assets can range from 0.05% to 0.01%, but can also be
incorporated into an agreed-upon fixed family office service fee. The majority
of our client relationships pay a blended fee rate since they are invested in
multiple strategies.
                                       33
--------------------------------------------------------------------------------


Management fees earned on investment funds that we advise are calculated
primarily based on the net assets of the funds. Some funds calculate investment
fees based on the net assets of the funds as of the last business day of each
calendar quarter, whereas other funds calculate investment fees based on the
value of net assets on the first business day of the month. Depending on the
investment fund, fees are paid either quarterly in advance or quarterly in
arrears. For our private funds, the fees range from 0.25% to 1.5% annually.
Certain management fees earned on investment funds for which we perform risk
management and due diligence services are based on flat fee agreements
customized for each engagement.

Average annual management fee is calculated by dividing our actual annualized
revenue earned over a period by our average assets under management during the
same period (which is calculated by averaging quarter-end assets under
management for the applicable period). Our average annual management fee was
0.43% and 0.44% for the three months ended June 30, 2022 and 2021, respectively.
Our average annual management fee was 0.43% and 0.44% for the six months ended
June 30, 2022 and 2021, respectively. Changes in our total average management
fee rates are typically the result of changes in the mix of our assets under
management and the concentration in our equities strategies whose fee rates are
higher than those of other investment strategies. Management and advisory fees
are also adjusted for any cash flows into or out of a portfolio, where the cash
flow represents greater than 10% of the previous quarter-end market value of the
portfolio. These cash flow-related adjustments were insignificant for the three
and six months ended June 30, 2022 and 2021. Silvercrest L.P. has authority to
take fees directly from external custodian accounts of its separately managed
accounts.

Our management and advisory fees may fluctuate based on a number of factors, including:

changes in assets under management due to appreciation or depreciation of our investment portfolios, and levels of contribution and withdrawal of assets by new and existing clients;

the allocation of assets under management between our investment strategies, which have different fee schedules;

allocation of assets under management between separately managed accounts and
advised funds, for which we generally earn lower overall management and advisory
fees; and

the level of our performance with respect to the accounts and funds on which we earn incentive fees.

Our family office services capabilities enable us to provide comprehensive and
integrated services to our clients. Our dedicated group of tax and financial
planning professionals provide financial planning, tax planning and preparation,
partnership accounting and fund administration and consolidated wealth reporting
among other services. Family office services income fluctuates based on both the
number of clients for whom we perform these services and the level of
agreed-upon fees, most of which are flat fees. Therefore, non-discretionary
assets under management, which are associated with family office services, do
not typically serve as the basis for the amount of family office services
revenue that is recognized.

Expenses

Our expenses consist primarily of compensation and benefits expenses, as well as
general and administrative expense including rent, professional services fees,
data-related costs and sub-advisory fees. These expenses may fluctuate due to a
number of factors, including the following:

changes in the level of total compensation expense due to, among other things, bonuses, stock awards to our employees and partners of Silvercrest LP, changes in the number and composition of our employees and competitive factors; and

the level of management fees for funds that use sub-advisers will affect the amount of the sub-advisor fee.

Compensation and benefits expenses

Our largest expense is compensation and benefits, which includes the salaries,
bonuses, equity-based compensation and related benefits and payroll costs
attributable to our principals and employees. Our compensation methodology is
intended to meet the following objectives: (i) support our overall business
strategy; (ii) attract, retain and motivate top-tier professionals within the
investment management industry; and (iii) align our employees' interests with
those of our equity owners. We have experienced, and expect to continue to
experience, a general rise in compensation and benefits expense commensurate
with growth in headcount and with the need to maintain competitive compensation
levels.
                                       34
--------------------------------------------------------------------------------

The components of our compensation expense for the three and six month periods ended
June 30, 2022 and 2021 are as follows:

                                                For the Three Months           For the Six Months
                                                   Ended June 30,                Ended June 30,
(in thousands)                                  2022            2021           2022          2021
Cash compensation and benefits (1)           $    17,695      $  18,182     $   36,126     $  35,362
Non-cash equity-based compensation expense           276            293            504           762
Total compensation expense                   $    17,971      $  18,475     $   36,630     $  36,124


(1)
For the three months ended June 30, 2022 and 2021, $8,323 and $9,010,
respectively, of partner incentive payments were included in cash compensation
and benefits expense in the Condensed Consolidated Statements of Operations. For
the six months ended June 30, 2022 and 2021, $16,950 and $17,014, respectively,
of partner incentive payments were included in cash compensation and benefits
expense in the Condensed Consolidated Statements of Operations.

During the three and six months ended June 30, 2021, Silvercrest L.P. granted
restricted stock units ("RSU") to existing Class B unit holders. During the
three and six months ended June 30, 2021, Silvercrest L.P. granted non-qualified
options ("NQO") to an existing Class B unit holder. Information regarding
restricted stock units and stock options can be found in Note 16. "Equity Based
Compensation" in the "Notes to Condensed Consolidated Financial Statements" in
"Item 1. Financial Statements" of this filing.

General and administrative expenses

General and administrative expenses include occupancy-related costs,
professional and outside services fees, office expenses, depreciation and
amortization, sub-advisory fees and the costs associated with operating and
maintaining our research, trading and portfolio accounting systems. Our costs
associated with operating and maintaining our research, trading and portfolio
accounting systems and professional services expenses generally increase or
decrease in relative proportion to the number of employees retained by us and
the overall size and scale of our business operations. Sub-advisory fees will
fluctuate based on the level of management fees from funds that utilize
sub-advisors.

Other income

Other income is derived primarily from investment income arising from our
investments in various private investment funds that were established as part of
our investment strategies. We expect the investment components of other income,
in the aggregate, to fluctuate based on market conditions and the success of our
investment strategies. Performance fees and allocations earned from those
investment funds in which we have a partnership interest have been earned over
the past few years as a result of the achievement of various high-water marks
depending on the investment fund. These performance fees and allocations are
recorded based on the equity method of accounting. The majority of our
performance fees and allocations over the past few years have been earned from
our fixed income-related funds.

Non-majority interests

We are the general partner of Silvercrest L.P. and control its business and
affairs and, therefore, consolidate its financial results with ours. In light of
the limited partners' interest in Silvercrest L.P., we reflect their partnership
interests as non-controlling interests in our Condensed Consolidated Financial
Statements.

Provision for Income Tax

We are subject to taxes applicable to C-corporations. Our effective tax rate,
and the absolute dollar amount of our tax expense will be offset by the benefits
of the tax receivable agreement entered into with our Class B stockholders.

Acquisitions

On April 12, 2019, we entered into an Asset Purchase Agreement (the "Purchase
Agreement") with Cortina Asset Management, LLC, a Wisconsin limited liability
company ("Cortina"), and certain interest holders of Cortina (the "Principals of
Cortina") to acquire, directly or through a designated affiliate, substantially
all of the assets of Cortina relating to Cortina's business of providing
investment management, investment advisory, and related services.

Subject to the terms and conditions set forth in the Purchase Agreement, we
agreed to pay to Cortina an aggregate maximum amount of $44.9 million, 80% of
which was agreed to be paid in cash at closing by us, and 20% of which was
agreed to be paid by us in the form of issuance and delivery to certain
Principals of Cortina at closing of Class B Units in Silvercrest L.P., in each
case subject to certain adjustments as described in the Purchase Agreement. In
addition, the Purchase Agreement provides for up to an additional
                                       35
--------------------------------------------------------------------------------

$26.2 million be paid 80% in cash with some Cortina directors receiving the remaining 20% ​​as a class B-units of Silvercrest LP potential price complements over the next four years.

On July 1, 2019, the acquisition was completed pursuant to the Purchase
Agreement. At closing, the Company paid to Cortina an aggregate principal amount
of $33.6 million in cash, and Silvercrest L.P. paid an additional $9.0 million
in the form of issuance and delivery to certain Principals of Cortina of 662,713
Class B Units in Silvercrest L.P. Of the $33.6 million paid in cash, $35.1
million represented consideration, partially offset by net closing credits due
to the Company for reimbursable expenses from Cortina.

In addition, the purchase contract provides for up to an additional amount $26.2 million be paid 80% in cash with some Cortina directors receiving the remaining 20% ​​as a class B-units of Silvercrest LP potential price complements over the next four years.

The foregoing description of the Purchase Agreement is only a summary, does not
purport to be complete, and is qualified in its entirety by reference to the
full text of the Purchase Agreement, which is attached as Exhibit 2.1 to the
Form 8-K filed by Silvercrest on April 15, 2019.

On December 13, 2018, we executed an Asset Purchase Agreement (the "Neosho Asset
Purchase Agreement") by and among the Company, Silvercrest L.P. ("SLP"),
Silvercrest Asset Management Group LLC ("SAMG LLC") and Neosho Capital LLC
("Neosho" or the "Seller"), and Christopher K. Richey, Alphonse I. Chan, Robert
K. Choi and Vincent G. Pandes, each such individual a principal of Neosho, to
acquire certain assets of Neosho. The transaction contemplated by the Neosho
Asset Purchase Agreement closed on January 15, 2019 and is referred to herein as
the "Neosho Acquisition".

Information regarding the Cortina and Neosho Acquisitions can be found in Note
3. "Acquisitions" in the "Notes to Condensed Consolidated Financial Statements"
in "Item 1. Financial Statements" of this filing.

Operating results

Revenue

Our revenues for the three and six months ended June 30, 2022 and 2021 are set
forth below:

                                                      For the Three Months Ended June 30,
                                                                             2022 vs.         2022 vs.
(in thousands)                               2022            2021            2021 ($)         2021 (%)
Management and advisory fees              $   31,103       $  31,982     $       (879 )           (2.7 )%
Performance fees                                   2               -                2            100.0 %
Family office services                         1,068           1,119              (51 )           (4.6 )%
Total revenue                             $   32,173       $  33,101     $       (928 )           (2.8 )%



                                                      For the Six Months Ended June 30,
                                                                          2022 vs.         2022 vs.
(in thousands)                               2022          2021           2021 ($)         2021 (%)
Management and advisory fees              $   63,551     $  62,187     $     1,364              2.2 %
Performance fees                                   2             -               2            100.0 %
Family office services                         2,130         2,151             (21 )           (1.0 )%
Total revenue                             $   65,683     $  64,338     $     1,345              2.1 %



                                       36
--------------------------------------------------------------------------------

The growth of our assets under management during the three and six months ended
June 30, 2022 and 2021 is described below:

                                      Assets Under Management
(in billions)            Discretionary         Non-Discretionary      Total
As of March 31, 2021    $          21.9       $               7.1     $ 29.0
Gross client inflows                1.2                       0.2        1.4
Gross client outflows              (1.3 )                    (0.3 )     (1.6 )
Net client flows                   (0.1 )                    (0.1 )     (0.2 )
Market appreciation                 1.1                       1.1        2.2
As of June 30, 2021     $          22.9       $               8.1     $ 31.0   (1)

As of March 31, 2022    $          23.8       $               7.4     $ 31.2
Gross client inflows                1.2                       1.7        2.9
Gross client outflows              (2.1 )                    (0.1 )     (2.2 )
Net client flows                   (0.9 )                     1.6        0.7
Market depreciation                (2.5 )                    (0.7 )     (3.2 )
As of June 30, 2022     $          20.4       $               8.3     $ 28.7   (1)

As of January 1, 2021   $          20.6       $               7.2     $ 27.8
Gross client inflows                2.5                       0.3        2.8
Gross client outflows              (2.9 )                    (0.4 )     (3.3 )
Net client flows                   (0.4 )                    (0.1 )     (0.5 )
Market appreciation                 2.7                       1.0        3.7
As of June 30, 2021     $          22.9       $               8.1     $ 31.0   (1)

As of January 1, 2022   $          25.1       $               7.2     $ 32.3
Gross client inflows                2.6                       1.8        4.4
Gross client outflows              (3.6 )                    (0.1 )     (3.7 )
Net client flows                   (1.0 )                     1.7        0.7
Market depreciation                (3.7 )                    (0.6 )     (4.3 )
As of June 30, 2022     $          20.4       $               8.3     $ 28.7   (1)


(1)

Less than 5% of assets under management generate performance fees or allocations.

                                       37
--------------------------------------------------------------------------------

The following chart summarizes the performance 1, 2 of each of our main equity strategies against their appropriate benchmarks since inception:

EQUITY PERFORMANCE

as of June 30, 2022                                ANNUALIZED PERFORMANCE
                                  INCEPTION   1-YEAR   3-YEAR   5-YEAR   7-YEAR   INCEPTION
Large Cap Value Composite          4/1/02       -6.7      9.0     10.9     11.1         9.1
Russell 1000 Value Index                        -6.8      6.9      7.2      7.7         7.3
Small Cap Value Composite          4/1/02       -9.7      7.5      6.0      7.6        10.1
Russell 2000 Value Index                       -16.3      6.2      4.9      6.4         7.6
Smid Cap Value Composite           10/1/05     -10.5      6.4      6.7      8.7         9.3
Russell 2500 Value Index                       -13.2      6.2      5.5      6.5         7.1
Multi Cap Value Composite          7/1/02      -10.7      7.5      8.4      9.3         9.4
Russell 3000 Value Index                        -7.5      6.8      7.0      7.6         7.9
Equity Income Composite            12/1/03      -6.2      5.2      8.1      9.7        10.8
Russell 3000 Value Index                        -7.5      6.8      7.0      7.6         8.0
Focused Value Composite            9/1/04      -11.8      3.8      6.1      8.2         9.7
Russell 3000 Value Index                        -7.5      6.8      7.0      7.6         7.7
Small Cap Opportunity Composite    7/1/04      -22.1      5.8      7.6      8.6        10.3
Russell 2000 Index                             -25.2      4.2      5.2      5.9         7.5
Small Cap Growth Composite         7/1/04      -33.0     10.0     11.2     11.3        10.3
Russell 2000 Growth Index                      -33.4      1.4      4.8      5.0         7.6
Smid Cap Growth Composite          1/1/06      -35.1     12.5     13.8     11.9        10.6
Russell 2500 Growth Index                      -31.8      3.7      7.5      7.1         8.7


1 Returns are based upon a time weighted rate of return of various fully
discretionary equity portfolios with similar investment objectives, strategies
and policies and other relevant criteria managed by SAMG LLC, a subsidiary of
Silvercrest. Performance results are gross of fees and net of commission
charges. An investor's actual return will be reduced by the management and
advisory fees and any other expenses it may incur in the management of the
investment advisory account. SAMG LLC's standard management and advisory fees
are described in Part 2 of its Form ADV. Actual fees and expenses will vary
depending on a variety of factors, including the size of a particular account.
Returns greater than one year are shown as annualized compounded returns and
include gains and accrued income and reinvestment of distributions. Past
performance is no guarantee of future results. This report contains no
recommendations to buy or sell securities or a solicitation of an offer to buy
or sell securities or investment services or adopt any investment position. This
report is not intended to constitute investment advice and is based upon
conditions in place during the period noted. Market and economic views are
subject to change without notice and may be untimely when presented here.
Readers are advised not to infer or assume that any securities, sectors or
markets described were or will be profitable. SAMG LLC is an independent
investment advisory and financial services firm created to meet the investment
and administrative needs of individuals with substantial assets and select
institutional investors. SAMG LLC claims compliance with the Global Investment
Performance Standards (GIPS®).

2 The stock market indices used to compare the performance of our strategies are as follows:

The Russell 1000 Index is a capitalization-weighted, unmanaged index that
measures the 1000 largest companies in the Russell 3000. The Russell 1000 Value
Index is a capitalization-weighted, unmanaged index that includes those Russell
1000 Index companies with lower price-to-book ratios and lower expected growth
values.

The Russell 2000 Index is a capitalization-weighted, unmanaged index that
measures the 2000 smallest companies in the Russell 3000. The Russell 2000 Value
Index is a capitalization-weighted, unmanaged index that includes those Russell
2000 Index companies with lower price-to-book ratios and lower expected growth
values. The Russell 2000 Growth Index is a capitalization-weighted, unmanaged
index that includes those Russell 2000 Index companies with higher price-to-book
ratios and higher forecasted growth.

The Russell 2500 Index is a capitalization-weighted, unmanaged index that
measures the 2500 smallest companies in the Russell 3000. The Russell 2500 Value
Index is a capitalization-weighted, unmanaged index that includes those Russell
2000 Index companies with lower price-to-book ratios and lower expected growth
values. The Russell 2500 Growth Index is a capitalization-weighted, unmanaged
index that includes those Russell 2500 Index companies with higher price-to-book
ratios and higher forecasted growth.

The Russell 3000 Value Index is a capitalization-weighted, unmanaged index that
measures those Russell 3000 Index companies with lower price-to-book ratios and
lower forecasted growth.

Three months completed June 30, 2022 compared to the three months ended June 30, 2021

Our total revenue decreased by $0.9 million, or 2.8%, to $32.2 million for the
three months ended June 30, 2022, from $33.1 million for the three months ended
June 30, 2021. This decrease was driven by market depreciation and net client
outflows in discretionary assets under management.

Total assets under management decreased by $2.3 billion, or 7.4%, to $28.7
billion at June 30, 2022 from $31.0 billion at June 30, 2021. Compared to the
three months ended June 30, 2021, there was an increase in market depreciation
of $5.5 billion and an increase in client outflows of $0.6 billion partially
offset by an increase of $1.6 billion in client inflows. During the three months
                                       38
--------------------------------------------------------------------------------


ended June 30, 2022, from March 31, 2022, there was a decrease of $3.4 billion
in discretionary assets under management and an increase of $0.9 billion in
non-discretionary assets under management. The decrease in assets under
management as of June 30, 2022 as compared to March 31, 2022 was primarily due
to market depreciation during the quarter ended June 30, 2022, partially offset
by net client inflows. Sub-advised fund management revenue flat at $0.3 million
for the three months ended June 30, 2022 and June 30, 2021. Proprietary fund
management revenue decreased by $0.1 million for the three months ended June 30,
2022 as compared to the same period in the prior year. With respect to our
discretionary assets under management, equity assets experienced a decrease of
14.3% during the three months ended June 30, 2022 and fixed income assets
decreased by 1.8% during the same period. For the three months ended June 30,
2022, most of the decrease in equity assets came from our SMID growth, small cap
growth and core international strategies with composite returns of -24.5%,
-22.8% and -20.5%, respectively. As of June 30, 2022, the composition of our
assets under management was 71% in discretionary assets, which includes both
separately managed accounts and proprietary and sub-advised funds, and 29% in
non-discretionary assets which represent assets on which we provide portfolio
reporting but do not have investment discretion.

The following table represents a more detailed breakdown of our assets under management during the three months ended June 30, 2022 and 2021:

                                               Three Months Ended
                                                    June 30,
                                               2022           2021
Total AUM as of March 31,                    $    31.2       $  29.0
Discretionary AUM:
Total Discretionary AUM as of March 31,           23.8          21.9
New client accounts/assets (1)                     0.1             -
Closed accounts (2)                                  -             -
Net cash inflow/(outflow) (3)                     (1.0 )        (0.1 )
Non-discretionary to Discretionary AUM (4)           -             -
Market (depreciation)/appreciation                (2.5 )         1.1
Change to Discretionary AUM                       (3.4 )         1.0
Total Discretionary AUM at June 30,               20.4          22.9
Change to Non-Discretionary AUM (5)                0.9           1.0
Total AUM as of June 30,                     $    28.7          31.0


(1)

Represents flows of new accounts from new and existing customer relationships.

(2)

Represents closed accounts of existing customer relationships and those that have ended.

(3)

Represents periodic cash flows related to existing accounts.

(4)

Represents client assets converted to discretionary AUM from non-discretionary AUM.

(5)

Represents the net change in assets under non-discretionary management.

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

Our total revenue increased by $1.4 million, or 2.1%, to $65.7 million for the
six months ended June 30, 2022, from $64.3 million for the six months ended June
30, 2021. This increase was driven by net client inflows partially offset by
market depreciation.

Total assets under management decreased by $2.3 billion, or 7.4%, to $28.7
billion at June 30, 2022 from $31.0 billion at June 30, 2021. Compared to the
six months ended June 30, 2021, there was an increase in market depreciation of
$8.0 billion and an increase of $0.6 billion in client outflows, partially
offset by an increase of $1.6 billion in client inflows. During the six months
ended June 30, 2022, from December 31, 2021, there was a decrease of $4.7
billion in discretionary assets under management and an increase of $1.1 billion
in non-discretionary assets under management. The decrease in assets under
management as of June 30, 2022 as compared to December 31, 2021 was primarily
due to market depreciation during the period, partially offset by net client
inflows during the period. Sub-advised fund management revenue decreased by $0.1
million for the six months ended June 30, 2022 as compared to the same period in
the prior year. Proprietary fund management revenue decreased by $0.1 million
for the six months ended June 30, 2022 as compared to the same period in the
prior year. With respect to our discretionary assets under management, equity
assets experienced a decrease of 17.2% during the six months ended June 30, 2022
and fixed income assets decreased by 6.9% during the same period. For the six
months ended June 30, 2022, most of the decrease in equity assets came from our
SMID growth, small cap growth and focused opportunity strategies with composite
returns of -34.6%, -31.8% and -29.1%, respectively. As of June 30, 2022, the
composition of our assets under management was 71% in discretionary assets,
which includes both separately managed accounts and proprietary and sub-advised
funds, and 29% in non-discretionary assets which represent assets on which we
provide portfolio reporting but do not have investment discretion.
                                       39
--------------------------------------------------------------------------------

The following table represents a more detailed breakdown of our assets under management for the six months ended June 30, 2022 and 2021:

                                               Six Months Ended
                                                   June 30,
                                               2022          2021
Total AUM as of January 1,                   $    32.3      $ 27.8

Discretionary AUM: Total discretionary AUM as of January 1st25.1 20.6 New customer/active accounts (1)

                     0.2         0.2
Closed accounts (2)                                  -        (0.3 )
Net cash inflow/(outflow) (3)                     (1.2 )      (0.3 )
Non-discretionary to Discretionary AUM (4)           -           -
Market (depreciation)/appreciation                (3.7 )       2.7
Change to Discretionary AUM                       (4.7 )       2.3
Total Discretionary AUM at June 30,               20.4        22.9
Change to Non-Discretionary AUM (5)                1.1         0.9
Total AUM as of June 30,                     $    28.7      $ 31.0


(1)

Represents flows of new accounts from new and existing customer relationships.

(2)

Represents closed accounts of existing customer relationships and those that have ended.

(3)

Represents periodic cash flows related to existing accounts.

(4)

Represents client assets converted to discretionary AUM from non-discretionary AUM.

(5)

Represents the net change in assets under non-discretionary management.

Expenses

Our expenses for the three and six months ended June 30, 2022 and 2021 are set
forth below:

                                                     For the Three Months Ended June 30,
                                                                        2022 vs.         2022 vs.
(in thousands)                               2022          2021         2021 ($)         2021 (%)
Compensation and benefits (1)             $   17,971     $  18,475     $      (504 )           (2.7 )%
General, administrative and other              2,302         7,284          (4,982 )          (68.4 )%
Total expenses                            $   20,273     $  25,759     $    (5,486 )          (21.3 )%



                                                     For the Six Months Ended June 30,
                                                                       2022 vs.         2022 vs.
(in thousands)                              2022          2021         2021 ($)         2021 (%)
Compensation and benefits (1)             $  36,630     $  36,124     $       506              1.4 %
General, administrative and other         $   1,714        15,184         (13,470 )          (88.7 )%
Total expenses                            $  38,344     $  51,308     $   (12,964 )          (25.3 )%



(1)
For the three months ended June 30, 2022 and 2021, $8,323 and $9,010,
respectively, of partner incentive payments were included in cash compensation
and benefits expense in the Condensed Consolidated Statements of Operations. For
the six months ended June 30, 2022 and 2021, $16,950 and $17,014, respectively,
of partner incentive payments were included in cash compensation and benefits
expense in the Condensed Consolidated Statements of Operations.

Our expenses are driven primarily by our compensation costs. The table included
in "-Expenses-Compensation and Benefits Expense" describes the components of our
compensation expense for the three and six months ended June 30, 2022 and 2021.
Other expenses, such as rent, professional service fees, data-related costs, and
sub-advisory fees incurred are included in our general and administrative
expenses in the Condensed Consolidated Statements of Operations.

Three months completed June 30, 2022 compared to the three months ended June 30, 2021

Total expenses decreased by $5.5 million, or 21.3%, to $20.3 million for the
three months ended June 30, 2022 from $25.8 million for the three months ended
June 30, 2021. This decrease was attributable to a decrease in compensation and
benefits expense of $0.5 million and a decrease in general, administrative and
other expenses of $5.0 million.
                                       40
--------------------------------------------------------------------------------


Compensation and benefits expense decreased by $0.5 million, or 2.7%, to $18.0
million for the three months ended June 30, 2022 from $18.5 million for the
three months ended June 30, 2021. The decrease was primarily attributable to a
decrease in the accrual for bonuses of $0.9 million partially offset by an
increase in salaries and benefits of $0.4 million primarily as a result of
merit-based increases and newly hired staff.

General and administrative expenses decreased by $5.0 million, or 68.4%, to $2.3
million for the three months ended June 30, 2022 from $7.3 million for the three
months ended June 30, 2021. This was primarily attributable to a decrease in the
adjustment to the fair value of contingent consideration related to the Cortina
Acquisition of $5.7 million, a decrease in trade errors of $0.2 million and a
decrease in occupancy and related costs of $0.1 million primarily due to a
decrease in cleaning and maintenance costs, partially offset by an increase in
travel and entertainment expenses of $0.5 million due to the easing of
restrictions related to the coronavirus pandemic, an increase in portfolio and
systems expense of $0.2 million, an increase in professional fees of $0.2
million and an increase in shareholder related expenses of $0.1 million.

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

Total expenses decreased by $13.0 million, or 25.3%, to $38.3 million for the
six months ended June 30, 2022 from $51.3 million for the six months ended June
30, 2021. This decrease was attributable to a decrease in general,
administrative and other expenses of $13.5 million, partially offset by an
increase in compensation and benefits expense of $0.5 million.

Compensation and benefits expense increased by $0.5 million, or 1.4%, to $36.6
million for the six months ended June 30, 2022 from $36.1 million for the six
months ended June 30, 2021. The increase was primarily attributable to an
increase in salaries and benefits of $1.0 million primarily as a result of
merit-based increases and newly hired staff, partially offset by a decrease in
the accrual for bonuses of $0.2 million and a decrease in equity-based
compensation expense of $0.3 million due to a decrease in the number of vested
and unvested restricted stock units and unvested non-qualified stock options
outstanding.

General and administrative expenses decreased by $13.5 million, or 88.7%, to
$1.7 million for the six months ended June 30, 2022 from $15.2 million for the
six months ended June 30, 2021. This was primarily attributable to a decrease in
the adjustment to the fair value of contingent consideration related to the
Cortina Acquisition of $14.5 million and a decrease in occupancy and related
costs of $0.2 million primarily due to a decrease in cleaning and maintenance
costs and a decrease in trade errors of $0.2 million, partially offset by an
increase in travel and entertainment expenses of $0.6 million due to the easing
of restrictions related to the coronavirus pandemic, an increase in portfolio
and systems expense of $0.4 million, an increase in professional fees of $0.2
million, an increase in shareholder related expense of $0.1 million and an
increase in sub-advisory referral fee expense of $0.1 million.

Other income (expenses), net

                                                           For the Three Months Ended June 30,
                                                                                                        2022 vs.
(in thousands)                               2022             2021            2022 vs. 2021 ($)         2021 (%)
Other income (expense), net               $        7       $        8       $                (1 )          (12.5 )%
Interest income                                    3                2                         1             50.0 %
Unrealized gain (loss)                            (1 )              -                        (1 )          100.0 %
Interest expense                                 (83 )            (97 )                      14            (14.4 )%
Total other income (expense), net         $      (74 )     $      (87 )     $                13            (14.9 )%



                                                           For the Six Months Ended June 30,
                                                                                                      2022 vs.
(in thousands)                               2022             2021          2022 vs. 2021 ($)         2021 (%)
Other income (expense), net               $       15       $       15     $                 -                -
Interest income                                    4                4                       -                -
Unrealized gain (loss)                            (1 )              -                      (1 )          100.0 %
Interest expense                                (161 )           (202 )                    41            (20.3 )%

Total other income (expenses), net $ (143 ) $ (183 ) $

                40            (21.9 )%


Three months completed June 30, 2022 compared to the three months ended June 30, 2021

Total other income (expense) net increased by $13 thousand to other expense of
$74 thousand for the three months ended June 30, 2022 from other expense of $87
thousand for the three months ended June 30, 2021 primarily due to a decrease in
interest expense as a result of the level of borrowings under our credit
facility.
                                       41
--------------------------------------------------------------------------------

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

Total other income (expense) net increased by $40 thousand to other expense of
$143 thousand for the six months ended June 30, 2022 from other expense of $183
thousand for the six months ended June 30, 2021 primarily due to a decrease in
interest expense as a result of the level of borrowings under our credit
facility.

Provision for income taxes

Three months completed June 30, 2022 compared to the three months ended June 30, 2021

The provision for income taxes was $2.4 million and $1.6 million for the three
months ended June 30, 2022 and 2021, respectively. The change was primarily
related to the tax effect of the change in the fair value of the contingent
consideration related to the Cortina Acquisition and by increased profitability
during the current period as compared to the prior year. Our provision for
income taxes as a percentage of income before provision for income taxes for the
three months ended June 30, 2022 and 2021 was 19.9% and 22.0%, respectively.

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

The provision for income taxes was $5.3 million and $2.9 million for the six
months ended June 30, 2022 and 2021, respectively. The change was primarily
related to the tax effect of the change in the fair value of the contingent
consideration related to the Cortina Acquisition and by increased profitability
during the current period as compared to the prior year. Our provision for
income taxes as a percentage of income before provision for income taxes for the
six months ended June 30, 2022 and 2021 was 19.6% and 22.2%, respectively.


                                       42
--------------------------------------------------------------------------------

Additional Non-GAAP Financial Information

To provide investors with additional insight, promote transparency and allow for
a more comprehensive understanding of the information used by management in its
financial and operational decision-making, we supplement our Condensed
Consolidated Financial Statements presented on a basis consistent with U.S.
generally accepted accounting principles, or GAAP, with Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Earnings Per Share
which are non-GAAP financial measures of earnings.

EBITDA represents net earnings before provision for income taxes, interest income, interest expense, depreciation and amortization.

We define Adjusted EBITDA as EBITDA without giving effect to the Delaware
franchise tax, professional fees associated with acquisitions or financing
transactions, gains on extinguishment of debt or other obligations related to
acquisitions, impairment charges and losses on disposals or abandonment of
assets and leaseholds, client reimbursements and fund redemption costs,
severance and other similar expenses, but including partner incentive
allocations, prior to our initial public offering, as an expense. We feel that
it is important to management and investors to supplement our Condensed
Consolidated Financial Statements presented on a GAAP basis with Adjusted
EBITDA, a non-GAAP financial measure of earnings, as this measure provides a
perspective of recurring earnings of the Company, taking into account earnings
attributable to both Class A and Class B shareholders.

Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by total
revenue. We feel that it is important to management and investors to supplement
our Condensed Consolidated Financial Statements presented on a GAAP basis with
Adjusted EBITDA Margin, a non-GAAP financial measure of earnings, as this
measure provides a perspective of recurring profitability of the Company, taking
into account profitability attributable to both Class A and Class B
shareholders.

Adjusted Net Income represents recurring net income without giving effect to
professional fees associated with acquisitions or financing transactions, losses
on forgiveness of notes receivable from our principals, gains on extinguishment
of debt or other obligations related to acquisitions, impairment charges and
losses on disposals or abandonment of assets and leaseholds, client
reimbursements and fund redemption costs, severance and other similar expenses,
but including partner incentive allocations, prior to our initial public
offering, as an expense. Furthermore, Adjusted Net Income includes income tax
expense assuming a blended corporate rate of 26%. We feel that it is important
to management and investors to supplement our Condensed Consolidated Financial
Statements presented on a GAAP basis with Adjusted Net Income, a non-GAAP
financial measure of earnings, as this measure provides a perspective of
recurring income of the Company, taking into account income attributable to both
Class A and Class B shareholders.

Adjusted Earnings Per Share represents Adjusted Net Income divided by the actual
Class A and Class B shares outstanding as of the end of the reporting period for
basic Adjusted Earnings Per Share, and to the extent dilutive, we add unvested
restricted stock units and non-qualified stock options to the total shares
outstanding to compute diluted Adjusted Earnings Per Share. As a result of our
structure, which includes a non-controlling interest, we feel that it is
important to management and investors to supplement our Condensed Consolidated
Financial Statements presented on a GAAP basis with Adjusted Earnings Per Share,
a non-GAAP financial measure of earnings, as this measure provides a perspective
of recurring earnings per share of the Company as a whole as opposed to being
limited to our Class A common stock.

These adjustments, and the non-GAAP financial measures that are derived from
them, provide supplemental information to analyze our operations between periods
and over time. Investors should consider our non-GAAP financial measure in
addition to, and not as a substitute for, financial measures prepared in
accordance with GAAP.


                                       43
--------------------------------------------------------------------------------


The following tables contain reconciliations of net income to Adjusted EBITDA,
Adjusted Net Income and Adjusted Earnings Per Share (amounts in thousands except
per share amounts).
                                            Three Months Ended             Six Months Ended
                                                 June 30,                      June 30,
                                            2022           2021           2022          2021
Reconciliation of non-GAAP financial
measure:
Net income                               $     9,473     $   5,661     $   21,869     $   9,996
GAAP Provision for income taxes                2,353         1,594          5,327         2,851
Delaware Franchise Tax                            50            50            100           100
Interest expense                                  83            97            161           202
Interest income                                   (3 )          (2 )           (4 )          (4 )
Depreciation and amortization                    970           993          1,927         1,961
Equity-based compensation                        276           293            504           462
Other adjustments (A)                         (4,039 )       1,743        (10,471 )       4,517
Adjusted EBITDA                          $     9,163     $  10,429     $   19,413     $  20,085
Adjusted EBITDA Margin                          28.5 %        31.5 %         29.6 %        31.2 %

Adjusted Net Income and Adjusted
Earnings Per Share
Reconciliation of non-GAAP financial
measure:
Net income                               $     9,473     $   5,661     $   21,869     $   9,996
GAAP Provision for income taxes                2,353         1,594          5,327         2,851
Delaware Franchise Tax                            50            50            100           100
Other adjustments (A)                         (4,039 )       1,743        (10,471 )       4,517
Adjusted earnings before provision for
income taxes                                   7,837         9,048         16,825        17,464
Adjusted provision for income taxes:
Adjusted provision for income taxes
(26% assumed tax rate)                        (2,038 )      (2,352 )       (4,375 )      (4,541 )

Adjusted net income                      $     5,799     $   6,696     $   12,451     $  12,923

GAAP net income per share (B):
Basic and diluted                        $      0.58     $    0.35     $    

1.35 $0.61

Adjusted earnings per share/unit (B):
Basic                                    $      0.40     $    0.46     $     0.86     $    0.89
Diluted                                  $      0.39     $    0.45     $     0.83     $    0.87

Shares/units outstanding:
Basic Class A shares outstanding               9,911         9,670          9,911         9,670
Basic Class B shares/units outstanding         4,603         4,782          4,603         4,782
Total basic shares/units outstanding          14,514        14,452         14,514        14,452

Diluted Class A shares outstanding (C)         9,943         9,690          9,943         9,690
Diluted Class B shares/units
outstanding (D)                                4,977         5,206          

4,977 5,206 Total diluted shares/units outstanding 14,920 14,896 14,920 14,896



                                       44
--------------------------------------------------------------------------------

(A)

The other adjustments consist of the following:

                            Three Months Ended          Six Months Ended
                                 June 30,                   June 30,
                             2022          2021         2022         2021
Acquisition costs (a)     $        11     $    20     $      27     $   331
Other (b)                      (4,050 )     1,723       (10,498 )     4,186
Total other adjustments   $    (4,039 )   $ 1,743     $ (10,471 )   $ 4,517


(a)
For the three months ended June 30, 2022, represents insurance costs of $11
related to the acquisition of Cortina. For the six months ended June 30, 2022,
represents insurance costs of $22 and professional fees of $5 related to the
acquisition of Cortina. For the three months ended June 30, 2021, represents
insurance costs of $11 and professional fees of $9 related to the acquisition of
Cortina. For the six months ended June 30, 2021, represents equity-based
compensation expense of $300 related to restricted stock unit grants issued to
two associates hired as part of the Cortina Acquisition in conjunction with
their admission to Silvercrest L.P., insurance costs of $22 and professional
fees of $9 related to the acquisition of Cortina.

(b)

For the three months ended June 30, 2022, represents a fair value adjustment to
the Cortina contingent purchase price consideration of ($4,100), an ASC 842 rent
adjustment of $48 related to the amortization of property lease incentives and
expenses related to the Coronavirus pandemic of $2. For the six months ended
June 30, 2022, represents a fair value adjustment to the Cortina contingent
purchase price consideration of ($10,600), an ASC 842 rent adjustment of $96
related to the amortization of property lease incentives and expenses related to
the Coronavirus pandemic of $6. For the three months ended June 30, 2021,
represents a fair value adjustment to the Cortina contingent purchase price
consideration of $1,600, an ASC 842 rent adjustment of $48 related to the
amortization of property lease incentives and expenses related to the
Coronavirus pandemic of $75. For the six months ended June 30, 2021, represents
a fair value adjustment to the Cortina contingent purchase price consideration
of $3,900, an ASC 842 rent adjustment of $96 related to the amortization of
property lease incentives and expenses related to the Coronavirus pandemic of
$190.

(b)

GAAP net earnings per share are strictly attributable to Class A shareholders. Adjusted earnings per share includes earnings attributable to Class A and Class B shareholders.

(vs)

Includes 31,974 and 19,877 unvested restricted stock units as of June 30, 2022 and 2021, respectively.

(D)

Includes 120,772 and 170,854 unvested restricted stock units and 252,904 unvested unqualified options as of June 30, 2022 and 2021, respectively.

Cash and capital resources

Historically, the working capital needs of our business have primarily been met
through cash generated by our operations. We expect that our cash and liquidity
requirements in the next twelve months will be met primarily through cash
generated by our operations. The challenges posed by the COVID-19 pandemic and
the impact on our business and cash flows are evolving rapidly and cannot be
predicted at this time. Consequently, we will continue to evaluate our liquidity
and financial position on an ongoing basis.

On June 24, 2013, the subsidiaries of Silvercrest L.P. entered into a $15.0
million credit facility with City National Bank. The subsidiaries of Silvercrest
L.P. are the borrowers under such facility and Silvercrest L.P. guarantees the
obligations of its subsidiaries under the credit facility. The credit facility
is secured by certain assets of Silvercrest L.P. and its subsidiaries. The
credit facility consists of a $7.5 million delayed draw term loan that matures
on June 24, 2025 and a $7.5 million revolving credit facility that was scheduled
to mature on June 21, 2019. On July 1, 2019, the credit facility was amended to
increase the term loan by $18.0 million to $25.5 million, extend the draw date
on the term loan facility to July 1, 2024, extend the maturity date of the term
loan to July 1, 2026 and increase the revolving credit facility by $2.5 million
to $10.0 million. On June 17, 2022, the revolving credit facility was further
amended to extend the maturity date to June 18, 2023 and amended to replace
LIBOR terms with its successor, the Secured Overnight Financing Rate ("SOFR").
The loan bears interest at either (a) the higher of the prime rate plus a margin
of 0.25 percentage points and 2.5% or (b) the SOFR rate plus 2.80 percentage
points, at the borrowers' option. Borrowings under the term loan on or prior to
June 30, 2021 are payable in 20 equal quarterly installments. Borrowings under
the term loan after June 30, 2021 will be payable in equal quarterly
installments through the maturity date. On February 15, 2022, the credit
facility was amended and restated to reflect changes to various definitions and
related clauses with respect to our subsidiaries. The credit facility contains
restrictions on, among other things, (i) incurrence of additional debt, (ii)
creating liens on certain assets, (iii) making certain investments, (iv)
consolidating, merging or otherwise disposing of substantially all of our
assets, (v) the sale of certain assets, and (vi) entering into transactions with
affiliates. In addition, the credit facility contains certain financial
covenants including a test on discretionary assets under management, maximum
debt to EBITDA and a fixed charge coverage ratio. The credit facility contains
customary events of default, including the occurrence of a change in control
which includes a person or group of persons acting together acquiring more than
30% of the total voting securities of Silvercrest. Any undrawn amounts under
this facility would be available to fund future acquisitions or for working
capital purposes, if needed. As of June 30, 2022, we had $7.2 million
outstanding under the term loan. As of June 30, 2022, there were no borrowings
outstanding on the revolving credit facility. We were in compliance with the
covenants under the credit facility as of June 30, 2022.

Our ongoing sources of cash will primarily consist of management fees and family
office services fees, which are principally collected quarterly. We will
primarily use cash flow from operations to pay compensation and related
expenses, general and administrative expenses, income taxes, debt service,
capital expenditures, distributions to Class B unit holders and dividends on
shares of our Class A common stock.
                                       45
--------------------------------------------------------------------------------


Seasonality typically affects cash flow since the first quarter of each year
includes, as a source of cash, payment of the prior year's annual performance
fees and allocations, if any, from our various funds and external investment
strategies and, as a use of cash, the prior fiscal year's incentive
compensation. We believe that we have sufficient cash from our operations to
fund our operations and commitments for the next twelve months.

The following table sets forth certain key financial data relating to our liquidity and capital resources as of June 30, 2022 and December 31, 2021.

                                        As of
                             June 30,       December 31,
(in thousands)                 2022             2021
Cash and cash equivalents    $  67,558     $       85,744
Accounts receivable          $   8,988     $        8,850
Due from Silvercrest Funds   $   2,029     $          428


We anticipate that distributions to the limited partners of Silvercrest L.P.
will continue to be a material use of our cash resources and will vary in amount
and timing based on our operating results and dividend policy. We pay and intend
to continue paying quarterly cash dividends to holders of our Class A common
stock. We are a holding company and have no material assets other than our
ownership of interests in Silvercrest L.P. As a result, we will depend upon
distributions from Silvercrest L.P. to pay any dividends to our Class A
stockholders. We expect to cause Silvercrest L.P. to make distributions to us in
an amount sufficient to cover dividends, if any, declared by us. Our dividend
policy has certain risks and limitations, particularly with respect to
liquidity. Although we expect to pay dividends according to our dividend policy,
we may not pay dividends according to our policy, or at all, if, among other
things, we do not have the cash necessary to pay our intended dividends or our
subsidiaries are prevented from making a distribution to us under the terms of
our current credit facility or any future financing. To the extent we do not
have cash on hand sufficient to pay dividends, we may decide not to pay
dividends. By paying cash dividends rather than investing that cash in our
future growth, we risk slowing the pace of our growth, or not having a
sufficient amount of cash to fund our operations or unanticipated capital
expenditures, should the need arise.

Our purchase of Class B units in Silvercrest L.P. that occurred concurrently
with the consummation of our initial public offering, and the future exchanges
of Class B units of Silvercrest L.P., are expected to result in increases in our
share of the tax basis of the tangible and intangible assets of Silvercrest L.P.
at the time of our acquisition and these future exchanges, which will increase
the tax depreciation and amortization deductions that otherwise would not have
been available to us. These increases in tax basis and tax depreciation and
amortization deductions are expected to reduce the amount of tax that we would
otherwise be required to pay in the future. We entered into a tax receivable
agreement with the current principals of Silvercrest L.P. and any future
employee-holders of Class B units pursuant to which we agreed to pay them 85% of
the amount of cash savings, if any, in U.S. federal, state and local income tax
that we actually realize as a result of these increases in tax basis and certain
other tax benefits related to entering into the tax receivable agreement,
including tax benefits attributable to payments thereunder. The timing of these
payments is currently unknown. The payments to be made pursuant to the tax
receivable agreement will be a liability of Silvercrest and not Silvercrest
L.P., and thus this liability has been recorded as an "other liability" on our
Condensed Consolidated Statement of Financial Condition. For purposes of the tax
receivable agreement, cash savings in income tax will be computed by comparing
our actual income tax liability to the amount of such taxes that we would have
been required to pay had there been no increase in our share of the tax basis of
the tangible and intangible assets of Silvercrest L.P.

The actual increase in tax basis, as well as the amount and timing of any
payments under the tax receivable agreement, will vary depending upon a number
of factors, including the timing of exchanges, the price of shares of our Class
A common stock at the time of the exchange, the extent to which such exchanges
are taxable, the amount and timing of our income and the tax rates then
applicable. Nevertheless, we expect that as a result of the size of the
increases in the tax basis of our tangible and intangible assets, the payments
that we may make under the tax receivable agreement likely will be substantial.
Assuming no material changes in the relevant tax law and that we earn sufficient
taxable income to realize the full tax benefit of the increased depreciation and
amortization of our assets, we expect that future payments to the selling
principals of Silvercrest L.P. in respect of our purchase of Class B units from
them will aggregate approximately $9.4 million. Future payments to current
principals of Silvercrest L.P. and future holders of Class B units in respect of
subsequent exchanges would be in addition to these amounts and are expected to
be substantial. We intend to fund required payments pursuant to the tax
receivable agreement from the distributions received from Silvercrest L.P.
                                       46
--------------------------------------------------------------------------------

Cash flow

The following table sets forth our cash flows for the six months ended June 30,
2022 and 2021. Operating activities consist of net income subject to adjustments
for changes in operating assets and liabilities, depreciation, and equity-based
compensation expense. Investing activities consist primarily of acquiring and
selling property and equipment, and cash paid as part of business acquisitions.
Financing activities consist primarily of contributions from partners,
distributions to partners, dividends paid on Class A common stock, the issuance
and payments on partner notes, other financings, and earnout payments related to
business acquisitions.

                                                        Six Months Ended June 30,
(in thousands)                                            2022               2021

Net cash (used in) provided by operating activities ($6,561) $

1,951

Net cash used in investing activities                          (290 )           (396 )
Net cash used in financing activities                       (11,335 )        (10,422 )
Net change in cash                                    $     (18,186 )     $   (8,867 )


Operating Activities

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

For the six months ended June 30, 2022 and 2021, operating activities used $6.6
million and provided $2.0 million, respectively. This difference is primarily
the result of a decrease in accrued compensation of $7.6 million, a decrease in
distributions received from investment funds of $0.5 million, increased
operating lease liabilities of $0.3 million, a decrease in equity-based
compensation expense of $0.3 million, a decrease in prepaid and other expenses
of $0.3 million and a decrease in accounts payable and accrued expense of $14.2
million primarily due to a change in the fair value of contingent consideration
related to the Cortina Acquisition, partially offset by an increase in net
income of $11.9 million, increased deferred tax expense of $2.5 million and
increased non-cash lease expense of $0.3 million.

Investing activities

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

For the six months ended June 30, 2022 and 2021, investing activities used $0.3
million and $0.4 million, respectively. The primary use of cash during the six
months ended June 30, 2022 and 2021 was for the acquisition of furniture,
equipment and leasehold improvements.

Fundraising activities

Semester completed June 30, 2022 compared to the half-year ended June 30, 2021

For the six months ended June 30, 2022 and 2021, financing activities used $11.3
million and $10.4 million, respectively. During the six months ended June 30,
2022 and 2021, the Company repaid $1.8 million and $1.8 million, respectively,
of principal on the term loan with City National Bank. Distributions to partners
during the six months ended June 30, 2022 and 2021 were $6.2 million and $5.4
million, respectively. During the six months ended June 30, 2022 and 2021, the
Company paid dividends of $3.4 million and $3.1 million, respectively, to Class
A shareholders. During the six months ended June 30, 2022 and 2021, we made
earnout payments of $0.1 and $0.3 million. During the six months ended June 30,
2022 and 2021, we received payments from partners on notes receivable of $0.2
million and $0.2 million, respectively.

We anticipate that distributions to principals of Silvercrest L.P. will continue
to be a material use of our cash resources, and will vary in amount and timing
based on our operating results and dividend policy.

As of June 30, 2022 and December 31, 2021, $7.2 million and $9.0 million,
respectively, was outstanding under the term loan with City National Bank. As of
June 30, 2022 and December 31, 2021, accrued but unpaid interest on the term
loan with City National Bank was $26 thousand and $25 thousand, respectively.

From June 30, 2022 and December 31, 2021nothing was outstanding on our revolving credit facility with National City Bank.

Significant Accounting Policies and Estimates

There have been no changes to our critical accounting policies during the six
months ended June 30, 2022 from those disclosed in our Annual Report on Form
10-K for the year ended December 31, 2021 filed with the Securities and Exchange
Commission on March 2, 2022.
                                       47
--------------------------------------------------------------------------------

Revenue recognition

Investment advisory fees are typically billed quarterly in advance at the
beginning of the quarter or in arrears after the end of the quarter, based on a
contractual percentage of the assets managed. Family office services fees are
also typically billed quarterly in advance at the beginning of the quarter or in
arrears after the end of the quarter based on a contractual percentage of the
assets managed or upon a contractually agreed-upon flat fee arrangement. Revenue
is recognized on a ratable basis over the period in which services are
performed.

We account for performance-based revenue in accordance with ASC 606-10-32,
Accounting for Management Fees Based on a Formula, by recognizing performance
fees and allocations as revenue only when it is certain that the fee income is
earned and payable pursuant to the relevant agreements. In certain arrangements,
we are only entitled to receive performance fees and allocations when the return
on assets under management exceeds certain benchmark returns or other
performance targets. We record performance fees and allocations as a component
of revenue once the performance fee has crystallized. As a result, there is no
estimate or variability in the consideration when revenue is recorded.

Because the majority of our revenues are earned based on assets under management
that have been determined using fair value methods and since market
appreciation/depreciation has a significant impact on our revenue, we have
presented our assets under management using the GAAP framework for measuring
fair value. That framework provides a three-level fair value hierarchy that
prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs based on company assumptions (Level 3). A financial
instrument's categorization within the fair value hierarchy is based upon the
lowest level of input that is significant to the instrument's fair value
measurement. The three levels within the fair value hierarchy are described as
follows:

Level 1-includes quoted prices (unadjusted) in active markets for identical
instruments at the measurement date. The types of financial instruments included
in Level 1 include unrestricted securities, including equities listed in active
markets.

Level 2-includes inputs other than quoted prices that are observable for the
instruments, including quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not
active, or inputs other than quoted prices that are observable for the
instruments. The type of financial instruments in this category include less
liquid and restricted securities listed in active markets, securities traded in
other than active markets, government and agency securities, and managed funds
whose net asset value is based on observable inputs.

Level 3 includes one or more significant unobservable inputs. Financial instruments included in this category include assets under management consisting primarily of investments in private entities, limited partnerships and other instruments whose fair value is based on unobservable inputs.

The table below summarizes the approximate amount of assets under management for
the periods indicated for which fair value is measured based on Level 1, Level 2
and Level 3 inputs.

                         Level 1       Level 2       Level 3      Total
                                         (in billions)
June 30, 2022 AUM       $    21.5     $     3.8     $     3.4     $ 28.7
December 31, 2021 AUM   $    25.3     $     5.4     $     1.6     $ 32.3

Since substantially all of our assets under management are valued by independent valuation services based on prices or observable market data, we believe that market risk is the most significant risk underlying the valuation of our assets under management, as disclosed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2021 and point 3. “- Qualitative and quantitative information regarding market risk.”

                                       48
--------------------------------------------------------------------------------


The average value of our assets under management for the three and six months
ended June 30, 2022 was approximately $30.0 and $30.5 billion, respectively.
Assuming a 10% increase or decrease in our average assets under management and
the change being proportionately distributed over all our products, the value
would increase or decrease by approximately $3.0 and $3.1 billion, respectively,
for the three and six months ended June 30, 2022, which would cause an
annualized increase or decrease in revenues of approximately $12.9 and $13.1
million, respectively, for the three and six months ended June 30, 2022, at a
weighted average fee rate for the three and six months ended June 30, 2022 of
0.43% and 0.43%, respectively.

The average value of our assets under management for the year ended December 31,
2021 was approximately $30.1 billion. Assuming a 10% increase or decrease in our
average assets under management and the change being proportionately distributed
over all our products, the value would increase or decrease by approximately
$3.0 billion for the year ended December 31, 2021, which would cause an
annualized increase or decrease in revenues of approximately $13.2 million for
the year ended December 31, 2021, at a weighted average fee rate for the year
ended December 31, 2021 of 0.44%.

Recently published accounting pronouncements

Information regarding recent accounting developments and their impact on the
Company can be found in Note 2. "Summary of Significant Accounting Policies" in
the "Notes to Condensed Consolidated Financial Statements" in this filing.

© Edgar Online, source Previews

Share.

Comments are closed.