•

the acquisition by Silvercrest Asset Management Group LLC (the “Company”), an affiliate of Silvercrest, of substantially all of the assets and the assumption of certain liabilities of Cortina Asset Management, LLC, a Wisconsin limited liability company (“Cortina”) relating to Cortina’s business of providing investment management, investment advisory, and related services (the “Closing”).  At Closing, the Company paid to Cortina an aggregate principal amount of $33,577,395 in cash, and Silvercrest L.P., a Delaware limited partnership and an affiliate of the Company (“SLP”), paid an additional $8,951,938 in the form of issuance and delivery to certain interest holders of Cortina (the “Principals”) of 662,713 Class B Units in SLP. The Asset Purchase Agreement (the “Purchase Agreement”) provides for up to an additional $26,209,243 to be paid 80% in cash with certain Principals receiving the remaining 20% in the form of Class B Units of SLP. in potential earn-out payments over the next four years; and

•

the Seventh Amendment to the credit facility with City National Bank (the “Credit Facility”) whereby, among other things, the delayed draw term loan credit facility was increased by $18 million to $25.5 million, the commitment period for the term loan was extended to July 1, 2024 from June 25, 2023 and the stated maturity date therefor was extended until July 1, 2026.  All other terms of the Credit Facility remain unchanged.  Additionally, the revolving credit facility was increased by $2.5 million to $10 million.  Silvercrest’s cash payments at Closing were funded in part by cash on hand and in part by borrowings under the Credit Facility. 

Silvercrest

Asset

Management

Group Inc.

Cortina

Asset

Management

Group, LLC

Pro Forma

Pro Forma

Silvercrest

Asset

Management

Group Inc.

Consolidated

Historical

Historical

Adjustments (1)

Note

Pro Forma

Revenue

Management and advisory fees

$

94,675

$

15,673

$

(1,405

)

(A)

$

108,943

Performance fees and allocations

25

—

—

25

Family office services

3,973

—

—

3,973

Total revenue

98,673

15,673

(1,405

)

112,941

Expenses

Compensation and benefits

57,938

7,125

(950

)

(B)

64,113

General and administrative

19,583

2,001

1,963

(C)

23,547

Total expenses

77,521

9,126

1,013

87,660

Income before other income (expense), net

21,152

6,547

(2,418

)

25,281

Other income (expense), net

Other income (expense), net

(15

)

—

—

(15

)

Interest income

274

2

—

276

Interest expense

(62

)

—

(931

)

(D)

(993

)

Equity income from investments

1,477

—

—

1,477

Total Other income (expense), net

1,674

2

(931

)

745

Income before provision for income taxes

22,826

6,549

(3,349

)

26,026

Provision for income taxes

5,458

—

146

(E)

5,604

Net income

17,368

6,549

(3,495

)

20,422

Less: net income attributable to non-controlling

   interests

(7,738

)

—

1,180

(F)

(6,558

)

Net income attributable to Silvercrest

$

9,630

$

6,549

$

(2,315

)

$

13,864

Net income per share:

Basic

$

1.16

(G)

$

1.67

Diluted

$

1.16

(G)

$

1.67

Weighted average shares outstanding:

Basic

8,298,354

8,298,354

Diluted

8,302,768

8,302,768

(A)

Includes $180 of revenue related to the Cortina Funds and revenue of $1,225 related to Cortina's New York City operation neither of which were acquired by the Company and were closed in 2019 prior to the acquisition.

(B)

Represents $771 in compensation related to Cortina employees that did not become employees of the Company. In addition, $179 related to Cortina's Equity Appreciation Plan which was not assumed as part of the acquisition.

(C)

Includes $1,433 of amortization of finite-life intangible assets based on the preliminary fair value of $21,500 for acquired customer relationships that are being amortized over a fifteen-year period, $2 for the Escrow Agent fee, a $900 success fee to the Company’s investment banking firm, $18 for the underwriting fee related to the Reps and Warranties insurance coverage, and $13 for reimbursement to Cortina for 50% of Cortina’s audit fees. Also included is the elimination of $355 of Cortina expenses related to Cortina’s funds and $48 related to Cortina's New York City operation which was not acquired by the Company and was closed in 2019 by Cortina prior to the acquisition.

(D)

Represents $26 in deferred financing fees and $905 of interest expense on the incremental debt incurred as a result of the acquisition. The Company entered into the Seventh Amendment to the Credit Facility with City National Bank ("CNB") whereby the delayed draw term loan credit facility was increased by $18,000 to $25,500. Additionally, the revolving credit facility was increased by $2,500 to $10,000. The Base Rate Margin and LIBOR Rate Margin were each decreased by 0.25 percentage points to 0.25 percentage points and 2.75 percentage points, respectively. At Closing, the Company entered into a 30-day LIBOR contract at a rate of 5.1875 percent inclusive of the LIBOR Rate Margin.

(E)

Represents the income tax effects related to the pro forma adjustments. Below are the key components of the pro forma income tax provision adjustment:

Corporate current tax expense adjustment

$

60

Corporate deferred tax expense adjustment

209

SLP current tax expense adjustment

(145

)

SLP deferred tax expense adjustment

22

$

146

(F)

Represents the portion of the pro forma adjustments that are attributable to the Class B unitholders or non-controlling interests of Silvercrest L.P.

Effect of pro forma adjustments to income before

   provision for income taxes

$

(3,349

)

Pro forma Class B units portion of total outstanding

   shares (1)

38.9

%

Pro forma adjustments effect on non-controlling

   interest income before provision for income taxes

(1,303

)

Pro forma non-controlling portion of provision for

   income taxes

(123

)

Pro forma effect on net income attributable to non-

   controlling interests

$

(1,180

)

(1)

See Note (K) to the Unaudited Pro Forma Consolidated Statement of Financial Condition as of June 30, 2019.

(G)

The pro forma basic and diluted net income per Class A share is as follows:

Basic

Diluted

Pro forma net income attributable to Silvercrest

$

13,864

$

13,864

Weighted average common shares outstanding

8,298,354

8,302,768

Pro forma net income per share

$

1.67

$

1.67

Silvercrest

Asset

Management

Group Inc.

Cortina

Asset

Management

Group, LLC

Pro Forma

Pro Forma

Silvercrest

Asset

Management

Group Inc.

Consolidated

Historical

Historical

Adjustments (1)

Note

Pro Forma

Assets

Cash and cash equivalents

$

50,877

$

1,282

$

(17,563

)

(A)

$

34,596

Investments

16

—

—

16

Receivables, net

6,790

1,604

—

8,394

Due from Silvercrest Funds

831

20

—

851

Furniture, equipment and leasehold improvements,

   net

5,498

30

(30

)

(B)

5,498

Goodwill

27,352

—

34,131

(C)

61,483

Operating lease assets

35,220

—

202

(D)

35,422

Finance lease assets

157

—

30

(D)

187

Intangibles, net

9,198

—

21,500

(E)

30,698

Deferred tax asset - tax receivable agreement

11,407

—

—

11,407

Prepaid expenses and other assets

3,939

219

3,265

(F)

7,423

Total assets

$

151,285

$

3,155

$

41,535

$

195,975

Liabilities and Equity

Accounts payable and accrued expenses

$

3,803

$

901

$

14,790

(G)

$

19,494

Accrued compensation

13,568

195

(195

)

(H)

13,568

Notes payable

—

—

18,000

(I)

18,000

Operating lease liabilities

41,768

—

195

(D)

41,963

Finance lease liabilities

160

—

30

(D)

190

Deferred tax and other liabilities

9,458

—

—

9,458

Total liabilities

68,757

1,096

32,820

102,673

Equity

Preferred stock, par value $0.01, 10,000,000 shares

   authorized; none issued and outstanding, as

   adjusted

—

—

—

—

Class A Common stock, par value $0.01,

   50,000,000 shares authorized; and

   8,623,720 and 8,518,096 issued and

   outstanding as of June 30, 2019 and

   December 31, 2018, respectively

86

—

—

86

Class B Common stock, par value $0.01,

   25,000,000 shares authorized; and

   4,832,839 and 4,934,103issued and

   outstanding as of June 30, 2019 and

   December 31, 2018, respectively

47

—

7

(J)

54

Additional paid-in capital

44,188

—

2,756

(F)

46,944

Retained Earnings

13,332

—

(570

)

(K)

12,762

Partners' capital

—

2,059

(2,059

)

(L)

—

Total Silvercrest Asset Management Group

   Inc.'s equity

57,653

2,059

134

59,846

Non-controlling interests

24,875

—

8,581

(M)

33,456

Total equity

82,528

2,059

8,715

93,302

Total liabilities and equity

$

151,285

$

3,155

$

41,535

$

195,975

(A)

The following table summarized the components of the estimated cash consideration:

Cash inflow from financing (1)

$

18,000

Cash consideration outflow (2)

(35,808

)

Cash consideration credit from Seller (3)

(88

)

Closing cash target (4)

739

Cash payment for prepaid expenses (5)

(278

)

CNB deferred financing fees (6)

(128

)

$

(17,563

)

(1)

Cash inflow from entering into the Seventh Amendment to the Credit Facility with City National Bank on July 1, 2019.

(2)

Gross closing cash payment to seller.

(3)

Credit to Seller for payments the Company made on behalf of the Seller prior to closing. This credit consists of payment of $2 for the Escrow Agent fee, a $900 success fee to the Company’s investment banking firm, $145 for the premium for Reps & Warranties insurance coverage, $18 for the underwriting fee related to the Reps and Warranties insurance coverage, and $13 for reimbursement to Cortina for 50% of Cortina’s audit fees. These payments were partially offset by a credit to the Company of $990 reserved for integration expenses.  Pursuant to the agreement these costs were originally assumed by the seller but the Company is making the payment.

(4)

Working capital adjustment pursuant to the Agreement represents a purchase price credit due to the difference between working capital available at the time of signing the Asset Purchase Agreement and the time of Closing.

(5)

Cash payment made for expenses paid by the Seller for services pertaining to periods after closing.

(6)

Bank and legal fees related to the Seventh Amendment to the Credit Facility with CNB which have been deferred and will be amortized as interest expense over five years which is equal to the duration of the delayed draw term loan.

(B)

Represents an adjustment to eliminate fixed assets not acquired.

(C)

The following represents the excess of the preliminary purchase price for the acquisition over the amounts assigned to assets acquired and liabilities assumed based on their estimated fair values and any acquired identifiable intangible assets.

Cash consideration (1)

$

35,808

Shares issued at closing (2)

8,952

Estimated accrued liability for earnouts (3)

13,800

Elimination of fixed assets (4)

30

Elimination of security deposits (5)

34

Elimination of liability for Cortina’s equity appreciation

   plan (6)

(195

)

Closing cash target (7)

(739

)

Elimination of Cortina Partners’ Capital (8)

(2,059

)

Customer relationships (9)

(21,500

)

$

34,131

(1)

See footnote (A)(2).

(2)

Represents the fair value of equity consideration in the form of the issuance and delivery of 662,713 Class B Units of SLP to the Cortina principals at Closing.

(3)

Preliminary fair value of contingent consideration pursuant to the terms of the Asset Purchase Agreement whereby the sellers of Cortina are potentially entitled to two retention payments and one growth payment contingent upon the achievement of various revenue targets.

(4)

See footnote (B).

(5)

Represents an adjustment to eliminate security deposits not acquired.

(6)

Represents an adjustment for the accrual for Cortina’s Equity Appreciation Plan which was not assumed as part of the acquisition.

(7)

See footnote (A)(4).

(8)

Elimination of Cortina’s partners’ capital.

(9)

Preliminary purchase price allocation for identifiable, finite-lived intangible assets. The identified intangible assets are customer relationships which were determined to play a key role in driving Cortina's revenue.

(D)

Represents the rent adjustment due to the adoption of the new lease accounting standard, which requires lessees to recognize leases on the balance sheet and disclose key information about related leasing arrangements.

(E)

See footnote (C)(9).

(F)

Represents the following adjustments:

Cash payment for prepaid expenses (1)

$

278

CNB deferred financing fees (2)

128

Reps and Warranties insurance (3)

144

Adjustment for security deposits (4)

(34

)

Deferred tax asset adjustments (5)

2,756

Lease accounting adjustment (6)

(7

)

$

3,265

(1)

Cash payment made for expenses paid by the Seller for services pertaining to periods after closing.

(2)

See footnote (A)(6).

(3)

See footnote (A)(3).

(4)

Represents and adjustment for security deposits not acquired as part of the acquisition.

(5)

Represents deferred tax asset adjustments due to the Cortina acquisition.  

(6)

See footnote (D).

(G)

Represents the following adjustments:

Estimated accrued liability for earnouts (1)

$

13,800

Integration expenses withholding adjustment (2)

990

$

14,790

(1)

See footnote (C)(3).

(2)

See footnote (A)(3).

(H)

Represents an adjustment for the accrual for Cortina's Equity Appreciation Plan which was not assumed as part of the acquisition.

(I)

Cash inflow from entering into the Seventh Amendment to the Credit Facility with City National Bank on July 1, 2019.

(J)

Represents equity consideration in the form of the issuance and delivery of 662,713 Class B Units in SLP at par value on July 1, 2019.

(K)

Represents the effect on retained earnings for Silvercrest’s share of the following expenses:

Escrow agent fee

$

(2

)

Cortina audit fee reimbursement

(8

)

Reps and Warranties coverage underwriter’s fee

(10

)

Success fee to the Company’s investment banker

(550

)

$

(570

)

Class A shares of common stock outstanding as of

   June 30, 2019

8,623,720

61.1

%

Pro forma Class B units outstanding as of June 30,

   2019

5,495,552

38.9

%

Total

14,119,272

100.0

%

(L)

Elimination of Cortina's partners' capital.

(M)

The following are pro forma adjustments to non-controlling interests:

Issuance of Class B units

$

8,944

Escrow agent fee

(1

)

Cortina audit fee reimbursement

(5

)

Reps and Warranties coverage underwriter’s fee

(7

)

Success fee to the Company’s investment banker

(350

)

$

8,581

Silvercrest

Asset

Management

Group Inc.

Cortina

Asset

Management

Group, LLC

Pro Forma

Pro Forma

Silvercrest

Asset

Management

Group Inc.

Consolidated

Historical

Historical

Adjustments (1)

Note

Pro Forma

Revenue

Management and advisory fees

$

44,468

$

6,324

$

(131

)

(A)

$

50,661

Performance fees and allocations

—

—

—

—

Family office services

2,001

—

—

2,001

Total revenue

46,469

6,324

(131

)

52,662

Expenses

Compensation and benefits

27,381

2,810

(145

)

(B)

30,046

General and administrative

10,659

958

1,583

(C)

13,200

Total expenses

38,040

3,768

1,438

43,246

Income before other income

   (expense), net

8,429

2,556

(1,569

)

9,416

Other income (expense), net

Other income (expense), net

15

(3

)

—

12

Interest income

149

4

—

153

Interest expense

(16

)

—

(466

)

(D)

(482

)

Total Other income (expense), net

148

1

(466

)

(317

)

Income before provision for income

   taxes

8,577

2,557

(2,035

)

9,099

Provision for income taxes

2,181

—

(56

)

(E)

2,125

Net income

6,396

2,557

(1,979

)

6,974

Less: net income attributable to non-

   controlling interests

(2,823

)

(497

)

767

(F)

(2,553

)

Net income attributable to Silvercrest

$

3,573

$

2,060

$

(1,212

)

$

4,421

Net income per share:

Basic

$

0.42

(G)

$

0.52

Diluted

$

0.42

(G)

$

0.52

Weighted average shares

   outstanding:

Basic

8,552,017

8,552,017

Diluted

8,555,181

8,555,181

(A)

Includes $73 of contra-revenue related to the Cortina Funds and $204 related to Cortina’s New York City operation neither of which were acquired by the Company and were closed in 2019 prior to the acquisition.

(B)

Represents $129 in compensation related to Cortina employees that did not become employees of the Company. In addition, $16 related to Cortina's Equity Appreciation Plan which was not assumed as part of the acquisition.

(C)

Includes $717 of amortization of finite-life intangible assets based on the preliminary fair value of $21,500 for acquired customer relationships that are being amortized over a fifteen-year period, $2 for the Escrow Agent fee, a $900 success fee to the Company’s investment banking firm, $18 for the underwriting fee related to the Reps and Warranties insurance coverage, and $13 for reimbursement to Cortina for 50% of Cortina’s audit fees. Also included is the elimination of $8 of Cortina expenses related to Cortina’s funds and $59 related to Cortina's New York City operation which was not acquired by the Company and was closed in 2019 by Cortina prior to the acquisition.

(D)

Represents $13 in deferred financing fees and $453 in interest expense on the incremental debt incurred as a result of the acquisition. The Company entered into the Seventh Amendment to the Credit Facility with City National Bank ("CNB") whereby the delayed draw term loan credit facility was increased y by $18,000 to $25,500. Additionally, the revolving credit facility was increased by $2,500 to $10,000. The Base Rate Margin and LIBOR Rate Margin were each decreased by 0.25 percentage points to 0.25 percentage points and 2.75 percentage points, respectively. At closing on 7/1/2019, the Company entered into a 30-day LIBOR contract at a rate of 5.1875 percent.

(E)

Represents the income tax effects related to the pro forma adjustments. Below are the key components of the pro forma income tax provision adjustment:

Corporate current tax expense adjustment

$

(174

)

Corporate deferred tax expense adjustment

93

SLP current tax expense adjustment

17

SLP deferred tax expense adjustment

8

$

(56

)

(F)

Represents the portion of the pro forma adjustments that are attributable to the Class B unitholders or non-controlling interests of Silvercrest L.P.

Effect of pro forma adjustments to income before

   provision for income taxes

$

(2,035

)

Pro forma Class B units portion of total outstanding

   shares (1)

38.9

%

Pro forma adjustments effect on non-controlling

   interest income before provision for income taxes

(792

)

Pro forma non-controlling portion of provision for

   income taxes

  25

Pro forma effect on net income attributable to non-

   controlling interests

$

(767

)

(1)

See Note (K) to the Unaudited Pro Forma Consolidated Statement of Financial Condition as of June 30, 2019.

(G)

The pro forma basic and diluted net income per Class A share is as follows:

Basic

Diluted

Pro forma net income attributable to Silvercrest

$

4,421

$

4,421

Weighted average common shares outstanding

8,552,017

8,555,181

Pro forma net income per share

$

0.52

$

0.52