Prior to the reorganization described in Note 1, Silvercrest was a private company. SLP historically made, and will continue to make, distributions of its net income to the holders of its partnership units for income taxes as required under the terms of its partnership agreement and also made, and will continue to make, additional distributions of net income under the terms of its partnership agreement. Prior to the reorganization distributions were recorded in the financial statements on the payment date. Partnership distributions totaled $4,231 and $5,339 for the three months ended June 30, 2013 and 2012, respectively, and $17,900 and $13,194 for the six months ended June 30, 2013 and 2012, respectively. The 2013 and 2012 amounts are included in Partners’ Capital and excess of liabilities, redeemable partners’ capital and partners’ capital over assets, respectively, in the Condensed Consolidated Statements of Financial Condition.

SLP distributed $10,000 to its existing partners prior to the consummation of the IPO. Accordingly, this distribution was accrued and is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition as of June 30, 2013.

Prior to the reorganization and pursuant to SLP’s partnership agreement, as amended and restated, partner incentive allocations were treated as distributions of net income. The remaining net income or loss after partner incentive allocations was generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the three and six months ended June 30, 2013 and 2012 amounted to $12,104 and $6,581, respectively, and are included in non-controlling interests as of June 30, 2013 and in excess of liabilities, redeemable partners’ capital and partners’ capital over assets as of December 31, 2012 in the Condensed Consolidated Statements of Financial Condition. As part of the reorganization, partner incentive distributions for the six months ended June 30, 2013 were treated as an equity transaction and accrued and recorded in “Accrued compensation” in the Condensed Consolidated Statements of Financial Condition as of June 30, 2013. Subsequent to the consummation of the IPO, Silvercrest will treat SLP’s partner incentive allocations as compensation expense and accrue such amounts when earned.

The pre-IPO partners of SLP received Silvercrest shares in connection with the reorganization and IPO, as described below.

Silvercrest - Stockholders’ Equity

As described in Note 1, Silvercrest’s equity structure was modified in connection with the IPO-related reorganization. Silvercrest has the following authorized and outstanding equity:

Silvercrest is dependent on cash generated by SLP to fund any dividends. Generally, SLP will distribute its profits to all of its partners, including Silvercrest, based on the proportionate ownership each holds in SLP. Silvercrest will fund dividends to its stockholders from its proportionate share of those distributions after provision for its taxes and other obligations.

In connection with the reorganization and IPO described in Note 1, “Reorganization and Initial Public Offering”, Silvercrest issued the following shares during the period ended June 30, 2013:

Class A Common Stock

Silvercrest issued 4,790,684 shares of Class A common stock in the IPO. Each Class B unit of SLP acquired by the Company upon the reorganization of SLP immediately converted to a Class A unit. Class A units have the same rights as Class B units.

Class B Common Stock

Silvercrest issued 6,459,316 shares of Class B common stock to employee-principals which equals to the number of Class B common units those individuals hold in SLP. Shares of Silvercrest’s Class B common stock are issuable only in connection with the issuance of Class B units of SLP. When a vested or unvested Class B unit is issued by SLP, Silvercrest will issue the holder one share of its Class B common stock in exchange for the payment of its par value, subject to the holder’s agreement to be bound by the terms of a stockholders’ agreement amongst the Class B stockholders of the Company. Each share of Silvercrest’s Class B common stock will be redeemed for its par value and cancelled by Silvercrest if the holder of the corresponding Class B unit exchanges or forfeits its Class B unit pursuant to the terms of the Second Amended and Restated Limited Partnership Agreement of SLP, the terms of the 2012 Equity Incentive Plan of Silvercrest, or otherwise.