10-Q 1 gcm-20240331.htm 10-Q gcm-20240331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
__________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-39716
__________________________________
GCM Grosvenor Inc.
(Exact Name of Registrant as Specified in Its Charter)
__________________________________
Delaware85-2226287
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification No.)
900 North Michigan Avenue, Suite 1100
Chicago, IL
60611
(Address of principal executive offices)(Zip Code)
312-506-6500
(Registrant's telephone number, including area code)
N/A
(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)
__________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par value per share
GCMGThe Nasdaq Stock Market LLC
Warrants to purchase shares of Class A common stock
GCMGW
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
As of May 3, 2024, there were 44,223,213 shares of the registrant’s Class A common stock, par value $0.0001 per share, outstanding and 144,235,246 shares of the registrant’s Class C common stock, par value $0.0001 per share, outstanding.




Table of Contents
Page
Item 1.
Item 4.
Item 2.
Item 3.
Item 4.
Item 5.
        

1


BASIS OF PRESENTATION

As used in this Quarterly Report on Form 10-Q, unless as the context requires otherwise, as used herein, references to “GCM,” the “Company,” “we,” “us,” and “our,” and similar references refer collectively to GCM Grosvenor Inc. and its consolidated subsidiaries.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

“AUM” are to assets under management;
“clients” are to persons who invest in our funds, even if such persons are not deemed clients of our registered investment adviser subsidiaries for purposes of the Investment Advisers Act 1940, as amended;
“Class A common stock” are to our Class A common stock, par value $0.0001 per share;
“Class B common stock” are to our Class B common stock, par value $0.0001 per share;
“Class C common stock” are to our Class C common stock, par value $0.0001 per share;
“FPAUM” are to fee-paying AUM;
“GCMG” are to GCM Grosvenor Inc., which was incorporated in Delaware as a wholly owned subsidiary of Grosvenor Capital Management Holdings, LLLP, formed for the purpose of completing the Transaction. Pursuant to the Transaction, Grosvenor Capital Management Holdings, LLLP cancelled its shares in GCM Grosvenor Inc. no longer making GCM Grosvenor Inc. a wholly owned subsidiary of Grosvenor Capital Management Holdings, LLLP;
“GCM Grosvenor” are to GCMH, its subsidiaries, and GCM, L.L.C.;
“GCM V” are to GCM V, LLC, a Delaware limited liability company;
“GCMH” are to Grosvenor Capital Management Holdings, LLLP, a Delaware limited liability limited partnership;
“GCM Funds” and “our funds” are to GCM Grosvenor’s specialized funds and customized separate accounts;
“GCMH Equityholders” are to Holdings, Management LLC, Holdings II and GCM Progress Subsidiary LLC;
“Grosvenor common units” are to units of partnership interests in GCMH entitling the holder thereof to the distributions, allocations, and other rights accorded to holders of partnership interests in GCMH;
“Holdings” are to Grosvenor Holdings, L.L.C., an Illinois limited liability company;
“Holdings II” are to Grosvenor Holdings II, L.L.C., a Delaware limited liability company;
“IntermediateCo” are to GCM Grosvenor Holdings, LLC (formerly known as CF Finance Intermediate Acquisition, LLC), a Delaware limited liability company;
“Management LLC” are to GCM Grosvenor Management, LLC, a Delaware limited liability company;
“NAV” are to net asset value;
“Transaction” are to the transactions contemplated by the Transaction Agreement;
“Transaction Agreement” are to the definitive transaction agreement, dated as of August 2, 2020, by and among CF Finance Acquisition Corp., a Delaware corporation, IntermediateCo, CF Finance Holdings, LLC, a Delaware limited liability company, GCMH, the GCMH Equityholders, GCMH GP, L.L.C., GCM V and us; and
“TRA Parties” are to the GCMH LLLP Equityholders, and their successors and assigns with respect to the Tax Receivable Agreement (“TRA”).

2


FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including, but not limited to, statements regarding our future results of operations or financial condition; business strategy and plans; and market opportunity may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, equity compensation, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only current expectations and predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the historical performance of GCM Grosvenor’s funds may not be indicative of GCM Grosvenor’s future results; risks related to redemptions and termination of engagements; the variable nature of GCM Grosvenor’s revenues; competition in GCM Grosvenor’s industry; effects of government regulation or compliance failures; market, geopolitical and economic conditions, identification and availability of suitable investment opportunities; risks related to the performance of GCM Grosvenor’s investments; and the other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and other filings with the Securities and Exchange Commission. The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q.

3


PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GCM Grosvenor Inc.
Condensed Consolidated Statements of Financial Condition
(In thousands, except share and per share amounts)
As of
March 31, 2024December 31, 2023
(Unaudited)
Assets
Cash and cash equivalents$41,863 $44,354 
Management fees receivable18,165 24,996 
Incentive fees receivable14,151 27,371 
Due from related parties10,285 13,581 
Investments248,433 240,202 
Premises and equipment, net13,165 7,378 
Lease right-of-use assets39,459 38,554 
Intangible assets, net2,298 2,627 
Goodwill28,959 28,959 
Deferred tax assets, net58,772 58,298 
Other assets21,754 18,623 
Total assets497,304 504,943 
Liabilities and Equity (Deficit)
Accrued compensation and benefits76,859 98,561 
Debt384,000 384,727 
Payable to related parties pursuant to the tax receivable agreement
53,759 53,759 
Lease liabilities43,197 41,481 
Warrant liabilities8,575 6,431 
Accrued expenses and other liabilities31,785 31,213 
Total liabilities598,175 616,172 
Commitments and contingencies (Note 13)
Preferred stock, $0.0001 par value, 100,000,000 shares authorized, none issued
  
Class A common stock, $0.0001 par value, 700,000,000 authorized; 42,996,776 and 42,988,563 issued and outstanding as of March 31, 2024 and December 31, 2023, respectively
4 4 
Class B common stock, $0.0001 par value, 500,000,000 authorized, none issued
  
Class C common stock, $0.0001 par value, 300,000,000 authorized; 144,235,246 issued and outstanding as of March 31, 2024 and December 31, 2023
14 14 
Additional paid-in capital4,817 1,936 
Accumulated other comprehensive income2,973 2,630 
Retained earnings(34,201)(32,218)
Total GCM Grosvenor Inc. deficit(26,393)(27,634)
Noncontrolling interests in subsidiaries57,588 59,757 
Noncontrolling interests in GCMH(132,066)(143,352)
Total deficit(100,871)(111,229)
Total liabilities and equity (deficit)$497,304 $504,943 
    
See accompanying notes to Condensed Consolidated Financial Statements.

4


GCM Grosvenor Inc.
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
(In thousands, except share and per share amounts)


Three Months Ended March 31,
20242023
Revenues
Management fees$95,885 $92,245 
Incentive fees10,118 5,815 
Other operating income2,863 1,056 
Total operating revenues108,866 99,116 
Expenses
Employee compensation and benefits99,647 86,224 
General, administrative and other25,179 25,779 
Total operating expenses124,826 112,003 
Operating loss(15,960)(12,887)
Investment income5,677 6,324 
Interest expense(5,923)(6,655)
Other income553 714 
Change in fair value of warrant liabilities (2,144)(2,221)
Net other expense(1,837)(1,838)
Loss before income taxes(17,797)(14,725)
Provision for income taxes1,110 422 
Net loss(18,907)(15,147)
Less: Net income attributable to noncontrolling interests in subsidiaries1,302 2,773 
Less: Net loss attributable to noncontrolling interests in GCMH(22,333)(16,690)
Net income (loss) attributable to GCM Grosvenor Inc.$2,124 $(1,230)
Earnings (loss) per share of Class A common stock:
Basic $0.05 $(0.03)
Diluted $(0.13)$(0.10)
Weighted average shares of Class A common stock outstanding:
Basic43,670,260 42,380,335 
Diluted187,905,506 186,615,581 
See accompanying notes to Condensed Consolidated Financial Statements.
5


GCM Grosvenor Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
(In thousands)


Three Months Ended March 31,
20242023
Net loss$(18,907)$(15,147)
Other comprehensive income (loss), net of tax:
Net change in cash flow hedges3,201 (5,743)
Foreign currency translation adjustment(678)(58)
Total other comprehensive income (loss)2,523 (5,801)
Comprehensive loss before noncontrolling interests(16,384)(20,948)
Less: Comprehensive income attributable to noncontrolling interests in subsidiaries1,302 2,773 
Less: Comprehensive loss attributable to noncontrolling interests in GCMH(20,153)(21,142)
Comprehensive income (loss) attributable to GCM Grosvenor Inc.$2,467 $(2,579)
See accompanying notes to Condensed Consolidated Financial Statements.
6


GCM Grosvenor Inc.
Condensed Consolidated Statements of Equity (Deficit)
(Unaudited)
(In thousands)
Class A Common StockClass C Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Noncontrolling Interests in SubsidiariesNoncontrolling Interests in GCMHTotal Equity (Deficit)
Balance at December 31, 2023$4 $14 $1,936 $(32,218)$2,630 $59,757 $(143,352)$(111,229)
Capital contributions from noncontrolling interests in subsidiaries— — — — — 396 — 396 
Capital distributions paid to noncontrolling interests— — — — — (3,867)— (3,867)
Settlement of equity-based compensation in satisfaction of withholding tax requirements— — (34)— — — (115)(149)
Partners’ distributions— — — — — — (7,896)(7,896)
Deemed contributions— — — — — — 30,002 30,002 
Net change in cash flow hedges— — — — 499 — 2,702 3,201 
Translation adjustment— — — — (156)— (522)(678)
Equity-based compensation, equity-classified awards— — 3,221 — — — 10,806 14,027 
Declared dividends— — — (5,465)— — — (5,465)
Deferred tax and other tax adjustments— — (306)— — — — (306)
Equity reallocation between controlling and non-controlling interests— — — 1,358 — — (1,358) 
Net income (loss)— — — 2,124 — 1,302 (22,333)(18,907)
Balance at March 31, 2024$4 $14 $4,817 $(34,201)$2,973 $57,588 $(132,066)$(100,871)
Class A Common StockClass C Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Noncontrolling Interests in SubsidiariesNoncontrolling Interests in GCMHTotal Equity (Deficit)
Balance at December 31, 2022$4 $14 $ $(23,934)$4,096 $67,900 $(142,086)$(94,006)
Capital contributions from noncontrolling interests in subsidiaries— — — — — 167 — 167 
Capital distributions paid to noncontrolling interests— — — — — (4,977)— (4,977)
Repurchase of Class A common stock— — (746)— — — (2,587)(3,333)
Settlement of equity-based compensation in satisfaction of withholding tax requirements— — (848)— — — (2,946)(3,794)
Deemed contributions— — — — — — 11,097 11,097 
Net change in cash flow hedges— — — — (1,335)— (4,408)(5,743)
Translation adjustment— — — — (14)— (44)(58)
Equity-based compensation, equity-classified awards— — 2,864 — — — 9,945 12,809 
Declared dividends— — — (5,102)— — — (5,102)
Deferred tax and other tax adjustments— — 13 — — — — 13 
Equity reallocation between controlling and non-controlling interests— — — 335 — — (335) 
Net income (loss)— — — (1,230)— 2,773 (16,690)(15,147)
Balance at March 31, 2023$4 $14 $1,283 $(29,931)$2,747 $65,863 $(148,054)$(108,074)

See accompanying notes to Condensed Consolidated Financial Statements.





7


GCM Grosvenor Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended March 31,
20242023
Cash flows from operating activities
Net loss$(18,907)$(15,147)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense633 675 
Equity-based compensation, equity-classified awards14,027 12,809 
Deferred tax income benefit(686)(1,219)
Other non-cash compensation171 584 
Partnership interest-based compensation30,002 11,097 
Amortization of debt issuance costs273 272 
Amortization of terminated swap(1,890)(991)
Change in fair value of warrant liabilities2,144 2,221 
Change in payable to related parties pursuant to tax receivable agreement (12)
Proceeds received from investments1,908 3,030 
Non-cash investment income(5,677)(6,324)
Non-cash lease expense677 1,623 
Other276 316 
Change in assets and liabilities:
Management fees receivable6,809 (1,214)
Incentive fees receivable13,220 2,151 
Due from related parties(3,296)(390)
Other assets2,762 1,155 
Accrued compensation and employee related obligations(22,488)(19,010)
Lease liabilities132 (2,024)
Accrued expenses and other liabilities4,114 5,637 
Net cash provided by (used in) operating activities24,204 (4,761)
Cash flows from investing activities
Purchases of premises and equipment(4,195)(203)
Contributions/subscriptions to investments(6,048)(8,505)
Distributions from investments1,586 3,970 
Net cash used in investing activities(8,657)(4,738)
Cash flows from financing activities
Capital contributions received from noncontrolling interests396 167 
Capital distributions paid to partners and member(7,896) 
Capital distributions paid to noncontrolling interests(3,867)(4,977)
Principal payments on senior loan(1,000)(1,000)
Payments to repurchase Class A common stock (3,333)
Settlement of equity-based compensation in satisfaction of withholding tax requirements(149) 
Dividends paid(4,733)(4,577)
Net cash used in financing activities(17,249)(13,720)
Effect of exchange rate changes on cash(789)(71)
Net decrease in cash and cash equivalents$(2,491)$(23,290)
Cash and cash equivalents
Beginning of period44,354 85,163 
End of period$41,863 $61,873 
Supplemental disclosure of cash flow information
Cash paid during the period for interest$7,821 $6,980 
Cash paid during the period for income taxes, net$1,380 $545 
Supplemental disclosure of cash flow information from operating activities
Non-cash right-of-use assets obtained in exchange for new and extended operating leases$3,155 $1,351 
Non-cash adjustment to operating lease right-of-use assets from lease modification$(60)$ 
Supplemental disclosure of cash flow information from investing activities
Non-cash premises and equipment additions in accrued expenses and other liabilities$1,911 $ 
Supplemental disclosure of non-cash information from financing activities
Deemed contributions from GCMH Equityholders$30,002 $11,097 
Establishment of deferred tax assets, net related to non-cash activities$(306)$13 
Dividends declared but not paid$736 $546 

See accompanying notes to Condensed Consolidated Financial Statements.
8


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)

1. Organization
GCM Grosvenor Inc. (“GCMG”) and its subsidiaries including Grosvenor Capital Management Holdings, LLLP (the “Partnership” or “GCMH” and collectively, the “Company”), provide comprehensive investment solutions to primarily institutional clients who seek allocations to alternative investments such as hedge fund strategies, private equity, real estate, infrastructure and strategic investments. The Company collaborates with its clients to construct investment portfolios across multiple investment strategies in the private and public markets, customized to meet their specific objectives. The Company also offers specialized commingled funds which span the alternatives investing universe that are developed to meet broad market demands for strategies and risk-return objectives.
The Company, through its subsidiaries acts as the investment adviser, general partner or managing member to customized funds and commingled funds (collectively, the “GCM Funds”).
GCMG was incorporated on July 27, 2020 under the laws of the State of Delaware for the purpose of consummating the Transaction and merging with CF Finance Acquisition Corp. (“CFAC”), which was incorporated on July 9, 2014 under the laws of the State of Delaware. GCMG owns all of the equity interests of GCM Grosvenor Holdings, LLC (“IntermediateCo”), formerly known as CF Finance Intermediate Acquisition, LLC until November 18, 2020, which is the general partner of GCMH subsequent to the Transaction. GCMG’s ownership (through IntermediateCo) of GCMH as of each of March 31, 2024 and December 31, 2023 was approximately 23.0%.
GCMH is a holding company operated pursuant to the Fifth Amended and Restated Limited Liability Limited Partnership Agreement (the “Partnership Agreement”) dated November 17, 2020, among the limited partners including Grosvenor Holdings, L.L.C. (“Holdings”), Grosvenor Holdings II, L.L.C. (“Holdings II”) and GCM Grosvenor Management, LLC (“Management LLC”) (collectively, together with GCM Progress Subsidiary LLC, the “GCMH Equityholders”).
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all necessary adjustments (which consists of only normal recurring items) have been made to fairly present the Condensed Consolidated Financial Statements for the interim periods presented. Results of operations for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (“SEC”).
Fair Value Measurements
The Company categorizes its fair value measurements according to a three-level 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 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are defined as follows:
Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly, including inputs in markets that are not considered to be active; and
Level 3 – Inputs that are unobservable and require significant management judgment or estimation.
9


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)



Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available under the circumstances.
The carrying amounts of cash and cash equivalents and fees receivable approximate fair value due to the immediate or short-term maturity of these financial instruments.
Investments
Investments primarily consist of investments in GCM Funds and other funds the Company does not control, but is deemed to exert significant influence, and are generally accounted for using the equity method of accounting. Under the equity method of accounting, the Company records its share of the underlying income or loss of such entities, which reflects the net asset value of such investments. Management believes the net asset value of the funds is representative of fair value. The resulting gains and losses are included as investment income in the Condensed Consolidated Statements of Income (Loss).
The Company’s equity method investments in the GCM Funds investing in private equity, real estate and infrastructure (“GCM PEREI Funds”) are valued based on the most recent available information, which typically has a delay of up to three months due to the timing of financial information received from the investments held by the GCM PEREI Funds. The Company records its share of capital contributions to and distributions from the GCM PEREI Funds within investments in the Condensed Consolidated Statements of Financial Condition during the three-month lag period. To the extent that management is aware of material events that affect the GCM PEREI Funds during the intervening period, the impact of the events would be disclosed in the notes to the Condensed Consolidated Financial Statements.
Certain subsidiaries which hold the general partner capital interest in the GCM Funds are not wholly owned, and as such, the portion of the Company’s investments owned by limited partners in those subsidiaries are reflected within noncontrolling interests in the Condensed Consolidated Statements of Financial Condition.
For certain other debt investments, the Company has elected the fair value option. Such election is irrevocable and is made at the investment level at initial recognition. The debt investments are not publicly traded and are a Level 3 fair value measurement. For investments carried at fair value, the Company records the increase or decrease in fair value as investment income in the Condensed Consolidated Statements of Income (Loss). See Note 5 for additional information regarding the Company’s other investments.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 scopes in entities with a single reportable segment and requires those entities to provide all disclosures required in Topic 280, requires that current annual disclosures about a reportable segment’s profit or loss and assets also be provided in interim periods and requires other various new disclosures. Enhanced reporting requirements for all entities includes disclosure of (1) significant segment expenses, (2) the title and position of the chief operating decision maker (the “CODM”) and (3) how the CODM uses disclosed measure(s) of a segment’s profit or loss in assessing segment performance and allocating resources. This guidance is effective for public entities for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024. Companies are required to apply the amendments retrospectively to all prior periods presented in the financial statements and early adoption is permitted. The Company is evaluating this guidance and currently expects that adoption will result in new disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires enhanced income tax disclosure including disclosures of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, additional disclosures about income taxes paid, and disclosure of pre-tax income or loss from continuing operations disaggregated between domestic and foreign income or loss. This guidance is effective for public business entities for fiscal years beginning after December 15, 2024. Companies should provide the enhanced disclosures on a prospective basis, however retrospective application is
10


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)



permitted. Early adoption is permitted for annual financial statements that have not yet been issued. The Company is evaluating this guidance and currently expects that adoption will result in enhanced income tax disclosures.
3. Revenues
For the three months ended March 31, 2024 and 2023, management fees and incentive fees consisted of the following:
Three Months Ended March 31,
Management fees20242023
Management fees, net
$91,952 $88,938 
Fund expense reimbursement revenue
3,933 3,307 
Total management fees
$95,885 $92,245 
Three Months Ended March 31,
Incentive fees20242023
Performance fees$5,987 $244 
Carried interest4,131 5,571 
Total incentive fees
$10,118 $5,815 
The Company did not recognize revenue during the three months ended March 31, 2024 and 2023 that was previously deferred.
4. Investments
Investments consist of the following:
As of
March 31, 2024December 31, 2023
Equity method investments$236,625 $228,822 
Other investments11,808 11,380 
Total investments$248,433 $240,202 
As of March 31, 2024 and December 31, 2023, the Company held investments of $248.4 million and $240.2 million, respectively, of which $55.5 million and $56.1 million were owned by noncontrolling interest holders, respectively. Net income (loss) and cash flow from investments held by noncontrolling interest holders will not be attributable to the Company.
See Note 5 for fair value disclosures of certain investments held within other investments.
5. Fair Value Measurements
The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis and level of inputs used for such measurements as of March 31, 2024 and December 31, 2023:
11


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
Fair Value as of March 31, 2024
Level 1Level 2Level 3Total
Assets
Money market funds
$7,918 $ $ $7,918 
Other investments  11,621 11,621 
Total assets$7,918 $ $11,621 $19,539 
Liabilities
Public warrants $8,057 $ $ $8,057 
Private warrants  518 518 
Interest rate derivatives
 2,071  2,071 
Total liabilities
$8,057 $2,071 $518 $10,646 
Fair Value as of December 31, 2023
Level 1Level 2Level 3Total
Assets
Money market funds$10,282 $ $ $10,282 
Other investments  11,192 11,192 
Total assets$10,282 $ $11,192 $21,474 
Liabilities
Public warrants$6,042 $ $ $6,042 
Private warrants  389 389 
Interest rate derivatives 7,469  7,469 
Total liabilities
$6,042 $7,469 $389 $13,900 
Money Market Funds
Money market funds are valued using quoted market prices and are included in cash and cash equivalents in the Condensed Consolidated Statements of Financial Condition.
Interest Rate Derivatives
Management determines the fair value of its interest rate derivative agreement based on the present value of expected future cash flows based on observable future rates applicable to each swap contract using linear interpolation, inclusive of the risk of non-performance, using a discount rate appropriate for the duration. See Note 12 for additional information regarding interest rate derivatives.
Other Investments
Investments in the subordinated notes of a structured alternatives investment solution are not publicly traded and are classified as Level 3. Management determines the fair value of these other investments using a discounted cash flow analysis (“Cash Flow Analysis”), which includes assumptions regarding the expected deployment and realization timing of private investments. The position was classified as Level 3 as of March 31, 2024 and December 31, 2023 because of the use of significant unobservable inputs in the Cash Flow Analysis as follows:
12


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
As of March 31, 2024As of December 31, 2023
Impact to Valuation from an Increase in Input(2)
Significant Unobservable Inputs(1)
RangeWeighted Average RangeWeighted Average
Discount rate(3)
26.5% – 27.5%
27.0 %
26.5% - 27.5%
27.0 %Decrease
Expected remaining term (years)
812
N/A
812
N/ADecrease
Expected return – liquid assets(4)
2.0% – 5.0%
4.3 %
2.0% - 5.0%
4.3 %Increase
Expected total value to paid in capital – private assets(5)
1.55x – 2.05x
1.85x
1.55x – 2.05x
1.87xIncrease
____________
(1)In determining these inputs, management considers the following factors including, but not limited to: liquidity, estimated yield, capital deployment, diversified multi-strategy appreciation, expected net multiple of investment capital across Private Assets investments, annual operating expenses, as well as investment guidelines such as concentration limits, position size, and investment periods.
(2)Unless otherwise noted, this column represents the directional change in fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect.
(3)The discount rate was based on the relevant benchmark rate, spread, and yield migrations on related securitized assets.
(4)Inputs were weighted based on actual and estimated expected return included in the range.
(5)Inputs were weighted based on the actual and estimated commitments to the respective private asset investments included in the range.
The resulting fair values of $11.6 million and $11.2 million were recorded within investments in the Condensed Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023, respectively.
The following table presents changes in Level 3 assets measured at fair value for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31,
20242023
Balance at beginning of period$11,192 $10,007 
Change in fair value429 272 
Balance at end of period$11,621 $10,279 
Public Warrants
The public warrants are valued using quoted market prices on the Nasdaq Stock Market LLC under the ticker GCMGW.
Private Warrants
The private warrants were classified as Level 3 as of March 31, 2024 and December 31, 2023 because of the use of significant unobservable inputs in the valuation, however the overall private warrant valuation and change in fair value are not material to the Condensed Consolidated Financial Statements.
The valuations for the private warrants were determined to be $0.58 and $0.43 per unit as of March 31, 2024 and December 31, 2023, respectively. The resulting fair values of $0.5 million and $0.4 million were recorded within warrant liabilities in the Condensed Consolidated Statements of Financial Condition as of March 31, 2024 and December 31, 2023, respectively. See Note 7 for additional information regarding the warrant activity.
The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2024 and 2023:
13


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
Three Months Ended March 31,
20242023
Balance at beginning of period$389 $475 
Change in fair value129 134 
Balance at end of period$518 $609 
6. Equity
Shares of Common Stock Outstanding
The following table shows a rollforward of the common stock outstanding for the three months ended March 31, 2024 and 2023:
Three Months Ended March 31, 2024
Class A common stock Class B common stock Class C common stock
Beginning of period42,988,563 144,235,246
Net shares delivered for vested RSUs8,213   
End of period42,996,776144,235,246
Three Months Ended March 31, 2023
Class A common stock Class B common stock Class C common stock
Beginning of period41,806,215 144,235,246
Repurchase of Class A shares(415,909)  
End of period41,390,306144,235,246
As of March 31, 2024, 1,497,510 RSUs were vested, but not yet delivered, and are therefore not yet included in outstanding Class A common stock. The delivery of vested RSUs will be reduced by the number of shares withheld to satisfy statutory withholding tax obligations as well as RSUs that are settled in cash.
Dividends
Dividends are reflected in the Condensed Consolidated Statements of Equity (Deficit) when declared by the Board of Directors. The table below summarizes dividends declared to date during 2024:
Declaration Date Record Date Payment Date Dividend per Common Share
February 8, 2024March 1, 2024March 15, 2024$0.11
May 6, 2024June 3, 2024June 17, 2024$0.11
Dividend equivalent payments of $1.9 million were accrued for holders of RSUs as of March 31, 2024. Distributions to partners represent distributions made to GCMH Equityholders.
Stock Repurchase Plan
On August 6, 2021, GCMG’s Board of Directors authorized a stock repurchase plan which may be used to repurchase shares of the Company’s outstanding Class A common stock and warrants to purchase shares of Class A common stock. Class A common stock and warrants may be repurchased from time to time in open market transactions, in privately negotiated transactions, including with employees or otherwise, pursuant to the requirements of Rule 10b5-1 and Rule 10b-18 of the Exchange Act, as well as to retire (by cash settlement or the payment of tax withholding amounts upon net settlement) equity-based awards granted under our 2020 Incentive Award Plan, as amended and restated (and any successor plan thereto), with the
14


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)

terms and conditions of these repurchases depending on legal requirements, price, market and economic conditions and other factors. The Company is not obligated under the terms of the plan to repurchase any of its Class A common stock or warrants, the program has no expiration date and the Company may suspend or terminate the program at any time without prior notice. Any shares of Class A common stock and any warrants repurchased as part of this program will be canceled. GCMG’s Board of Directors has made subsequent increases to its original stock repurchase authorization amount for shares and warrants. As of December 31, 2023, the total authorization was $115 million, excluding fees and expenses. On February 8, 2024, GCMG’s Board of Directors increased the firm's existing repurchase authorization by $25 million, from $115 million to $140 million.
During the three months ended March 31, 2024, the Company repurchased 15,470 shares for RSUs that were settled in cash, including amounts withheld in connection with the payment of tax withholding obligations, for $0.1 million, or an average of $9.66 per share. See Note 10 for additional information regarding RSUs. Other than the deemed repurchases described above, the Company did not repurchase shares of Class A common stock during the three months ended March 31, 2024. As of March 31, 2024, the Company had $65.0 million remaining under the stock repurchase plan.
In April 2024, the Company repurchased 3,021,060 shares for RSUs that were settled in cash, including amounts withheld in connection with the payment of tax withholding obligations, for $28.0 million, or an average of $9.28 per share. As of April 30, 2024, the Company had $37.0 million remaining under the stock repurchase plan.
7. Warrants
The public and private warrants meet the definition of a derivative under ASC 815 and the Company records these warrants as liabilities in the Condensed Consolidated Statements of Financial Condition at fair value, with subsequent changes in their respective fair values recorded in the change in fair value of warrant liabilities within the Condensed Consolidated Statements of Income (Loss) at each reporting date.
Each public warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. The warrants expire 5 years after the consummation of the Transaction, or earlier upon redemption or liquidation. The public warrant holders do not have the rights or privileges of holders of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock, upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
The private placement warrants (including the Class A common stock issuable upon exercise of the private placement warrants) will not be redeemable by the Company so long as they are held by CF Sponsor, Holdings or their permitted transferees. CF Sponsor, Holdings or their permitted transferees, have the option to exercise the private placement warrants on a cashless basis.
No warrants were exercised or repurchased during the three months ended March 31, 2024 and 2023. The Company had 16,784,970 of public warrants and 900,000 of private warrants outstanding as of each of March 31, 2024 and December 31, 2023.
8. Variable Interest Entities
The Company consolidates certain VIEs in which it is determined that the Company is the primary beneficiary.
The Company holds variable interests in certain entities that are VIEs which are not consolidated, as it is determined that the Company is not the primary beneficiary. The Company’s involvement with such entities is generally in the form of direct equity interests in, and fee arrangements with, the entities in which it also serves as the general partner or managing member. The Company evaluated its variable interests in the VIEs and determined it is not considered the primary beneficiary of the entities primarily because it does not have interests in the entities that could potentially be significant. No reconsideration events that caused a change in the Company’s consolidation conclusions occurred during either the three months ended March 31, 2024 or the year ended December 31, 2023. As of March 31, 2024 and December 31, 2023, the total unfunded commitments from the special limited partner and general partners to the unconsolidated VIEs were $41.8 million and $42.1 million, respectively. These commitments are the primary source of financing for the unconsolidated VIEs.
15


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)

The following table sets forth certain information regarding the VIEs in which the Company holds a variable interest but does not consolidate. The assets recognized on the Company’s Condensed Consolidated Statements of Financial Condition relate to the Company’s interests in and management fees, incentive fees and third party costs receivables from these non-consolidated VIEs. The Company’s maximum exposure to loss relating to non-consolidated VIEs as of March 31, 2024 and December 31, 2023 were as follows:
As of
March 31, 2024December 31, 2023
Investments$105,252 $102,109 
Receivables6,920 16,324 
Maximum exposure to loss$112,172 $118,433 
The above table includes investments in VIEs which are owned by noncontrolling interest holders of approximately $30.5 million and $30.9 million as of March 31, 2024 and December 31, 2023, respectively.
9. Employee Compensation and Benefits
For the three months ended March 31, 2024 and 2023, employee compensation and benefits consisted of the following:
Three Months Ended March 31,
20242023
Cash-based employee compensation and benefits
$37,273 $44,453 
Equity-based compensation25,470 25,793 
Partnership interest-based compensation
30,002 11,097 
Carried interest compensation
2,542 3,560 
Cash-based incentive fee related compensation4,189 737 
Other non-cash compensation
171 584 
Total employee compensation and benefits
$99,647 $86,224 
Partnership Interest in Holdings, Holdings II and Management LLC
Payments and settlements for partnership interest awards to the employees are made by GCMH Equityholders. As a result, the Company records a non-cash profits interest compensation charge and an offsetting deemed contribution to equity (deficit) to reflect the payments or settlements made or owed by the GCMH Equityholders. Since payments or settlements are made by Holdings, Holdings II and Management LLC, the expense that is pushed down to GCMH and the offsetting deemed contribution are each attributed solely to noncontrolling interests in GCMH. Any liability related to the awards is recognized at Holdings, Holdings II or Management LLC as Holdings, Holdings II or Management LLC is the party responsible for satisfying the obligation, and is not shown in the Company’s Condensed Consolidated Financial Statements. The Company has recorded deemed contributions to equity (deficit) from Holdings, Holdings II and Management LLC of $30.0 million and $11.1 million for the three months ended March 31, 2024 and 2023, respectively, for partnership interest-based compensation expense which was or will ultimately be paid or settled by Holdings, Holdings II or Management LLC.
GCMH Equityholders have modified awards to certain individuals upon their voluntary retirement or intention to retire as employees. These awards generally include a stated target amount that, upon payment, terminates the recipient’s rights to future distributions and allows for a lump sum buy-out of the awards, at the discretion of the managing member of Holdings, Holdings II, and Management LLC. The awards are accounted for as partnership interest-based compensation at the present value of these expected future payments, in the period the employees accepted the offer. The Company recognized $18.5 million in partnership interest-based compensation expense related to award modifications for the three months ended March 31, 2024 and none was recognized for the three months ended March 31, 2023.
The liability associated with awards that contain a stated target has been retained by Holdings as of March 31, 2024 and December 31, 2023 and is re-measured at each reporting date, with any corresponding changes in liability being reflected as
16


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
employee compensation and benefits expense of the Company. No recipients had unvested stated target payments as of each of March 31, 2024 and 2023. The Company recognized partnership interest-based compensation expense of $2.4 million and $5.7 million for the three months ended March 31, 2024 and 2023, respectively, related to profits interest awards that are in substance profit-sharing arrangements.
GCMH Equityholders Awards
In the year ended December 31, 2022, GCMH Equityholders entered into agreements that will transfer equity ownership between certain existing employee members of the GCMH Equityholders (“GCMH Equityholders Awards”). The GCMH Equityholders Awards will entitle recipients to receive Class A common stock upon vesting. The non-cash awards serve to transfer equity ownership from existing GCMH Equityholders to other existing member employees upon vesting. The GCMH Equityholders Awards do not dilute Class A common stockholders and do not impact cash flows of the Company. The GCMH Equityholders Awards are accounted for under ASC 718, Compensation—Stock Compensation. The awards generally will vest in May 2025 and do not entitle the recipients to dividends or distributions made on Class A common stock during the vesting period. As such, the fair value of the GCMH Equityholders Awards is based on the closing price of Class A common stock on the accounting grant date less the present value of dividends expected to be paid during the vesting period. GCMH Equityholders can settle the awards at various dates after vesting by exchanging outstanding GCMH common units or by otherwise acquiring and delivering Class A common stock, and therefore the vesting of such awards will not dilute Class A common stockholders. As such, the expense that is pushed down to GCMH and the offsetting deemed contribution are each attributed solely to noncontrolling interests in GCMH, consistent with the accounting for payments to employees described above. The GCMH Equityholders Awards of 7,169,415 units had an aggregate grant date fair value of $53.4 million, or an average grant date fair value of $7.45 per unit. The Company recognized partnership interest-based compensation expense related to the GCMH Equityholders Awards of $5.5 million and $5.4 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, total unrecognized compensation expense related to unvested GCMH Equityholders Awards was $23.7 million and is expected to be recognized over the remaining weighted average period of 1.1 years.
Holdings Awards
On May 9, 2023, Holdings entered into amended and restated participation certificates with existing employee members (“Holdings Awards”). The Holdings Awards entitle recipients to a stated percentage, or minimum allocable share, of distributions from Holdings, as well as a profits interest with respect to net sale proceeds from dispositions of Holdings properties after certain threshold distributions to other members. Pursuant to ASC 505, the Holdings Awards will be recognized as compensation expense with a corresponding deemed contribution and are accounted for under ASC 718, Compensation—Stock Compensation as the awards have characteristics that are more akin to the risks and rewards of equity ownership in Holdings. These awards do not dilute Class A common stockholders or impact net cash flows of the Company.
Certain of these existing employee members were previously awarded target amounts that entitled them to a stated percentage, or minimum allocable share, of distributions from Holdings until they received a sum certain. Those target amounts represented by those sums, which were previously recorded as partnership interest-based compensation, were reduced to zero in the amended and restated participation certificates. As a result, target amounts that were previously recorded as partnership interest-based compensation were reversed, while partnership interest-based compensation associated with the amended and restated participation certificates is recorded.
The Holdings Awards had an aggregate grant date fair value of $155.5 million, which was partially offset when recognized in expense by $80.0 million target amounts reversed during the year ended December 31, 2023. The fair value of the Holdings Awards was determined by a third-party valuation firm utilizing a discounted cash flow analysis for the minimum allocable share and a Monte Carlo simulation valuation model for the profits interest with respect to net sale proceeds from dispositions of Holdings properties after the threshold distributions. Significant valuation inputs and assumptions included Holdings projected financial information and distributions, an estimated 10 year holding period, a 15.4% cost of equity, a 13.0% weighted average cost of capital, a 35% volatility assumption, the likelihood of a defined conversion event, a 40% discount for lack of marketability, and the fair value of reference properties that determine the threshold distributions for the profits interest with respect to net sale proceeds. The resulting fair value of the Holdings Awards is pushed down from Holdings to the Company and recorded as compensation expense. A portion of the Holdings Awards were vested upon grant, resulting in immediate expense recognition. The Company recognized partnership interest-based compensation expense related to the Holdings Awards of $3.6 million for the three months ended March 31, 2024. A portion of the Holdings Awards will vest and
17


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
are being expensed over a requisite service period through December 31, 2024. As of March 31, 2024, total unrecognized compensation expense related to unvested Holdings Awards was $11.2 million and is expected to be recognized over the remaining weighted average period of 0.8 years.
Other
Other consists of employee compensation and benefits expense related to deferred compensation programs and other awards that represent investments made in GCM Funds on behalf of the employees.
10. Equity-Based Compensation
In the three months ended March 31, 2024, the Company granted 2.0 million equity-classified RSUs and 1.5 million liability-classified RSUs with aggregate grant date fair values of $16.9 million and $13.2 million, respectively, to certain employees. The liability-classified RSUs are either classified as liabilities because they are required to be settled in cash or because the Company has the right to and intends to (as of the grant date or March 31, 2024, as applicable) settle the RSUs partially or wholly in cash. In the three months ended March 31, 2024, the Company reclassified 1.5 million RSUs from liability-classified to equity-classified based on management’s intent to settle the awards in shares of Class A common stock.
The majority of liability-classified awards outstanding as of December 31, 2023 were granted in October 2023, vested on March 1, 2024 and were delivered on April 15, 2024. Of the 1.5 million liability-classified RSUs granted in the three months ended March 31, 2024, 1.0 million vested and delivered on April 15, 2024. Other awards generally vest either (a) one-third at the grant date with the remainder over two years in equal annual installments or (b) over a one to three year period. Upon delivery, the Company may withhold the number of shares to satisfy the statutory withholding tax obligation and deliver the net number of resulting shares vested.
See Note 9 for additional information regarding GCMH Equityholders Awards and Holdings Awards.
A summary of non-vested equity-classified RSU activity for the three months ended March 31, 2024 is as follows:
Number of RSUsWeighted-Average Grant-Date Fair Value Per RSU
Balance as of December 31, 2023
2,164,163 $8.51 
Granted1,971,809 8.58 
Reclassified from liability-classified RSUs1,514,764 7.94 
Vested(1,237,282)9.05 
Balance as of March 31, 2024
4,413,454 $8.20 
A summary of non-vested liability-classified RSU activity for the three months ended March 31, 2024 is as follows:
Number of RSUsWeighted-Average Grant-Date Fair Value Per RSU
Balance as of December 31, 2023
3,550,186 $7.73 
Granted1,515,093 8.68 
Reclassified to equity-classified RSUs(1,514,764)7.94 
Vested(1,897,269)7.65 
Balance as of March 31, 2024
1,653,246 $8.49 
The total grant-date fair value of RSUs that vested during the three months ended March 31, 2024 was $25.7 million. For the three months ended March 31, 2024 and 2023, $25.5 million and $25.8 million, respectively, of compensation expense related to RSUs was recorded within employee compensation and benefits in the Condensed Consolidated Statements of
18


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)

Income (Loss). As of March 31, 2024, total unrecognized compensation expense related to unvested RSUs was $34.5 million and is expected to be recognized over the remaining weighted average period of 2.6 years.
The tax benefit related to RSUs that vested during the three months ended March 31, 2024 will be recognized in the second and third quarters of 2024 when the cash or Class A common stock is delivered.
11. Debt
The table below summarizes the outstanding debt balance as of March 31, 2024 and December 31, 2023:
As of
March 31, 2024December 31, 2023
Senior loan$388,000 $389,000 
Less: debt issuance costs(4,000)(4,273)
Total debt$384,000 $384,727 
Maturities of debt for the next five years and thereafter as of March 31, 2024 are as follows:
Remainder of 20243,000 
20254,000 
20264,000 
20274,000 
2028373,000 
Thereafter 
Total$388,000 
Senior Loan
On January 2, 2014, the Company entered into a senior secured term loan facility (“Senior Loan”), which was subsequently amended through several debt modifications.
On February 24, 2021, the Company completed an amendment and extension of its Senior Loan to further extend the maturity (“Amended Credit Agreement”). Approximately $290.0 million of the aggregate principal amount of the Senior Loan was extended from a maturity date of March 29, 2025 to a maturity date of February 24, 2028. On June 23, 2021, the Company further amended its Senior Loan to increase the aggregate principal amount from $290.0 million to $400.0 million (as extended and increased, the “2028 Term Loans”). The Company capitalized $0.9 million and $2.2 million of debt issuances costs related to payments to lenders in connection with the amendments and extension of its Senior Loan in February and June 2021, respectively, which were recorded within debt in the Consolidated Statements of Financial Condition.
Since and beginning on June 30, 2021, quarterly principal payments of $1.0 million are required to be made toward the 2028 Term Loans (less any reduction for prior or future voluntary or mandatory prepayments of principal). Through June 30, 2023, the 2028 Term Loans had an interest rate of 2.50% over the LIBOR, subject to a 0.50% LIBOR floor. On June 29, 2023, the Company entered into Amendment No. 7 to the Credit Agreement to incorporate changes for the contemplated transition to the Term Secured Overnight Financing Rate (“Term SOFR”), and on July 1, 2023, in conjunction with a Benchmark Transition Event, the interest rate defaulted to the Term SOFR plus a Benchmark Replacement Adjustment of 0.11% as recommended by the Relevant Governmental Body (all terms as defined in the Amended Credit Agreement).
In addition to the scheduled principal repayments, the Company is required to offer to make prepayments of Consolidated Excess Cash Flow (“Cash Flow Payments”) no later than five days following the date the quarterly financial statements are due if the leverage ratio exceeds certain thresholds in the Amended Credit Agreement. The Cash Flow Payments
19


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)

were calculated as defined in the Senior Loan agreement based on a percentage of calculated excess cash. During the three months ended March 31, 2024, the Company was not required to offer to make any Cash Flow Payments.
As of March 31, 2024 and December 31, 2023, $388.0 million and $389.0 million of 2028 Term Loans were outstanding, respectively, with weighted average interest rates of 7.95% and 7.03% for the three months ended March 31, 2024 and 2023, respectively.
Under the credit and guaranty agreement governing the terms of the Senior Loan, the Company must maintain certain leverage and interest coverage ratios. The credit and guaranty agreement also contains other covenants that, among other things, restrict the ability of the Company and its subsidiaries to incur debt and restrict the Company and its subsidiaries ability to merge or consolidate, or sell or convey all or substantially all of the Company’s assets. As of March 31, 2024, the Company was in compliance with all covenants.
GCMH Equityholders and IntermediateCo have executed a pledge agreement (“Pledge Agreement”) and security agreement (“Security Agreement”) with the lenders of the Senior Loan. Under the Pledge Agreement, GCMH Equityholders and IntermediateCo have agreed to secure the obligations under the Senior Loan by pledging its interests in GCMH as collateral against the repayment of the Senior Loan, and GCMH has agreed to secure the obligations under the Senior Loan by granting a security interest in and continuing lien on the collateral described in the Security Agreement. The Pledge Agreement and Security Agreement will remain in effect until such time as all obligations relating to the Senior Loan have been fulfilled
Credit Facility
Concurrent with the issuance of the Senior Loan, the Company entered into a $50.0 million revolving credit facility (“Credit Facility”). The Credit Facility matures on February 24, 2026 and carries an unused commitment fee that is paid quarterly. There were no outstanding borrowings related to the Credit Facility as of each of March 31, 2024 and December 31, 2023.
Other
Certain subsidiaries of the Company agree to jointly and severally guarantee, as primary obligors and not merely as surety guarantees the obligations of their parent entity, GCMH.
Amortization of deferred debt issuance costs was $0.3 million for each of the three months ended March 31, 2024 and 2023. These amounts were recorded within interest expense in the Condensed Consolidated Statements of Income (Loss).
The carrying value of the Senior Loan, excluding the unamortized debt issuance costs presented as a reduction to the principal balance, approximated the fair value as of March 31, 2024 and December 31, 2023. As the Senior Loan was not accounted for at fair value, it was not included in the Company’s fair value hierarchy in Note 5, however had it been included, it would have been classified in Level 2.
12. Interest Rate Derivatives
The Company has entered into various derivative agreements with financial institutions to hedge interest rate risk related to its outstanding debt. The Company had the following interest rate derivative recorded within accrued expenses and other liabilities as of March 31, 2024 and December 31, 2023 in the Condensed Consolidated Statements of Financial Condition:
DerivativeNotional Amount
Fair Value as of March 31, 2024
Fair Value as of December 31, 2023
Fixed Rate PaidFloating Rate Received
Effective Date(2)
Maturity Date
Interest rate swap$300,000 $(2,071)$(7,469)4.37 %
1 month Term SOFR(1)
November 2022February 2028
____________
(1)Floating rate received subject to a 0.50% Floor. Refer to Note 11 regarding the interest rate on the outstanding debt for the July 1, 2023 Benchmark Transition Event. The floating rate received under the interest rate swap also defaulted to Term SOFR plus a Benchmark Replacement Adjustment concurrent with the Benchmark Transition Event.
20


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
(2)Represents the date at which the derivative is in effect and the Company is contractually required to begin payment of interest under the terms of the agreement.
A rollforward of the amounts in accumulated other comprehensive income (loss) (“AOCI”) related to interest rate derivatives designated as cash flow hedges is as follows:
Three Months Ended March 31,
20242023
Derivative gain at beginning of period$21,806 $29,130 
Amount recognized in other comprehensive income(1)
5,901 (4,639)
Amount reclassified from accumulated other comprehensive income (loss) to interest expense(2,700)(1,104)
Derivative gain at end of period25,007 23,387 
Less: gain attributable to noncontrolling interests in GCMH20,969 19,796 
Derivative gain at end of period, net$4,038 $3,591 
____________
(1)Net of tax provision of $0.3 million for the three months ended March 31, 2024 and an immaterial tax impact for the three months ended March 31, 2023.
In February 2021, the Company terminated derivative instruments which were entered into in 2017 and 2018. In October 2022, the Company terminated derivative instruments which were entered into in 2021 and received $40.3 million of cash for the fair market value of the interest rate swaps at termination. The amounts previously recorded as hedges in AOCI will remain in AOCI and will be recorded in interest expense within the Condensed Consolidated Statements of Comprehensive Income (Loss) over the original lives of the derivative instruments.
The Company reclassified $1.9 million and $1.0 million for the three months ended March 31, 2024 and 2023, respectively, from AOCI to interest expense relating to the derivative instruments terminated that initially qualified for hedge accounting. The net impact of these reclassifications decreased interest expense for each of the three months ended March 31, 2024 and 2023.
Effective on November 1, 2022, the Company entered into a swap agreement to hedge interest rate risk related to payments made for the 2028 Term Loans that has a notional amount of $300 million and a fixed rate of 4.37%. The swap agreement and the 2028 Term Loans had a 0.50% LIBOR floor through June 30, 2023 and defaulted to Term SOFR plus a Benchmark Replacement Adjustment on July 1, 2023 at the Benchmark Transition Event as discussed in Note 11. The swap was determined to be an effective cash flow hedge at inception based on a comparison of critical terms and remained an effective cash flow hedge at and following the Benchmark Transition Event.
The fair values of the interest rate swaps are based on observable market inputs and represent the net amount required to terminate the positions, taking into consideration market rates and non-performance risk. Refer to Note 5 for additional information.
During the next twelve months, the Company expects to reclassify approximately $9.7 million from AOCI to interest expense, which will decrease interest expense, including the impact of the swap terminations.
13. Commitments and Contingencies
Leases
The Company has entered into operating lease agreements for office space. The Company leases office space in various countries around the world and maintains its headquarters in Chicago, Illinois, where it leases primary office space under a lease agreement expiring September 2026. The leases contain rent escalation clauses based on increases in base rent, real estate taxes and operating expenses.
21


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
In January 2024, the Company executed an agreement to lease office space for its United Kingdom office. The new space will replace the Company’s existing United Kingdom office space. The Company gained access to this space in January 2024 and established the ROU asset and lease liability. Total future lease payments are expected to be $2.7 million over 5.0 years. The lease contains rent escalation clauses based on increases in base rent, real estate taxes and operating expenses and a 10 month rent concession.
The components of operating lease expense recorded within general, administrative and other in the Condensed Consolidated Statements of Income (Loss) were as follows:
Three Months Ended March 31,
20242023
Operating lease cost(1)
$2,879 $1,869 
Variable lease cost(2)
1,095 1,109 
Less: sublease income66 49 
Total lease cost$3,908 $2,929 
____________
(1)Includes less than $0.1 million of short term lease expense for each of the three months ended March 31, 2024 and 2023. For the three months ended March 31, 2024, includes lease cost for two offices in New York due to the build out of new office space.
(2)Includes common area maintenance charges and other variable costs not included in the measurement of ROU assets and lease liabilities.
The following table summarizes cash flows and other supplemental information related to our operating leases:
Three Months Ended March 31,
20242023
Cash paid for amounts included in the measurement of operating lease liabilities$1,979$2,195
Non-cash ROU assets obtained in exchange for new and extended operating leases$3,155$1,351
Weighted average remaining lease term in years12.8 years2.7 years
Weighted average discount rate6.1 %4.9 %
As of March 31, 2024, the maturities of operating lease liabilities were as follows:
Remainder of 2024$3,168 
20258,131 
20266,843 
20274,959 
20284,754 
Thereafter49,717 
Total lease payments77,572 
Less: minimum future rental payments for which the lease has not commenced(716)
Total lease payments for which the Company has a right-of-use-asset and corresponding liability76,856 
Less: tenant improvement allowance(7,049)
Less: imputed interest(26,610)
Total operating lease liabilities$43,197 
22


GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
Commitments
The Company was required to pay a fixed management fee of $0.5 million per year for a five year period that commenced in 2019 pursuant to its 12.5% interest in an aircraft. On March 11, 2021, GCMH entered into an agreement to assign 50% of its 12.5% share interest in an aircraft to Holdings, for cash consideration of approximately $1.3 million. The Company is now required to pay a fixed management fee of $0.3 million per year.
The Company had $86.3 million and $85.6 million of unfunded investment commitments as of March 31, 2024 and December 31, 2023, respectively, representing general partner capital funding commitments to several of the GCM Funds.
Litigation
In the normal course of business, the Company may enter into contracts that contain a number of representations and warranties, which may provide for general or specific indemnifications. The Company’s exposure under these contracts is not currently known, as any such exposure would be based on future claims, which could be made against the Company. The Company’s management is not currently aware of any such pending claims and based on its experience, the Company believes the risk of loss related to these arrangements to be remote.
From time to time, the Company is a defendant in various lawsuits related to its business. The Company’s management does not believe that the outcome of any current litigation will have a material effect on the Company’s Condensed Consolidated Financial Statements.
Off-Balance Sheet Risks
The Company may be exposed to a risk of loss by virtue of certain subsidiaries serving as the general partner of GCM Funds organized as limited partnerships. As general partner of a GCM Fund organized as a limited partnership, the Company’s subsidiaries that serve as the general partner have exposure to risk of loss that is not limited to the amount of its investment in such GCM Fund. The Company cannot predict the amount of loss, if any, which may occur as a result of this exposure; however, historically, the Company has not incurred any significant losses and management believes the likelihood is remote that a material loss will occur.
14. Related Parties
In regard to the following related party disclosures, the Company’s management cannot be sure that such transactions or arrangements would be the same to the Company if the parties involved were unrelated and such differences could be material.
The Company provides certain employees partnership interest awards which are paid or settled by Holdings, Holdings II and Management LLC. Refer to Note 9 for further details.
The Company has a sublease agreement with Holdings. Because the terms of the sublease are identical to the terms of the original lease, there is no impact to net loss in the Condensed Consolidated Statements of Income (Loss) or Condensed Consolidated Statements of Cash Flows.
The Company incurs certain costs, primarily related to accounting, client reporting, investment-decision making and treasury-related expenditures, for which it receives reimbursement from the GCM Funds in connection with its performance obligations to provide investment management services. The Company also incurs certain costs, primarily related to employee benefits and travel, for which it receives reimbursement from Holdings. Due from related parties in the Condensed Consolidated Statements of Financial Condition includes net receivables from GCM Funds of $10.2 million and $13.5 million and from Holdings of less than $0.1 million as of March 31, 2024 and December 31, 2023, respectively, paid on behalf of affiliated entities that are reimbursable to the Company.
Our executive officers, senior professionals, and certain current and former employees and their families invest on a discretionary basis in GCM Funds, and such investments are generally not subject to management fees and performance fees. As of March 31, 2024 and December 31, 2023, such investments and future commitments were $405.8 million and $377.5 million in aggregate, respectively.
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GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)


Certain employees of the Company have an economic interest in an entity that is the owner and landlord of the building in which the principal headquarters of the Company are located.
The Company utilizes the services of an insurance broker to procure insurance coverage, including its general commercial package policy, workers’ compensation and professional and management liability coverage for its directors and officers. Certain members of Holdings have an economic interest in, and relatives are employed by, the Company’s insurance broker.
From time to time, certain of the Company’s executive officers utilize a private business aircraft, including an aircraft wholly owned or controlled by members of Holdings. Additionally, the Company arranges for the use of the private business aircraft through a number of charter services, including entities predominantly or wholly owned or controlled by members of Holdings. The Company paid, net of reimbursements, $1.4 million for the three months ended March 31, 2023 to utilize aircraft and charter services wholly owned or controlled by members of Holdings, which is recorded within general, administrative and other in the Condensed Consolidated Statements of Income (Loss). The Company had no such payments for the three months ended March 31, 2024.
In an internal restructuring effective January 1, 2024, GCMH acquired from its general partner, IntermediateCo, the equity interests in GCM, L.L.C. held by IntermediateCo for cash consideration in the amount of approximately $2.0 million. The transaction was completed in accordance with the terms of a transfer agreement. IntermediateCo, a wholly owned subsidiary of GCM Grosvenor Inc., acquired GCM, L.L.C. in connection with the Transaction for nominal consideration and continues to control GCM, L.L.C. indirectly as general partner of GCMH.
15. Income Taxes
The Company’s effective tax rate used for interim periods is based on the tax effect of items recorded discretely in the interim period in which those items occur. The effective tax rate is dependent on many factors, including the estimated amount of income subject to income tax and allocation of tax benefit to noncontrolling interest; therefore, the effective tax rate can vary from period to period. The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation allowance when it is expected a portion of the deferred tax asset may not be realized.
The Company’s effective tax rate was (6)% and (3)% for each of the three months ended March 31, 2024 and 2023, respectively. These rates were different than the statutory rate primarily due to the portion of income allocated to the noncontrolling interest holders, a valuation allowance recorded against deferred tax assets and discrete tax adjustments recorded in the periods.
As of March 31, 2024, the Company had no unrecognized tax positions and believes there will be no changes to uncertain tax positions within the next 12 months.
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GCM Grosvenor Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(In thousands, except share and per share amounts and where otherwise noted)
16. Earnings (Loss) Per Share
The following is a reconciliation of basic and diluted earnings (loss) per share for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Numerator for earnings (loss) per share calculation:
Net income (loss) attributable to GCM Grosvenor Inc., basic$2,124 $(1,230)
Exchange of Partnership units(25,652)(16,683)
Net income (loss) attributable to common stockholders, diluted(23,528)(17,913)
Denominator for earnings (loss) per share calculation:
Weighted-average shares, basic43,670,260 42,380,335 
Exchange of Partnership units144,235,246 144,235,246 
Weighted-average shares, diluted 187,905,506 186,615,581 
Basic EPS
Net income (loss) attributable to common stockholders, basic$2,124 $(1,230)
Weighted-average shares, basic 43,670,260 42,380,335 
Net income (loss) per share attributable to common stockholders, basic$0.05 $(0.03)
Diluted EPS
Net income (loss) attributable to common stockholders, diluted$(23,528)$(17,913)
Weighted-average shares, diluted187,905,506 186,615,581 
Net income (loss) per share attributable to common stockholders, diluted$(0.13)$(0.10)
When applying the if-converted method to calculate the potential dilutive impact of the exchangeable common units of the Partnership, the earnings (loss) per share numerator adjustment reflects the net income (loss) attributable to noncontrolling interests in GCMH, as reported, adjusted for the hypothetical incremental provision (benefit) for income taxes that would have been recorded by the Company if the units had been converted.
Shares of the Company’s Class C common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, a separate presentation of basic and diluted earnings (loss) per share of Class C common stock under the two-class method has not been presented.
The following outstanding potentially dilutive securities were excluded from the calculations of diluted earnings (loss) per share attributable to common stockholders because their impact would have been antidilutive for the periods presented:
Three Months Ended March 31,
20242023
Public warrants 16,784,970 16,784,970 
Private warrants 900,000 900,000 
Unvested RSUs under the treasury stock method
2,270,669 1,539,673 
17. Subsequent Events
On May 6, 2024, GCMG’s Board of Directors declared a quarterly dividend of $0.11 per share of Class A common stock to record holders as of the close of business on June 3, 2024. The payment date will be June 17, 2024.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” section of Part I, Item IA in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and under the “Forward-Looking Statements” section elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are a leading alternative asset management solutions provider that invests across all major alternative investment strategies. We invest on a primary basis and through direct-oriented strategies, which we define as secondaries, co-investments, direct investments and seed investments. We operate customized separate accounts and commingled funds. We collaborate with our clients to invest on their behalf across the private and public markets, either through portfolios customized to meet a client’s specific objectives or through specialized commingled funds that are developed to meet broad market demands for strategies and risk-return objectives.
We operate at scale across the full range of private markets and absolute return strategies. Private markets and absolute return strategies are primarily defined by the liquidity of the underlying securities purchased, the length of the client commitment, and the form and timing of incentive fees. For private markets strategies, clients generally commit to invest over a three-year time period and have an expected duration of seven years or more. In private markets strategies, carried interest is typically based on realized gains on liquidation of the investment. For absolute return strategies, the securities tend to be more liquid, clients have the ability to redeem assets more regularly, and performance fees can be earned on an annual basis. We offer the following investment strategies:
Private Equity
Infrastructure
Real Estate
Absolute Return Strategies
Alternative Credit
Sustainable and Impact Investing
Our clients include large, sophisticated, global institutional investors who rely on our investment expertise and differentiated investment access to navigate the alternatives market, but also include a growing individual investor client base. As one of the pioneers of the customized separate account solutions, we are equipped to provide investment services to clients with a wide variety of needs, internal resources and investment objectives, and our client relationships are deep and frequently span decades.
Trends Affecting Our Business
As a global alternative asset manager, our results of operations are impacted by a variety of factors, including conditions in the global financial markets and economic and political environments, particularly in the United States, Europe, Asia-Pacific, Latin America and the Middle East. While economic factors, such as interest rates, can make alternative investments more or less attractive relative to other asset classes, investors have increasingly gravitated towards the returns generated by alternative investments in order to meet their return objectives. In addition, increased equity market volatility can also contribute to increased investor demand for alternative strategies. Finally, the opportunities in private markets continue to expand as firms raise new funds and launch new vehicles and products to access private markets across the globe.
In addition to the trends discussed above, we believe the following factors, among others, will influence our future performance and results of operations:
Our ability to retain existing investors and attract new investors in our funds.
Our ability to retain existing assets under management and attract new investors in our funds is partially dependent on the extent to which investors continue to favorably see the alternative asset management industry relative to traditional publicly
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listed equity and debt securities. A decline in the pace or the size of our fundraising efforts or investments as a result of increased competition in the private markets investing environment or a shift toward public markets may impact our revenues, which are generated from management fees and incentive fees.
Our ability to expand our business through new lines of business and geographic markets.
Our ability to grow our revenue base is partially dependent upon our ability to offer additional products and services by entering into new lines of business and by entering into, or expanding our presence in, new geographic markets. Entry into certain lines of business or geographic markets or the introduction of new types of products or services may subject us to the evolving macroeconomic and regulatory environment of the various countries where we operate or in which we invest.
Our ability to realize investments.
Challenging market and economic conditions may adversely affect our ability to exit and realize value from our investments and we may not be able to find suitable investments in which to effectively deploy capital. During periods of adverse economic conditions, such as current geopolitical turmoil abroad and elevated inflation and interest rates, our funds may have difficulty accessing financial markets, which could make it more difficult to obtain funding for additional investments and impact our ability to successfully exit positions in a timely manner. A general market downturn, a recession or a specific market dislocation may result in lower investment returns for our funds, which would adversely affect our revenues.
Our ability to identify suitable investment opportunities for our clients.
Our success largely depends on the identification and availability of suitable investment opportunities for our clients, and, in particular, the success of the investment vehicles managed by third-party investment managers in which GCM Funds invest. The availability of investment opportunities is subject to certain factors outside of our control and the control of the investment managers with which we invest for our funds, including the market environment at a given point in time. Although there can be no assurance that we will be able to secure the opportunity to invest on behalf of our clients in all or a substantial portion of the investments we select, or that the size of the investment opportunities available to us will be as large as we would desire, we seek to maintain excellent relationships with investment managers of investment funds, including those in which we have previously made investments for our clients and those in which we may in the future invest, as well as sponsors of investments that might provide co-investment opportunities in portfolio companies alongside the sponsoring fund manager. Our ability to identify attractive investments and execute on those investments is dependent on a number of factors, including the general macroeconomic environment, valuation, transaction size, and expected duration of such investment opportunity.
Our ability to generate competitive returns.
The ability to attract and retain clients is partially dependent on returns we are able to deliver versus client objectives, our peers and industry benchmarks. The capital we are able to attract drives the growth of our assets under management and the management and incentive fees we earn. Similarly, in order to maintain our desired fee structure in a competitive environment, we must be able to continue to provide clients with investment returns and service that incentivize our investors to pay our desired fee rates.
Our ability to comply with increasing and evolving regulatory requirements.
The complex and evolving regulatory and tax environment may have an adverse effect on our business and subject us to additional expenses or capital requirements, as well as restrictions on our business operations.
Operating Segments
We have determined that we operate in a single operating and reportable segment, consistent with how our chief operating decision maker allocates resources and assesses performance.
Components of Results of Operations
Revenues
We generate revenues from management fees and incentive fees, which includes carried interest and performance fees.
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Management Fees
Management Fees
We earn management fees from providing investment management services to specialized funds and customized separate account clients. Specialized funds are generally structured as partnerships or companies having multiple investors. Customized separate account clients may be structured using an affiliate-managed entity or may involve an investment management agreement between us and a single client. Certain separate account clients may have us manage assets both with full discretion over investments decisions as well as without discretion over investment decisions and may also receive access to various other advisory services the firm may provide.
Certain of our management fees, typically associated with our private markets strategies, are based on client commitments to those funds during an initial commitment or investment period. During this period fees may be charged on total commitments, on invested capital (capital committed to underlying investments) or on a ratable ramp-in of total commitments, which is meant to mirror typical invested capital pacing. Following the expiration or termination of such period, certain fees continue to be based on client commitments while others are based on invested assets or based on invested capital and unfunded deal commitments less returned capital or based on a fixed ramp down schedule.
Certain of our management fees, typically associated with absolute return strategies, are based on the NAV of those funds. Such GCM Funds either have a set fee for the entire fund or a fee scale through which clients with larger commitments pay a lower fee.
Management fees are determined quarterly and are more commonly billed in advance based on the management fee rate applied to the management fee base at the end of the preceding quarterly period as defined in the respective contractual agreements.
We provided investment management / advisory services on assets of $78.8 billion and $76.9 billion as of March 31, 2024 and December 31, 2023, respectively.
Fund expense reimbursement revenue
We incur certain costs, primarily related to accounting, client reporting, investment-decision making and treasury-related expenditures, for which we receive reimbursement from the GCM Funds in connection with our performance obligations to provide investment management services. We concluded that we control the services provided and resources used before they are transferred to the customer, and therefore we act as a principal. Accordingly, the reimbursement for these costs incurred by us are presented on a gross basis within management fees. Expense reimbursements are recognized at a point in time, in the periods during which the related expenses are incurred and the reimbursements are contractually earned.
Incentive Fees
Incentive fees are based on the results of our funds, in the form of performance fees and carried interest income, which together comprise incentive fees.
Carried Interest
Carried interest is a performance-based capital allocation from a fund’s limited partners earned by us in certain GCM Funds, more commonly in private markets strategies. Carried interest is typically a percentage of the profits calculated in accordance with the terms of fund agreements, certain fees and a preferred return to the fund’s limited partners. Carried interest is ultimately realized when underlying investments distribute proceeds or are sold and therefore carried interest is highly susceptible to market factors, judgments, and actions of third parties that are outside of our control.
Agreements generally include a clawback provision that, if triggered, would require us to return up to the cumulative amount of carried interest distributed, typically net of tax, upon liquidation of those funds, if the aggregate amount paid as carried interest exceeds the amount actually due based upon the aggregate performance of each fund. We have defined the portion to be deferred as the amount of carried interest, typically net of tax, that we would be required to return if all remaining investments had no value as of the end of each reporting period. As of March 31, 2024, deferred revenue relating to constrained realized carried interest was approximately $5.6 million.
Assets under management that are subject to carried interest, excluding investments of the firm and our professionals from which we generally do not earn incentive fees, were approximately $43.8 billion as of March 31, 2024.
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Performance Fees
We may receive performance fees from certain GCM Funds, more commonly in funds associated with absolute return strategies. Performance fees are typically a fixed percentage of investment gains, subject to loss carryforward provisions that require the recapture of any previous losses before any performance fees can be earned in the current period. Performance fees may or may not be subject to a hurdle or a preferred return, which requires that clients earn a specified minimum return before a performance fee can be assessed. These performance fees are determined based upon investment performance at the end of a specified measurement period, generally the end of the calendar year.
Investment returns are highly susceptible to market factors, judgments, and actions of third parties that are outside of our control. Accordingly, performance fees are variable consideration and are therefore constrained and not recognized until it is probable that a significant reversal will not occur. In the event that a client redeems from one of the GCM Funds prior to the end of a measurement period, any accrued performance fee is ordinarily due and payable by such redeeming client as of the date of the redemption.
Assets under management that are subject to performance fees, excluding investments of the firm and our professionals from which we generally do not earn incentive fees, were approximately $13.4 billion as of March 31, 2024.
Other Operating Income
Other operating income primarily consists of administrative fees from certain private investment vehicles where we perform a full suite of administrative functions but do not manage or advise and have no discretion over the capital.
Expenses
Employee Compensation and Benefits
Employee compensation and benefits primarily consists of (1) cash-based employee compensation and benefits, (2) equity-based compensation, (3) partnership interest-based compensation, (4) carried interest compensation, (5) cash-based incentive fee related compensation and (6) other non-cash compensation. Bonus and incentive fee related compensation is generally determined by our management and is discretionary taking into consideration, among other things, our financial results and the employee’s performance. In addition, various individuals, including certain senior professionals have been awarded partnership interests and/or restricted stock units (“RSUs”). These partnership interests grant the recipient the right to certain cash distributions from GCMH Equityholders’ profits (to the extent such distributions are authorized) and/or to certain net sale proceeds after threshold distributions, resulting in non-cash profits interest compensation expense. The Company recognizes compensation expense attributable to the RSUs on a straight-line basis over the requisite service period, which is generally the vesting period. Certain employees and former employees are also entitled to a portion of the carried interest and performance fees realized from certain GCM Funds, which is payable upon a realization of the carried interest or performance fees.
General, Administrative and Other
General, administrative and other consists primarily of professional fees, travel and related expenses, IT operations, communications and information services, occupancy, fund expenses, depreciation and amortization, and other costs associated with our operations.
Net Other Income (Expense)
Investment Income (Loss)
Investment income (loss) primarily consists of gains and losses arising from our equity method investments.
Interest Expense
Interest expense includes interest paid and accrued on our outstanding debt, along with the amortization of deferred debt issuance costs incurred from debt issued by us, including the Term Loan Facility and the Revolving Credit Facility entered into by us. Interest expense also includes (1) the impact of qualifying effective cash flow hedges and (2) the amortization of realized gains or losses on interest rate swaps that initially qualified for hedge accounting and were subsequently terminated. The
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unrealized gains or losses are reclassified from accumulated other comprehensive income into interest expense over the original life of the swap.
Other Income (Expense)
Other income (expense) consists primarily of other non-operating items, including write-off of unamortized debt issuance costs due to prepayments and refinancing of debt and interest income.
Change in Fair Value of Warrant Liabilities
Change in fair value of warrant liabilities are non-cash changes and consist of fair value adjustments related to the outstanding public and private warrants issued in connection with the Transaction. The warrant liabilities are classified as marked-to-market liabilities pursuant to ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and the corresponding increase or decrease in value impacts our net income (loss).
Provision for Income Taxes
We are a corporation for U.S. federal income tax purposes and therefore are subject to U.S. federal and state income taxes on our share of taxable income generated by the Company and its subsidiaries. GCMH is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by GCMH flows through to its partners, and is generally not subject to U.S. federal or state income tax at the partnership level. Our non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to local or non-U.S. income taxes. The tax liability with respect to income attributable to noncontrolling interests in GCMH is borne by the holders of such noncontrolling interests.

Net Income (Loss) Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests in subsidiaries represents the economic interests of third parties in certain consolidated subsidiaries.
Net income (loss) attributable to noncontrolling interests in GCMH represents the economic interests of GCMH Equityholders in GCMH. Profits and losses, other than partnership interest-based compensation, are allocated to the noncontrolling interests in GCMH in proportion to their relative ownership interests regardless of their basis.
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Results of Operations
The following is a discussion of our consolidated results of operations for the three months ended March 31, 2024 and 2023. This information is derived from our accompanying Condensed Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Three Months Ended March 31,
20242023
(in thousands, unaudited)
Revenues
Management fees$95,885 $92,245 
Incentive fees10,118 5,815 
Other operating income2,863 1,056 
Total operating revenues108,866 99,116 
Expenses
Employee compensation and benefits99,647 86,224 
General, administrative and other25,179 25,779 
Total operating expenses124,826 112,003 
Operating loss(15,960)