Perella Weinberg Partners [PWP] Filings

10-Q 1 pwp-20230630.htm 10-Q pwp-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_____________________________________________________________________________________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________________________________________________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023


☐			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: 001-39558

_____________________________________________________________________________________________________________________________________________________________________

PERELLA WEINBERG PARTNERS

(Exact Name of Registrant as Specified in its Charter)

_____________________________________________________________________________________________________________________________________________________________________


Delaware			84-1770732
( State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
767 Fifth Avenue New York, NY			10153
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (212) 287-3200

_____________________________________________________________________________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

PWP

Nasdaq Global Select Market

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 x No o

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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	x
		Emerging growth company	x

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of July 31, 2023, the registrant had 41,633,454 shares of Class A common stock, par value $0.0001 per share, and 43,778,015 shares of Class B common stock, par value $0.0001 per share, outstanding.

Perella Weinberg Partners

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Statements of Financial Condition as of June 30 , 2023 and December 31, 2022	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2023 and 2022	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30 , 2023 and 2022	5
	Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30 , 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 , 2023 and 2022	8
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	33
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	36
Signatures		37

On June 24, 2021 (the “Closing Date” or the “Closing”), Perella Weinberg Partners consummated a business combination pursuant to that certain Business Combination Agreement, dated as of December 29, 2020 (the “Business Combination Agreement”). As contemplated by the Business Combination Agreement, (i) Perella Weinberg Partners acquired certain partnership interests in PWP Holdings LP (“PWP OpCo”), (ii) PWP OpCo became jointly-owned by Perella Weinberg Partners, PWP Professional Partners LP (“Professional Partners”) and certain existing partners of PWP OpCo, and (iii) PWP OpCo serves as Perella Weinberg Partners’ operating partnership as part of an umbrella limited partnership C-corporation (Up-C) structure (collectively with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). Unless the context otherwise requires, all references to “PWP,” the “Company,” “we,” “us” or “our” refer to Perella Weinberg Partners and its consolidated subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain statements made in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, 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”). Statements regarding the expectations regarding the combined business are “forward-looking statements.” In addition, words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements.

Important factors, among others, that may affect actual results or outcomes include (but are not limited to): global economic, business, and market conditions; the Company’s dependence on and ability to retain key employees; the Company’s ability to successfully identify, recruit and develop talent; conditions impacting the corporate advisory industry; the Company’s dependence on its fee-paying clients and fluctuating revenues from its non-exclusive, engagement-by-engagement business model; the high volatility of the Company’s revenue as a result of its reliance on advisory fees that are largely contingent on the completion of events which may be out of its control; the Company’s ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to the Company’s business, including actual, potential or perceived conflicts of interest and other factors that may damage its business and reputation; the Company’s successful formulation and execution of its business and growth strategies; substantial litigation risks in the financial services industry; cybersecurity and other operational risks; assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity; extensive regulation of the corporate advisory industry and U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy and laws (including the treatment of carried interest); other risks and uncertainties described under the section entitled “Risk Factors” included in our Annual Report on Form 10-K.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Website Disclosure

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains an internet site where reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC are available. Our SEC filings are available to the public over the Internet at the SEC’s website at www.sec.gov and on our website at https://investors.pwpartners.com/ free of charge as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC. Our website is https://pwpartners.com/. Although we refer to our website in this report, the contents of our website are not included or incorporated by reference into this report. All references to our website in this report are intended to be inactive textual references only.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)




	June 30, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	129,761	$	171,570
Restricted cash	2,649		2,596
Investments in short-term marketable debt securities	50,004		140,110
Accounts receivable, net of allowance	50,959		67,906
Due from related parties	3,499		3,362
Fixed assets, net of accumulated depreciation and amortization	70,977		48,390
Intangible assets, net of accumulated amortization	22,482		25,772
Goodwill	34,383		34,383
Prepaid expenses and other assets	33,819		36,190
Right-of-use lease assets	147,631		153,720
Deferred tax assets, net	35,938		33,094
Total assets	$	582,102	$	717,093
Liabilities and Equity
Accrued compensation and benefits	$	90,409	$	217,011
Accounts payable, accrued expenses and other liabilities	34,808		46,336
Deferred revenue	2,178		5,014
Lease liabilities	171,323		165,601
Amount due pursuant to tax receivable agreement	25,116		22,991
Total liabilities	323,834		456,953
Commitments and Contingencies (Note 17)
Class A common stock, par value $0.0001 per share (1,500,000,000 shares authorized, 54,371,216 issued and 41,625,690 outstanding at June 30, 2023; 1,500,000,000 shares authorized, 52,237,247 issued and 41,744,961 outstanding at December 31, 2022)	5		5
Class B common stock, par value $0.0001 per share (600,000,000 shares authorized, 43,778,015 issued and outstanding at June 30, 2023; 600,000,000 shares authorized, 44,563,877 issued and outstanding at December 31, 2022)	4		4
Preferred stock, par value $0.0001 per share (100,000,000 shares authorized, no shares issued and outstanding at June 30, 2023 and December 31, 2022)	—		—
Additional paid-in-capital	279,317		242,129
Retained earnings (accumulated deficit)	(32,616)		(18,071)
Accumulated other comprehensive income (loss)	(4,822)		(6,538)
Treasury stock, at cost (12,745,526 and 10,492,286 shares of Class A common stock at June 30, 2023 and December 31, 2022, respectively)	(101,074)		(80,067)
Total Perella Weinberg Partners equity	140,814		137,462
Non-controlling interests	117,454		122,678
Total equity	258,268		260,140
Total liabilities and equity	$	582,102	$	717,093

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	165,545	$	151,104	$	296,971	$	302,980
Expenses
Compensation and benefits	106,216		90,587		176,179		177,832
Equity-based compensation	42,212		36,427		89,883		77,317
Total compensation and benefits	148,428		127,014		266,062		255,149
Professional fees	8,737		7,419		16,290		17,722
Technology and infrastructure	9,293		7,521		17,805		15,077
Rent and occupancy	6,678		5,378		14,092		11,107
Travel and related expenses	4,726		3,641		9,500		5,935
General, administrative and other expenses	5,796		6,491		11,190		11,766
Depreciation and amortization	3,639		2,653		6,474		5,596
Total expenses	187,297		160,117		341,413		322,352
Operating income (loss)	(21,752)		(9,013)		(44,442)		(19,372)
Non-operating income (expenses)
Related party income	276		950		549		1,508
Other income (expense)	(1,337)		3,776		(1,054)		5,619
Change in fair value of warrant liabilities	—		10,094		—		22,100
Total non-operating income (expenses)	(1,061)		14,820		(505)		29,227
Income (loss) before income taxes	(22,813)		5,807		(44,947)		9,855
Income tax expense (benefit)	(4,543)		3,141		743		6,137
Net income (loss)	(18,270)		2,666		(45,690)		3,718
Less: Net income (loss) attributable to non-controlling interests	(18,629)		(6,599)		(40,926)		(14,441)
Net income (loss) attributable to Perella Weinberg Partners	$	359	$	9,265	$	(4,764)	$	18,159
Net income (loss) per share attributable to Class A common shareholders
Basic	$	0.01	$	0.21	$	(0.11)	$	0.40
Diluted	$	(0.19)	$0.00		$	(0.56)	$	(0.01)
Weighted-average shares of Class A common stock outstanding
Basic	42,743,611		44,584,181		42,531,895		45,247,373
Diluted	86,521,626		90,688,871		86,566,075		91,953,077

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(Dollars in Thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income (loss)	$	(18,270)	$	2,666	$	(45,690)	$	3,718
Foreign currency translation gain (loss), net of tax	1,898		(5,177)		3,483		(7,279)
Comprehensive income (loss)	(16,372)		(2,511)		(42,207)		(3,561)
Less: Comprehensive income (loss) attributable to non-controlling interests	(17,661)		(9,228)		(39,159)		(18,131)
Comprehensive income (loss) attributable to Perella Weinberg Partners	$	1,289	$	6,717	$	(3,048)	$	14,570

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)


	Shares
	Class A Common Stock	Class B Common Stock	Treasury Stock	Class A Common Stock		Class B Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interests		Total Equity
Balance at December 31, 2021	43,649,319	50,154,199	(1,000,000)	$	4	$	5	$	(12,000)	$	158,131	$	(18,075)	$	(1,746)	$	145,033	$	271,352
Net income (loss)	—	—	—	—		—		—		—		8,894		—		(7,842)		1,052
Equity-based awards	—	—	—							22,695				—		18,710		41,405
Distributions to partners	—	—	—	—		—		—		—		—		—		(15,823)		(15,823)
Issuance of Class A common stock for vested PWP Incentive Plan Awards	601,098	—	—	—		—		—		—		—		—		—		—
Withholding payments on vested PWP Incentive Plan Awards	—	—	—	—		—		—		(6,075)		—		—		—		(6,075)
Dividends declared ($0.07 per share of Class A common stock)	—	—	—	—		—		—		116		(4,229)		—		—		(4,113)
Foreign currency translation gain (loss)	—	—	—	—		—		—		—		—		(1,040)		(1,062)		(2,102)
Other	—	—	—	—		—		—		734		—		—		1,265		1,999
Issuance of Class A common stock and exchange of PWP OpCo Units with corresponding Class B common stock for cash using Offering proceeds (Note 9—Stockholders’ Equity)	3,502,033	(3,498,534)	—	1		—		—		(538)		—		—		—		(537)
Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity)	337,048	(336,712)	—	—		—		—		17		—		—		—		17
Treasury stock purchase	—	—	(172,303)	—		—		(1,598)		—		—		—		—		(1,598)
Change in ownership interests	—	—	—	—		—		—		4,665		—		—		(4,665)		—
Balance at March 31, 2022	48,089,498	46,318,953	(1,172,303)	$	5	$	5	$	(13,598)	$	179,745	$	(13,410)	$	(2,786)	$	135,616	$	285,577
Net income (loss)	—	—	—	—		—		—		—		9,265		—		(6,599)		2,666
Equity-based awards	—	—	—	—		—		—		18,432		—		—		18,525		36,957
Distributions to partners	—	—	—	—		—		—		—		—		—		(2,856)		(2,856)
Issuance of Class A common stock for vested PWP Incentive Plan Awards	66,116	—	—	—		—		—		—		—		—		—		—
Withholding payments on vested PWP Incentive Plan Awards	—	—	—	—		—		—		(359)		—		—		—		(359)
Dividends declared ($0.07 per share of Class A common stock)	—	—	—	—		—		—		134		(4,689)		—		—		(4,555)
Foreign currency translation gain (loss)	—	—	—	—		—		—		—		—		(2,548)		(2,629)		(5,177)
Other	—	—		—		—				(8)		—		—		(6)		(14)
Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity)	629,591	(628,965)	—	—		—		—		263		—		—		—		263
Treasury stock purchase	—	—	(6,267,904)	—		—		(43,689)		—		—		—		—		(43,689)
Change in ownership interests	—	—	—	—		—		—		5,654		—		—		(5,654)		—
Balance at June 30, 2022	48,785,205	45,689,988	(7,440,207)	$	5	$	5	$	(57,287)	$	203,861	$	(8,834)	$	(5,334)	$	136,397	$	268,813

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts)


	Shares
	Class A Common Stock	Class B Common Stock	Treasury Stock	Class A Common Stock		Class B Common Stock		Treasury Stock		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interests		Total Equity
Balance at December 31, 2022	52,237,247	44,563,877	(10,492,286)	$	5	$	4	$	(80,067)	$	242,129	$	(18,071)	$	(6,538)	$	122,678	$	260,140
Net income (loss)	—	—	—	—		—		—		—		(5,123)		—		(22,297)		(27,420)
Equity-based awards	—	—	—	—		—		—		27,932		—		—		20,334		48,266
Distributions to partners	—	—	—	—		—		—		—		—		—		(3,119)		(3,119)
Issuance of Class A common stock for vested PWP Incentive Plan Awards	1,250,162	—	99,057	—		—		1,189		(1,189)		—		—		—		—
Withholding payments on vested PWP Incentive Plan Awards	—	—	—	—		—		—		(11,356)		—		—		—		(11,356)
Dividends declared ($0.07 per share of Class A common stock)	—	—	—	—		—		—		169		(4,925)		—		—		(4,756)
Foreign currency translation gain (loss)	—	—	—	—		—		—		—		—		786		799		1,585
Other	—	—	—	—		—		—		(14)		—		—		(17)		(31)
Exchange of PWP OpCo Units and corresponding Class B common stock for Class A common stock (Note 9—Stockholders’ Equity)	786,644	(785,862)	—	—		—		—		457		—		—		—		457
Treasury stock purchase	—	—	(1,457,304)	—		—		(14,754)		—		—		—		—		(14,754)
Change in ownership interests	—	—	—	—		—		—		2,678		—		—		(2,678)		—
Balance at March 31, 2023	54,274,053	43,778,015	(11,850,533)	$	5	$	4	$	(93,632)	$	260,806	$	(28,119)	$	(5,752)	$	115,700	$	249,012
Net income (loss)	—	—	—	—		—		—		—		359		—		(18,629)		(18,270)
Equity-based awards	—	—	—	—		—		—		24,173		—		—		18,407		42,580
Distributions to partners	—	—	—	—		—		—		—		—		—		(5,692)		(5,692)
Issuance of Class A common stock for vested PWP Incentive Plan Awards	97,163	—	24,386	—		—		293		(189)		(98)		—		—		6
Withholding payments on vested PWP Incentive Plan Awards	—	—	—	—		—		—		(453)		—		—		—		(453)
Dividends declared ($0.07 per share of Class A common stock)	—	—	—	—		—		—		156		(4,758)		—		—		(4,602)
Foreign currency translation gain (loss)	—	—	—	—		—		—		—		—		930		968		1,898
Other	—	—	—	—		—		—		747		—		—		777		1,524

Treasury stock purchase	—	—	(919,379)	—		—		(7,735)		—		—		—		—		(7,735)
Change in ownership interests	—	—	—	—		—		—		(5,923)		—		—		5,923		—
Balance at June 30, 2023	54,371,216	43,778,015	(12,745,526)	$	5	$	4	$	(101,074)	$	279,317	$	(32,616)	$	(4,822)	$	117,454	$	258,268

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in Thousands)


	Six Months Ended June 30,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	(45,690)	$	3,718
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity-based awards vesting expense	90,846		78,362
Depreciation and amortization	6,474		5,596
Change in fair value of warrant liabilities	—		(22,100)
Foreign currency revaluation	1,401		—
Non-cash operating lease expense	7,006		7,694
Deferred taxes	343		(1,217)
Other	1,144		1,250
Decrease (increase) in operating assets:
Accounts receivable, net of allowance	16,431		4,691
Due from related parties	(138)		587
Prepaid expenses and other assets	1,364		1,336
Increase (decrease) in operating liabilities:
Accrued compensation and benefits	(126,207)		(212,126)
Accounts payable, accrued expenses and other liabilities	(5,127)		(1,246)
Deferred revenue	(2,906)		(2,966)
Lease liabilities	4,692		(8,819)
Amount due pursuant to tax receivable agreement	(472)		—
Net cash provided by (used in) operating activities	(50,839)		(145,240)
Cash flows from investing activities
Purchases of fixed assets	(34,829)		(3,959)
Purchases of investments in short-term marketable debt securities	(49,733)		(115,001)
Maturities of investments in short-term marketable debt securities	140,551		—
Other	488		—
Net cash provided by (used in) investing activities	56,477		(118,960)
Cash flows from financing activities
Proceeds from the Offering, net of underwriting discount	—		36,526
Exchange of PWP OpCo Units and corresponding Class B common stock for cash using Offering proceeds	—		(36,526)
Payment of offering costs	—		(798)
Distributions to partners	(8,811)		(18,679)
Dividends paid on Class A and Class B common stock	(6,502)		(6,569)
Withholding payments for vested PWP Incentive Plan Awards	(11,809)		(6,434)
Treasury stock purchases	(22,489)		(44,740)
Net cash provided by (used in) financing activities	(49,611)		(77,220)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	2,217		(10,331)
Net increase (decrease) in cash, cash equivalents and restricted cash	(41,756)		(351,751)
Cash, cash equivalents and restricted cash, beginning of period	174,166		504,775
Cash, cash equivalents and restricted cash, end of period	$	132,410	$	153,024
Supplemental disclosure of non-cash activities
Lease liabilities arising from obtaining right-of-use lease assets	$	178	$	67,876
Accrued capital expenditures	$	6,906	$	—
Accrued dividends and dividend equivalent units on unvested PWP Incentive Plan Awards	$	3,781	$	2,721
Non-cash paydown of Partner promissory notes	$	1,547	$	2,567
Deferred tax effect resulting from exchanges of PWP OpCo Units, net of amounts payable under tax receivable agreement	$	457	$	1,061
Accrued treasury stock purchases	$	—	$	547
Pending broker-to-broker trades	$	—	$	2,364
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	4,185	$	8,925

The accompanying notes are an integral part of these condensed consolidated financial statements (unaudited)

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 1—Organization and Nature of Business

Perella Weinberg Partners and its consolidated subsidiaries, including PWP Holdings LP (“PWP OpCo”) (collectively, “PWP” and the “Company”), is a global independent advisory firm that provides strategic and financial advice to a wide range of clients. The Company’s activities as an investment banking advisory firm constitute a single business segment that provides a range of advisory services, including advice related to mission-critical strategic and financial decisions, mergers and acquisitions (“M&A”) execution, shareholder and defense advisory, financing and capital solutions advice with resources focused on restructuring and liability management, capital markets advisory, private capital placement, as well as specialized underwriting and research services primarily for the energy and related industries.

Perella Weinberg Partners (formerly known as FinTech Acquisition Corp. IV (“FTIV”)) was incorporated in Delaware on November 20, 2018 as a special purpose acquisition company for the purpose of acquiring businesses or assets through a business combination. On June 24, 2021, the Company consummated a business combination pursuant to a Business Combination Agreement among various parties, resulting in FTIV acquiring partnership interests in PWP OpCo, and PWP OpCo becoming jointly-owned by Perella Weinberg Partners, PWP Professional Partners LP (“Professional Partners”) and existing partners, as part of an umbrella limited partnership C-corporation (Up-C) structure (the “Business Combination”).

The operations of PWP OpCo are conducted through a wholly-owned subsidiary, Perella Weinberg Partners Group LP, and its subsidiaries which are consolidated in these financial statements. PWP GP LLC is the general partner that controls PWP OpCo. The limited partner interests of PWP OpCo are held by Investor Limited Partners (the “ILPs”) and Professional Partners. The Company shareholders are entitled to receive a portion of PWP OpCo’s economics through their direct ownership interests in shares of Class A common stock of PWP. The non-controlling interest owners of PWP OpCo receive economics through ownership of PWP OpCo Class A partnership units (“PWP OpCo Units”). See Note 9—Stockholders’ Equity for additional information.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements reflect the financial condition, results of operations and cash flows of the Company and have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). All intercompany balances and transactions between the consolidated subsidiaries comprising the Company have been eliminated in the accompanying condensed consolidated financial statements.

These condensed consolidated financial statements and notes thereto are unaudited, and as permitted by the interim reporting rules and regulations set forth by the Securities and Exchange Commission (the “SEC”), exclude certain financial information and note disclosures normally included in annual audited financial statements prepared in accordance with U.S. GAAP. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K. The condensed consolidated financial statements reflect all material adjustments of a normal recurring nature that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods.

Consolidation

The Company’s policy is to consolidate entities in which the Company has a controlling financial interest and variable interest entities where the Company is deemed to be the primary beneficiary. The Company is deemed to be the primary beneficiary of a variable interest entity (“VIE”) when it has both (i) the power to make the decisions that most significantly affect the economic performance of the VIE and (ii) the obligation to absorb significant losses or the right to receive benefits that could potentially be significant to the VIE. PWP is the primary beneficiary of and consolidates PWP OpCo, a VIE. As of June 30, 2023 and December 31, 2022, the net assets of PWP OpCo were $239.5 million and $237.9 million, respectively. As of June 30, 2023 and December 31, 2022, the Company did not consolidate any VIEs other than PWP OpCo.

Use of Estimates

The preparation of the condensed consolidated financial statements and related disclosures in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and the assumptions underlying these estimates are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

In preparing the condensed consolidated financial statements, management makes estimates regarding the measurement of amount due pursuant to the tax receivable agreement, measurement and timing of revenue recognition, assumptions used in the provision for income taxes, measurement of equity-based compensation, evaluation of goodwill and intangible assets, fair value measurement of financial instruments, and other matters that affect the reported amounts and disclosures of contingencies in the condensed consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

Cash includes both cash and interest-bearing money market accounts and cash equivalents are defined as highly liquid investments with original maturities of three months or less from the date of purchase. As of June 30, 2023 and December 31, 2022, the Company had no cash equivalents. The Company maintains cash with banks and brokerage firms, which from time to time may exceed federally insured limits.

Restricted cash represents cash that is not readily available for general purpose cash needs. As of June 30, 2023 and December 31, 2022, the Company had restricted cash of $2.6 million maintained as collateral for letters of credit related to certain office leases.

A reconciliation of the Company’s cash, cash equivalents and restricted cash as of June 30, 2023 and June 30, 2022 is presented below:


	June 30,
	2023		2022
Cash	$	129,761	$	150,286
Cash equivalents	—		—
Restricted cash	2,649		2,738
Cash, cash equivalents and restricted cash as shown on statements of cash flows	$	132,410	$	153,024

Foreign Currencies

In the normal course of business, the Company and its subsidiaries may enter into transactions denominated in a non-functional currency. The Company recognized net foreign exchange gains (losses) arising from such transactions of $(1.1) million and $(2.2) million during the three and six months ended June 30, 2023, respectively, and $3.8 million and $5.2 million for the three and six months ended June 30, 2022, respectively, which are included in Other income (expense) in the Condensed Consolidated Statements of Operations. In addition, the Company consolidates its foreign subsidiaries that have non-U.S. dollar functional currencies. Non-U.S. dollar denominated assets and liabilities are translated to U.S. dollars at the exchange rate prevailing at the reporting date and income, expenses, gains and losses are generally translated using the average exchange rate throughout the period. Cumulative translation adjustments arising from the translation of non-U.S. dollar denominated operations are included as a component of Accumulated other comprehensive income (loss) in the Condensed Consolidated Statements of Changes in Equity.

Recently Adopted Accounting Pronouncements

There were no recently adopted accounting pronouncements that had a material effect on the Company’s condensed consolidated financial statements.

Future Adoption of Accounting Pronouncements

No changes to U.S. GAAP that are not yet effective are expected to have a material effect on the Company’s condensed consolidated financial statements.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 3—Revenue and Receivables from Contracts with Customers

The following table disaggregates the Company’s revenue between over time and point in time recognition:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Over time	$	157,469	$	149,287	$	281,798	$	295,885
Point in time	8,076		1,817		15,173		7,095
Total revenues	$	165,545	$	151,104	$	296,971	$	302,980

Reimbursable expenses billed to clients were $1.3 million and $2.5 million for the three and six months ended June 30, 2023, respectively, and $0.9 million and $1.3 million for the three and six months ended June 30, 2022, respectively.

Remaining Performance Obligations and Revenue Recognized from Past Performance

As of June 30, 2023, the aggregate amount of the transaction price, as defined in the Accounting Standards Codification (“ASC”), allocated to performance obligations yet to be satisfied was $1.7 million, and the Company generally expects to recognize this revenue within the next 12 months. Such amounts primarily relate to the Company’s performance obligations of providing transaction-related advisory services.

The Company recognized revenue of $86.8 million and $181.0 million during the three and six months ended June 30, 2023, respectively, and $103.7 million and $223.6 million during the three and six months ended June 30, 2022, respectively, related to performance obligations that were satisfied or partially satisfied in prior periods. These amounts were recognized upon the resolution of revenue constraints and uncertainties in the respective periods and were generally related to transaction-related advisory services.

Contract Balances

As of June 30, 2023 and December 31, 2022, the Company recorded $2.2 million and $5.0 million, respectively, for contract liabilities which are presented as Deferred revenue on the Condensed Consolidated Statements of Financial Condition. The Company recognized revenue of $1.2 million and $3.4 million for the three and six months ended June 30, 2023, respectively, and $2.8 million and $4.9 million for the three and six months ended June 30, 2022, respectively, of the respective beginning deferred revenue balance, which was primarily related to transaction-related advisory services that are recognized over time.

Accounts Receivable and Allowance for Credit Losses

As of June 30, 2023 and December 31, 2022, $6.6 million and $5.1 million, respectively, of accrued revenue was included in Accounts receivable, net of allowance on the Condensed Consolidated Statements of Financial Condition. These amounts represent amounts due from clients and are recognized as revenue in accordance with the Company’s revenue recognition policies but unbilled at the end of the period.

As of June 30, 2023, certain accounts receivable in the aggregate amount of $20.7 million were individually greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients. Of that amount, all was subsequently received after June 30, 2023. As of December 31, 2022, certain accounts receivable in the aggregate amount of $28.4 million, were greater than 10% of the Company’s gross accounts receivable and were concentrated with two clients. Of that amount, all was subsequently received after year end.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The allowance for credit losses activity for the three and six months ended June 30, 2023 and 2022 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning balance	$	1,227	$	1,378	$	1,143	$	1,851
Bad debt expense	903		1,388		1,065		1,672
Write-offs	(198)		(30)		(281)		(760)
Recoveries	82		—		82		—
Foreign currency translation and other adjustments	7		(11)		12		(38)
Ending balance	$	2,021	$	2,725	$	2,021	$	2,725

Note 4—Leases

The Company leases office space and certain office equipment under operating lease agreements. See the summary below of significant new leases and lease modifications.

During the first half of 2022, the Company entered into amendments to its New York and Los Angeles office leases, as well as a new 12-year lease agreement related to the relocation of the Company’s United Kingdom (“U.K.”) office in London. The New York lease amendment extended the term of the lease by approximately 16 years with an expiration of December 31, 2039. The amended term of the Los Angeles lease is scheduled to expire on December 31, 2032. In the second quarter of 2022, the Company’s amended Los Angeles lease commenced and the amended New York lease partially commenced resulting in an increase to Lease liabilities and a corresponding increase to Right-of-use lease assets of $66.3 million. In the third quarter of 2022, the New York lease became fully commenced and the London lease also commenced, which resulted in an additional $62.3 million increase to Lease liabilities and a corresponding increase to Right-of-use lease assets.

Other information as it relates to the Company’s operating leases was as follows:


	June 30, 2023	December 31, 2022
Weighted-average discount rate - operating leases	4.6%	4.6%
Weighted-average remaining lease term - operating leases	14.7 years	14.9 years


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Operating lease cost	$	5,388	$	4,226	$	10,772	$	8,861
Variable lease cost	594		565		1,944		1,007
Sublease income - operating leases	(160)		(160)		(319)		(363)
Total net lease cost	$	5,822	$	4,631	$	12,397	$	9,505

Net cash outflows (inflows) on operating leases(1)	$	(2,857)	$	4,975	$	(466)	$	9,963

__________________

(1)Presented net of lease incentives received, including landlord contributions to tenant improvements.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

As of June 30, 2023, the maturities of undiscounted operating lease liabilities of the Company are as follows:


Years Ending:	Operating Leases		Sublease Income		Net Payments
Remainder of 2023	$	(2,881)	$	77	$	(2,958)
2024	7,454		—		7,454
2025	18,367		—		18,367
2026	19,442		—		19,442
2027	18,608		—		18,608
Thereafter	188,581		—		188,581
Total lease payments(1)	249,571		$	77	$	249,494
Less: Imputed Interest	(78,248)
Total lease liabilities	$	171,323

__________________

(1)Future lease payments are presented net of expected lease incentives, including landlord contributions to tenant improvements.

Refer to Note 16—Related Party Transactions for information regarding the Company’s subleasing arrangements.

Note 5—Intangible Assets

The following table provides the detail of the intangible assets:


	June 30, 2023
	Gross Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	47,400	$	(31,205)	$	16,195
Trade names and trademarks	18,400		(12,113)		6,287
Total	$	65,800	$	(43,318)	$	22,482


	December 31, 2022
	Gross Amount		Accumulated Amortization		Net Carrying Amount
Customer relationships	$	47,400	$	(28,835)	$	18,565
Trade names and trademarks	18,400		(11,193)		7,207
Total	$	65,800	$	(40,028)	$	25,772

The intangible assets are amortized over an average useful life of ten years. Intangible amortization expense was $1.6 million and $3.3 million for the three and six months ended June 30, 2023, respectively, and $1.6 million and $3.3 million for the three and six months ended June 30, 2022, respectively, which is included in Depreciation and amortization in the Condensed Consolidated Statements of Operations. Amortization of intangible assets held at June 30, 2023 is expected to be $6.6 million for each of the years ending December 31, 2023, 2024, 2025, and $6.0 million for the year ending December 31, 2026. These intangible assets will be fully amortized by November 30, 2026.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 6—Regulatory Requirements

The Company has a number of consolidated subsidiaries registered as broker-dealers with regulatory agencies in their respective countries, including the SEC, the Financial Industry Regulatory Authority (“FINRA”), the Canadian Investment Regulatory Organization (“CIRO,” formerly the Investment Industry Regulatory Organization of Canada or “IIROC”), the Financial Conduct Authority (“FCA”) of the U.K. and the Autorité de contrôle prudentiel et de resolution (“ACPR”) of France. None of the SEC regulated subsidiaries hold funds or securities for, or owe money or securities to clients or carry accounts of or for clients, and as such are all exempt from the SEC Customer Protection Rule (Rule 15c3-3). As of June 30, 2023 and December 31, 2022, all regulated subsidiaries were in excess of their applicable minimum capital requirements. As a result of the minimum capital requirements and various regulations on these broker dealers, a portion of the capital of each subsidiary of the Company is restricted and may be unavailable to pay its creditors.

Note 7—Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation and amortization and consist of the following as of June 30, 2023 and December 31, 2022:


	June 30, 2023		December 31, 2022
Leasehold improvements	$	65,616	$	76,389
Furniture and fixtures	11,283		15,313
Equipment	21,111		21,382
Software	5,920		6,945
Total	103,930		120,029
Less: Accumulated depreciation and amortization	(32,953)		(71,639)
Fixed assets, net	$	70,977	$	48,390

Depreciation expense related to fixed assets was $1.9 million and $3.0 million for the three and six months ended June 30, 2023, respectively, and $0.8 million and $1.8 million for the three and six months ended June 30, 2022, respectively. Amortization expense related to software development costs was $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively, and $0.3 million and $0.5 million for the three and six months ended June 30, 2022, respectively.

During the six months ended June 30, 2023, the Company disposed of certain assets, substantially all of which were fully depreciated and related to the renovations and relocation of the New York and London office space. Leasehold improvement assets capitalized during the six months ended June 30, 2023 were largely related to build-out projects associated with new or amended office leases in New York and London. Refer to Note 4—Leases for further information.

Note 8—Income Taxes

The following table summarizes the Company’s tax position for the periods presented:


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Income (loss) before income taxes	$	(22,813)		$	5,807		$	(44,947)		$	9,855
Income tax expense (benefit)	$	(4,543)		$	3,141		$	743		$	6,137
Effective income tax rate	19.9		%	54.1		%	(1.7)		%	62.3		%

The Company’s overall effective tax rate in each of the periods presented above varies from the U.S. federal statutory rate primarily because (i) a portion of the Company’s income is allocated to non-controlling interests held in PWP OpCo in which the majority of any tax liability on such income is borne by the holders of such non-controlling interests and reported outside of the condensed consolidated financial statements, (ii) a portion of the Company’s compensation expense is non-deductible for tax purposes, and (iii) during the three and six months ended June 30, 2023, the Company recognized a previously unrecognized tax benefit at one of its foreign subsidiaries, as referenced below.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

As of June 30, 2023 and December 31, 2022, the Company recorded a liability for unrecognized tax benefits of $2.8 million and $5.6 million, respectively, related to potential double taxation at certain of its foreign subsidiaries. During the three and six months ended June 30, 2023, the Company favorably resolved an inquiry from a taxing authority, which caused the Company to change its assessment of the technical merits of this tax position at one of its foreign subsidiaries. The Company does not expect there to be any material changes to uncertain tax positions within 12 months of the reporting date.

Note 9—Stockholders’ Equity

Share Repurchase Program

The Company’s Board of Directors approved a stock repurchase program on February 16, 2022 under which the Company is authorized to repurchase up to $100.0 million of the Company’s Class A common stock, and on February 8, 2023, the Board approved an incremental $100.0 million, in each case with no requirement to purchase any minimum number of shares. The manner, timing, pricing and amount of any transactions will be subject to the Company’s discretion. During the three and six months ended June 30, 2023, the Company purchased 919,379 and 2,376,683 shares, respectively, resulting in an increase of $7.7 million and $22.5 million, respectively, at cost, to Treasury stock on the Company’s Condensed Consolidated Statement of Financial Condition. During the three and six months ended June 30, 2022, the Company purchased 6,267,904 and 6,440,207 shares, respectively, resulting in an increase of $43.7 million and $45.3 million, respectively, at cost, to Treasury stock on the Company’s Condensed Consolidated Statement of Financial Condition. The 11,920,699 shares purchased since inception of the share repurchase program through June 30, 2023 were purchased at an average price per share of $7.65.

Non-Controlling Interests

Perella Weinberg Partners owns less than 100% of the economic interests in PWP OpCo with the remaining interests held by non-controlling interests. As of June 30, 2023, PWP held a 48.8% ownership interest in PWP OpCo. Professional Partners and the ILPs owned 43,778,015 PWP OpCo Units as of June 30, 2023, which represented a 51.2% non-controlling ownership interest in PWP OpCo. These PWP OpCo Units are exchangeable into PWP Class A common stock on a one-for-one basis. Class B-1 and Class B-2 common stock have de minimis economic rights.

PWP OpCo Limited Partnership Agreement

Exchange Rights

In accordance with the Amended and Restated Agreement of Limited Partnership of PWP OpCo, dated as of June 24, 2021 (as amended, restated, modified or supplemented from time to time, the “PWP OpCo LPA”), holders of PWP OpCo Units (“PWP OpCo Unitholders”) (other than the Company) may exchange these units for (i) shares of Class A common stock on a one-for-one basis or (ii) cash from an offering of shares of Class A common stock with the form of consideration determined by the Company. Concurrently with an exchange of PWP OpCo Units for shares of Class A common stock or cash by a PWP OpCo Unitholder who also holds shares of Class B common stock, such PWP OpCo Unitholder will be required to surrender to the Company a number of shares of Class B common stock equal to the number of PWP OpCo Units exchanged, and such shares will be converted into shares of Class A common stock or cash (at the Company’s option) which will be delivered to such PWP OpCo Unitholder at a conversion rate of 0.001.

On January 21, 2022, the Company closed a follow-on public offering of 3,502,033 shares of Class A common stock (the “Offering”) at a public offering price of $10.75 per share for total gross proceeds of $37.6 million, before deducting underwriting discounts and commissions. All proceeds from the Offering, net of the underwriting discounts and commissions of $0.32 per share or an aggregate of $1.1 million, were used by the Company to settle an exchange of certain PWP OpCo Units and certain shares of Class B common stock. Under the terms of the underwriting agreement, directors, officers and certain significant shareholders signed customary lockup agreements with respect to their ownership of Class A common stock. Total deferred offering costs of $1.3 million for the Offering were netted against the proceeds of the offering in Additional paid-in-capital on the Condensed Consolidated Statements of Financial Condition.

The Company settled exchanges of certain PWP OpCo Units and certain shares of Class B common stock for 786,644 shares during the six months ended June 30, 2023, and 629,591 and 966,639 shares, respectively, during the three and six months ended June 30, 2022, of Class A common stock. The exchanges created a step-up in tax basis for which the Company recorded on the Condensed Consolidated Statements of Financial Condition an increase in Deferred tax assets, net, as well as a related increase in Amounts due pursuant to the tax receivable agreement resulting in a net increase to Additional paid-in-capital. There were no exchanges during the three months ended June 30, 2023.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Note 10—Debt

As of June 30, 2023, and December 31, 2022, the Company had no outstanding debt. The Company has a revolving credit facility (the “Revolving Credit Facility”) through a credit agreement with Cadence Bank, N.A. (“Cadence Bank”), dated November 30, 2016 (as amended, the “Credit Agreement”), with an available line of credit of $50 million with up to $20 million of available incremental revolving commitments. The Company incurred $1.8 million in issuance costs related to the Credit Agreement, which were amortized as interest expense using the effective interest method over the life of the Revolving Credit Facility. Interest expense related to the Revolving Credit Facility was immaterial during the three and six months ended June 30, 2023 and June 30, 2022 and is included within Other income (expense) on the Condensed Consolidated Statements of Operations. Unamortized debt issuance costs of $0.3 million and $0.4 million, as of June 30, 2023 and December 31, 2022, respectively are reported within Prepaid expenses and other assets on the Condensed Consolidated Statements of Financial Position. On June 30, 2023, the Credit Agreement was amended to provide for Term SOFR as the replacement benchmark rate for LIBOR, such that future SOFR-based loans will accrue interest at Term SOFR plus (i) a 0.10%-0.25% per annum spread based on interest payment frequency (with an adjusted Term SOFR floor of 0.25%) and (ii) a fixed rate of 2.00% per annum.

Note 11—Warrants

Warrant Exchange

As of June 30, 2023 and December 31, 2022, the Company had no warrants outstanding. On August 23, 2022, the Company concluded an offer to holders of its outstanding warrants which provided such holders the opportunity to receive 0.20 shares of the Company’s Class A common stock in exchange for each warrant tendered by such holders. This offer coincided with a solicitation of consents from holders of the public warrants to amend the warrant agreement (together, the “Warrant Exchange Offer”). Further information regarding the Company’s warrants is described in Note 12—Warrants in the Notes to Consolidated Financial Statements in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Prior to Warrant Exchange

Prior to the Warrant Exchange Offer, each warrant entitled the registered holder to purchase one share of Class A common stock at an exercise price of $11.50 per share. The warrants met the definition of a derivative under ASC Topic 815, Derivatives and Hedging, and as such, the Company recorded these warrants as liabilities at fair value upon the closing of the Business Combination in accordance with ASC Topic 820, Fair Value Measurement, with subsequent changes in their respective fair values recorded in Change in fair value of warrant liabilities on the Condensed Consolidated Statements of Operations.

Note 12—Equity-Based Compensation

Further information regarding the Company’s equity-based compensation awards is described in Note 13—Equity-Based Compensation in the Notes to Consolidated Financial Statements in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Concurrent with the Business Combination, the Company adopted the Perella Weinberg Partners 2021 Omnibus Incentive Plan (the “PWP Incentive Plan”), which establishes a plan for the granting of incentive compensation awards measured by reference to PWP Class A common stock (“PWP Incentive Plan Awards”). Under the PWP Incentive Plan, the Company may grant options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance restricted stock units (“PSUs”), stock bonuses, other stock-based awards, cash awards or any combination of the foregoing. The PWP Incentive Plan established a reserve for a one-time grant of awards that occurred in connection with the Business Combination (the “Transaction Pool Reserve”) as well as a reserve for general purpose grants (the “General Share Reserve”).

During the third quarter of 2021, in connection with the Business Combination, the Company granted awards (the “Business Combination Awards”) in the form of (i) restricted stock units out of the Transaction Pool Reserve consisting of (a) PSUs that only vest upon the achievement of both service and market conditions and (b) RSUs that vest upon the achievement of service conditions as well as (ii) PSUs out of the General Share Reserve to certain executives and a small number of other partners that vest upon the achievement of both service and market conditions.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The Company grants RSU awards out of the General Share Reserve from time to time, which vest upon the achievement of service conditions. Additionally, during the six months ended June 30, 2023, the Company granted PSUs from the General Share Reserve that vest upon the achievement of both service and market conditions. During the six months ended June 30, 2023 and 2022, the Company granted 7,857,726 and 6,449,163 awards, respectively, from the General Share Reserve at a weighted average grant date fair value of $9.61 and $9.90 per award, respectively.

Prior to the Business Combination, Professional Partners granted certain equity-based awards to partners providing services to PWP OpCo (the “Legacy Awards”). In connection with the Business Combination, existing Legacy Awards were canceled and replaced by converting each limited partner’s capital interests in Professional Partners attributable to PWP OpCo into (“Professional Partners Awards”).

As of June 30, 2023, total unrecognized compensation expense related to all unvested equity-based awards was $347.7 million, which is expected to be recognized over a weighted average period of 2.5 years.

The following table presents the expense related to awards that were recorded in Professional fees and components of Equity-based compensation included on the Condensed Consolidated Statements of Operations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Professional fees
PWP Incentive Plan Awards	$	368	$	530	$	963	$	1,045
Total Professional fees	$	368	$	530	$	963	$	1,045

Equity-based compensation
PWP Incentive Plan Awards	$	23,805	$	17,902	$	51,142	$	40,082
Legacy Awards(1)	3,224		3,338		6,449		6,677
Professional Partners Awards(1)	15,183		15,187		32,292		30,558
Total Equity-based compensation	$	42,212	$	36,427	$	89,883	$	77,317

Income tax benefit of equity-based awards	$	3,065	$	2,328	$	6,624	$	5,567

__________________

(1)The vesting of these awards does not dilute Perella Weinberg Partners shareholders relative to Professional Partners. As such the related equity-based compensation expense is fully attributed to non-controlling interests.

Note 13—Other Compensation and Benefits

Compensation and benefits includes, but is not limited to, salaries, bonuses (discretionary awards and guaranteed amounts), severance, deferred compensation, benefits and payroll taxes. In all instances, compensation expense is accrued over the requisite service period.

Benefit Plans

Certain employees participate in employee benefit plans, which consists of defined contribution plans including (i) profit-sharing plans qualified under Section 401(k) of the Internal Revenue Code and (ii) a U.K. pension scheme for U.K. employees and (iii) a Germany pension plan for employees in Germany. Expenses related to the Company’s employee benefit plans were $1.7 million and $3.4 million for the three and six months ended June 30, 2023, respectively, and $1.5 million and $2.9 million for the three and six months ended June 30, 2022, respectively, and are included in Compensation and benefits in the Condensed Consolidated Statements of Operations.

Business Realignment

During the second quarter of 2023, the Company began a review of the business, which will result in employee reductions in order to improve compensation alignment and to provide greater flexibility to advance strategic opportunities (the “Business Realignment”).

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

In conjunction with the Business Realignment and for each of three and six months ended June 30, 2023, the Company incurred expenses related to separation and transition benefits of $3.8 million and the acceleration of equity-based compensation amortization (net of forfeitures) of $1.3 million, recorded in Compensation and benefits and Equity-based compensation, respectively, on the Condensed Consolidated Statements of Operations. Approximately $18 million of additional expense is expected to be incurred during the second half of 2023. This estimate is based on certain assumptions, and actual results may differ materially if unanticipated costs are incurred related to the Business Realignment.

As of June 30, 2023, the $3.3 million obligation related to the Business Realignment was recorded in Accrued compensation and benefits on the Condensed Consolidated Statements of Financial Condition, which reflected payments of $0.5 million made during the six months ended June 30, 2023.

Note 14—Net Income (Loss) Per Share Attributable to Class A Common Shareholders

The calculations of basic and diluted net income (loss) per share attributable to Class A common shareholders are presented below:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Net income (loss) attributable to Perella Weinberg Partners – basic	$	359	$	9,265	$	(4,764)	$	18,159

Dilutive effect from assumed exchange of PWP OpCo Units, net of tax	(16,980)		(9,319)		(43,859)		(18,647)

Net income (loss) attributable to Perella Weinberg Partners – diluted	$	(16,621)	$	(54)	$	(48,623)	$	(488)
Denominator:
Weighted average shares of Class A common stock outstanding – basic	42,743,611		44,584,181		42,531,895		45,247,373

Weighted average number of incremental shares from assumed exchange of PWP OpCo Units	43,778,015		46,104,690		44,034,180		46,705,704

Weighted average shares of Class A common stock outstanding – diluted	86,521,626		90,688,871		86,566,075		91,953,077
Net income (loss) per share attributable to Class A common shareholders
Basic	$	0.01	$	0.21	$	(0.11)	$	0.40
Diluted	$	(0.19)	$	0.00	$	(0.56)	$	(0.01)

Basic and diluted net income (loss) per share attributable to Class B common shareholders has not been presented as these shares are entitled to an insignificant amount of economic participation.

The Company uses the treasury stock method to determine the potential dilutive effect of unvested PWP Incentive Plan Awards and outstanding warrants (prior to the Warrant Exchange Offer) and the if-converted method to determine the potential dilutive effect of exchanges of PWP OpCo Units into Class A common stock. The Company adjusts net income (loss) attributable to Class A common shareholders under both the treasury stock method and if-converted method for the reallocation of net income (loss) between Class A common shareholders and non-controlling interests that result upon the assumed issuance of dilutive shares of Class A common stock as if the issuance occurred as of the beginning of the applicable period.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

The following table presents the weighted average potentially dilutive shares that were excluded from the calculation of diluted net income (loss) per share under the treasury stock method or if-converted method, as applicable, because the effect of including such potentially dilutive shares was antidilutive for the period presented:


	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Warrants(1)	n/a	—	n/a	—

PWP Incentive Plan Awards	275,508	41,654	1,001,289	168,435
Total	275,508	41,654	1,001,289	168,435

__________________

(1)Prior to the Warrant Exchange Offer on August 23, 2022, the warrants were out-of-the-money which resulted in no potentially dilutive shares under the treasury stock method. For the three and six months ended June 30, 2023, the warrants were not outstanding, and thus, they are not applicable. Refer to Note 11—Warrants for further information regarding the Warrant Exchange Offer.

Note 15—Fair Value Measurements and Investments

Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs:

Level 1 – Unadjusted quoted prices are available in active markets for identical financial instruments as of the reporting date.

Level 2 – Pricing inputs are observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3 – Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the instrument.

As of June 30, 2023 and December 31, 2022, the fair values of cash, restricted cash, accounts receivable, due from related parties, accounts payable and certain accrued liabilities approximate their carrying amounts due to the short-term nature of these items.

Perella Weinberg Partners

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(Dollars in Thousands, Except Per Share Amounts and Where Otherwise Noted)

Fair Value of Financial Instruments

The following table summarizes the categorization and fair value estimate of the Company’s financial instruments that are measured on a recurring basis pursuant to the above fair value hierarchy levels as of June 30, 2023 and December 31, 2022:

June 30, 2023

Level 1

Level 2

Level 3

Total

Financial asset

Perella Weinberg Partners [PWP] Filings
10-Q	[2023-08-04]
10-Q	[2023-05-04]
10-K	[2023-02-28]
10-Q	[2022-11-07]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-03-11]
S-1	[2021-12-21]
10-Q	[2021-11-05]
10-Q	[2021-08-12]
S-1	[2021-07-15]
10-Q	[2021-05-24]
10-K	[2021-03-15]
10-Q	[2020-11-16]
S-1	[2020-09-08]