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INVESTMENTS AND FAIR VALUE DISCLOSURES
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
INVESTMENTS AND FAIR VALUE DISCLOSURES
4. INVESTMENTS AND FAIR VALUE DISCLOSURES
The following table presents the components of the Company’s investments:
(dollars in thousands)March 31,
2025		December 31,
2024
Preferred equity investment, at fair value$268,263 $267,169 
Equity investments in the Company’s products, at fair value
73,276 96,956 
Equity investments in the Company’s products, equity method62,252 63,465 
Loans and deferred purchase price receivable, at amortized cost (includes $48,586 and $48,094 of investments in the Company’s products, respectively)
54,643 54,186 
Investments in the Company’s CLOs, at fair value7,702 5,169 
Total$466,136 $486,945 
Fair Value Measurements Categorized within the Fair Value Hierarchy
Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the products it manages hold a variety of assets and liabilities, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these assets and liabilities. The fair value of these assets and liabilities may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of assets and liabilities that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material.
GAAP prioritizes the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of assets and liabilities and the specific characteristics of the financial assets and liabilities. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.
Financial assets and liabilities measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:
•Level I – Quoted prices that are available in active markets for identical financial assets or liabilities as of the reporting date.
•Level II – Valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly market observable as of the measurement date. These financial assets and liabilities exhibit higher levels of liquid market observability as compared to Level III financial assets and liabilities.
•Level III – Pricing inputs that are unobservable in the market and includes situations where there is little, if any, market activity for the financial asset or liability. The inputs into the determination of fair value of financial assets and liabilities in this category may require significant management judgment or estimation. The fair value of these financial assets and liabilities may be estimated using a combination of observed transaction prices, independent pricing services, models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable (e.g., cash flows, implied yields).
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial asset or liability when the fair value is based on unobservable inputs.
The tables below summarizes the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:
March 31, 2025
(dollars in thousands)Level ILevel IILevel IIITotal
Investments, at Fair Value
Preferred equity investment$— $— $268,263 $268,263 
Equity investments in the Company’s products— 73,276 — 73,276 
CLOs— — 7,702 7,702 
Total Assets, at Fair Value$— $73,276 $275,965 $349,241 
Liabilities, at Fair Value
TRA liability$— $— $97,228 $97,228 
Earnout liability— 526 305,680 306,206 
Total Liabilities, at Fair Value$— $526 $402,908 $403,434 
December 31, 2024
(dollars in thousands)Level ILevel IILevel IIITotal
Investments, at Fair Value
Preferred equity investment$— $— $267,169 $267,169 
Equity investments in the Company’s products— 96,956 — 96,956 
CLOs— — 5,169 5,169 
Total Assets, at Fair Value$— $96,956 $272,338 $369,294 
Liabilities, at Fair Value
TRA liability$— $— $108,257 $108,257 
Earnout liability— 529 167,912 168,441 
Total Liabilities, at Fair Value$— $529 $276,169 $276,698 
Reconciliation of Fair Value Measurements Categorized within Level III
Unrealized gains and losses on the Company’s assets and liabilities carried at fair value on a recurring basis are included within other loss in the consolidated statements of operations. There were no transfers in or out of Level III. The following table sets forth a summary of changes in the fair value of the Level III measurements for the three months ended March 31, 2025 and 2024:
Three Months Ended March 31, 2025Level III Assets
(dollars in thousands)Preferred EquityCLOsTotal
Beginning balance$267,169 $5,169 $272,338 
Purchases(1)
8,081 3,986 12,067 
Net losses(6,987)(1,453)(8,440)
Ending Balance$268,263 $7,702 $275,965 
Change in net unrealized losses on assets still recognized at the reporting date$(6,987)$(1,453)$(8,440)
(1)Preferred equity purchases includes $8.1 million of cumulative unpaid cash preferential dividends that compound quarterly and are payable when declared.
Three Months Ended March 31, 2024Level III Assets
(dollars in thousands)CLOsTotal
Beginning balance$2,521 $2,521 
Net losses(144)(144)
Ending Balance$2,377 $2,377 
Change in net unrealized losses on assets still recognized at the reporting date$(144)$(144)
    
Three Months Ended March 31, 2025Level III Liabilities
(dollars in thousands)TRA LiabilityEarnout LiabilityTotal
Beginning balance$108,257 $167,912 $276,169 
Issuances— 140,083 140,083 
Settlements(14,556)— (14,556)
Net (gains) losses3,527 (2,315)1,212 
Ending Balance$97,228 $305,680 $402,908 
Change in net unrealized (gains) losses on liabilities still recognized at the reporting date$3,527 $(2,315)$1,212 
Three Months Ended March 31, 2024Level III Liabilities
(dollars in thousands)TRA LiabilityWarrant LiabilityEarnout LiabilityTotal
Beginning balance$116,398 $22,600 $92,119 $231,117 
Settlements(8,551)— (82,875)(91,426)
Net (gains) losses(536)14,700 402 14,566 
Ending Balance$107,311 $37,300 $9,646 $154,257 
Change in net unrealized (gains) losses on liabilities still recognized at the reporting date$(536)$14,700 $402 $14,566 
Valuation Methodologies for Fair Value Measurements Categorized within Levels II and III
Preferred Equity Investment
The fair value of the preferred equity investment is determined using a discounted cash flow model, which estimates the present value of future expected cash flows. The key inputs in this model include the projected cash flows attributable to the preferred interest and the discount rate. The expected cash flows are based on management’s forecasts and projections, taking into consideration market conditions and redemption of the preferred interest. The discount rate applied reflects the time value of money and the risks associated with the preferred interest, which includes assumptions about the risk-free rate, credit risk, and market volatility. This investment is generally classified as Level III.
Equity Investments in the Company’s Products
The fair value of equity investments in the Company’s products is determined based on the published net asset value of these investments, as such values are the price at which contributions and redemptions are effectuated on a monthly basis. These investments are generally classified as Level II. The remaining balance is generally redeemable on a monthly basis at the Company’s option.
CLOs
The fair value of CLOs are determined based on inputs from independent pricing services. These investments are classified as Level III. The Company obtains prices from independent pricing services that utilize discounted cash flows, which take into account unobservable significant inputs, such as yield, prepayments and credit quality.
TRA Liability
The TRA related to the Dyal Acquisition is considered contingent consideration and is measured at fair value based on discounted future cash flows. The remaining TRA liability on the Company’s consolidated statements of financial condition is not measured at fair value.
Earnout Liability
As of March 31, 2025, the earnout liability was comprised of contingent consideration payable for the Wellfleet Earnouts, Prima Earnouts, KAM Earnouts and Atalaya Earnouts, as well as the contingent consideration payable for the IPI Acquisition. As of December 31, 2024, the earnout liability was comprised of contingent consideration payable for the Wellfleet Earnouts, Prima Earnouts, KAM Earnouts and Atalaya Earnouts.
The Company uses a Monte Carlo simulation model to value certain earnouts where revenue milestones need to be achieved before a payment is due. These models consider current progress towards revenue targets, as well as forecasts, to simulate a range of outcomes based on market inputs such as volatility. For other earnouts, the Company uses a discounted cash flow model, which estimates the present value of future expected cash flows. The key inputs in this model include the projected cash flows attributable to the respective earnout and the discount rate.
Quantitative Inputs and Assumptions for Fair Value Measurements Categorized within Level III
The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of March 31, 2025:
(dollars in thousands)Fair ValueValuation TechniqueSignificant Unobservable InputsRangeWeighted AverageImpact to Valuation from an Increase in Input
Assets
Preferred equity$268,263 Discounted cash flowDiscount Rate13 %-13%13 %Decrease
CLOs 7,702 Discounted cash flowYield10 %-15%11 %Decrease
Total Assets, at Fair Value$275,965 
Liabilities
TRA liability$97,228 Discounted cash flowDiscount Rate13 %-13%13 %Decrease
Earnout liability:
180,364 Monte Carlo SimulationVolatility21 %-37%24 %Increase
125,316 Discounted cash flowDiscount Rate0 %-6%0 %Decrease
305,680 
Total Liabilities, at Fair Value$402,908 
The following table summarizes the quantitative inputs and assumptions used for the Company’s Level III measurements as of December 31, 2024:
(dollars in thousands)Fair ValueValuation TechniqueSignificant Unobservable InputsRangeWeighted AverageImpact to Valuation from an Increase in Input
Assets
Preferred equity$267,169 Discounted cash flowDiscount Rate13 %-13%13 %Decrease
CLOs 5,169 Discounted cash flowYield10 %-16%12 %Decrease
Total Assets, at Fair Value$272,338 
Liabilities
TRA liability$108,257 Discounted cash flowDiscount Rate13 %-13%13 %Decrease
Earnout liability:
163,001 Monte Carlo SimulationVolatility20 %-37%29 %Increase
4,911 Discounted cash flowDiscount Rate6 %-6%6 %Decrease
167,912 
Total Liabilities, at Fair Value$276,169 
Fair Value of Other Financial Instruments
As of March 31, 2025, the fair value of the Company’s debt obligations was approximately $3.1 billion compared to a carrying value of $3.2 billion, of which $2.3 billion of the fair value would have been categorized as Level II within the fair value hierarchy and the remainder as Level III. As of December 31, 2024, the fair value of the Company’s debt obligations was approximately $2.5 billion, compared to a carrying value of $2.6 billion, of which $2.3 billion of the fair value would have been categorized as Level II within the fair value hierarchy and the remainder as Level III.
As of March 31, 2025 and December 31, 2024, the fair value of the portion of the TRA liability that is not carried at fair value in the Company’s consolidated balance sheets was approximately $541.2 million and $535.7 million, respectively, compared to a carrying value of $1.3 billion as of each date, and such fair value measurements are categorized as Level III within the fair value hierarchy.
Management estimates that the carrying value of the Company’s other financial instruments, which are not carried at fair value, approximated their fair values as of March 31, 2025 and December 31, 2024, respectively, and such fair value measurements are categorized as Level III within the fair value hierarchy.