Form S-1

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0001193125-12-395546.txt : 20130424 0001193125-12-395546.hdr.sgml : 20130424 20120918170649 ACCESSION NUMBER: 0001193125-12-395546 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 62 FILED AS OF DATE: 20120918 DATE AS OF CHANGE: 20121113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Silvercrest Asset Management Group Inc. CENTRAL INDEX KEY: 0001549966 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 455146560 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-183963 FILM NUMBER: 121097935 BUSINESS ADDRESS: STREET 1: 1330 AVENUE OF THE AMERICAS, 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-649-0600 MAIL ADDRESS: STREET 1: 1330 AVENUE OF THE AMERICAS, 38TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 S-1 1 d411733ds1.htm FORM S-1 Form S-1

As filed with the Securities and Exchange Commission on September 18, 2012

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Silvercrest Asset Management Group Inc.

(Exact name of each registrant as specified in its charter)


Delaware	6282	45-5146560
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

David J. Campbell

General Counsel

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Floyd I. Wittlin

Christina E. Melendi

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

(212) 705-7000

Robert D. Goldbaum

David S. Huntington

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

CALCULATION OF REGISTRATION FEE


Title of each class of securities to be registered	Amount to be Registered(1)	Proposed Maximum Offering Price Per Share	Proposed Maximum Aggregate Offering Price(2)		Amount of Registration Fee
Class A common stock, par value, $0.01 per share			$	60,000,000	$	6,876

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)	Including shares of Class A common stock which may be purchased by the underwriters to cover over-allotments, if any.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2012

PRELIMINARY PROSPECTUS

Shares

LOGO

Silvercrest Asset Management Group Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of Silvercrest Asset Management Group Inc. We are offering shares of Class A common stock.

Prior to this offering, there has been no public market for our Class A common stock. We expect the initial public offering price of our Class A common stock will be between $ and $ per share. We will apply to list our Class A common stock on The Nasdaq Global Market under the symbol “SAMG.”

We intend to use a portion of the net proceeds of this offering to purchase limited partnership units of Silvercrest L.P. from certain of its limited partners and will not retain any of these proceeds.

The underwriters have the option to purchase up to an additional shares of our Class A common stock from us within 30 days of the date of this prospectus at the initial public offering price, less the underwriting discounts and commissions.

Concurrently with the consummation of this offering, we will issue shares of our Class B common stock, each share of which initially entitles the holder to one vote per share, to the continuing limited partners of our subsidiary, Silvercrest L.P. These Class B stockholders, who will hold % of the combined voting power of our common stock immediately after this offering, will enter into a stockholders’ agreement pursuant to which they will agree to vote their shares of common stock together, as determined by the Executive Committee of Silvercrest L.P., on all matters submitted to a vote of our common stockholders.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our Class A common stock involves risks. See “Risk Factors” on page 15.


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds, before expenses, to Silvercrest Asset Management Group Inc.	$	$

⁽¹⁾	See “Underwriting” beginning on page 158.

Sandler O’Neill + Partners, L.P., on behalf of the underwriters, expects to deliver the shares of Class A common stock on or about , 2012, subject to customary closing conditions.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


SANDLER O’NEILL + PARTNERS, L.P.			RAYMOND JAMES

The date of this prospectus is , 2012.

TABLE OF CONTENTS


	Page

PROSPECTUS SUMMARY		1

RISK FACTORS		15

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE		41

USE OF PROCEEDS		54

DIVIDEND POLICY		55

CAPITALIZATION		56

DILUTION		57

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		58

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION		63

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		75

BUSINESS		100

REGULATORY ENVIRONMENT		116

MANAGEMENT		119

COMPENSATION DISCUSSION AND ANALYSIS		125

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		141

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		143

DESCRIPTION OF CAPITAL STOCK		145

SHARES ELIGIBLE FOR FUTURE SALE		151

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S		153

UNDERWRITING		158

LEGAL MATTERS		161

EXPERTS		161

WHERE YOU CAN FIND MORE INFORMATION		161

INDEX TO FINANCIAL STATEMENTS		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered to you. Neither we nor the underwriters have authorized anyone to provide you with additional or different information. When you make a decision about whether to participate in this offering, you should not rely on any information other than the information contained in this prospectus or any such free writing prospectus. This document may only be used where it is legal to sell these securities. The information in this prospectus may only be accurate as of the date of this prospectus.

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your decision to invest in our Class A common stock. This summary is qualified in its entirety by the more detailed information, and the consolidated financial statements and notes thereto, included elsewhere in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding to invest in our Class A common stock. Unless otherwise indicated, “Silvercrest” refers solely to Silvercrest Asset Management Group Inc. The terms “we,” “us” and “our” refer to Silvercrest L.P. and its consolidated subsidiaries when referring to events occurring prior to this offering, and these terms refer to Silvercrest Asset Management Group Inc. and its consolidated subsidiaries when referring to events occurring after this offering.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. As of June 30, 2012, our assets under management were $10.7 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance and high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of June 30, 2012, our top 375 client relationships had an average size of $28 million and represented approximately 98% of our assets under management. Our top 50 relationships averaged $151 million in size as of June 30, 2012.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Our organic growth has been complemented by selective hiring and by four completed acquisitions, which have expanded not only our assets under management, but also our professional ranks, geographic footprint and service capabilities. Our annual client retention rate has averaged 98% since 2006 and, as shown below, the compound annual growth rate in assets under management since inception is 49%.

LOGO

Our fees for our investment advisory services, non-proprietary services and family office and related administrative services are structured to align our financial incentives with those of our clients to ensure they receive unconflicted advice. The vast majority of our fees are for discretionary asset management, and are based on the value of the assets we manage for our clients. These fee revenues increase if our clients’ assets grow in value; these fee revenues decrease if our clients’ assets decline in value. Unlike our discretionary asset management fees, our fees for family office services and related administrative services are generally not based on or correlated to market values of our clients’ assets. For these services, we generally charge our clients a negotiated fee based on the scope of work requested. These services create strong client relationships and contribute meaningfully to our record of client retention.

As of June 30, 2012, approximately 94% of our assets under management were held for our individual clients and 6% for our institutional clients. Based on the strong investment results of our proprietary equity strategies, we have begun to attract a significant amount of institutional investor interest. The following chart summarizes the performance of each of our principal equity strategies relative to their appropriate benchmarks since inception.

LOGO

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. We believe our track record of superior performance and our trusted reputation within the wealth management industry and among our clients is solely attributable to the talent and pedigree of our employees. As of June 30, 2012, we had 87 employees, including 37 employee-owners.

Our Market Opportunity

We operate in the multi-family office (MFO)/registered investment adviser (RIA) channel of private wealth management, the fastest growing sector of the market according to Cerulli Associates. The aggregate assets of managers in this channel have doubled from 2005 to 2010, largely due to market share gains primarily from large financial institutions. Our client relationships with ultra-high net worth individuals currently represent less than 1% of U.S. families with investable assets over $25 million. The Spectrem Group estimates there were 1.1 million households in the United States with a net worth of over $5 million in 2011 and 107,000 with a net worth in excess of $25 million. Even modest improvements in our penetration of this market will lead to significant further growth.

The 2008 financial crisis created an ongoing opportunity for independent smaller firms to attract assets from their larger competitors. The press has documented the erosion of client trust that has occurred at large financial institutions due to inherent conflicts of interest and lack of transparency. In delivering conflict-free advice within a completely transparent fee relationship, we are well-positioned to achieve further market share gains.

Key Competitive Strengths

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and all of our investment decisions are made in the best interests of our clients. All of our fees are fully disclosed and transparent to our clients who have an unrestricted right to accept or reject them.

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Demonstrated Track Record of Growing Assets Under Management. We have expanded our business through a combination of organic growth and acquired growth. Our value proposition to clients has enabled us to win market share from competitors. Since 2004, we have completed four strategic acquisitions of separate registered investment advisers and we have integrated and rebranded their operations into our company. These factors, combined with strong investment returns, have produced a compound annual growth rate in total client assets of 49% since our inception.

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Long-Term Track Record of Superior Investment Performance. We have a proven ability to generate excellent investment performance through both our asset allocation work on behalf of clients as well as through security selection. We have a team-based approach that utilizes the same body of research to manage all of our proprietary equity strategies, which we believe generates superior, more consistent returns over time. Through June 30, 2012, each of our proprietary equity strategies has outperformed its respective benchmark since inception.

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Loyal, Diverse Base of Clients. As a result of our focus on delivering outstanding investment performance combined with highly personalized client service, we have developed significant long-term relationships with a large majority of our clients. Since 2006, our annual client retention rate has averaged 98%. As of June 30, 2012, our clients were represented in 43 states and the District of Columbia and no single client represented more than 5% of our total revenue.

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Dedicated, Proven Senior Management. Our entire business is overseen by an Executive Committee comprising our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and General Counsel. At present, no one on the Executive Committee has direct client or investment responsibility and, as a result, each member of the Executive Committee commits his full resources to managing the business and executing our growth strategy.

Our Growth Strategy

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Continuing To Support Our Organic Growth. We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm that can deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown on average in excess of $1 billion per year, consisting of the market appreciation of our assets under management as well as an increase in the amount of assets we manage for both new and existing clients, without a commensurate increase in headcount. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients through client referrals, as well as through our recently created business development team charged with identifying and then creating customized solicitations for newly formed wealth.

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Continuing Our Successful Track Record of Acquired Growth. From our inception, our organic growth has been complemented by selective hiring and strategic acquisitions. We expect to continue to acquire compatible wealth management companies, and recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We currently intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest to be closer to both our clients and to prospective clients.

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Continuing To Accelerate Our Institutional Growth. After four years of effort focused on cultivating relationships with institutional investment consultants, we are now regularly making new business presentations to institutional investors, including public pension funds, endowments, foundations, and their consultants. We are now on the “approved” lists of certain prominent institutional investment consultants and we have begun to win mandates in our equity strategies. In addition, we have been hired to manage a new equity mutual fund which is presently in the early stages of its national marketing campaign. We expect this trend to continue once it is publicly known that these and other institutions

have engaged us to manage significant portfolios for them and we will actively pursue new business opportunities in this channel.

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Continuing to Uphold And Increase Our Brand Awareness. We have invested heavily to build, maintain and extend our brand. With limited resources, we have created a focused national advertising campaign and have invested in efforts to receive media coverage in some of the nation’s most prestigious national publications as well as in industry journals and newsletters. Following this offering we expect to increase our spending in both advertising and public relations as part of our effort to further build our brand and to increase the market’s awareness of our company, particularly in geographic markets that we expect to enter.

Risks Facing our Company

Our business is subject to numerous risks that are described more fully in the section entitled “Risk Factors” on page 15.

We derive a substantial portion of our revenues from a limited number of our strategies. As a result, a portion of our operating results depends upon the performance of those strategies and our ability to retain client assets. If a significant portion of the investors in our larger strategies decide to withdraw their investments or terminate their investment management agreements for any reason, our revenues from those strategies would decline, which would have a material adverse effect on our results of operations and financial condition.

We face additional challenges that may impact our growth strategy and our ability to compete. A significant portion of our assets under management are or may be derived from a small number of clients. If any such clients withdraw all or a portion of their assets under management, our business would be significantly affected, which would negatively impact our advisory fees and could have a material adverse effect on our results of operations and financial condition.

Further, volatile market conditions could adversely affect our business in many ways, including reducing the value of our assets under management and causing clients to withdraw funds, either of which could materially reduce our revenues and adversely affect our financial condition.

Our Structure and Reorganization

On July 11, 2011, Silvercrest was incorporated as a Delaware corporation. Silvercrest GP LLC is currently the general partner of Silvercrest L.P., which is the managing member of the operating subsidiary, Silvercrest Asset Management Group LLC. See “The Reorganization and Our Holding Company Structure—Overview” for a description of the reorganization and the structure of our company. Immediately prior to the consummation of this offering, the members of Silvercrest GP LLC will receive a distribution of the general partner interests of Silvercrest L.P. owned by Silvercrest GP LLC as part of the reorganization. Once acquired, these interests that were distributed to the members of Silvercrest GP LLC will be automatically converted into limited partnership interests. Subsequent to the distribution of the general partner interests of Silvercrest L.P. to its members and the conversion of those interests into limited partnership interests, Silvercrest GP LLC will transfer its rights as general partner to Silvercrest and will be dissolved. Thereafter, Silvercrest will become the general partner of Silvercrest L.P. As part of the reorganization, the partnership agreement of Silvercrest L.P. will be amended to provide that the limited partnership interests will be converted to Class B units and the general partnership interests will be converted to Class A units.

investors in Silvercrest L.P., and such Class B units acquired by us will be immediately converted into Class A units. These third-party investors will therefore no longer hold any portion of Silvercrest L.P’s Class B units or any of our Class B common stock subsequent to the reorganization. Following the reorganization and this offering, we will own all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) will be held by 37 of our principals. See “The Reorganization and Our Holding Company Structure” for a description of the reorganization and the structure of our company.

Set forth below is our holding company structure and anticipated ownership immediately after the consummation of the reorganization and this offering (assuming no exercise of the over-allotment option).

LOGO

(1)	Each share of class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

Each share of Class A common stock is entitled to one vote per share. Class A common stockholders will have 100% of the rights of all classes of our capital stock to receive distributions, except that Class B common stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(3)

Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units, which will represent the right to receive % of the distributions made by Silvercrest L.P. and deferred equity units exerciseable for Class B units, which represent the right to receive % of the distributions made by Silvercrest L.P. (or % and %, respectively, of the distributions made by Silvercrest L.P. if the underwriters exercise their option to purchase additional shares of Class A common stock in full).

(4)	We will hold Class A units (or Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full), which will represent the right to receive % of the distributions made by Silvercrest L.P.

We are a Delaware corporation and the address of our principal executive offices is 1330 Avenue of the Americas, 38th Floor, New York, New York 10019. Our telephone number is (212) 649-0600 and our website is www.silvercrestgroup.com. Our website and the information included therein are not part of this prospectus.

The Offering

Class A common stock offered by us

shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares.

Class A common stock to be outstanding immediately after this offering

shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares. If all Class B units of Silvercrest L.P. were to be exchanged for shares of our Class A common stock, shares of Class A common stock would be outstanding immediately after this offering.

Class B common stock to be outstanding immediately after this offering

shares of Class B common stock. Shares of our Class B common stock have voting rights but no economic rights (including no rights to dividends or distribution upon liquidation) and will be issued to our principals in an amount equal to the number of Class B units of Silvercrest L.P. that our principals hold following the reorganization. When a Class B unit is exchanged for a share of Class A common stock, the corresponding share of Class B common stock will be cancelled. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.”

Use of proceeds

We will receive net proceeds from our sale of Class A common stock in this offering of approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares), based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus), in each case after deducting assumed underwriting discounts and estimated offering expenses payable by us. We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B Units will be determined by the public offering price of our Class A common stock in this offering, less the amount of offering expenses incurred by us on a per share basis. We intend to use the remaining net proceeds of this offering, including any proceeds from the exercise of the underwriters’ option to purchase additional shares, for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions.

Voting rights and stockholders’ agreement

One vote per share for Class A common stock and Class B common stock. Our principals who hold shares of Class B common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote, while employed by us, the shares of Class A common stock and Class B common stock that they hold in accordance with the decision of the Executive Committee of Silvercrest L.P., consisting initially of G. Moffett Cochran, Richard R. Hough III, Scott A. Gerard and David J. Campbell. The vote of each member of

the Executive Committee will be weighted based on the number of Class B units owned by the member relative to the number of Class B units held by all members of the Executive Committee at the time of a vote. See “The Reorganization and Our Holding Company Structure—Voting Rights of Class A and Class B Stockholders” and “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders.”

Class B unit exchange

Pursuant to the terms of the second amended and restated limited partnership agreement of Silvercrest L.P. and an exchange agreement to be entered into between us and the holders of the Class B units, each Class B unit will be exchangeable for a share of our Class A common stock, subject to the exchange timing and volume limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” All Class B units held by a principal will be exchanged automatically for shares of our Class A common stock upon the termination of employment of such principal, other than in the case of retirement, subject to certain limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

Resale and registration rights

Pursuant to a resale and registration rights agreement that we will enter into with the holders of Class B units, we will agree to use our best efforts to file a registration statement for the sale of the shares of our Class A common stock that are issuable upon exchange of Class B units as soon as practicable after we become eligible to file a registration statement on Form S-3, which we expect to be one year after the consummation of this offering. We expect to cause that registration statement to be declared effective by the Securities and Exchange Commission, or the SEC, as soon as practicable thereafter. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement” for a description of the timing and manner limitations on resales of these shares of our Class A common stock.

Dividend policy

Upon completion of this offering, we will have no material assets other than our ownership of Class A units of Silvercrest L.P. Accordingly, our ability to pay dividends will depend on distributions from Silvercrest L.P. We intend to cause Silvercrest L.P. to make distributions to us with available cash generated from its subsidiaries’ operations in an amount sufficient to cover dividends. If Silvercrest L.P. makes such distributions, the holders of its Class B units will be entitled to receive equivalent distributions on a pro rata basis.

The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors and may be discontinued at any time. In determining the amount of any future dividends, our board of directors will take into account any legal or contractual limitations, our actual and anticipated future earnings, cash flow, debt service and capital requirements and the amount of distributions to us from Silvercrest L.P.

Following this offering, we intend to pay quarterly cash dividends. See “Dividend Policy.”

Tax Receivable Agreement

We will enter into a tax receivable agreement with the current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized.

The tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed upon value of payments remaining to be made under the agreement. The tax receivable agreement will automatically terminate with respect to our obligations to a principal if a principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement, and no further payments will be made to such principal under the tax receivable agreement. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement.”

Listing symbol

“SAMG.”

Unless otherwise noted, the number of shares of Class A common stock outstanding after this offering and other information based thereon in this prospectus excludes:

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shares of Class A common stock, which may be issued upon the exercise of the underwriters’ option to purchase additional shares;

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shares of Class A common stock reserved for issuance upon exchange of the Class B units that will be outstanding immediately after this offering;

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shares of Class A common stock reserved for issuance upon exchange of the corresponding number of Class B units reserved for issuance upon the exercise of deferred equity units and performance units that have been granted as of the date of this prospectus; and

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shares of Class A common stock reserved for issuance under our new 2012 Equity Incentive Plan for which awards exchangeable for shares of Class A common stock will be made at the time of this offering.

Risk Factors

You should consider carefully the information set forth in the section entitled “Risk Factors” beginning on page 15 and all other information contained in this prospectus before investing in our Class A common stock.

Summary Selected Historical and Pro Forma Consolidated Financial Data

The following table sets forth the summary selected historical consolidated financial data of Silvercrest L.P., which is deemed to be our predecessor for accounting purposes, as of the dates and for the periods indicated. The historical selected consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009, and the consolidated statements of financial position data as of December 31, 2011 and 2010 of Silvercrest L.P. have been derived from, and are qualified in their entirety by, the historical audited consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus. The consolidated statements of financial position data as of December 31, 2009 have been derived from financial statements not included in this prospectus. The summary selected consolidated statements of operations data for the six months ended June 30, 2012 and the summary selected consolidated statement of financial condition data as of June 30, 2012 and 2011 have been derived from the Silvercrest L.P. unaudited condensed consolidated financial statements included elsewhere in this prospectus. The summary selected consolidated statement of financial condition data as of June 30, 2011 have been derived from the Silvercrest L.P. unaudited condensed consolidated statement of financial condition as of June 30, 2011, not included in this prospectus. These unaudited condensed consolidated financial statements have been prepared on substantially the same basis as our audited consolidated financial statements and include all adjustments that we consider necessary for a fair presentation of our results of operations and financial condition for the periods and as of the dates presented. Our results for the six months ended June 30, 2012 are not necessarily indicative of our results for a full fiscal year.

The unaudited pro forma consolidated financial data for Silvercrest Asset Management Group Inc. give effect to all transactions described under “Unaudited Pro Forma Consolidated Financial Information,” including the reorganization and this offering.

You should read the following summary selected historical consolidated financial data of Silvercrest L.P. and the unaudited pro forma financial information of Silvercrest, together with “Business,” “Selected Historical Consolidated Financial Data,” “Unaudited Pro forma Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements and related notes of Silvercrest L.P. and subsidiaries appearing elsewhere in this prospectus. In the following tables (including the footnotes thereto), dollars are in thousands, except as otherwise indicated.


	Historical Silvercrest L.P.															Pro Forma Silvercrest
	Year Ended December 31,									Six Months Ended June 30,						Year Ended December 31,	Six Months Ended June 30,
	2011			2010			2009			2012			2011			2011	2012
Statements of operations data:
Revenue:
Management and advisory fees	$	37,869		$	32,442		$	29,341		$	22,327		$	18,539
Performance fees and allocations		85			548			96			16			31
Family office services		4,833			3,841			3,097			2,444			2,209

Total revenue		42,787			36,831			32,534			24,787			20,779

Expenses:
Compensation and benefits		17,492			16,528			15,630			9,600			8,474
General and administrative		10,849			9,459			13,006			5,208			4,424
Impairment charges		—			—			1,691			—			—

Total expenses		28,341			25,987			30,327			14,808			12,898

Income before net loss from investment activities of Silvercrest Funds and other income (expenses)		14,446			10,844			2,207			9,979			7,881

Other income (expense):
Gain on extinguishment of debt		—			—			3,934			—			—
Gain on settlement with former LongChamp shareholder		—			—			1,470			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—
Change in value of options granted to equity holders		—			2			134			—			—
Interest income		187			231			213			86			92
Interest expense		(164	)		(241	)		(467	)		(206	)		(75	)
Other (expense) income		(210	)		30			—			61			(176	)
Equity income (loss) from investments		950			1,241			274			—			—

Total other income (expense)		729			755			5,558			(59	)		(159	)

Income (loss) before non-controlling interests in income of consolidated entities and (provision) benefit for income taxes:		15,175			11,599			7,765			9,920			7,722

Non-controlling interests in income of consolidated entities		—			—			—			—			—

Income before provision for income taxes		15,175			11,599			7,765			9,920			7,722
(Provision) benefit for income taxes		(566	)		(657	)		321			(516	)		(178	)

Net income	$	14,609		$	10,942		$	8,086		$	9,404		$	7,544

Selected statements of financial position data:
Total assets	$	45,262		$	33,079		$	29,964		$	40,419		$	29,867
Notes payable		4,809			2,957			7,120			4,414			2,284
Total liabilities		15,751			12,490			14,893			12,741			8,970
Redeemable partners’ capital		85,177			45,619			34,220			91,092			70,173
Partners’ deficit		(55,666	)		(25,030	)		(19,148	)		(63,414	)		(49,278	)

Selected unaudited operating data:
Assets under management (billions of dollars) (1)	$	10.1		$	9.2		$	8.8		$	10.7		$	10.6
Adjusted EBITDA (2)	$	10,839		$	9,068		$	6,449		$	6,776		$	5,580
Adjusted EBITDA margin (3)		25.3%			24.6%			19.8%			27.3%			26.9%

(1)	Reflected as of the last day of the period.

(2)

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with Adjusted EBITDA, a non-GAAP financial measure of earnings. EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Year Ended December 31,									Six Months Ended June 30,
	2011			2010			2009			2012			2011
Reconciliation of non-GAAP financial measures:
Net income	$	14,609		$	10,942		$	8,086		$	9,404		$	7,544
Provision (benefit) for income taxes		566			657			(321	)		516			178
Interest expense		164			241			467			206			75
Interest income		(187	)		(231	)		(213	)		(86	)		(92	)
Partner incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(4,448	)		(3,449	)
Depreciation and amortization		1,469			1,379			1,531			955			645
Equity-based compensation		1,060			583			—			806			496
Other adjustments (B)		1,933			670			(460	)		(577	)		183

Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	6,776		$	5,580

(A)

Partner incentive allocations have historically been treated as distributions of net income and recorded when paid. Upon the completion of the reorganization and this offering, we will account for partner incentive payments as an expense in our statement of operations and have reflected the related adjustments in our pro forma financial information. Accordingly, this will have the effect of increasing compensation expense relative to the amounts that have been recorded historically in our financial statements. See “Unaudited Pro Forma Financial Information.”

(B)

Other adjustments consist of the following:


	Year Ended December 31,							Six Months Ended June 30,
	2011		2010		2009			2012			2011
Loss on forgiveness of notes receivable (a)	$	34	$	508	$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—		(3,934	)		—			—
Gain on settlement with former LongChamp shareholders (b)		—		—		(926	)		—			—
Write-off of LongChamp revenue (b)		—		64		557			—			—
Loss on sub-lease (c)		150		—		—			(42	)		192
Lease abandonment charge (d)		—		—		1,154			(662	)		—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—		1,691			—			—


	Year Ended December 31,								Six Months Ended June 30,
	2011		2010			2009			2012			2011
Client reimbursement	$	—	$	—		$	1,132		$	—		$	—
Fund redemption costs (f)		827		—			—			9			—
IPO professional fees		578		—			—			103			—
Milbank acquisition costs (g)		222		—			—			15			—
Severance		69		100			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		—			—
Other (i)		53		—			—			—			(9	)

Total other adjustments	$	1,933	$	670		$	(460	)	$	(577	)	$	183

(a)

Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

In 2009, we entered into a settlement agreement with the former owners of the LongChamp Group, Inc., or LGI, to close the business of LGI, which was acquired by us in 2007. All agreements between us and the former owners of LGI were terminated. LGI was ultimately wound down in 2009. For further explanation of the closing of the LGI business, see Note 10 to the audited consolidated financial statements of Silvercrest L.P. and subsidiaries included elsewhere in this prospectus.

(c)

Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)

Reflects a charge and subsequent reversal for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and reoccupied in May 2012. A portion of this space is subleased through September 29, 2017.

(e)

Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)

Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)

Reflects the legal and accounting fees associated with the closing of the Milbank Winthrop & Co., Inc. acquisition that were expensed in 2011. Also reflects expenses related to relocating Milbank personnel and operations to our headquarters that were incurred during the six months ended June 30, 2012.

(h)

Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)

Represents professional fees related to the Milbank acquisition and a Silvercrest fund.

(3)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

RISK FACTORS

You should carefully consider the following risk factors in addition to the other information presented in this prospectus before investing in our Class A common stock. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations or cash flow. If any of the following risks and uncertainties actually occur, you may lose all or part of your original investment.

Risks Related to our Investment Performance and the Financial Markets

Volatile market conditions could adversely affect our business in many ways, including by reducing the value of our assets under management and causing clients to withdraw funds, either of which could materially reduce our revenues and adversely affect our financial condition.

The fees we earn under our investment management agreements with clients are based on the value of our assets under management. The prices of the securities held in the portfolios we manage and, therefore, our assets under management, may decline due to any number of factors beyond our control, including, among others, a declining stock or bond market, general economic downturn, political uncertainty or acts of terrorism. In connection with the severe market dislocations of 2008 and early 2009, the value of our assets under management declined substantially due primarily to the significant decline in stock prices worldwide. In future periods of difficult market conditions we may experience accelerated client redemptions or withdrawals if clients move assets to investments they perceive as offering greater opportunity or lower risk, which could further reduce our assets under management in addition to market depreciation. The economic outlook remains uncertain and we continue to operate in a challenging business environment. If market conditions, or actions taken by clients in response to market conditions, cause a decline in our assets under management, it would result in lower investment management fees and other revenue. If our revenues decline without a commensurate reduction in our expenses, our net income will be reduced and our business will be negatively affected.

If market conditions improve greatly, driving the prices of the securities in our clients’ accounts higher, it may lead to withdrawals or redemptions. In many cases, we advise only a portion of our clients’ complete financial portfolio. This is because many clients prefer to diversify their portfolio among more than one asset manager or investment type. As to those clients, if the portion of their portfolio held by us increases significantly, it may become too large a percentage of their overall portfolio, and they may withdraw assets from our management and invest it elsewhere, thereby rebalancing their overall portfolio and returning their allocation to us to its prior level.

If our investment strategies perform poorly, clients could withdraw their assets and we could suffer a decline in our assets under management and/or become the subject of litigation, either of which would reduce our earnings.

The performance of our investment strategies is critical in retaining existing client assets as well as attracting new client assets. If our investment strategies perform poorly for any reason on an absolute basis or relative to other investment advisers, or the rankings of mutual funds we sub-advise decline, our earnings could decline because:

•

our existing clients may withdraw funds from our investment strategies or terminate their relationships with us, or investors in the mutual funds we sub-advise may redeem their investments, which would cause the revenues that we generate from investment management and other fees to decline; or

•

third-party financial intermediaries, advisers or consultants may rate our investment products poorly, which may lead our existing clients to withdraw funds from our investment strategies or reduce asset inflows from these third parties or their clients.

clients. In addition, while we seek to deliver long-term value to our clients, volatility may lead to under-performance in the near term, which could adversely affect our results of operations.

While clients do not generally have legal recourse against us solely on the basis of poor investment results, if our investment strategies perform poorly, we are more likely to become subject to litigation brought by dissatisfied clients. In addition, to the extent clients are successful in claiming that their losses resulted from fraud, gross negligence, willful misconduct, breach of contract or other similar misconduct, these clients may have remedies against us and/or our investment professionals under the federal securities laws and/or state law.

The historical returns of our existing investment strategies may not be indicative of their future results or of the future results of investment strategies we may develop in the future.

We have presented the historical returns of our existing investment strategies under “Business—Our Business Model.” The historical returns of our strategies should not be considered indicative of the future results of these strategies or of the results of any other strategies that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The historical performance presented herein is as of June 30, 2012 and for periods then ended. The performance we achieve as of a subsequent date and for a subsequent period may be higher or lower and the difference may be material. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, such as in 2008, the first quarter of 2009 and the second quarter of 2010, general economic and market conditions have negatively affected investment opportunities and our strategies’ returns. These negative conditions may occur again, and in the future, we may not be able to identify and invest in profitable investment opportunities within our current or future strategies.

We derive a substantial portion of our revenues from a limited number of our strategies.

As of June 30, 2012, $6.8 billion of our assets under management were concentrated in discretionary managed accounts, representing approximately 81% of our investment management fees for the six months ended June 30, 2012. In addition, $0.9 billion of our assets under management were invested in private partnerships, as of June 30, 2012, representing approximately 19% of our investment management fees for the six months ended June 30, 2012. As a result, a substantial portion of our operating results depends upon the performance of a limited number of investment strategies used to manage those discretionary managed accounts and private partnerships, and our ability to retain client assets. If a significant portion of the investors in our larger strategies decided to withdraw their investments or terminate their investment management agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those strategies would decline, which would have a material adverse effect on our results of operations and financial condition.

A significant portion of our assets under management are or may be derived from a small number of clients, the loss of which could significantly reduce our management fees and have a material adverse effect on our results of operations.

Certain of our strategies are or may derive a significant portion of their total assets under management from assets of a single client or a small number of clients. If any such clients withdraw all or a portion of their assets under management, our business would be significantly affected, which would negatively impact our management fees and could have a material adverse effect on our results of operations and financial condition.

We may not be able to maintain our current fee structure as a result of poor investment performance, competitive pressures or as a result of changes in our business mix, which could have a material adverse effect on our profit margins and results of operations.

been a general trend toward lower fees in the investment management industry, and some of our investment strategies, because they tend to invest in larger-capitalization companies and were designed to have larger capacity and to appeal to larger clients, have lower fee schedules. In order to maintain our fee structure in a competitive environment, we must be able to continue to provide clients with investment returns and service that our clients believe justify our fees. We may not succeed in providing the investment returns and service that will allow us to maintain our current fee structure. If our investment strategies perform poorly, we may be forced to lower our fees in order to retain current, and attract additional, assets to manage. Furthermore, if a larger part of our assets under management are invested in our larger capacity, lower fee strategies, our revenue could be adversely affected.

We derive most of our revenues from assets under management that may be reduced at any time by our clients.

We derive our revenues principally from our assets under management, which may be reduced by our clients, or investors in the mutual funds we sub-advise, at any time. A client may reduce his assets under management with us by re-allocating all or any portion of the assets that we manage away from us at any time with little or no notice. In addition, investors in the mutual funds we advise can redeem their investments in those funds at any time without prior notice. A client may also reduce his assets under management with us through the termination of his investment advisory agreement with us. Our investment advisory agreements are terminable by our clients upon short notice or no notice. These investment management agreements and client relationships may be terminated or not renewed for any number of reasons. The decrease in revenues that could result from a reduction in assets under management or the termination of a material client relationship or group of client relationships could have a material adverse effect on our business.

The long-only, equity investment focus of the majority of our strategies exposes us to greater risk than certain of our competitors whose investment strategies may also include non-equity securities or hedged positions.

Our largest equity investment strategies hold long positions in publicly-traded equity securities of companies across a wide range of market capitalizations, geographies and industries. Accordingly, under market conditions in which there is a general decline in the value of equity securities, each of our equity strategies is likely to perform poorly on an absolute basis. Aside from our privately managed funds and funds of funds, we do not have strategies that invest in privately-held companies or take short positions in equity securities, which could offset some of the poor performance of our long-only, equity strategies under such market conditions. Even if our investment performance remains strong during such market conditions relative to other long-only, equity strategies, investors may choose to withdraw assets from our management or allocate a larger portion of their assets to non-long-only or non-equity strategies. In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our assets under management and related revenues more volatile.

The performance of our investment strategies or the growth of our assets under management may be constrained by the unavailability of appropriate investment opportunities or if we close certain of our investment strategies.

that sufficiently appropriate investment opportunities may be unavailable is influenced by a number of factors, including general market conditions, but is particularly acute with respect to our Small Cap and SMID Cap strategies that focus on small-cap investments, and is likely to increase as our assets under management increase, particularly if these increases occur very rapidly. If we are unable to identify appropriate investment opportunities in which to invest client assets, our growth and results of operations may be negatively affected.

Our investment strategies may not obtain attractive returns in the short-term or during certain market periods.

Our products are best suited for investors with long-term investment horizons. In order for our classic value investment approach to yield attractive returns, we must typically hold securities for an average of over three years. Therefore, our investment strategies may not perform well during short periods of time. In addition, our strategies may not perform well during points in the economic cycle when value-oriented stocks are relatively less attractive. For instance, during the late stages of an economic cycle, investors may purchase relatively expensive stocks in order to obtain access to above average growth, as was the case in the late 1990s. Value-oriented strategies may also experience weakness during periods when the markets are focused on one investment thesis or sector. For example, in the past two years, the markets have deemed many businesses producing commodities and basic materials to be sound investments, regardless of their prices, based on the thesis that the rapid growth of such large economies as China and India means that there will be constant shortfalls in the supply of the goods produced by these companies. We would not invest in these companies if their stocks were not inexpensively priced, thus foregoing potentially attractive returns during the periods when these companies’ stock prices are continuing to advance.

Our investment approach may underperform other investment approaches, which may result in significant withdrawals of client assets or client departures or a reduction in our assets under management.

Even when securities prices are rising generally, portfolio performance may be affected by our investment approach. We employ a long-term investment approach in all of our investment strategies. This investment approach has outperformed the market in some economic and market environments and underperformed it in others. In particular, a prolonged period in which the growth style of investing outperforms the value style may cause our investment strategy to go out of favor with some clients, consultants or third-party intermediaries. Poor performance relative to peers, coupled with changes in personnel, extensive periods in particular market environments or other difficulties may result in significant withdrawals of client assets, client departures or a reduction in our assets under management.

Our investment process requires us to conduct extensive fundamental research on any company before investing in it, which may result in missed investment opportunities and reduce the performance of our investment strategies.

We take a considerable amount of time to complete the in-depth research projects that our investment process requires before adding any security to our portfolio. Our process requires that we take this time in order to understand the company and the business well enough to make an informed decision whether we are willing to own a significant position in a company whose current earnings are below its historic norms and that does not yet have earnings visibility. However, the time we take to make this judgment may cause us to miss the opportunity to invest in a company that has a sharp and rapid earnings recovery. Any such missed investment opportunities could adversely impact the performance of our investment strategies.

Our Core International Equity Strategy invests principally in the securities of non-U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks.

As of June 30, 2012, our Core International Equity Strategy, which invests in companies domiciled outside of the United States, accounted for approximately 0.6% of our assets under management. In addition, some of our other strategies also invest on a more limited basis in securities of non-U.S. companies. Fluctuations in foreign

currency exchange rates could negatively affect the returns of our clients who are invested in these strategies. In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our assets under management, which, in turn, could result in lower revenue since we report our financial results in U.S. dollars.

Investments in non-U.S. issuers may also be affected by tax positions taken in countries or regions in which we are invested, as well as political, social and economic uncertainty, particularly as a result of the recent decline in economic conditions. Declining tax revenues may cause governments to assert their ability to tax the local gains and/or income of foreign investors (including our clients), which could adversely affect clients’ interests in investing outside the United States. Many financial markets are not as developed, or as efficient, as the U.S. financial markets, and, as a result, those markets may have limited liquidity and higher price volatility. Liquidity also may be adversely affected by political or economic events within a particular country, and our ability to dispose of an investment also may be adversely affected if we increase the size of our investments in smaller non-U.S. issuers. Non-U.S. legal and regulatory environments, including financial accounting standards and practices, also may be different, and there may be less publicly available information about such companies. These risks could adversely affect the performance of our Core International Equity Strategy and may be particularly acute in the emerging or less developed markets in which we invest.

Risks Related to our Key Professionals

The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business.

We depend on the skills and expertise of our investment professionals and our success depends on our ability to retain the key members of our senior management and investment teams, who possess substantial experience in investing and have been primarily responsible for the historically strong investment performance we have achieved. In particular, we depend on the portfolio managers. As of June 30, 2012, $3.5 billion, representing 33% of our assets under management, were managed using one of our proprietary equity strategies. Our five largest strategies as of June 30, 2012 were Large Cap, Multi Cap, Small Cap, Equity Income and Focused Value which represented 12%, 7%, 6%, 5% and 1% of assets under management, respectively. Each of these five strategies has been managed by its current portfolio manager since its inception at Silvercrest.

Because of the long tenure and stable track record of our portfolio managers, our clients may attribute the investment performance we have achieved to these individuals. While we have generally experienced very few departures among our portfolio managers, there can be no assurance that this stability will continue in the future. The departure of one of a strategy’s portfolio managers could cause clients to withdraw funds from the strategy, which would reduce our assets under management, our investment management and other fees and, if we were not able to reduce our expenses sufficiently, our net income, and these reductions could be material to our business. The departure of one of a strategy’s portfolio managers also could cause clients to refrain from allocating additional funds to the strategy or delay such allocation of additional funds until a sufficient track record under a new portfolio manager or managers has been established. This would have a negative effect on the future growth of our assets under management and, therefore, our results of operations.

We also depend on the contributions of our senior management team led by G. Moffett Cochran, our Chairman and Chief Executive Officer, who co-founded our company and has been the primary architect of our business strategy, as well as other members of our senior management team. Mr. Cochran is 61 years old and has no current plans to retire. In 2002, he had an islet cell tumor removed from his pancreas and in 2005, he was found to have neuroendocrine tumors on his liver. Since 2005, Mr. Cochran has been under the treatment of a physician and has continuously performed his duties as Chief Executive Officer of our company on a full-time basis. There can be no assurance, however, that Mr. Cochran will not reduce his responsibilities or retire earlier than expected if his health condition were to worsen in the future. In addition, our senior marketing and client service personnel have direct contact with our clients and their consultants and advisors and other key individuals

within each of our distribution channels. The loss of any of these key professionals could limit our ability to successfully execute our business strategy, prevent us from sustaining the historically strong investment performance and adversely affect our ability to retain or attract client assets.

If any member of our senior management or a key investment professional were to join a competitor or form a competing company, some of our current clients or other prominent members of the investing community could choose to invest with that competitor rather than us.

Any of our investment or management professionals may resign at any time, join our competitors or form a competing company. Although the unvested shares of Class A common stock and Class B units held by our principals are subject to forfeiture, and the vested shares of Class A common stock and Class B units held by our principals are subject to repurchase, if the principal voluntarily resigns or retires and competes with us while employed or during the 12-month period following termination of employment, these forfeiture and repurchase provisions may not be enforceable or may not be enforceable to their full extent. We do not carry “key man” insurance on any of our key investment professionals that would provide us with proceeds in the event of the death or disability of any of the key members of our investment or management teams.

The professional reputations, expertise in investing and client relationships of our senior management and key investment professionals are critical elements to executing our business strategy and attracting and retaining clients. Accordingly, the retention of our senior management and key investment professionals is crucial to our future success. There is no guarantee that they will not resign, join our competitors or form a competing company. The terms of the second amended and restated limited partnership agreement of Silvercrest L.P. restrict each of the principals of Silvercrest L.P. from soliciting our clients or other employees during the term of their employment with us and for 18 months thereafter. In addition to the legal rights and remedies available to us to enforce these restrictive covenants, the penalty for a breach of these restrictive covenants or, if a principal voluntarily resigns or retires from our company, for competing with us during the 12-month period following termination of employment, will be the forfeiture of all of the unvested shares of Class A common stock and Class B units of the offending party and his or her permitted transferees and, at the option of Silvercrest L.P., the required sale to Silvercrest L.P. of all of the vested Class B units of the offending party and his or her permitted transferees at a purchase price equal to the lesser of (i) the aggregate capital account balance of the offending party and his or her permitted transferees in Silvercrest L.P. and (ii) the purchase price paid by the offending party to first acquire the Class B units, and, at our option, the required sale to us of all of the Class A common stock collectively held by the offending party and his or her permitted transferees at a purchase price equal to the purchase price paid by the offending party to first acquire the Class B units for which such shares of Class A common stock had been exchanged. Although we also would seek specific performance of these restrictive covenants, there can be no assurance that we would be successful in obtaining this relief. Further, after this post-employment restrictive period, we will not be able to prohibit a departed professional from soliciting our clients or employees. If any of our principals were to join a competitor or form a competing company, some of our current clients or other prominent members of the investing community could choose to invest with that competitor rather than us which could have a negative impact on our results of operations.

Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future.

overall compensation levels to remain commensurate with amounts paid to our key employees in the past, we may not be successful in designing and implementing an attractive compensation model. Any cost-reduction initiative or adjustments or reductions to compensation could negatively impact our ability to retain key personnel. In addition, changes to our management structure, corporate culture and corporate governance arrangements, including the changes associated with, and resulting from, our reorganization and on becoming a public company, could negatively impact our ability to retain key personnel. If we are unable to retain key personnel, our results of operations may be negatively affected.

Risks Related to the Regulatory Environment in which We Operate

We are subject to extensive regulation that imposes numerous obligations on our business.

We are subject to extensive regulation in the United States, primarily at the federal level, including regulation by the SEC under the Investment Advisers Act of 1940, as amended, or the Advisers Act, by the U.S. Department of Labor under the Employee Retirement Income Security Act of 1974, or ERISA, and Nasdaq. The Advisers Act imposes numerous obligations on investment advisers including advertising, recordkeeping and operating requirements, disclosure obligations and prohibitions on fraudulent activities. In addition, we regularly rely on exemptions from various requirements of the Securities Act of 1933, as amended, or the Securities Act, the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Investment Company Act of 1940, as amended, or the Investment Company Act, and ERISA. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to be revoked or challenged or otherwise become unavailable to us, we could be subject to regulatory action or third-party claims, and our business could be materially and adversely affected.

In the future, we may further expand our business outside of the United States in such a way or to such an extent that we may be required to register with additional foreign regulatory agencies or otherwise comply with additional non-U.S. laws and regulations that do not currently apply to us and with respect to which we do not have compliance experience. Our lack of experience in complying with any such non-U.S. laws and regulations may increase our risk of becoming party to litigation and subject to regulatory actions.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was signed into law on July 21, 2010. While we do not at this time believe that the Dodd-Frank Act will cause us to reconsider our business model, it does appear that certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act will be determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the Commodity Futures Trading Commission, or CFTC, jointly issued final rules that require investment advisers registered with the SEC that advise one or more private funds, as well as commodity pool operators and commodity trading advisors registered with the CFTC, to provide certain information on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information, which will be used by the Financial Stability Oversight Council for purposes of assessing the systemic risk posed by private funds and by the SEC and CFTC for other purposes. In light of this rulemaking, we will have to file a Form PF, providing all necessary information. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

administrative proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in some of our business activities. The requirements imposed by our regulators, other than the Exchange Act and the Nasdaq rules, are generally designed to ensure the integrity of the financial markets and to protect clients and other third parties who deal with us, and are generally not designed to protect our stockholders. Moreover, recent extreme volatility events in the U.S. equities markets have led to heightened scrutiny of sophisticated trading technology and execution methods. Consequently, these regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements.

The regulatory environment in which we operate is subject to continual change, and regulatory developments designed to increase oversight may adversely affect our business.

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. We believe that significant regulatory changes in our industry are likely to continue, which is likely to subject industry participants to additional, more costly and generally more detailed regulation. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries already have resulted in increased scrutiny of the industry and new rules and regulations for investment advisers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of the recent economic downturn, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, the CFTC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct business.

We could be subject to regulatory investigations, which could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

The failure by us to comply with applicable laws or regulations could result in fines, suspensions of individual employees or other sanctions. Even if an investigation or proceeding did not result in a fine or sanction or the fine or sanction imposed against us or our employees by a regulator were small in monetary amount, the adverse publicity relating to an investigation, proceeding or imposition of these fines or sanctions could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business.

compensation to a government entity for two years, subject to very limited exceptions, after the investment adviser, its senior executives or its personnel involved in soliciting investments from government entities have made contributions to certain candidates and officials in a position to influence the hiring of an investment adviser by such government entity. Advisers are required to implement compliance policies designed, among other matters, to track contributions by certain of the adviser’s employees and engagements of third parties that solicit government entities (and political action committees controlled by such persons) and to keep certain records in order to enable the SEC to determine compliance with the rule. Additionally, California enacted legislation that requires placement agents (including in certain cases employees of investment managers) who solicit funds from California state retirement systems, such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, to register as lobbyists, thereby becoming subject to increased reporting requirements and prohibited from receiving contingent compensation for soliciting investments from California state retirement systems. There also has been similar rulemaking in New York and other states. Such additional regulations may require the attention of senior management and may result in fines if any of our funds are deemed to have violated any regulations, thereby imposing additional expenses on us. Any failure on our part to comply with these rules could cause us to lose compensation for our advisory services or expose us to significant penalties and reputational damage.

Risks Related to Our Growth

Our efforts to establish new investment teams and strategies may be unsuccessful and could negatively impact our results of operations and our reputation.

As part of our growth strategy, we may seek to take advantage of opportunities to add new investment teams that invest in a way that is consistent with our philosophy of offering high value-added investment strategies. To the extent we are unable to recruit and retain investment teams that will complement our existing business model, we may not be successful in further diversifying our investment strategies and client assets, any of which could have a material adverse effect on our business and future prospects. In addition, the costs associated with establishing a new team and investment strategy initially will exceed the revenues they generate. If any such new strategies perform poorly and fail to attract sufficient assets to manage, our results of operations will be negatively impacted. A new strategy’s poor performance also may negatively impact our reputation and the reputation of our other investment strategies within the investment community.

We may enter into new lines of business, make strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties for our business.

The second amended and restated limited partnership agreement of Silvercrest L.P. permits us to enter into new lines of business, make future strategic investments or acquisitions and enter into joint ventures. As we have in the past, and subject to market conditions, we may grow our business through increasing assets under management in existing investment strategies, pursue new investment strategies, which may be similar or complementary to our existing strategies or be wholly new initiatives, consummating acquisitions of other investment advisers or entering into joint ventures.

To the extent we make strategic investments or acquisitions, enter into strategic relationships or joint ventures or enter into new lines of business, we will face numerous risks and uncertainties, including risks associated with the required investment of capital and other resources and with combining or integrating operational and management systems and controls and managing potential conflicts. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business generates insufficient revenues, or produces investment losses, or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected, and our reputation and business may be harmed. In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under our control.

We may be unable to successfully execute strategic investments or acquisitions or enter into joint ventures, and we may fail to successfully integrate and operate new investment teams, which could limit our ability to grow assets under management and adversely affect our results of operations.

We have not at this time entered into any binding agreements with respect to any strategic investments or acquisitions or any strategic relationships or joint ventures and we cannot assure you that we will actually make any additional acquisitions. Our ability to execute our acquisition strategy will depend on our ability to identify new lines of businesses or new investment teams that meet our investment criteria and to successfully negotiate with the owners/managers who may not wish to give up control of the target fund general partner or managing member, as the case may be. We cannot be certain that we will be successful in finding new investment teams or investing in new lines of business or that they will have favorable operating results following our acquisitions.

Moreover, our future acquisition strategies may focus on privately-held asset managers that pursue single strategy specialized investments. This approach presents challenges, including the lack of publicly available information, and greater risks than are generally associated with transactions with more traditional asset managers. The asset managers that we may acquire and their financial information may not be subject to the reporting requirements and other rules that govern public companies, including the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley. Moreover, such asset managers may not be subject to regulation under the Advisers Act at the time we acquire them. As a result, such asset managers could be more susceptible to irregular accounting or fraudulent practices. The targets we seek to acquire in the future may have shorter operating histories than us on which to estimate future performance and may not have significant or any operating revenues. They also may have a lower capitalization and fewer resources (including cash) and be more vulnerable to failure than traditional asset managers. We will be required to rely on the ability of the professionals employed by us to obtain adequate information to evaluate the manager affiliates we seek to acquire.

In addition, our ability to acquire asset managers on favorable teams and successfully integrate and operate them is subject to the following significant risks:

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we may acquire asset managers that are not accretive to our financial results upon acquisition, and we may not successfully manage acquired funds to meet our expectations;

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we may be unable to generate sufficient management fees from operations or obtain the necessary debt or equity financing to consummate an acquisition on favorable terms or at all;

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agreements for the acquisition of such asset managers will typically be subject to customary conditions to closing, including satisfactory completion of due diligence investigations and negotiation of ancillary documentation, and we may spend significant time and money on potential acquisitions that we do not consummate;

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the process of acquiring or pursuing the acquisition of such asset managers may divert the attention of our management team from the operations of our business and our initial funds;

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we will need to attract, hire, train, supervise and manage new employees as a result of the acquisitions of asset managers;

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we may acquire such asset managers without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as claims against the former owners of the asset managers and claims for indemnification by the asset managers, limited partners and others indemnified by the former owners of the managers of the funds; and

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we may be unable to quickly and efficiently integrate new acquisitions into our existing operations.

If we cannot complete acquisitions of such asset managers on favorable terms, or integrate or operate new investment teams to meet our goals or expectations, our financial condition, results of operations, cash flow, trading price of our common stock and ability to satisfy any debt service obligations and to pay distributions could be adversely affected. Additionally, any acquisitions that we make generally will not be subject to our stockholders’ consent. These factors increase the risk of investing in our common stock.

The due diligence process that we undertake in connection with strategic investments or acquisitions or entry into joint ventures may not reveal all facts that may be relevant in connection with an investment, which could subject us to unknown liabilities.

In connection with strategic investments, acquisitions or entry into joint ventures, we conduct due diligence that we deem reasonable and appropriate based on the facts and circumstances applicable to such investments, acquisitions or joint ventures and expect to use our resources and oversight to enhance the risk management functions and diligence of our business and any investments going forward. When conducting due diligence, we have been required and will be required to evaluate important and complex business, financial, tax, accounting and legal issues. Outside consultants, legal advisers, accountants and investment banks may be involved in the due diligence process in the future in varying degrees depending on the type of investment. When conducting due diligence and making an assessment regarding a strategic investment, acquisition or joint venture, we have and will continue to rely on the resources available to us, including information provided by the target of the strategic investment, acquisition or joint venture, in some circumstances, third-party investigations. The due diligence investigations that we have carried out or will carry out with respect to any strategic investment, acquisition or joint venture may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating the strategic investment, acquisition or joint venture, which could subject us to unknown liabilities that could adversely affect our profitability, financial condition and results of operations. Moreover, such investigations will not necessarily result in the strategic investment, acquisition or joint venture being successful.

Risk Related Generally to our Business

Our failure to comply with investment guidelines set by our clients and limitations imposed by applicable law could result in damage awards against us and a loss of our assets under management, either of which could adversely affect our results of operations or financial condition.

Certain clients who retain us to manage assets on their behalf specify guidelines regarding investment allocation and strategy that we are required to follow in managing their portfolios. In addition, the boards of mutual funds we sub-advise generally establish similar guidelines regarding the investment of assets in those funds. We are also required to invest the mutual funds’ assets in accordance with limitations under the Investment Company Act, and applicable provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Our failure to comply with any of these guidelines and other limitations could result in losses to clients which, depending on the circumstances, could result in our obligation to make clients whole for such losses. If we believed that the circumstances did not justify a reimbursement, or clients believed the reimbursement we offered was insufficient, they could seek to recover damages from us, withdraw assets from our management or terminate their investment advisory agreement with us. Any of these events could harm our reputation and adversely affect our business.

Operational risks, including the threat of cyber attacks, may disrupt our business, breach our clients’ security, result in losses or limit our growth.

Although we have back-up systems and cyber security and consumer protection measures in place, our back-up procedures, cyber defenses and capabilities in the event of a failure, interruption, or breach of security may not be adequate. Insurance and other safeguards we use may not be available or may only partially reimburse us for our losses related to operational failures or cyber attacks. In addition, we may choose to reimburse a client in the event of a trading error or under other circumstances, even if we are not legally required to do so, and any such reimbursements could adversely affect our results of operations.

After we become a public company and as our client base, number of investment strategies and/or physical locations increase, developing and maintaining our operational systems and infrastructure and protecting our systems from cybersecurity attacks and threats may become increasingly challenging and costly, which could constrain our ability to expand our businesses. Any upgrades or expansions to our operations and/or technology to accommodate increased volumes of transactions or otherwise may require significant expenditures and may increase the probability that we will suffer system interruptions and failures. We also depend substantially on our New York office where a majority of our employees, administration and technology resources are located, for the continued operation of our business. Any significant disruption to that office could have a material adverse effect on us.

Employee misconduct could expose us to significant legal liability and reputational harm.

We are vulnerable to reputational harm because we operate in an industry in which personal relationships, integrity and the confidence of our clients are of critical importance. Our employees could engage in misconduct that adversely affects our business. For example, if an employee were to engage in illegal or suspicious activities, we could be subject to regulatory sanctions and suffer serious harm to our reputation (as a consequence of the negative perception resulting from such activities), financial position, client relationships and ability to attract new clients.

Our business often requires that we deal with confidential information. If our employees were to improperly use or disclose this information, even if inadvertently, we could be subject to legal action and suffer serious harm to our reputation, financial position and current and future business relationships. It is not always possible to deter employee misconduct, and the precautions we take to detect and prevent this activity may not always be effective. In addition, the SEC has increased its scrutiny of the use of non-public information obtained from corporate insiders by professional investors. Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in an adverse effect on our reputation and our business.

Improper disclosure of personal data could result in liability and harm our reputation.

We and our service providers store and process personal client information. It is possible that the security controls, training and other processes with respect to personal data may not prevent the improper disclosure of client information. Such disclosure could harm our reputation as well and subject us to liability, resulting in increased costs or loss of revenue.

Failure to properly address conflicts of interest could harm our reputation, business and results of operations.

As we expand the scope of our business and our client base, we must continue to monitor and address any conflicts between our interests and those of our clients. The SEC and other regulators have increased their scrutiny of potential conflicts of interest, and we have implemented procedures and controls that we believe are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex, and if we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face reputational damage, litigation or regulatory proceedings or penalties, any of which may adversely affect our results of operations.

We provide a broad range of services to Silvercrest Funds and family office services, which may expose us to liability.

We provide a broad range of administrative services to the management of certain of our company’s funds of funds and other investment funds, or collectively, the Silvercrest Funds, including preparation or supervision of the preparation of some of the Silvercrest Funds’ regulatory filings, provision of shareholder services and communications, accounting services including the supervision of the activities of Silvercrest Funds’ accounting services providers in the calculation of the funds’ net asset values, supervision of the preparation of Silvercrest Funds’ financial statements and coordination of the audits of those financial statements, tax services, including supervision of tax return preparation and supervision of the work of Silvercrest Funds’ other service providers. If it were determined that the Silvercrest Funds failed to comply with applicable regulatory requirements as a result of action or failure to act by our employees, we could be responsible for losses suffered or penalties imposed.

We also provide a range of family office services, in addition to investment management services, to some of our clients, including philanthropic, estate and wealth planning services, tax planning and preparation, financial statement, bill paying and record keeping services, bank loan arrangement and payment services and property and casualty insurance review. If we fail to perform these services properly, we could incur costs and reputational harm for which we might be liable. Further, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income, or negatively affect our current business or our future growth prospects.

The investment management industry faces substantial litigation risks which could have a material adverse effect on our business, financial condition or results of operations or cause significant reputational harm to us.

We depend to a large extent on our network of relationships and on our reputation in order to attract and retain client assets. We make investment decisions on behalf of our clients that could result in substantial losses to them. If our clients suffer significant losses, or are otherwise dissatisfied with our services, we could be subject to the risk of legal liabilities or actions alleging negligent misconduct, breach of fiduciary duty, breach of contract, unjust enrichment and/or fraud. These risks are often difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time, even after an action has been commenced. We may incur significant legal expenses in defending against litigation commenced by a client or regulatory authority. Substantial legal liability or significant regulatory action against us could have a material adverse effect on our business, financial condition or results of operations or cause significant reputational harm to us.

The investment management industry is intensely competitive.

The investment management industry is intensely competitive, with competition based on a variety of factors, including investment performance, investment management fee rates, continuity of investment professionals and client relationships, the quality of services provided to clients, reputation, continuity of selling arrangements with intermediaries and differentiated products. A number of factors, including the following, serve to increase our competitive risks:

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a number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do;

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potential competitors have a relatively low cost of entering the investment management industry;

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the recent trend toward consolidation in the investment management industry and the securities business in general, has served to increase the size and strength of a number of our competitors;

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some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly traded asset manager may focus on the manager’s own growth to the detriment of investment performance for clients;

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some competitors may invest according to different investment styles or in alternative asset classes that the markets may perceive as more attractive than the investment strategies we offer;

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other industry participants, hedge funds and alternative asset managers may seek to recruit our investment professionals; and

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some competitors charge lower fees for their investment services than we do.

If we are unable to compete effectively, our results of operations may be materially adversely affected.

Reductions in business sourced through third-party distribution channels, or their poor reviews of us or our products, could materially reduce our revenue and ability to attract new clients.

New accounts sourced through consultant-led searches may be a major component of our future growth. We also have accessed the high-net-worth segment of the investing community through relationships with well-respected wealth advisers who use our investment strategies in investment programs they construct for their clients. If we fail to successfully maintain these third-party distribution and sub-investment advisory relationships, our business could be materially adversely affected. In addition, many of these parties review and evaluate our products and our organization. Poor reviews or evaluations of either the particular product or of us may result in client withdrawals or may impact our ability to attract new assets through such intermediaries.

The significant growth we have experienced may be difficult to sustain.

Our assets under management have increased from $7.8 billion as of December 31, 2006 to $10.7 billion as of June 30, 2012. The absolute measure of our assets under management represents a significant rate of growth that may be difficult to sustain. The growth of our business will depend on, among other things, our ability to retain key investment professionals, to devote sufficient resources to maintaining existing investment strategies and to selectively develop new investment strategies. Our business growth also will depend on our success in achieving superior investment performance from our investment strategies, as well as our ability to maintain and extend our distribution capabilities, to deal with changing market conditions, to maintain adequate financial and business controls and to comply with new legal and regulatory requirements arising in response to both the increased sophistication of the investment management industry and the significant market and economic events of the last few years. If we believe that in order to continue to produce attractive returns from some or all of our investment strategies we should limit the growth of those strategies, we have in the past chosen, and in the future may choose, to limit or close access to those strategies to some or most categories of new investors or otherwise take action to slow the flow of assets into those strategies.

In addition, we expect there to be significant demand on our infrastructure and investment teams and we may not be able to manage our growing business effectively or be able to sustain the level of growth we have achieved historically, and any failure to do so could adversely affect our ability to generate revenue and control our expenses.

A change of control of us could result in termination of our sub-investment advisory and investment advisory agreements.

Pursuant to the Advisers Act, each of our investment advisory agreements for the separate accounts we manage may not be “assigned” without the consent of the client. In addition, under the Investment Company Act, each of the investment advisory agreements with SEC registered mutual funds that we sub-advise automatically terminates in the event of its assignment. A sale of a controlling block of our voting securities and certain other transactions would be deemed an “assignment” pursuant to the Advisers Act and the Investment Company Act. Such an assignment may be deemed to occur in the event that the holders of the Class B units of Silvercrest L.P. exchange enough of their Class B units for shares of our Class A common stock and dispose of such shares of Class A common stock such that they no longer own a controlling interest in us, even if no other person or group

acquires a controlling interest. If such a deemed assignment occurs, there can be no assurance that we will be able to obtain the necessary consents from our clients and, unless the necessary approvals and consents are obtained, the deemed assignment could adversely affect our ability to continue managing client accounts, resulting in the loss of assets under management and a corresponding loss of revenue.

If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.

In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and control our exposure to operational, legal and reputational risks. Our risk management methods may prove to be ineffective due to their design, implementation or insufficient scope, or as a result of the lack of adequate, accurate or timely information or otherwise. If our risk management efforts are ineffective, we could suffer losses that could have a material adverse effect on our financial condition or operating results. Additionally, we could be subject to litigation, particularly from our clients, and sanctions or fines from regulators. Our techniques for managing risks in client portfolios may not fully mitigate the risk exposure in all economic or market environments, or against all types of risk, including risks that we might fail to identify or anticipate.

The cost of insuring our business is substantial and may increase.

Our insurance costs are substantial and can fluctuate significantly from year to year and rate increases in the future are possible. In addition, certain insurance coverage may not be available or may only be available at prohibitive costs. As we renew our insurance policies, we may be subject to additional costs resulting from rising premiums, the assumption of higher deductibles and/or co-insurance liability. In addition, we intend to obtain additional liability insurance for our directors and officers in connection with this offering. Higher insurance costs and increased deductibles would negatively impact our net income.

Our reliance on prime brokers, custodians, administrators and other agents subjects us to certain risks relating to their execution of transactions and their solvency, and the failure by or insolvency of, any such person could adversely affect our business and financial performance.

Our business generally depends on the services of prime brokers, custodians, administrators and other agents to carry out securities transactions. For example, in the event of the insolvency of a prime broker and/or custodian, our funds might not be able to recover equivalent assets in full as they will rank among the prime broker’s and custodian’s unsecured creditors in relation to assets which the prime broker or a custodian borrows, lends or otherwise uses. In addition, our funds’ cash held with a prime broker or a custodian will not be segregated from the prime broker’s or custodian’s own cash, and our funds will therefore rank as unsecured creditors in relation thereto.

The historical consolidated and unaudited pro forma financial information included in this prospectus is not necessarily indicative of our future financial results after the reorganization and as a public company.

The historical consolidated financial information included in this prospectus may not be indicative of our future financial results after the reorganization and as a public company. Our assets under management have increased 29% in the past five years. We do not expect our assets under management or revenue to grow at the same rate as they have grown in the past five years. In addition, the historical consolidated financial information included in this prospectus does not reflect the added costs that we expect to incur as a public company or the changes that will occur in our capital structure and operations in connection with our reorganization. For example, because we operated through a limited liability company prior to this offering and paid little or no taxes on our profits, our historical consolidated financial information does not reflect the tax impact of our adoption of a corporate holding company structure.

Company Structure.” The estimates we used in this unaudited pro forma financial information are not intended to approximate our actual experience as a public company or be indicative in any way of our future performance. The results of future periods may be materially different than those of the past as a result of:

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the impact of the reorganization, in relation to our size, during the pro forma periods;

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future performance of our investment strategies, which differs from the historical performance reflected in the unaudited pro forma financial information;

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the pace of growth of our business in the future, including the formation of new investment strategies, which differs from the historical growth reflected in the unaudited pro forma financial information; and

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the additional costs of being a public company including compliance with Sarbanes-Oxley.

If we incur indebtedness or issue senior equity securities, we will be exposed to additional risks, including the typical risks associated with leverage.

The amount of leverage that we employ will depend on our board of directors’ assessment of market and other factors at the time of any proposed borrowing. We may also use leverage to make certain investments. There is no assurance that a leveraging strategy will be successful. Leverage involves risks and special considerations that include the following:

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there is a likelihood of greater volatility of net asset value of our business and market price of our common stock than a comparable business without leverage;

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we will be exposed to increased risk of loss if we incur debt or issue senior equity securities to finance acquisitions or investments because a decrease in the value of our investments would have a greater negative impact on our returns, and therefore the value of our common stock than if we did not use leverage;

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it is likely that such debt or equity securities will be governed by instruments containing covenants restricting our operating flexibility. These covenants may impose asset overage or investment composition requirements that are more stringent than those of our business plan and could require our business to liquidate investments at an inopportune time;

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if we are required to pledge a substantial portion of our assets in order to obtain debt financing, it may limit our ability to enter into subsequent financings at attractive terms;

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we, and indirectly our investors, will bear the cost of leverage, including issuance and servicing costs; and

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any preferred, convertible or exchangeable securities that we issue may have rights, preferences and privileges more favorable than those of our common stock. Any requirement that we sell assets at a loss to redeem or pay interest on any leverage or for other reasons would reduce our net asset value and also make it difficult for our net asset value to recover. Our board of directors, in its best judgment, nevertheless may determine to use leverage if it expects that the benefits to our common stockholders of maintaining the leveraged position will outweigh the risks. General interest rate fluctuations may have a substantial negative impact on our investments and investment opportunities. In addition, an increase in interest rates would make it more expensive for us to use debt to finance these investments.

Future financings could adversely affect us and our common stockholders by diluting existing stockholders or by placing restrictions on our ability to run our business, including making distributions to unitholders.

we may use proceeds remaining from this offering and then raise additional capital through the incurrence of long-term or short-term indebtedness or the issuance of additional equity securities in private or public transactions. This could result in dilution of existing common stockholders’ equity positions, increased interest expense and decreased net income. In addition, significant capital requirements associated with such investments may impair our ability to make distributions to our common stockholders.

Risks Related to Our Structure

Control by our principals of % of the combined voting power of our capital stock and the rights of holders of Class B units of Silvercrest L.P. may give rise to conflicts of interest.

Immediately after the completion of this offering, our employee stockholders will collectively hold approximately % of the combined voting power of our capital stock (or approximately %, if the underwriters exercise in full their option to purchase additional shares of our Class A common stock). Concurrently with the completion of this offering, each of our principals (including directors who are principals) who hold shares of our common stock will enter into a stockholders’ agreement with respect to all shares of our Class A common stock and Class B common stock then held by them and any shares of our Class A common stock and Class B common stock they may acquire in the future. Pursuant to the stockholders’ agreement, the shares of Class A common stock and Class B common stock held by our employees will be voted in accordance with the determination of the Executive Committee of Silvercrest L.P. until the termination of employment of such employee. The votes of the members of the Executive Committee will be weighted based upon their relative holdings of Silvercrest L.P. Class B units. As a result of his equity ownership and position on the Executive Committee, Mr. Cochran, our Chief Executive Officer, will initially control the vote of the Executive Committee and, as a result, all of the shares of Class A common stock and Class B common stock held by our principals.

In connection with this offering, we plan to adopt the 2012 Equity Incentive Plan, pursuant to which we intend to grant equity awards of or with respect to shares of our Class A common stock or Class B units of Silvercrest L.P. To the extent that we cause Silvercrest L.P. to issue additional Class B units to our principals, these employees would be entitled to receive a corresponding number of shares of our Class B common stock (including if the Class B units awarded are subject to vesting). All of the shares of our common stock issued to principals under this plan will be subject to the stockholders’ agreement.

For so long as our principals who remain employed by us collectively hold at least 50% of the number of outstanding shares of our common stock, the parties to the stockholders’ agreement will be able to elect all of the members of our board of directors and thereby control our management and affairs, including determinations with respect to acquisitions, dispositions, borrowings, issuances of securities and the declaration and payment of dividends. In addition, the parties to the stockholders’ agreement will be able to determine the outcome of all matters requiring the approval of stockholders to cause or prevent a change of control of our company or a change in the composition of our board of directors and could preclude any unsolicited acquisition of our company. The parties to the stockholders’ agreement will have the ability to prevent the consummation of mergers, takeovers or other transactions that may be in the best interests of our Class A stockholders. In particular, this concentration of voting power could deprive Class A stockholders of an opportunity to receive a premium for their shares of Class A common stock as part of a sale of our company, and could ultimately affect the market price of our Class A common stock.

In addition, because our principals will hold all or a portion of their ownership interests in our business through Silvercrest L.P., rather than through Silvercrest, these existing owners may have other conflicting interests with holders of our Class A common stock. For example, our existing owners may have different tax positions from holders of our Class A common stock which could influence their decisions regarding whether and when we should dispose of assets, whether and when we should incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreement that we will enter into in connection with this offering, and whether and when our company should terminate the tax receivable agreement and accelerate its obligations thereunder. Also, the structuring of future transactions may take into consideration

these existing owners’ tax or other considerations even where no similar benefit would accrue to us. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement” for more information.

Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law.

Following completion of this offering, we intend to declare cash dividends on our Class A common stock as described in “Dividend Policy.” However, our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, because of our structure, we will be dependent upon the ability of our subsidiaries to generate earnings and cash flows and distribute them to us so that we may pay dividends to our stockholders. We expect to cause Silvercrest L.P., which is a Delaware limited partnership, to make distributions to its partners, including us, in an amount sufficient for us to pay dividends. However, its ability to make such distributions will be subject to its subsidiaries’ operating results, cash requirements and financial condition, the applicable provisions of Delaware law that may limit the amount of funds available for distribution to its partners, its compliance with covenants and financial ratios related to future indebtedness, its other agreements with third parties, as well as its obligation to make tax distributions under the second amended and restated limited partnership agreement (which distributions would reduce the cash available for distributions by Silvercrest L.P. to us). As a Delaware corporation, our ability to pay cash dividends to our Class A stockholders with the distributions received by us as general partner of Silvercrest L.P. also will be subject to the applicable provisions of Delaware law. Also, each of the companies in the corporate chain must manage its assets, liabilities and working capital in order to meet all of its cash obligations, including the payment of dividends or distributions. As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our Class A common stock. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our Class A common stock.

Our ability to pay taxes and expenses, including payments under the tax receivable agreement, may be limited by our structure.

Upon the consummation of this offering, we will have no material assets other than our ownership of Class A units of Silvercrest L.P. and will have no independent means of generating revenue. Silvercrest L.P. will be treated as a partnership for U.S. federal income tax purposes and, as such, will not be subject to U.S. federal income tax. Instead, taxable income will be allocated to holders of its partnership units, including us. Accordingly, we will incur income taxes on our proportionate share of any net taxable income of Silvercrest L.P. and also will incur expenses related to our operations. Under the terms of its second amended and restated limited partnership agreement, Silvercrest L.P. will be obligated to make tax distributions to holders of its partnership units, including us. In addition to tax expenses, we also will incur expenses related to our operations, including expenses under the tax receivable agreement, which we expect will be significant. We intend to cause Silvercrest L.P. to make distributions in an amount sufficient to allow us to pay our taxes and operating expenses, including any payments due under the tax receivable agreement. However, its ability to make such distributions will be subject to various limitations and restrictions as set forth in the preceding risk factor. If, as a consequence of these various limitations and restrictions, we do not have sufficient funds to pay tax or other liabilities to fund our operations, we may have to borrow funds and thus this could have a material adverse effect on our liquidity and financial condition. To the extent we are unable to make payments under the tax receivable agreement for any reason, such payments will be deferred and will accrue interest at until paid.

We will be required to pay holders of Class B units of Silvercrest L.P. for certain tax benefits we may claim, and the amounts we may pay could be significant.

Class B units from existing partners, both the existing basis and the anticipated basis adjustments are likely to increase (for tax purposes) depreciation and amortization deductions allocable to us from Silvercrest L.P. and therefore reduce the amount of income tax we would otherwise be required to pay in the future. This increase in tax basis also may decrease gain (or increase loss) on future dispositions of certain capital assets to the extent the increased tax basis is allocated to those capital assets.

The tax receivable agreement, which we will enter into with current holders of Silvercrest L.P. units and holders of our Class B common stock, will generally provide for the payment by us to each of them of 85% of the amount of the cash savings, if any, in U.S. federal and state income tax that we actually realize (or are deemed to realize in certain circumstances) in periods after this offering as a result of (i) any step-up in tax basis in Silvercrest L.P.’s assets resulting from (a) the purchases or exchanges of Class B units (along with the corresponding shares of our Class B common stock) for shares of our Class A common stock and (b) payments under this tax receivable agreement; (ii) certain prior distributions by Silvercrest L.P. and prior transfers or exchanges of Class B units which resulted in tax basis adjustments to the assets of Silvercrest L.P.; and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of this tax receivable agreement.

We expect that the payments we will be required to make under the tax receivable agreement will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreement, we expect that the reduction in tax payments for us associated with (i) the purchase of Class B units from certain of the limited partners of Silvercrest L.P. with a portion of the net proceeds of this offering and (ii) future exchanges of Class B units as described above would aggregate approximately $ over 15 years from the date of this offering based on an assumed price of $ per share of our Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) and assuming all future exchanges or purchases, other than the purchases in connection with this offering, would occur one year after this offering. Under such scenario we would be required to pay the holders of limited partnership units 85% of such amount, or $ , over the 15-year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and tax receivable agreement payments by us will be calculated using the market value of our Class A common stock and the prevailing tax rates at the time of the exchange and will be dependent on us generating sufficient future taxable income to realize the benefit. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement.”

The actual increase in tax basis, as well as the amount and timing of any payments under this agreement, will vary depending upon a number of factors, including the timing of exchanges by the holders of Class B units, the price of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable, as well as the portion of our payments under the tax receivable agreement constituting imputed interest or depreciable or amortizable basis.

Payments under the tax receivable agreement will be based on the tax reporting positions that we determine. Although we are not aware of any issue that would cause the IRS to challenge a tax basis increase or other tax attributes subject to the tax receivable agreement, we will not be reimbursed for any payments previously made under the tax receivable agreement. As a result, in certain circumstances, payments could be made under the tax receivable agreement in excess of the benefits that we actually realize in respect of the attributes to which the tax receivable agreement relates.

In certain cases, payments under the tax receivable agreement to our existing owners may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement.

agreement, our (or our successor’s) obligations under the tax receivable agreement (with respect to all Class B units, whether or not Class B units have been exchanged or acquired before or after such transaction) would be based on certain assumptions, including that we would have sufficient taxable income to fully avail ourselves of the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement. As a result, (i) we could be required to make payments under the tax receivable agreement that are greater than or less than the specified percentage of the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement, and (ii) if we elect to terminate the tax receivable agreement early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits, which payment may be made significantly in advance of the actual realization of such future benefits. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to finance our obligations under the tax receivable agreement. If we were to elect to terminate the tax receivable agreement immediately after this offering, based on an assumed price of $ per share of our Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), we estimate that we would be required to pay $ in the aggregate under the tax receivable agreement.

If we were deemed an investment company under the Investment Company Act as a result of our ownership of Silvercrest L.P., applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

We do not believe that we are an “investment company” under the Investment Company Act. Because we, as the sole general partner of Silvercrest L.P., control and operate Silvercrest L.P., we believe that our interest in Silvercrest L.P. is not an “investment security” as that term is used in the Investment Company Act. If we were to cease participation in the management of Silvercrest L.P., our interest in Silvercrest L.P. could be deemed an “investment security” for purposes of the Investment Company Act. A person may be an “investment company” if it owns investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items). Upon consummation of this offering, our sole asset will be our general partner interest in Silvercrest L.P. A determination that such investment was an investment security could cause us to be deemed an investment company under the Investment Company Act and to become subject to the registration and other requirements of the Investment Company Act. In addition, we do not believe that we are an investment company under Section 3(b)(1) of the Investment Company Act because we are not primarily engaged in a business that causes us to fall within the definition of “investment company.” We and Silvercrest L.P. intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks Related to this Offering

There is no existing market for our Class A common stock, and we do not know if one will develop, which may cause our Class A common stock to trade at a discount from its initial offering price and make it difficult to sell the shares you purchase.

Prior to this offering, there has not been a public market for our Class A common stock and we cannot predict the extent to which investor interest in us will lead to the development of an active trading market on Nasdaq, or otherwise, or how liquid that market might become. If an active trading market does not develop, you may have difficulty selling your shares of Class A common stock at an attractive price, or at all. The initial public offering price for our Class A common stock will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell shares of our Class A common stock at prices equal to or greater than the price you paid in this offering and you may suffer a loss on your investment.

The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

Even if an active trading market develops, the market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. Moreover, the trading volume of our Class A common stock may fluctuate and cause significant price variations to occur. If the market price of our Class A common stock declines significantly, you may be unable to sell your shares of Class A common stock at or above the price at which you purchased it, if at all. The market price of our Class A common stock may fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our Class A common stock, or result in fluctuations in the price or trading volume of our Class A common stock, include:

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variations in our quarterly or annual operating results;

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failure to meet the market’s earnings expectations;

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publication of research reports about us or the investment management industry, or the failure of securities analysts to cover our Class A common stock after this offering;

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the public’s reactions to our press releases, other public announcements and filings with the SEC;

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departures of any of our portfolio managers or members of our senior management team or additions or departures of other key personnel;

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adverse market reaction to any indebtedness we may incur or securities we may issue in the future;

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market and industry perception of our success, or lack thereof, in pursuing our growth strategies;

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actions by stockholders;

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strategic actions by us or our competitors such as acquisitions or restructurings;

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changes in market valuations of similar companies;

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changes in our capital structure;

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actual or anticipated poor performance in one or more of the investment strategies we offer;

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changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting our business, or enforcement of these laws and regulations, or announcements relating to these matters;

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changes in accounting standards, policies, guidance, interpretations or principles;

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adverse publicity about the investment management industry generally or as a result of specific events;

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sales of shares of our Class A common stock by us or members of our management team;

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litigation and governmental investigations;

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the expiration of contractual lockup agreements; and

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general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war, and responses to such.

Future issuances and sales of our Class A common stock in the public market could lower our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock available for sale after completion of this offering, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also may make it more difficult for us to raise additional capital by selling equity securities in the future, at a time and price that we deem appropriate.

We will agree with the underwriters not to issue, sell, or otherwise dispose of or hedge any shares of our Class A common stock, subject to certain exceptions, for the 180-day period following the date of this prospectus, without the prior consent of Sandler O’Neill & Partners, L.P. and Raymond James & Associates, Inc. Our officers and directors will enter into similar lock-up agreements with the underwriters. Sandler O’Neill & Partners, L.P. and Raymond James & Associates, Inc. may, at any time, release us and/or any of our officers and directors from this lock-up agreement and allow us to sell shares of our Class A common stock within this 180-day period. For more information, see “Underwriting.” In addition, pursuant to the terms of an exchange agreement that we will enter into with the holders of Class B units of Silvercrest L.P., such Class B units will not be exchangeable for shares of our Class A common stock until the six-month anniversary of the consummation of this offering. Pursuant to our lock-up agreement with the underwriters, we will not be permitted to waive these restrictions pursuant to the exchange agreement without the prior consent of Sandler O’Neill & Partners, L.P. and Raymond James & Associates, Inc.

Upon completion of this offering, there will be shares of our Class A common stock outstanding (or shares if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) of which shares will be freely transferable without restriction or further registration under the Securities Act. The shares of Class A common stock that will be issuable upon exchange of Class B units may only be sold in the manner at the times described under “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.” Every 12-month period beginning on the six-month anniversary of this offering and ending on the date of a principal’s termination of employment, each principal and his permitted transferees (e.g., family trusts) may collectively exchange vested Class B units that equal 20% of the Class B units such persons collectively held at the beginning of such 12-month period, subject to certain exceptions described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Upon a termination of employment other than due to retirement or for cause, all Class B units held by a principal, other than those Class B units forfeited under certain circumstances, will be exchanged automatically for shares of Class A common stock. The shares of Class A common stock received upon exchange for Class B units may be sold (i) at any time and in any manner by retired employees and employees or estates of employees terminated due to death or disability, (ii) for any principal whose employment is terminated by us without cause, in an amount equal to 50% of the total shares of Class A common stock held by the principal at the time of termination of employment less any amounts sold for taxes in each 12-month period following the 18-month anniversary of the date of termination of employment, and (iii) for any principal who voluntarily resigns his employment, in an amount equal to one-third of the total shares of Class A common stock held by the principal at the time of termination of employment less any amounts sold for taxes in each 12-month period following the 18-month anniversary of the date of resignation of employment subject to manner of sale restrictions described in “The Reorganization and Our Holding Company Structure—Resale and Registration Rights.”

After this offering, we intend initially to register shares of our Class A common stock for issuance pursuant to, upon the exercise of options granted under, or upon exchange of Class B units granted under, our 2012 Equity Incentive Plan that we are adopting in connection with this offering. We may increase the number of shares registered for this purpose from time to time. Once we register these shares, they will be able to be sold in the public market upon issuance.

We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock may have on the market price of our Class A common stock. Sales or distributions of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of our Class A common stock to decline.

We are an “emerging growth company,” and any decision on our part to comply only with certain reduced disclosure requirements applicable to emerging growth companies could make our Class A common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the last business day of an issuer’s most recently completed second fiscal quarter before the end of that five-year period, or (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period. We cannot predict whether investors will find our Class A common stock less attractive if we choose to rely on these exemptions. If some investors find our Class A common stock less attractive as a result of any decisions to reduce future disclosure, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are, however, choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us and could have a negative effect on our business, results of operations and financial condition. As a public company, we will be subject to the reporting requirements of the Exchange Act and requirements of Sarbanes Oxley. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. Sarbanes Oxley requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies, including consideration of an upgrade to our financial reporting systems. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our company and to maintain appropriate operational and financial systems to adequately support expansion. In addition, as a public company, we must also enhance our investor relations, legal and corporate communications functions. All of these activities and additional efforts may increase our costs, strain our resources and divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

As an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes Oxley (and rules and regulations of the SEC thereunder, which we refer to as Section 404) and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

You will suffer immediate and substantial dilution and may experience additional dilution in the future.

We expect that the initial public offering price per share of our Class A common stock will be substantially higher than the pro forma net tangible book value per share of our Class A common stock immediately after this offering, and after giving effect to the exchange of all outstanding Class B units for shares of our Class A common stock. As a result, you will pay a price per share that substantially exceeds the per share book value of our assets after subtracting our liabilities. At an offering price of $ (the midpoint of the range set forth on the cover of this prospectus), you will incur immediate and substantial dilution in an amount of $ per share of our Class A common stock. In addition, you will experience further dilution upon the issuance of restricted Class B units or restricted shares of our Class A common stock, or upon the grant of options to purchase Class B units or shares of our Class A common stock, in each case under our 2012 Equity Incentive Plan.

We have broad discretion in the use of the net proceeds to us from this offering and may not use them in a manner in which our stockholders would consider appropriate.

We cannot specify with certainty the particular uses of the net proceeds remaining after the repurchase of Class B units from principals that we will receive from this offering. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described under the heading “Use of Proceeds” included elsewhere in this prospectus. Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. The failure by our management to apply these funds effectively could have an adverse effect on our business. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws could discourage a change of control that our stockholders may favor, which also could adversely affect the market price of our Class A common stock.

Provisions in our amended and restated certificate of incorporation and bylaws may make it more difficult and expensive for a third party to acquire control of us, even if a change of control would be beneficial to our stockholders. For example, our amended and restated certificate of incorporation, which will be in effect at the time this offering is consummated, will authorize our board of directors to issue up to shares of our preferred stock and to designate the rights, preferences, privileges and restrictions of unissued series of our preferred stock, each without any vote or action by our stockholders. We could issue a series of preferred stock to impede the consummation of a merger, tender offer or other takeover attempt. In addition, our amended and restated certificate of incorporation will provide that our board of directors is classified into three classes of directors. The anti-takeover provisions in our amended and restated certificate of incorporation and bylaws may impede takeover attempts, or other transactions, that may be in the best interests of our stockholders and, in particular, our Class A stockholders. Moreover, the market price of our Class A common stock could be adversely affected to the extent that provisions of our amended and restated certificate of incorporation and bylaws discourage potential takeover attempts, or other transactions, that our stockholders may favor.

We will be a “controlled company” within the meaning of the Nasdaq rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

Upon the closing of this offering, our principals will continue to control a majority of our Class A common stock. As a result, we will be a “controlled company” within the meaning of the Nasdaq corporate governance standards. Under the Nasdaq rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain Nasdaq corporate governance requirements, including:

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the requirement that a majority of the board consists of independent directors;

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the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors;

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the requirement that we have a compensation committee that is composed entirely of independent directors; and

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the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

Following this offering, we do not intend to utilize these exemptions. As a result, we will have a majority of independent directors and our Nominating/Corporate Governance and Compensation Committees will consist entirely of independent directors and we will have an annual performance evaluation of the Nominating/Corporate Governance and Compensation Committees. See “Management” section. However, if we decide to utilize these exemptions in the future, you will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our Class A common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” or “will,” or the negative thereof, or other variations thereon or comparable terminology. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance relating to our growth, expansion into new markets, sales trends of particular lines of products and other statements contained in this prospectus, including certain statements under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Regulatory Environment,” are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this prospectus under the headings “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Regulatory Environment” may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from our expectations are:

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our business strategies and investment policies;

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our intention to pay quarterly dividends;

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our financing plans;

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our competitive position and the effects of competition on our business;

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potential growth opportunities available to us;

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status as an emerging growth company;

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the recruitment and retention of our employees;

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our expected levels of compensation of our employees and the impact of compensation on our ability to attract and retain employees;

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our potential operating performance and efficiency;

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our expected tax rate;

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our expectation with respect to the economy, capital markets, the market for asset management services and other industry trends;

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the benefits to our business resulting from the effects of the reorganization;

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our belief as to the adequacy of our facilities; and

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the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.

Other factors that could cause actual results to differ from those implied by the forward-looking statements in this prospectus are more fully described in the “Risk Factors” section and elsewhere in this prospectus. Given these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this prospectus are made only as of the date hereof. We do not undertake and specifically decline any obligation to update any of these statements or to publicly announce the results of any revisions to any of these statements to reflect future events or developments.

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE

Overview

Set forth below is our holding company structure and ownership immediately prior to the consummation of the reorganization and this offering.

LOGO

(1)	Silvercrest GP LLC is the General Partner of Silvercrest L.P.

(2)	Silvercrest L.P. is the Managing Member of the operating subsidiaries.

Immediately prior to the consummation of this offering, the members of Silvercrest GP LLC will receive a distribution of the general partner interests of Silvercrest L.P. owned by Silvercrest GP LLC as part of the reorganization. Once acquired, these interests that were distributed to the members of Silvercrest GP LLC will be automatically converted into limited partnership interests. Subsequent to the distribution of the general partner interests of Silvercrest L.P. to its members and the conversion of those interests into limited partnership interests, Silvercrest GP LLC will transfer its rights as general partner to Silvercrest and will be dissolved. Silvercrest will become the general partner of Silvercrest L.P. As part of the reorganization, the partnership agreement of

Silvercrest L.P. will be amended to provide that the limited partnership interests will be converted to Class B units and the general partnership interests will be converted to Class A units.

Immediately following the reorganization, our only material asset will be our general partner interests in Silvercrest L.P. We will use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners, including all Class B units held by third-party investors in Silvercrest L.P., and such Class B units acquired by us will be immediately converted into Class A units. These third-party investors will therefore no longer hold any portion of Silvercrest L.P’s Class B units or any of our Class B common stock subsequent to the reorganization. Following the reorganization and this offering, we will own all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) will be held by 37 of our principals.

The Class A units and Class B units will have the same economic rights. In addition, Silvercrest L.P. has issued deferred equity units exercisable for Class B units which entitle the holders thereof to distributions from Silvercrest L.P. as if the underlying Class B units were outstanding. Accordingly, immediately after the consummation of the reorganization and this offering, the holders of our Class A common stock (through us) and the holders of the Class B units and deferred equity units in Silvercrest L.P. will hold approximately % and %, respectively, of the economic interests in our business (or approximately % and %, respectively, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

As part of the reorganization, we will issue to the holders of Class B units, for each Class B unit, one share of Class B common stock in exchange for the payment by the holder of the Class B units of its par value. Each share of our Class B common stock will entitle its holder to one vote. Initially, the holder of the Class B common stock will have % of the combined voting power of our common stock (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock). When a Class B unit is exchanged for a share of our Class A common stock, forfeited as a result of applicable vesting provisions, or forfeited or redeemed as a result of a breach of any restrictive covenants contained in the second amended and restated limited partnership agreement of Silvercrest L.P., a corresponding number of shares of our Class B common stock automatically will be redeemed at par value and cancelled by us. Conversely, to the extent we cause Silvercrest L.P. to issue additional Class B units (including awards of Class B units subject to vesting) to our employees pursuant to our 2012 Equity Incentive Plan or Class B units are issued upon the vesting of outstanding deferred equity units in Silvercrest L.P., these employees will be entitled to receive an equal number of shares of our Class B common stock.

Concurrently with the closing of this offering and the reorganization, holders of our Class B common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote while they are employed by us all shares of Class B common stock and Class A common stock then held by them, and acquired in the future, on all matters submitted to a vote of our common stockholders in accordance with the decision of the Executive Committee of Silvercrest L.P. Therefore, upon the closing of this offering, the Executive Committee of Silvercrest L.P. will be able to exercise control over all matters requiring the approval of our stockholders, including the election of our directors and the approval of significant corporate transactions.

The Class A common stock will represent 100% of the rights of the holders of all classes of our capital stock to share in all distributions, except for the right of holders of our Class B common stock to receive the par value of each share of our Class B common stock upon our liquidation, dissolution or winding-up.

volume limitations described under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Unvested Class B units will not be exchangeable until they have vested other than upon a termination of employment of a principal, at which time all vested and unvested Class B units will be automatically exchanged for shares of our Class A common stock, subject to certain exceptions, including in the case of retirement and termination with cause, as described under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

Pursuant to a resale and registration rights agreement that we will enter into with the holders of Class B units, we intend to file a registration statement on Form S-3 to register the resale of shares of our Class A common stock that are issuable upon exchange of these Class B units and to maintain such registration in effect for no less than five years. We expect to become eligible to file a registration statement on Form S-3 one year after the consummation of this offering. See “—Resale and Registration Rights Agreement” for a description of the timing and manner limitations on resales of these shares.

LOGO

(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

(3)

Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units, which will represent the right to receive % of the distributions made by Silvercrest L.P. and deferred equity units exercisable for Class B units, which represent the right to receive % of the distributions made by Silvercrest L.P. (or % and %, respectively, of the distributions made by Silvercrest L.P. if the underwriters exercise their option to purchase additional shares of Class A common stock in full).

(4)	We will hold Class A units (or Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full), which will represent the right to receive % of the distributions made by Silvercrest L.P.

Holding Company Structure

Our only business following this offering will be to act as the general partner of Silvercrest L.P. and, as such, we will operate and control all of its business and affairs and will be able to consolidate its financial results into our financial statements. The ownership interests of holders of limited partnership interests of Silvercrest L.P. will be accounted for as a non-controlling interest in our consolidated financial statements after this offering.

Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

As a result of the reorganization, we will operate our business through Silvercrest L.P. and its consolidated subsidiaries. The operations of Silvercrest L.P., and the rights and obligations of its partners, are set forth in the second amended and restated limited partnership agreement of Silvercrest L.P., a form of which is being filed as an exhibit to the registration statement of which this prospectus forms a part. The following is a description of the material terms of the second amended and restated limited partnership agreement.

Governance

We will serve as the general partner of Silvercrest L.P. As such, we will control its business and affairs and will be responsible for the management of its business. We also will have the power to delegate some of our management responsibilities as the general partner of Silvercrest L.P. to an Executive Committee consisting of our Chief Executive Officer, Mr. Cochran, and the individuals appointed by us to serve as members of the Executive Committee. Initially, Mr. Cochran and each of Richard R. Hough III, Scott A. Gerard and David J. Campbell will serve as members of the Executive Committee. No limited partners of Silvercrest L.P., in their capacity as such, will have any authority or right to control the management of Silvercrest L.P. or to bind it in connection with any matter.

Voting and Economic Rights

Silvercrest L.P. will issue Class A units, which may only be issued to us, as general partner, and Class B units. Each Class A unit and Class B unit will entitle holders to equal economic rights. Holders of Class B units will have no voting rights, except for the right to approve amendments to the second amended and restated limited partnership agreement of Silvercrest L.P. that adversely affects the rights of the holders of Class B units and to approve certain material corporate transactions. See “—Amendments” and “—Material Corporate Transactions.”

We intend to cause Silvercrest L.P. to issue additional Class B units in the future pursuant to the 2012 Equity Incentive Plan which Class B units may be subject to vesting periods set forth in the relevant award agreements.

Net profits, net losses and distributions of Silvercrest L.P. will be allocated and made to each of its partners pro rata in accordance with the number of partnership units of Silvercrest L.P. held by each of them (whether or not vested). In addition, Silvercrest L.P. has issued deferred equity units which entitle the holders thereof to receive distributions from Silvercrest L.P. to the same extent as if the underlying Class B units were outstanding. Silvercrest L.P. will agree to make distributions to the holders of its partnership units, which includes us, for the purpose of funding their tax obligations in respect of Silvercrest L.P. See “—Tax Consequences.” Additional distributions from Silvercrest L.P. to us will be made at the discretion of our board of directors, acting on our behalf as the general partner of Silvercrest L.P. Neither Silvercrest Asset Management Group LLC nor Silvercrest L.P. may make any distributions to its members or partners if doing so would violate any agreement to which it is then a party or any law then applicable to it, have the effect of rendering it insolvent or result in it having net capital lower than that required by applicable law.

Assuming Silvercrest L.P. makes distributions to its partners in any given year, the determination to pay dividends, if any, to our Class A common stockholders will be made by our board of directors. Because our board of directors may or may not decide to pay dividends to our Class A stockholders, our Class A stockholders may not necessarily receive dividend distributions relating to our pro rata share of the income earned by Silvercrest L.P. even if Silvercrest L.P. makes such distributions to us.

Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.

At any time Silvercrest issues a share of our Class A common stock for cash, assets or other consideration, the net proceeds received by Silvercrest will be promptly transferred to Silvercrest L.P., and Silvercrest L.P. will issue to Silvercrest one of its Class A units. Alternatively, if otherwise agreed by us and any holder of Class B units, we may use the proceeds from the sale of a share of Class A common stock to purchase a Class B unit from such existing limited partner of Silvercrest L.P. Upon the purchase of a Class B unit by Silvercrest, the Class B unit will automatically be converted into a Class A unit. If at any time we issue a share of our Class A common stock pursuant to our 2012 Equity Incentive Plan, we will be deemed to have contributed to Silvercrest L.P. all of the proceeds we receive (if any), and Silvercrest L.P. will be deemed to have purchased from us the Class A common stock for the amount of the contribution and will issue to us one of its Class A units, having the same restrictions, if any, attached to the shares of Class A common stock issued under this plan. If we issue other classes or series of our equity securities, (i) Silvercrest L.P. will issue, and (ii) Class B units (if any) transferred to us by its limited partners in exchange for our newly issued equity securities will be converted automatically into, an equal number of equity securities of Silvercrest L.P. with designations, preferences and other rights and terms that are substantially the same as our newly issued equity securities. Conversely, if we redeem any shares of our Class A common stock (or our equity securities of other classes or series) for cash, Silvercrest L.P. will, immediately prior to our redemption, redeem an equal number of Class A units (or its equity securities of the corresponding classes or series) held by us, upon the same terms and for the same price, as the shares of our Class A common stock (or our equity securities of such other classes or series) are redeemed.

The Compensation Committee of our board of directors, as the administrator of the 2012 Equity Incentive Plan, in its sole discretion, may cause Silvercrest L.P. to grant equity-based awards to its employees exercisable for, or awarded in, Class B units or shares of Class A common stock. If Class B units are issued at any time after this offering, the holder will be entitled to receive a corresponding number of shares of our Class B common stock in exchange for the payment of their par value, as long as the holder agrees to be bound by the terms of the stockholders’ agreement described under “—Stockholders’ Agreement Among Class B Stockholders.” Silvercrest L.P. may also, from time to time, issue such other classes or series of partnership units having such relative rights, powers and preferences in profits, losses, allocations and distributions of Silvercrest L.P. as may be designated by us.

Silvercrest L.P. and its subsidiaries, or own (other than on a temporary basis) any other assets, other than certain cash accounts, although we may incur indebtedness and may take other actions if we determine in good faith that such indebtedness or other actions are in the best interest of Silvercrest L.P. In addition, partnership units of Silvercrest L.P., as well as our common stock, will be subject to equivalent stock splits, dividends and reclassifications.

Issuances and Transfer of Units

Class A units may only be issued to us, the general partner of Silvercrest L.P., and are non-transferable. Class B units may be issued only to persons or entities to which we agree to permit the issuance of units in exchange for cash or other consideration, including the services of Silvercrest L.P.’s and its subsidiaries’ employees. Class B units may not be transferred except, with our consent, to certain permitted transferees or a permitted charitable institution, subject to conditions we may specify, or as described below under “—Exchange Rights.” If a Class B unitholder is permitted to transfer its Class B units, the holder of Class B units may not transfer any Class B units to any person unless he or she transfers an equal number of shares of our Class B common stock to the same transferee.

Extraordinary Corporate Transactions

If Silvercrest L.P. proposes to engage in certain extraordinary corporate transactions, including a merger, consolidation, or conversion to another business entity, we, in our capacity as the general partner, along with a majority in interest of the holders of the Class B units, will have the power and authority to approve such a transaction. If Silvercrest L.P. proposes to dissolve, we, in our capacity as general partner, along with 75% in interest of the holders of our Class B units, will have the power and authority to approve a dissolution by vote.

Exchange Rights

We have reserved for issuance shares of our Class A common stock, which is the aggregate number of shares of our Class A common stock expected to be issued over time upon exchanges pursuant to an exchange agreement to be entered into with each holder of Class B units and the provisions of the second amended and restated limited partnership agreement of Silvercrest L.P. by:

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all holders of Class B units outstanding immediately after this offering;

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recipients of grants that may be made, or have been made at the consummation of this offering, under the 2012 Equity Incentive Plan, pursuant to which Silvercrest L.P. will have reserved a number of Class B units equal to 15% of the total number of units of Silvercrest L.P. outstanding immediately after the consummation of this offering and the reorganization, assuming no anti-dilution adjustments based on share splits, dividends or reclassifications; and

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all holders of the deferred equity units and performance units to acquire up to Class B units that have been granted prior to the consummation of this offering.

Holders of Class B units may exchange their vested Class B units for shares of our Class A common stock at the times and in the amounts described below.

Pursuant to the exchange agreement, each year, in the period beginning on the six-month anniversary of the consummation of this offering and ending on the date of the termination of employment of a principal with us, a principal and his permitted transferees may collectively exchange up to the number of vested Class B units that equals 20% of all Class B units such principal and his or her permitted transferees collectively hold as of the first day of that year, in accordance with the timing restrictions described under “—Resale and Registration Rights Agreement.” Notwithstanding the foregoing, each principal shall commit to retain at least 25% of the number of Class B units held by the principal on the date of the consummation of this offering or on the date of such principal’s initial employment if such principal was hired after the consummation of this offering (as adjusted for any stock

splits, dividends and reclassifications occurring after this offering). Any principal who is hired by our company after the consummation of this offering may not exchange any Class B units during his or her first year of employment with our company. In addition, unless otherwise determined by the Executive Committee of Silvercrest L.P., in its sole discretion, upon a termination of employment for any reason other than retirement, all of the Class B units held by a principal shall be exchanged automatically for shares of our Class A common stock, subject to the forfeiture of any Class B units as described under “—Restrictive Covenants—Forfeiture or Repurchase of Class B units and Class A Common Stock” below.

Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., if the amount of income taxes that principals are required to pay due to the grant or vesting of their Class B units, the exercise of their options to acquire Class B units and/or the exchange of their Class B units for shares of our Class A common stock upon termination of employment (whether or not they are employees at the time that the tax payment obligation arises) exceeds the net proceeds they would receive upon the sale of all of the shares of our Class A common stock issued to them in exchange for 20% of Class B units that they hold as of the first day of the year with respect to which the tax is payable, then they will instead be entitled to exchange an amount of vested Class B units and resell an equal number of shares of our Class A common stock issued in exchange for such Class B units such that the net proceeds from the sale of this amount of shares would enable them to pay all such taxes due. In addition, we may allow holders of Class B units to make exchanges in amounts exceeding those described above at any time following the effective date of the shelf registration statement (as described in “—Resale and Registration Rights Agreement”), which determination may be withheld, delayed, or granted on such terms and conditions as our Executive Committee may determine, in its sole discretion.

Any holder of Class B units who has acquired a corresponding number of shares of Class B common stock in connection with the original issuance of Class B units, which includes all holders of the Class B units to be issued to the 37 current principals in Silvercrest L.P. in connection with the reorganization, must deliver a corresponding number of shares of Class B common stock to us for redemption in connection with exercising its right to exchange Class B units for shares of our Class A common stock.

Restrictive Covenants

Non-Solicitation

Pursuant to the terms of the second amended and restated limited partnership agreement, each of the principals of Silvercrest L.P. will agree not to solicit our clients or any other employees of Silvercrest L.P. during the term of his or her employment and 18 months thereafter.

Confidential Information

Pursuant to the terms of the second amended and restated limited partnership agreement, each of the principals of Silvercrest L.P. will agree to protect the confidential information of Silvercrest L.P. This covenant will survive the termination of his or her employment.

Forfeiture or Repurchase of Class B Units and Class A Common Stock

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal and his or her permitted transferees and us, if a principal of Silvercrest L.P. breaches any of the non-solicitation or confidentiality covenants described above while employed, then, pursuant to the terms of the second amended and restated limited partnership agreement, the principal, and, to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees, would forfeit all of his, her or their unvested Class B units and 80% of the number of vested Class B units collectively held by the principal and his or her permitted transferees. Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal and his or her permitted transferees and us, if a principal of

Silvercrest L.P. breaches any of the non-solicitation or confidentiality covenants described above, after the termination of his or her employment, or, if a principal voluntarily resigns or retires and competes with our company during the 12 months following his or her termination of employment, then, in addition to any legal rights and remedies available to us, the principal (and to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B units and/or shares of Class A common stock, if any, and, at the option of Silvercrest L.P., would be required to sell to Silvercrest L.P. all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the capital account balance of the principal and his or her permitted transferees in Silvercrest L.P. and (ii) the purchase price paid by the terminated principal to first acquire the Class B units, and, at our option, would be required to sell to us all of the Class A common stock collectively held by the principal and his or her permitted transferees for a purchase price equal to the purchase price paid by the principal to first acquire the Class B units for which such shares of Class A common stock had been exchanged. To the extent a retired principal violates these restrictive covenants or competes with our company during 12 months following his or her termination of employment and the retired principal or his or her permitted transferees sold more than 20% of the Class B units and/or shares of Class A common stock held by the retired principal and his or her permitted transferees on the date of the principal’s retirement, then, in addition to the repurchase of Class B units and shares of Class A common stock described above, we will have the right to claw back from the retired principal the purchase price received for the shares of Class A common stock and/or Class B units sold less the purchase price originally paid to acquire the securities above an amount equal to 20% of the securities held on the date of retirement. In addition to the forfeiture, repurchase and claw back provisions described above, if a principal violates the non-solicitation or confidentiality covenants or competes with our company within the 12-month period following a voluntary resignation of employment or retirement, then the principal will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Repurchase of Class B Units Upon Termination for Cause

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal, his or her permitted transferees and us, if a principal of Silvercrest L.P. is terminated for cause, the principal (and, to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B units, if any, and, at our option, Silvercrest L.P. would have the right to redeem all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the aggregate capital account balance in Silvercrest L.P. of the principal and his or her permitted transferees and (ii) the purchase price paid by the terminated principal to first acquire the Class B units. In addition to the redemption described above, any principal terminated for cause will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Indemnification and Exculpation

To the extent permitted by applicable law, Silvercrest L.P. will indemnify us, as its general partner, its authorized officers, its other employees and its agents from and against any losses, liabilities, damages, costs, expenses, fees or penalties incurred by any acts or omissions of these persons, provided that the acts or omissions of these indemnified persons are not the result of fraud, intentional misconduct or a violation of the implied contractual duty of good faith and fair dealing, or any lesser standard of conduct permitted under applicable law.

We, as the general partner, and the authorized officers, other employees and agents of Silvercrest L.P., will not be liable to Silvercrest L.P., its partners or their affiliates for damages incurred by any acts or omissions of these persons, provided that the acts or omissions of these exculpated persons are not the result of fraud, intentional misconduct or a violation of the implied contractual duty of good faith and fair dealing, or any lesser standard of conduct permitted under applicable law.

Amendments

The second amended and restated limited partnership agreement of Silvercrest L.P. may be amended with the consent of the general partner and the holders of at least 60% of the Class B units, provided that the general partner may, without the consent of the holders of at least 60% of the Class B units, make amendments that, generally, are not expected to adversely affect the holders of Class B units.

Resale and Registration Rights Agreement

Pursuant to a resale and registration rights agreement that we will enter into with each holder of Class B units, the shares of Class A common stock issued upon exchange will be eligible for resale pursuant to a shelf registration statement, or otherwise, subject to the resale timing and manner limitations described below. Pursuant to this agreement, when Silvercrest L.P. issues any Class B units to its employees, partners or other consultants pursuant to the 2012 Equity Incentive Plan, the recipient will be entitled to the same resale and registration rights, and will be subject to the same restrictions, as the holders of Class B units outstanding immediately following this offering.

Pursuant to the resale and registration rights agreement, we will commit to use our best efforts to:

•

file a shelf registration statement in order to register the resale of these shares of Class A common stock as soon as practicable after the date that we become eligible to use Form S-3 under the Securities Act, which is expected to be one year after the consummation of this offering; and

•

cause the SEC to declare the shelf registration statement effective as soon as practicable thereafter.

From the first effective date of the shelf registration statement until the fifth anniversary of the consummation of this offering, holders of Class B units, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights,” will be able to sell the shares of Class A common stock issued upon exchange pursuant to the shelf registration statement. Prior to the first effective date of the shelf registration statement, holders of Class B units may, subject to securities law limitations, sell their shares in any manner, but only at times determined by us in our sole discretion and subject to the timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Holders of Class B units will be permitted to sell shares of Class A common stock issued upon exchange of Class B units during the first 10-day period of the open trading window of each quarter by submitting a request to the Executive Committee of Silvercrest L.P. to sell a specified number of shares. The Executive Committee may, in its discretion, deny the request of any holder of Class B units to sell his or her underlying shares of Class A common stock. If a sale request by a holder of Class B units is denied, the denied holder will be given the first opportunity to sell shares of Class A common stock in the next available open window. Thereafter, holders of Class B units will be able to exchange their Class B units for shares of our Class A common stock, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights” and will be permitted to sell their shares in any manner, but only at times determined by us, in our sole discretion.

Notwithstanding the restrictions described above and below, subject to securities law limitations, (i) holders of shares of Class A common stock issued upon exchange of Class B units after the consummation of this offering may always sell a number of shares of Class A common stock sufficient to cover any taxes due on the exchange, using an assumed tax rate equal to the applicable prevailing capital gains rate at the time of the exchange, and (ii) the estate of any deceased holder, or the beneficiaries thereof, and any principal who has retired or whose employment has been terminated due to death or disability may sell any or all shares of Class A common stock he or she holds without regard to the restrictions described above.

Following the termination of a principal’s employment other than in the case of retirement or termination for cause, the Class B units held by the terminated principal will be automatically exchanged, and the

corresponding number of shares of Class B common stock redeemed, for shares of our Class A common stock, subject to any required forfeiture or repurchase of Class B units as described under “—Restrictive Covenants—Forfeiture or Repurchase of Class B units and Class A Common Stock” above. If the principal’s employment was terminated for any reason other than retirement, death, disability or voluntarily resignation, the principal may (i) at the time of termination of employment, sell a number of shares of Class A common stock sufficient to cover any taxes due on the exchange of Class B units, and (ii) in each 12-month period following the 18-month anniversary of the termination, sell a number of shares of our Class A common stock equal to one-half of the difference between the aggregate number of vested shares of Class A common stock received upon exchange of the Class B units held as of the date of termination of his or her employment and the number of shares, if any, of Class A common stock the principal sold to cover taxes to the exchange subsequent to the principal’s termination. If a principal voluntarily terminates his or her employment, then the principal may (i) at the time of termination of employment, sell a number of shares of Class A common stock sufficient to cover taxes due on the exchange of Class B units and (ii) in each 12-month period following the 18-month anniversary of the termination, sell a number of shares of our Class A common stock equal to one-third of the difference between the aggregate number of vested shares of Class A common stock received upon exchange of the Class B units held as of the date of termination of his or her employment and the number of shares, if any, of Class A common stock the principal sold to cover taxes to the exchange subsequent to the principal’s termination. If the principal has retired, died or become disabled, he or she may sell any and all shares of Class A common stock or Class B units held by such retired principal, subject to any applicable securities law limitations. If the amount of income taxes that principals are required to pay due to the exchange of their Class B units for shares of our Class A common stock (whether or not they are employees at the time that the tax payment obligations arises) exceed the net proceeds they would receive upon the sale of all shares they are permitted to sell pursuant to the immediately preceding paragraph during the year with respect to which the tax is payable, then they will instead be entitled to sell a number of shares of our Class A common stock sufficient to provide net proceeds that would enable them to pay the taxes due.

We have agreed to indemnify the holders of the Class B units against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which they may sell the shares of our Class A common stock they receive upon exchange of their Class B units, unless such liability arose from the selling stockholder’s misstatement or omission, and the holders have agreed to indemnify us against all losses caused by their misstatements or omissions. We will pay all expenses incident to our performance under the resale and registration rights agreement, and the selling stockholders will pay their respective portions of all transfer taxes and selling expenses relating to the sale of their shares of Class A common stock pursuant to the registration rights agreement.

Voting Rights of Class A and Class B Stockholders

Each share of our Class A common stock and Class B common stock will entitle its holder to one vote. Immediately after this offering, our Class B common stockholders will hold approximately % of the combined voting power of our common stock (or % if the underwriters exercise their option in full to purchase additional shares of our Class A common stock). We intend to cause Silvercrest L.P. to issue additional Class B units to our employees in various forms of equity compensation, such as restricted Class B units and options to acquire Class B units. Silvercrest L.P. will initially be authorized to issue additional Class B units in an amount not exceeding % of all partnership units outstanding as of the consummation of this offering pursuant to the 2012 Equity Incentive Plan. The holders of any vested or unvested Class B units issued after this offering will be entitled to receive a corresponding number of shares of our Class B common stock in exchange for the payment of their par value and, therefore, the voting power of our Class B common stockholders will increase to the extent that we grant Class B unit awards pursuant to the 2012 Equity Incentive Plan, to our employees, partners or other consultants. Conversely, when any holder of vested Class B units exchanges them for the corresponding number of shares of our Class A common stock, any holder of unvested Class B units forfeits a Class B unit or has it repurchased due to applicable vesting provisions, or any holder of vested or unvested Class B units forfeits a Class B unit due to a breach of restrictive covenants contained in the amended and restated limited partnership

agreement of Silvercrest L.P. or the holder voluntarily resigns or retires and competes with our company in the 12-month period following termination of employment, it will result in the automatic redemption of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders.

Stockholders’ Agreement Among Class B Stockholders

Concurrently with the consummation of this offering and the reorganization, the holders of all outstanding shares of our Class B common stock will enter into a stockholders’ agreement with respect to all shares of Class B common stock then held by them and any additional shares of Class B common stock they may acquire in the future. Pursuant to this stockholders’ agreement, they will agree to vote all their shares of Class B common stock together on any matter submitted to our common stockholders for a vote. Upon a termination of employment, including a retirement, the terminated principal will cease to be a party to the stockholders’ agreement and will no longer be subject to the voting obligation contained in the agreement.

Prior to any vote of our common stockholders, the Executive Committee will convene to determine how the holders of our Class B common stock should vote their shares of Class B common stock and Class A common stock on each matter upon which a vote of all common stockholders is proposed to be taken. The vote of each member of the Executive Committee shall be weighted based on the number of Class B units owned by the member relative to the number of Class B units held by all members of the Executive Committee. Each Class B stockholder must then vote all of his or her shares of Class B common stock in accordance with the determination of the Executive Committee. In order to give effect to these voting provisions, each of these Class B stockholders will grant to each member of the Executive Committee an irrevocable proxy to vote all his or her shares of Class B common stock in accordance with the determination of the Executive Committee.

In addition, pursuant to this stockholders’ agreement, each holder of shares of Class B common stock will agree that:

•

the holder will not transfer any shares of Class B common stock to any person unless the holder transfers an equal number of Class B units to the same person; and

•

in the event the holder transfers any Class B units to any person, the holder will transfer an equal number of shares of Class B common stock to the same person.

This stockholders’ agreement may only be amended with the consent of the holders of a majority of the shares of Class B common stock that are party to this agreement.

Tax Consequences

The holders of partnership units of Silvercrest L.P., including us, generally will incur U.S. federal, state and local income taxes on their proportionate share of any net taxable income of Silvercrest L.P. Net profits and net losses of Silvercrest L.P. generally will be allocated to its partners pro rata in proportion to their respective partnership units. The second amended and restated limited partnership agreement of Silvercrest L.P. will provide for cash distributions to its partners if the taxable income of Silvercrest L.P. gives rise to taxable income for its partners. In accordance with this agreement, Silvercrest L.P. will make distributions to the holders of its partnership units for the purpose of funding their tax obligations in respect of the income of Silvercrest L.P. that is allocated to them. Generally, these tax distributions will be computed based on our estimate of the net taxable income of Silvercrest L.P. allocable per partnership unit multiplied by an assumed tax rate equal to the highest combined U.S. federal and applicable state and local tax rate applicable to any partner (taking into account the deductibility of state and local taxes for U.S. federal income tax purposes).

in our share of the tax basis in the tangible and intangible assets of Silvercrest L.P. at the time of our acquisition of partnership units, which will increase the tax depreciation and amortization deductions available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of tax that we would otherwise be required to pay in the future.

Tax Receivable Agreement

We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis described above and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement. Our obligation to make payments to a principal pursuant to the tax receivable agreement will automatically terminate if such principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement.

Estimating the amount of payments that we may be required to make under the tax receivable agreement is imprecise by its nature, because the actual increase in our share of the tax basis, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including:

•

the timing of exchanges of Class B units for shares of our Class A common stock—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of Silvercrest L.P. at the time of the exchanges;

•

the price of our Class A common stock at the time of exchanges of Class B units—the increase in our share of the basis in the assets of Silvercrest L.P., as well as the increase in any tax deductions, will be related to the price of our Class A common stock at the time of these exchanges;

•

the extent to which these exchanges are taxable—if an exchange is not taxable for any reason (for instance, if a holder of Class B units exchanges units in order to make a charitable contribution), increased deductions will not be available;

•

the tax rates in effect at the time we utilize the increased amortization and depreciation deductions; and

•

the amount and timing of our income—we will be required to pay 85% of the tax savings, as and when realized, if any. If we do not have taxable income, we generally will not be required to make payments under the tax receivable agreement for that taxable year because no tax savings will have been actually realized.

in the assumed initial public offering price of $ per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) the aggregate amount of future payments to holders of Class B units in respect of the purchase by $ million. Future payments under the tax receivable agreement in respect of subsequent exchanges will be in addition to these amounts and are expected to be substantial.

In addition, the tax receivable agreement provides that, upon certain mergers, asset sales, other forms of business combinations or other changes of control, our (or our successors’) obligations with respect to exchanged or acquired Class B units (whether exchanged or acquired before or after such transaction) would be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement.

Decisions made by the continuing partners of Silvercrest L.P. in the course of running our business, such as with respect to mergers, asset sales, other forms of business combinations or other changes in control, may influence the timing and amount of payments that are received by an exchanging or selling partner under the tax receivable agreement. For example, the earlier disposition of assets following an exchange or acquisition transaction will generally accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase an existing owner’s tax liability without giving rise to any rights of an existing owner to receive payments under the tax receivable agreement.

Were the IRS to successfully challenge the tax basis increases described above, we would not be reimbursed for any payments previously made under the tax receivable agreement. As a result, in certain circumstances, we could make payments under the tax receivable agreement in excess of our actual cash savings in income tax.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of shares of our Class A common stock by us in this offering will be approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares), based on an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus), in each case after deducting assumed underwriting discounts and estimated offering expenses payable by us.

We intend to use approximately $ million of the net proceeds from this offering to purchase an aggregate of Class B units of Silvercrest L.P. from existing limited partners and will not retain any of these proceeds. The purchase price for the Class B units will be determined by the public offering price of our Class A common stock in this offering less the per share amount of offering expenses incurred by us. We intend to use the remaining net proceeds of this offering, including any proceeds from the exercise of the underwriters’ option to purchase additional shares, for general corporate purposes, which may include business operations, investments in our business and new investment strategies and strategic acquisitions for which no targets have been identified.

DIVIDEND POLICY

Our Dividend Policy

Following this offering, we intend to pay quarterly cash dividends. We expect that our first dividend will be paid in the quarter of 2012 and will be $ per share of our Class A common stock. Only holders of our Class A common stock will be entitled to any dividend declared by us on our capital stock. We will be a holding company and will have no material assets other than our ownership of the general partnership interest of Silvercrest L.P. As a result, we intend to fund our initial dividend, as well as any future dividend, from our portion of distributions from Silvercrest L.P. If Silvercrest L.P. makes distributions to its partners, holders of Class B units will be entitled to receive equivalent distributions on a pro rata basis.

All of the foregoing is subject to the qualification that the declaration and payment of any distributions by Silvercrest L.P. are at our sole discretion, as general partner, and we may change our distribution policy at any time.

In addition, the declaration and payment of any dividends to our stockholders will be at the sole discretion of our board of directors. Our board or directors may decide not to declare a dividend on our Class A common stock even if Silvercrest L.P. makes a distribution to its partners, including Silvercrest. In determining whether to make a dividend payment to our Class A stockholders, our board of directors will take into account:

•

our financial results as well as the financial results of Silvercrest L.P.;

•

our available cash and anticipated cash needs;

•

the capital requirements of our company and our direct and indirect subsidiaries (including Silvercrest L.P.);

•

contractual, legal, tax and regulatory restrictions on, and implications of, the payment of dividends by us to our stockholders or by our direct and indirect subsidiaries (including Silvercrest L.P.) to us;

•

general economic and business conditions; and

•

such other factors as our board of directors may deem relevant.

Neither we nor any of our direct or indirect subsidiaries has any debt obligations that limit our or its ability to pay dividends or distributions. However, pursuant to its second amended and restated limited partnership agreement, Silvercrest L.P. may not make any distributions to its partners, including us, if doing so would violate any agreement to which it is then a party or any law then applicable to it, have the effect of rendering it insolvent or result in it having net capital lower than that required by applicable law.

Our dividend policy has certain risks and limitations, particularly with respect to liquidity. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy, or at all, if, among other things, we do not have the cash necessary to pay our intended dividends. By paying cash dividends rather than saving or investing that cash, we risk, among other things, slowing the pace of our growth and having insufficient cash to fund our operations or unanticipated capital expenditures.

Silvercrest L.P.’s Historical Distributions

Prior to the completion of this offering, Silvercrest L.P. was owned by 37 of its current employees and one outside investor. All decisions regarding the amount and timing of distributions were made by Silvercrest GP LLC as the general partner of Silvercrest L.P. prior to this offering, and the board of directors of Silvercrest GP LLC, based on an assessment of appropriate amounts of distributions, taking into account Silvercrest L.P.’s capital needs, as well as actual and potential earnings.

Silvercrest L.P. made distributions to its partners of $10.0 million, $5.9 million, $7.4 million, $12.9 million and $9.6 million for the years ended December 31, 2011, 2010, 2009, 2008 and 2007, respectively. In connection with the reorganization, Silvercrest L.P. may make a distribution to its existing partners representing some of its undistributed earnings generated between and the date of the offering.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of June 30, 2012 (1) on an actual basis for Silvercrest L.P. and (2) on a pro forma basis for Silvercrest after giving effect to the transactions described under “Unaudited Pro Forma Consolidated Financial Information,” including the reorganization and the application of the net proceeds from this offering (assuming no exercise of the underwriters’ option to purchase additional shares). The table below should be read in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical consolidated financial statements of Silvercrest L.P. and related notes included elsewhere in this prospectus.


	As of June 30, 2012
	Silvercrest L.P. Actual			Silvercrest Pro Forma
	(unaudited) (dollars in thousands)
Cash and cash equivalents	$	2,568		$

Total long-term debt, including current portion		4,414

Total redeemable equity		91,092

Total (deficit) equity		(63,414	)

Total capitalization	$	34,660		$

DILUTION

If you invest in our Class A common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma, as adjusted net tangible book value per share of our Class A common stock upon completion of this offering.

Our pro forma, as adjusted net tangible book value as of June 30, 2012 was approximately $ million, or approximately $ per share of our Class A common stock. Pro forma, as adjusted net tangible book value per share represents the amount of total tangible assets less total liabilities, after giving effect to the reorganization and the distribution by Silvercrest L.P. to its pre-offering partners of some of its retained profits as of the date of the closing of this offering.

After giving effect to the sale by us of shares of Class A common stock in this offering at the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) after deducting estimated underwriting discounts and estimated offering expenses payable by us and the assumed exchange of all Class B units that will be outstanding immediately after the reorganization for the corresponding number of shares of our Class A common stock, our pro forma as adjusted net tangible book value at June 30, 2012 was $ million, or $ per share of our Class A common stock. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price per share of Class A common stock		$
Pro forma, as adjusted net tangible book value per share of Class A common stock at June 30, 2012	$
Increase in pro forma, as adjusted net tangible book value per share of Class A common stock attributable to new investors	$

Pro forma, as adjusted net tangible book value per share after this offering		$

Dilution in pro forma, as adjusted net tangible book value per share of Class A common stock to new investors	$

The following table sets forth, on the same pro forma, as adjusted basis at June 30, 2012, the number of shares of Class A common stock purchased from us and the total consideration and the average price per share paid by existing equity holders, which consist of the principals, and by new investors purchasing Class A common stock in this offering, assuming that all holders of Class B units of Silvercrest L.P. immediately after the consummation of the reorganization have exchanged all their Class B units for the corresponding number of shares of our Class A common stock:

Shares Purchased

Total Consideration

Number

Percent

Amount

Percent

Average Price Per Share

Existing equity holders

New investors

Total

A $1.00 increase (decrease) in the assumed initial public offering price of $ per share would increase (decrease) total consideration paid by new investors by $ , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.

If the underwriters exercise in full their option to purchase additional shares, our pro forma as adjusted net tangible book value will increase to $ per share, representing an increase to existing holders of $ per share, and there will be an immediate dilution of $ per share to new investors.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth selected historical combined consolidated financial and other data of Silvercrest L.P., which is deemed to be our predecessor for accounting purposes, as of the dates and for the periods indicated. As discussed elsewhere in this prospectus, Silvercrest L.P. was formed on December 10, 2008 and commenced operations on January 1, 2009. For reporting purposes, all balances of Silvercrest Asset Management Group LLC, the accounting predecessor to Silvercrest L.P., were carried over to Silvercrest L.P. at their carrying values on December 31, 2008. The selected consolidated statements of operations data for the years ended December 31, 2011, 2010 and 2009, and the consolidated statements of financial position data as of December 31, 2011 and 2010 have been derived from the Silvercrest L.P. and subsidiaries audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of financial position data as of December 31, 2009 has been derived from consolidated financial statements of Silvercrest L.P. and subsidiaries not included in this prospectus. The selected consolidated statements of operations data for the years ended December 31, 2008 and 2007 and the consolidated statements of financial position data as of December 31, 2008 and 2007 have been derived from the unaudited consolidated financial statements of Silvercrest Asset Management Group LLC and subsidiaries not included in this prospectus.

The selected consolidated statements of operations data for the six months ended June 30, 2012 and the selected consolidated statements of financial condition as of June 30, 2012 have been derived from the Silvercrest L.P. unaudited condensed consolidated financial statements included elsewhere in this prospectus. The summary selected consolidated statement of financial condition data as of June 30, 2011 have been derived from the Silvercrest L.P. unaudited condensed consolidated statement of financial condition as of June 30, 2011, not included in this prospectus. These unaudited condensed consolidated financial statements have been prepared on substantially the same basis as our audited condensed consolidated financial statements and include all adjustments that we consider necessary for a fair presentation of our consolidated results of operations and financial condition for the periods and as of the date presented. Our results for the six months ended June 30, 2012 and 2011 are not necessarily indicative of our results for a full fiscal year.

You should read the following selected historical combined consolidated financial data together with “The Reorganization and Our Holding Company Structure,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical combined consolidated financial statements and related notes included elsewhere in this prospectus. In the following table, dollars are in thousands, except assets under management which is in billions.


	Historical Silvercrest L.P.																					Pro Forma Silvercrest
	Years Ended December 31,															Six Months Ended June 30,						Year Ended December 31,	Six Months Ended June 30,
	2011			2010			2009			2008⁽¹⁾			2007⁽²⁾			2012			2011			2011	2012
Statements of operations data:
Revenue:
Management and advisory fees	$	37,869		$	32,442		$	29,341		$	40,987		$	42,633		$	22,327		$	18,539
Performance fees and allocations		85			548			96			75			1,554			16			31
Family office services		4,833			3,841			3,097			2,019			931			2,444			2,209
Investment income		—			—			—			—			10,396			—			—

Total revenue		42,787			36,831			32,534			43,081			55,514			24,787			20,779

Expenses:
Compensation and benefits		17,492			16,528			15,630			18,399			19,263			9,600			8,474
General and administrative.		10,849			9,459			13,006			11,943			9,097			5,208			4,424
Impairment charges		—			—			1,691			9,599			9,402			—			—

Total expenses		28,341			25,987			30,327			39,941			37,762			14,808			12,898

Income before net loss from investment activities of Silvercrest Funds and other income (expense)		14,446			10,844			2,207			3,140			17,752			9,979			7,881
Net loss from investment activities of Silvercrest Funds:
Realized gains	$	—		$	—		$	—		$	—		$	6,510		$	—		$	—
Net change in unrealized gains		—			—			—			—			(28,693	)		—			—
Equity income (loss) from investment		—			—			—			—			41			—			—

Net loss from investment activities of Silvercrest Funds		—			—			—			—			(22,142	)		—			—

Other income (expense):
Gain on extinguishment of debt .		—			—			3,934			—			461			—			—
Gain on settlement with former LongChamp shareholders		—			—			1,470			—			—			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—			—			—
Interest income		187			231			213			358			—			86			92
Interest expense		(164	)		(241	)		(467	)		(613	)		(705	)		(206	)		(75	)
Change in value of options granted to equity holders		—			2			134			796			(931	)		—			—
Other (expense) income		(210	)		30			—			—			—			61			(176	)
Equity income (loss) from investments		950			1,241			274			(247	)		—			—			—

Total other income (expense)		729			755			5,558			294			(1,175	)		(59	)		(159	)

Income (loss) before non-controlling interests in income (loss) of consolidated entities and (provision) benefit for income taxes		15,175			11,599			7,765			3,434			(5,565	)		9,920			7,722

Non-controlling interests in income (loss) of consolidated entities		—			—			—			—			15,536			—			—

Income before provision for income taxes		15,175			11,599			7,765			3,434			9,971			9,920			7,722
(Provision) benefit for income taxes		(566	)		(657	)		321			(1,062	)		(2,653	)		(516	)		(178	)

Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318		$	9,404		$	7,544

Selected statements of financial position data:
Total assets	$	45,262		$	33,079		$	29,964		$	37,719		$	49,212		$	40,419		$	29,867
Notes payable	$	4,809		$	2,957		$	7,120		$	8,855		$	5,938		$	4,414		$	2,284
Total liabilities	$	15,751		$	12,490		$	14,893		$	23,282		$	27,766		$	12,741		$	8,970
Redeemable partners’/members’ capital	$	85,177		$	45,619		$	34,219		$	83,377		$	95,595		$	91,092		$	70,173
Partners’/members’ deficit	$	(55,666	)	$	(25,030	)	$	(19,148	)	$	(68,940	)	$	(74,149	)	$	(63,414	)	$	(49,278	)


	Historical Silvercrest L.P.																					Pro Forma Silvercrest
	Years Ended December 31,															Six Months Ended June 30,						Year Ended December 31,	Six Months Ended June 30,
	2011			2010			2009			2008⁽¹⁾			2007⁽²⁾			2012			2011			2011	2012
Selected unaudited operating data:
Assets under management (in billions)⁽³⁾	$	10.1		$	9.2		$	8.8		$	7.8		$	10.1		$	10.7		$	10.6
Adjusted EBITDA⁽⁴⁾	$	10,839		$	9,068		$	6,449		$	7,107		$	14,153		$	6,776		$	5,580
Adjusted EBITDA margin⁽⁵⁾		25.3	%		24.6	%		19.8	%		16.5	%		25.5	%		27.3	%		26.9	%

(1)

Effective January 1, 2009, each of the members of Silvercrest Asset Management Group LLC, or SAMG LLC, contributed their limited liability company interests in SAMG LLC to Silvercrest L.P. in return for limited partnership interests in Silvercrest L.P., and membership interests in Silvercrest GP LLC. As a result of the reorganization SAMG LLC became a wholly owned subsidiary of Silvercrest L.P. The reorganization was accounted for as a transaction between entities under common control.

(2)

Includes the effect of the consolidation of certain funds that we manage. These funds include the Silvercrest Funds. The Silvercrest Funds were consolidated through the respective effective date that each fund granted various rights to unaffiliated investors, which resulted in the ultimate deconsolidation of the various Silvercrest Funds. Set forth below is a summary of consolidated fund-related statement of operations data that is included in the 2007 financial data:

Revenue $ 7,229

Expenses $ 570

The consolidation of the various Silvercrest Funds had no net effect on net income or members’ capital.

(3)	Reflected as of the last day of the period.

(4)

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings. EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Years Ended December 31,															Six Months Ended June 30,
	2011			2010			2009			2008			2007			2012			2011
	(in thousands)
Reconciliation of non-GAAP financial measures:
Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318		$	9,404		$	7,544
Provision (benefit) for income taxes		566			657			(321	)		1,062			2,653			516			178
Interest expense		164			241			467			613			705			206			75
Interest income		(187	)		(231	)		(213	)		(358	)		(516	)		(86	)		(92	)
Partner/member incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(7,171	)		(7,215	)		(4,448	)		(3,449	)
Non-performance fee related equity method (gains) losses		—			—			—			247			—			—			—
Depreciation and amortization		1,469			1,379			1,531			1,539			1,206			955			645
Equity-based compensation		1,060			583			—			—			130			806			496
Other adjustments (B)		1,933			670			(460	)		8,803			9,872			(577	)		183

Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	7,107		$	14,153		$	6,776		$	5,580

(A)

Partner/member incentive allocations have historically been treated as distributions of net income and recorded when paid. Upon the completion of the reorganization and this offering, we will account for partner incentive payments as an expense in our statement of operations and have reflected the related adjustments in our pro forma financial information. Accordingly, this will have the effect of increasing compensation expense relative to the amounts that have been recorded historically in our financial statements. See “Unaudited Pro Forma Financial Information.”

(B)

Other adjustments consist of the following:


	Year Ended December 31,														Six Months Ended June 30,
	2011		2010			2009			2008			2007			2012			2011
Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—		$	—		$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)		—			(461	)		—			—
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)		—			—			—			—
Write-off of LongChamp revenue (b)		—		64			557			—			—			—			—
Loss on sub-lease (c)		150		—			—			—			—			(42	)		192
Lease abandonment charge (d)		—		—			1,154			—			—			(662	)		—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691			9,599			9,402			—			—
Client reimbursement		—		—			1,132			—			—			—			—
Fund redemption costs (f)		827		—			—			—			—			9			—
IPO professional fees		578		—			—			—			—			103			—
Milbank acquisition costs (g)		222		—			—			—			—			15			—
Severance		69		100			—			—			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		(796	)		931			—			—
Other (i)		53		—			—			—			—			—			(9	)

Total other adjustments	$	1,933	$	670		$	(460	)	$	8,803		$	9,872		$	(577	)	$	183

(a)

Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

In 2009, we entered into a settlement agreement with the former owners of LGI to close the business of LGI, which was acquired by us in 2007. All agreements between our company and the former owners of LGI were terminated. LGI was ultimately wound down in 2009. For further explanation of the closing of the LGI business, see Note 10 to the audited consolidated financial statements of Silvercrest L.P. and subsidiaries included elsewhere in this prospectus.

(c)

(d)

(e)

(f)

(g)

Reflects the legal and accounting fees associated with the closing of the Milbank acquisition that were expensed in 2011. Also reflects expenses related to relocating Milbank personnel and operations to our headquarters that were incurred during the six months ended June 30, 2012.

(h)

Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)

Represents professional fees related to the Milbank acquisition and a Silvercrest fund.

(5)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited consolidated pro forma financial statements present the consolidated results of operations and financial condition of Silvercrest and its predecessor, Silvercrest L.P., assuming that all of the transactions described in the four bullet points below had been completed as of January 1, 2011 with respect to the unaudited pro forma consolidated statement of operations data for the six months ended June 30, 2012 and the year ended December 31, 2011, and as of June 30, 2012 and December 31, 2011 with respect to the unaudited pro forma consolidated statement of financial condition data as of June 30, 2012 and December 31, 2011, respectively. The pro forma adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions and this offering on the historical financial information of Silvercrest L.P.

The pro forma adjustments principally give effect to the following transactions:

•

the acquisitions of Milbank Winthrop & Co., Inc., which closed on November 1, 2011, and MW Commodity Advisors, LLC, which closed on April 1, 2012 (included as an adjustment for the period ended December 31, 2011);

•

the reorganization described in “The Reorganization and Our Holding Company Structure,” which will occur immediately prior to the consummation of this offering, including our agreement to return 85% of the tax benefits that we receive as a result of our ability to step up our tax basis in the partnership units of Silvercrest L.P. that we acquire from our partners;

•

the amendment of the partnership agreement of Silvercrest L.P., effective as of the consummation of this offering, to eliminate the call and put rights of Silvercrest L.P. and its partners, respectively upon a partner’s death, or, if applicable, termination of employment, which required all partnership units to be classified as temporary equity in Silvercrest L.P.’s consolidated financial statements; and

•

the sale of shares of our Class A common stock in this offering at an assumed offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and the application of the proceeds therefrom, after payment of assumed underwriting discounts and estimated offering expenses payable by us (assuming no exercise of the underwriters’ option to purchase additional shares).

The pro forma adjustments for the acquisitions of Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC described above are not included in the unaudited pro forma consolidated statement of operations data and statement of financial condition data for the six months ended June 30, 2012 because the acquisition of Milbank Winthrop & Co., Inc. was completed on November 1, 2011 and the acquisition is already reflected in the unaudited financial statements of Silvercrest L.P. for the six months ended June 30, 2012 and the adjustments for MW Commodity Advisors, LLC are de minimis.

The unaudited consolidated pro forma financial information of Silvercrest and its predecessor should be read together with “The Reorganization and Our Holding Company Structure,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical consolidated financial statements of Silvercrest L.P., Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC and related notes included elsewhere in this prospectus.

The unaudited consolidated pro forma financial information is included for informational purposes only and does not purport to reflect our results of operations or financial condition that would have occurred had we operated as a public company during the periods presented. The unaudited consolidated pro forma financial information should not be relied upon as being indicative of our results of operations or financial condition had the transactions contemplated in connection with the reorganization and this offering been completed on the dates assumed. The unaudited consolidated pro forma financial information also does not project the results of operations or financial condition for any future period or date.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2011


	Silvercrest L.P. Historical			Business Acquisition(1)			Silvercrest L.P. Including Business Acquisition			Offering Adjustments(2)	Offering Adjustments Pro Forma Note	Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Assets:
Cash and cash equivalents	$	7,354		$	3		$	7,357			(A),(C)
Restricted certificates of deposit and escrow		1,130			—			1,130
Investments		1,128			—			1,128
Receivables, net		2,238			4			2,242
Due from Silvercrest Funds		2,043			—			2,043
Furniture, equipment and leasehold improvements, net		2,275			—			2,275
Goodwill		14,683			112			14,795
Intangible assets, net		13,810			—			13,810
Prepaid expenses and other assets		601			—			601			(A)

Total assets	$	45,262		$	119		$	45,381		$		$

Liabilities, Redeemable Partners’ Capital and Partners’ Deficit:
Accounts payable and accrued expenses	$	4,365		$	5		$	4,370
Accrued compensation		2,915			—			2,915
Notes payable		4,809			—			4,809
Deferred rent		3,287			—			3,287
Deferred tax and other liabilities		375			14			389			(A)

Total liabilities		15,751			19			15,770

Redeemable partners’ capital		96,613			154			96,767			(B)
Notes receivable from partners		(6,024	)		—			(6,024	)		(C)

Total redeemable partners’ capital		90,589			154			90,743

Commitments and Contingencies:

Partners’ Capital:
Common stock											(A)
Additional paid-in capital											(A)
Partners’ capital		44,359						44,359			(A)
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(105,437	)		(54	)		(105,491	)		(A)

Total partners’ deficit		(61,078	)		(54	)		(61,132	)
Non-controlling interests											(A)
Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	119		$	45,381		$		$

(1)

Silvercrest L.P. consolidates the acquired assets and liabilities arising from the MW Acquisition effective on the date of the closing of the MW Acquisition, and has accounted for the MW Acquisition as a business combination using the acquisition method of accounting. Since the Milbank Winthrop & Co., Inc. acquisition occurred on November 1, 2011, the acquired assets and liabilities arising from such acquisition are consolidated in the Silvercrest L.P. audited consolidated statement of financial condition as of December 31, 2011, and therefore, no pro forma adjustments are required.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF JUNE 30, 2012(1)


	Silvercrest L.P. Historical			Offering Adjustments(2)	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Assets:
Cash and cash equivalents	$	2,568				(A	),(C)
Restricted certificates of deposit and escrow		1,018
Investments		74
Receivables, net		3,554
Due from Silvercrest Funds		2,033
Furniture, equipment and leasehold improvements, net		2,103
Goodwill		14,830
Intangible assets, net		13,087
Prepaid expenses and other assets		1,152				(A	)

Total assets	$	40,419		$				$

Liabilities, Redeemable Partners’ Capital and Partners’ Deficit:
Accounts payable and accrued expenses	$	3,525
Accrued compensation		2,067
Notes payable		4,414
Deferred rent		2,399
Deferred tax and other liabilities		336				(A	)

Total liabilities		12,741

Redeemable partners’ capital		96,360				(B	)
Notes receivable from partners		(5,268	)			(C	)

Total redeemable partners’ capital		91,092

Commitments and Contingencies:

Partners’ Capital:
Common stock						(A	)
Additional paid-in capital						(A	)
Partners’ capital		45,660				(A	)
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(109,074	)			(A	)

Total partners’ deficit		(63,414	)
Non-controlling interests						(A	)
Total liabilities, redeemable partners’ capital and partners’ deficit	$	40,419		$				$

(1)

Business Acquisition: On April 1, 2012, Silvercrest L.P. acquired 100% of the LLC interests of MW Commodity Advisors, LLC, which is the general partner of MW Commodity Strategies L.P., a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. We refer to this acquisition as the MW Acquisition. The consolidated statement of financial condition for MW Commodity Advisors, LLC as of December 31, 2011 is derived from its audited financial statements included elsewhere in this prospectus. Since the MW Acquisition occurred on April 1, 2012, the acquired assets and liabilities arising from such acquisition are consolidated in the Silvercrest L.P. unaudited consolidated statement of financial condition as of June 30, 2012, and therefore, no pro forma adjustments are required.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR DECEMBER 31, 2011


(in thousands)	Silvercrest L.P. Historical			Milbank Winthrop Business Acquisition (1)			MW Commodity Business Acquisition (1)			Silvercrest L.P. Including Business Acquisitions			Offering Adjustments	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Revenue:
Management and advisory fees	$	37,869		$	4,348		$	158		$	42,375
Performance fees and allocations		85			—			—			85
Family office services.		4,833			387			—			5,220

Total revenue		42,787			4,735			158			47,680

Expenses:
Compensation and benefits		17,492			1,989			—			19,481				(D	)
General and administrative		10,849			1,278			37			12,164

Total expenses		28,341			3,267			37			31,645

Income before other income (expenses)		14,446			1,468			121			16,035
Other income (expenses)
Loss on forgiveness of notes receivable		(34	)		—			—			(34	)
Interest income		187			1			—			188
Interest expense		(164	)		(132	)		—			(296	)
Other expense		(210	)		—			—			(210	)
Equity income from investments		950			—			—			950

Total other income (expenses)		729			(131	)		—			598

Income before provision for income taxes		15,175			1,337			121			16,633
Provision for income taxes		(566	)		(49	)		(5	)		(620	)			(E	)

Net income		14,609			1,288			116			16,013
Less: net income attributable to non-controlling interests		—			—			—			—				(F	)

Net income attributable to Silvercrest	$	14,609		$	1,288		$	116		$	16,013		$				$

Net income per share:
Basic																	$

Diluted																	$

Weighted average shares outstanding:
Basic																	$

Diluted																	$

(1)

Business Acquisition: Silvercrest L.P. consolidates the statements of operations of Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC effective on the date of the closing of these acquisitions, and has accounted for them as business combinations using the acquisition method of accounting.

(2)	Offering Adjustments:

(A) From this offering, we expect to receive net proceeds from our sale of Class A common stock of approximately $ million, based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus), after deducting assumed underwriting discounts and estimated offering expenses payable by us (assuming no exercise of the underwriters’ option to purchase additional shares). We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B Units will be determined by the public offering price of our Class A common stock in this offering, less the per share amount of offering expenses incurred by us. We intend to use the remaining net proceeds of this offering, including any proceeds from the exercise of the underwriters’ option to purchase additional shares, for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions. We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. This liability of $ million is included in pro forma other liabilities. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until (i) all such tax benefits have been utilized or expired, (ii) the tax receivable agreement with a principal automatically terminates due to a breach by such principal of his or her non-solicitation covenants with our company, or (iii) the termination by our company of a principal with cause, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement.

As illustrated below, the consolidated pro forma statement of financial condition amounts of common stock and additional paid-in capital at December 31, 2011 were determined by combining the pro forma adjusted net of $ million, the $ million deferred tax asset that arises as a result of this offering and the $ million tax receivable liability to the selling partners of Silvercrest L.P., which also arises as a result of this offering.


Silvercrest L.P. excess of liabilities, redeemable partners’ capital and partners’ capital over assets		$
Deferred tax asset		$
Tax receivable liability to selling partners		$
Total		$
Common stock		$
Additional paid-in capital		$
Total		$

(B) Represents the elimination of redeemable partners’ capital as the Silvercrest L.P. limited partnership agreement will be amended as of the completion of this offering by removing the call and put rights of Silvercrest L.P. and its partners, respectively.

(C) Represents the satisfaction of partner notes receivable related to three of our named executive officers. These notes were satisfied on September 18, 2012.

(D) This adjustment reflects the treatment of our historical partner incentive payments that were recorded as distributions prior to the reorganization and this offering as compensation expense.

Unincorporated Business Tax. The effective rate of pro forma income tax is estimated to be approximately %, and was determined by combining the projected federal, state and local income taxes.

(F) Represents the non-controlling interest allocation of % (assuming no exercise of the underwriters’ option to purchase additional shares) of the income of Silvercrest to Silvercrest L.P.

Business acquisitions:

The following table summarizes the pro forma impact to the Silvercrest L.P. historical consolidated statement of financial condition from the MW Commodity Advisors, LLC acquisition. For purposes of determining the adjustments to the unaudited consolidated pro forma statement of financial condition as of December 31, 2011, the MW Commodity Advisors, LLC acquisition is assumed to have occurred on that date.


(in thousands)	MW Commodity Advisors, LLC Historical		Pro Forma Adjustments			Pro Forma Note			MW Commodity Advisors, LLC Pro Forma
Assets:
Cash and cash equivalents	$	3	$	—					$	3
Receivables, net		4		—						4
Goodwill		—		112			(1	)		112
MW Commodity Strategies, L.P.:										—
Cash and cash equivalents		141		(141	)		(2	)		—
Investments in Funds		29,920		(29,920	)		(2	)		—
Prepaid expenses and other assets		—		—						—

Total assets	$	30,068	$	(29,949	)				$	119

Liabilities, Redeemable Members’ Capital and Members’ Deficit:
Accounts payable and accrued expenses	$	5	$	—					$	5
Deferred tax and other liabilities		—		14			(3	)		14
MW Commodity Strategies, L.P.:
Accrued expenses		27		(27	)		(2	)		—
Other liabilities		21		(21	)		(2	)		—
Redemptions payable		195		(195	)		(2	)		—

Total liabilities		248		(229	)					19

Redeemable members’ capital		—		100			(4	)		100
		—		54			(5	)		54

Total redeemable members’ capital		—		154						154

Commitments and Contingencies:

Member’s Equity:
Member’s equity		71		(71	)		(6	)		—
Excess of liabilities, redeemable members’ capital and members’ capital over assets		—		(54	)		(5	)		(54	)

Total MW Commodity Advisors, LLC Member's Equity		71		(125	)		(2	)		(54	)

Minority interests in MW Commodity Strategies, L.P		29,749		(29,749	)					—

Total member’s equity (deficit)		29,820		(29,874	)					(54	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	30,068	$	(29,949	)				$	119

The following table summarizes the pro forma impact to the Silvercrest L.P. historical consolidated statement of operations from the MW Commodity Advisors, LLC acquisition. For purposes of determining the adjustments to the unaudited consolidated pro forma statement of operations for the year ended December 31, 2011, the MW Commodity Advisors, LLC acquisition is assumed to have occurred on January 1, 2011.


(in thousands)	MW Commodity Advisors, LLC Historical Twelve Months Ended December 31, 2011			Pro Forma Adjustments			Pro Forma Note			MW Commodity Advisors, LLC Pro Forma Twelve Months Ended December 31, 2011
Revenue:
Investment advisory fees	$	—		$	158			(7	)	$	158
MW Commodity Strategies, L.P.:
Interest		—			—						—

Total revenue		—			158						158

Expenses:
General and administrative		37			—						37
MW Commodity Strategies, L.P.:
General and administrative		58			(58	)		(2	)		—

Total expenses		95			(58	)					37

(Loss) income before net loss from MW Commodity Strategies, L.P.		(95	)		216						121

Net loss from MW Commodity Strategies, L.P.:
Unrealized loss on investments in funds, net		(2,287	)		2,287			(2	)		—
Realized loss on investments in Funds, net		(289	)		289			(2	)		—

Total net (loss) from investment activities of Consolidated Milbank Partnerships		(2,576	)		2,576						—

(Loss) income before provision for income taxes		(2,671	)		2,792						121
Provision for income taxes		—			(5	)		(8	)		(5	)

Net (loss) income		(2,671	)		2,787						116

Minority interest in MW Commodity Strategies, L.P.		2,793			(2,793	)		(2	)		—

Net income attributable to MW Commodity Advisors, LLC	$	122		$	(6	)				$	116

(1)	Represents the pro forma goodwill recorded upon the completion of the MW Commodity acquisition.

(2)

Upon closing of Silvercrest L.P.’s acquisition of the LLC interests of MW Commodity Advisors, LLC, the unaffiliated investors in MW Commodity Strategies, L.P. were granted rights to provide that a simple majority of the fund's unaffiliated investors will have the right, without cause, to remove the general partner or equivalent and investment adviser or equivalent of the partnership or to accelerate the liquidation date of that partnership in accordance with certain procedures. The granting of these rights resulted in the deconsolidation of MW Commodity Strategies, L.P. and in the accounting of Silvercrest L.P.'s interest in MW Commodity Strategies, L.P. under the equity method. These adjustments represent the adjustments to deconsolidate the assets of MW Commodity Strategies, L.P.

(3)	Pursuant to the purchase agreement to acquire LLC interests of MW Commodity Advisors, LLC, certain call rights were granted by Silvercrest L.P. to the former sole member of MW Commodity Advisors, LLC to repurchase the LLC interests subject to the following terms:

(i)

if Silvercrest L.P. terminates the employment of the former sole member of MW Commodity Advisors, LLC without cause, as defined in the purchase agreement, then the former sole member shall have the

right to purchase the LLC interests from Silvercrest L.P. in an amount equal to the revenue, as defined in the purchase agreement, assigned or attributable to investments of limited partners in MW Commodity Strategies, L.P. for the most recent calendar year, multiplied by two, proceeding the date on which the call right is exercised, or;

(ii)

if, within three years of the closing of the MW Commodity Advisors, LLC acquisition, Silvercrest L.P. exercises a change of control (excluding an initial public offering), then the former sole member will have the right to purchase the LLC interests from Silvercrest L.P. in an amount equal to the revenue, as defined in the purchase agreement, assigned or attributable to investments of limited partners in MW Commodity Strategies, L.P. for the most recent calendar year, multiplied by two, proceeding the date on which the call right is exercised.

The pro forma adjustment represents a liability equal to the estimated fair value of the call rights. A Monte Carlo simulation was utilized to estimate the fair value of the call rights. The call right was valued at $14,100 and vested immediately.

(4)	Represents the estimated fair value of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(5)	Represents the adjustment to the redemption value at December 31, 2011 of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(6)	Represents the elimination of historical MW Commodity Advisors, LLC member's equity of $71,000.

(7)	Represents management fees of $158,000 earned by MW Commodity Advisors, LLC from MW Commodity Strategies, L.P. which were eliminated in the historical consolidated statement of operations.

(8)	Represents the provision of income taxes for NYC Unincorporated Business Tax of $5,000. Silvercrest L.P. is a partnership for income tax purposes.

The following table summarizes the pro forma impact to the Silvercrest L.P. historical consolidated statement of operations from the Milbank Winthrop & Co., Inc. acquisition. For purposes of determining the adjustments to the unaudited consolidated pro forma statement of operations for the year ended December 31, 2011, the Milbank Winthrop & Co., Inc. acquisition is assumed to have occurred on January 1, 2011.


(in thousands)	Milbank Winthrop & Co., Inc. Historical Nine Months Ended September 30, 2011		Pro Forma Adjustments			Pro Forma Note			Milbank Winthrop & Co., Inc. Pro Forma Ten Months Ended October 31, 2011
Revenue:
Investment advisory fees	$	1,502	$	2,846			(1	)	$	4,348
Family office services		—		387			(2	)		387
Other income		1		—						1
Consolidated Milbank Partnerships:										—
Dividends		1,629		(1,629	)		(3	)		—
Interest		394		(394	)		(3	)		—

Total revenue		3,526		1,210						4,736

Expenses:
Compensation and benefits		3,780		(1,791	)		(4	)		1,989
General and administrative		589		689			(5	)		1,278
Interest		—		132			(6	)		132
Consolidated Milbank Partnerships:										—
Management and advisory fees		1,410		(1,410	)		(3	)		—
Interest and dividends		233		(233	)		(3	)		—
General and administrative		393		(393	)		(3	)		—

Total expenses		6,405		(3,006	)					3,399


(in thousands)	Milbank Winthrop & Co., Inc. Historical Nine Months Ended September 30, 2011			Pro Forma Adjustments			Pro Forma Note	Milbank Winthrop & Co., Inc. Pro Forma Ten Months Ended October 31, 2011
Loss before net gains from Consolidated Milbank Partnerships.	$	(2,879	)	$	4,216			$	1,337

Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,988			(4,988	)	(3)		—
Realized gain on investments in funds, net		767			(767	)	(3)		—
Unrealized loss on investments in securities, net		(19,574	)		19,574		(3)		—
Unrealized loss on investments in funds, net		(21,156	)		21,156		(3)		—

Total net gain (loss) from investment activities of Consolidated Milbank Partnerships		(34,975	)		34,975				—


Loss before provision for income taxes		(37,854	)		39,191				1,337
Provision for income taxes		(330	)		281		(7)		(49	)

Net loss		(38,184	)		39,472				1,288

Minority interest in Consolidated Milbank Partnerships		(38,507	)		38,507		(3)		—

Net income attributable to Milbank Winthrop & Co., Inc.	$	323		$	965			$	1,288

(1)

Represents investment advisory fee revenue associated with a previous Milbank Winthrop & Co., Inc. principal who did not join Silvercrest L.P. Also represents adjustment for $3,251,000 of investment advisory fees from the Milbank partnerships for the nine months ended September 30, 2011 that were eliminated in consolidation. Also, includes the adjustment for $393,000 of investment advisory fees earned in October 2011.

(2)	Represents adjustment for $379,000 of fund administration services fees from the Milbank partnerships for the nine months ended September 30, 2011 that were eliminated in consolidation. Also, includes the adjustment for $8,000 of fund administration services fees earned in October 2011.

(3)

Upon closing of Silvercrest L.P.’s acquisition of certain assets of Milbank, Silvercrest L.P. unaffiliated investors in each Milbank partnership were granted rights to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent and investment adviser or equivalent of that partnership or to accelerate the liquidation date of that partnership in accordance with certain procedures. The granting of these rights resulted in the deconsolidation of such investment partnerships and in the accounting of Silvercrest L.P.’s interest in these partnerships under the equity method. These adjustments represent the adjustments to deconsolidate the assets of these partnerships.

(4)	Upon the acquisition by Silvercrest L.P., the Milbank group is subject to a compensation cap equal to 42% of Milbank’s revenue. This adjustment represents the reduction to historical Milbank compensation and benefits expense to the compensation cap level.

(5)	Includes $520,000 of amortization expense for acquired intangible assets related to the Milbank acquisition, and additional estimated general and administrative expenses of $169,000 such as increased audit fees and referral fees to the former principal of Milbank that did not join Silvercrest L.P.

(6)	Pursuant to the terms of the asset purchase agreement between Milbank and Silvercrest L.P., Silvercrest L.P. issued a promissory note for $3.2 million to Milbank. Pro forma interest expense on the note is $132,000 for the ten months ended December 31, 2011.

(7)	Represents the elimination of Milbank’s historical corporate provision for income taxes of $330,000 and the provision of income taxes for NYC Unincorporated Business Tax of $49,000. Silvercrest L.P. is a partnership for income tax purposes.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2012(1)


(in thousands)	Silvercrest L.P. Historical			Offering Adjustments (2)	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Revenue:
Management and advisory fees	$	22,327
Performance fees and allocations		16
Family office services		2,444

Total revenue		24,787

Expenses:
Compensation and benefits		9,600				(D	)
General and administrative		5,208

Total expenses		14,808

Income before other income		9,979
Other income
Other income		61
Interest income		86
Interest expense		(206	)

Total other income		(59	)

Income before provision for income taxes		9,920
Provision for income taxes		(516	)			(E	)

Net income		9,404
Less: net income attributable to non-controlling interests		—				(F	)
Net income attributable to Silvercrest	$	9,404		$				$

Net income per share:
Basic								$

Diluted								$

Weighted average shares outstanding:
Basic

Diluted

(1)

(2)	Offering Adjustments:

additional shares). We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B units will be determined by the public offering price of our Class A common stock in this offering, less the amount of offering expenses incurred by us on a per share basis. We intend to use the remaining net proceeds of this offering, including any proceeds from the exercise of the underwriters’ option to purchase additional shares, for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions. We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. This liability of $ million is included in pro forma other liabilities. We expect to benefit from the remaining 15% of cash savings, if any, realized. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until (i) all such tax benefits have been utilized or expired, (ii) the tax receivable agreement with a principal automatically terminates due to a breach by such principal of his or her non-solicitation covenants with our company, or (iii) the termination by our company of a principal with cause, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement.

As illustrated below, the common stock and additional paid-in capital at June 30, 2012 reflected on the consolidated pro forma statement of financial condition were determined by combining the pro forma adjusted net excess of liabilities, redeemable partners’ capital and partners’ capital over assets of $ million, the $ million deferred tax asset that arises as a result of this offering and the $ million tax receivable liability to the selling partners of Silvercrest L.P., which also arises as a result of this offering.


Silvercrest L.P. excess of liabilities, redeemable partners’ capital and partners’ capital over assets		$
Deferred tax asset		$
Tax receivable liability to selling partners		$
Total		$
Common stock		$
Additional paid-in capital		$
Total		$

(C) Represents the satisfaction of partner notes receivable related to three of our named executive officers. These notes were satisfied on September 18, 2012.

(D) This adjustment reflects the treatment of our historical partner incentive payments that were recorded as distributions prior to the reorganization and this offering as compensation expense.

(E) Reflects the impact of federal, state and local income taxes on the income of Silvercrest. As a limited partnership, Silvercrest L.P. has not been subject to these taxes, although it has been liable for the New York City Unincorporated Business Tax. The effective rate of pro forma income tax is estimated to be approximately %, and was determined by combining the projected federal, state and local income taxes.

(F) Represents the non-controlling interest allocation of % (assuming that the underwriters do not exercise the overallotment option) of the income of Silvercrest to Silvercrest L.P.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read this discussion and analysis of our financial condition and results of operation in conjunction with our “Selected Historical Consolidated Financial Data” and our historical financial statements and related notes included elsewhere in this prospectus. The information in this section contains forward-looking statements (see “Special Note Regarding Forward-Looking Statements”). Our actual results may differ significantly from the results suggested by these forward-looking statements and from our historical results. Some factors that may cause our results to differ are described in the “Risk Factors” section of this prospectus. The historical financial data discussed below reflect the historical results of operations and financial condition of Silvercrest L.P. and its subsidiaries and do not give effect to our reorganization. See “Reorganization and Holding Company Structure” and “Unaudited Pro Forma Financial Information,” included elsewhere in this prospectus, for a description of our reorganization and its effect on our historical results of operations.

Overview

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and endowments, foundations and other institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking a comprehensive oversight of their financial affairs. During the six months ended June 30, 2012, our assets under management grew 5.9%, from $10.1 billion to $10.7 billion. During the twelve months ended December 31, 2011, our assets under management grew 9.8%, from $9.2 billion to $10.1 billion.

As part of the reorganization of our company occurring in connection with this offering, Silvercrest will become the general partner of Silvercrest, L.P, our operating company. In addition, the partnership units of all continuing partners of Silvercrest L.P. will be reclassified as Class B units that have equal economic rights to our shares of Class A common stock. After giving effect to the reorganization described above, we will hold approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters exercise in full their option to purchase additional shares). The partners in Silvercrest L.P. following this offering, consisting of 37 of our current employees, will collectively hold the remaining approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters in full exercise their over-allotment option). In addition, Silvercrest L.P. has issued deferred equity units exercisable for Class B units which entitle the holder thereof to receive distributions from Silvercrest L.P. to the same extent as if the underlying Class B units were outstanding. Net profits and net losses of Silvercrest L.P. will be allocated, and distributions from Silvercrest L.P. will be made, to its current partners pro rata in accordance with their respective partnership units (and assuming the Class B units underlying all deferred equity units are outstanding). For more information on our reorganization, see “The Reorganization and Our Holding Company Structure.”

The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of Silvercrest L.P. and its subsidiaries. After the completion of the reorganization, as the general partner of Silvercrest L.P., we will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ collective % partnership interest in Silvercrest L.P. immediately after the reorganization and this offering (or approximately % if the underwriters exercise in full their option to purchase additional shares), we will reflect the interests of these employees as a non-controlling interest in our consolidated financial statements. As a result, our net income, after amounts attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or approximately % if the underwriters exercise in full their option to purchase additional shares), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or approximately % if the underwriters exercise in full their over-allotment option). For more information on the pro forma impact of our reorganization, see “Unaudited Pro Forma Financial Information.”

Key Performance Indicators

When we review our performance, we focus on the indicators described below:


	For the year ended December 31,						For the six months ended June 30,
(in thousands except as indicated)	2011		2010		2009		2012		2011
Revenue	$	42,787	$	36,831	$	32,534	$	24,787	$	20,779
Income before other income (expense)	$	14,446	$	10,844	$	2,207	$	9,979	$	7,881
Net income	$	14,609	$	10,942	$	8,086	$	9,404	$	7,544
Adjusted EBITDA (1)	$	10,839	$	9,068	$	6,449	$	6,776	$	5,580
Adjusted EBITDA margin (2)		25.3%		24.6%		19.8%		27.3%		26.9%
Assets under management at period end (in billions)	$	10.1	$	9.2	$	8.8	$	10.7	$	10.6
Average assets under management (in billions) (3)	$	9.7	$	9.0	$	8.3	$	10.4	$	9.9

(1)

EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishment of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. See “Selected Historical Consolidated Financial Data” for a further explanation of Adjusted EBITDA and its reconciliation to net income on a basis consistent with GAAP.

(2)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

(3)	We have computed average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period.

Revenue

We generate revenue from management and advisory fees, performance fees, and family office services fees. Our management and advisory fees are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds. Our performance fees relate to assets managed in external investment strategies in which we have a revenue sharing arrangement and in funds in which we have no partnership interest. Our management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided. Income from performance fees is recorded at the conclusion of the contractual performance period when all contingencies are resolved. In certain arrangements, we are only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets.

The discretionary investment management agreements for our separately managed accounts do not have a specified term. Rather, each agreement may be terminated by either party at any time upon written notice of termination to the other party. The investment management agreements for our private funds are generally in effect from year to year, and may be terminated at the end of any year (or, in certain cases, on the anniversary of execution of the agreement) (i) by us upon 30 or 90 days’ prior written notice and (ii) after receiving the affirmative vote of a specified percentage of the investors in the private fund that are not affiliated with us, by the private fund on 60 or 90 days’ prior written notice. The investment management agreements for our private funds may also generally be terminated effective immediately by either party where the non-terminating party (i) commits a material breach of the terms subject, in certain cases, to a cure period, (ii) is found to have committed fraud, gross negligence or willful misconduct or (iii) terminates, become bankrupt, becomes insolvent or dissolves. Each of our investment management agreements contains customary indemnification obligations from us to our clients. As of June 30, 2012, $6.7 billion and $0.9 billion of our assets under management were concentrated in discretionary managed accounts and private funds, respectively, which represented approximately 81% and 19%, respectively, of our management and advisory fees revenue for the six months

ended June 30, 2012. As of June 30, 2011, $6.4 billion and $0.7 billion of our assets under management were concentrated in discretionary managed accounts and private funds, respectively, which represented approximately 87% and 13%, respectively, of our management and advisory fees revenue for the six months ended June 30, 2011. As of December 31, 2011, $6.2 billion and $0.8 billion of our assets under management were concentrated in discretionary managed accounts and private funds, respectively, which represented approximately 86% and 14% respectively, of our management and advisory fees revenue for the year ended December 31, 2011. As of December 31, 2010, $5.7 billion and $0.7 billion, of our assets under management were concentrated in discretionary managed accounts and private funds, respectively, which represented approximately 85% and 15%, respectively, of our management and advisory fees revenue for the year ended December 31, 2010. As of December 31, 2009, $5.3 billion and $0.8 billion of our assets under management were concentrated in discretionary managed accounts and private funds, respectively, which represented approximately 82% and 18%, respectively, of our management and advisory fees revenue for the year ended December 31, 2009. For the six months ended June 30, 2011, discretionary managed accounts and private funds revenue was $16.1 million and $2.4 million, respectively. For the year ended December 31, 2011, discretionary managed accounts and private funds revenue was $32.5 million and $5.4 million, respectively. For the year ended December 31, 2010, discretionary managed accounts and private funds revenue was $27.5 million and $4.9 million, respectively. For the year ended December 31, 2009, discretionary managed accounts and private funds revenue was $24.0 million and $5.3 million, respectively.

Our advisory fees are primarily driven by the level of our assets under management. Our assets under management increase or decrease based on the net inflows or outflows of funds into our various investment strategies and the investment performance of our clients’ accounts. In order to increase our assets under management and expand our business, we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term. Our ability to continue to attract clients will depend on a variety of factors including, among others:

•

our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service;

•

the relative investment performance of our investment strategies, as compared to competing products and market indices;

•

competitive conditions in the investment management and broader financial services sectors;

•

investor sentiment and confidence; and

•

our decision to close strategies when we deem it to be in the best interests of our clients.

The majority of advisory fees that we earn on separately-managed accounts are based on the value of assets under management on the last day of each calendar quarter. Most of our advisory fees are billed quarterly in advance on the first day of each calendar quarter. Our basic annual fee schedule for management of clients’ assets in separately managed accounts is: (i) for managed equity or balanced portfolios, 1% of the first $10 million and 0.60% on the balance, (ii) for managed fixed income only portfolios, 0.40% on the first $10 million and 0.30% on the balance and (iii) for the municipal value strategy, 0.65%. Our fee for monitoring non-discretionary assets can range from 0.05% to 0.01%, but can also be incorporated into an agreed-upon fixed family office service fee. The majority of our client relationships pay a blended fee rate since they are invested in multiple strategies.

Management fees earned on investment funds that we advise are calculated based on the net assets of the funds. Some funds calculate investment fees based on the net assets of the funds as of the last business day of each calendar quarter, whereas other funds calculate investment fees based on the value of net assets on the first business day of the month. Depending on the investment fund, fees are paid either quarterly in advance or quarterly in arrears. For our private funds, the fees range from 0.25% to 1.5% annually.

Average management fee is calculated by dividing our actual revenue earned over a period by our average assets under management during the same period (which is calculated by averaging quarter-end assets under management for the applicable period). Our average management fee was 0.43% and 0.37% for the six months ended June 30, 2012 and 2011, respectively, and 0.39%, 0.36% and 0.35% for the years ended December 31, 2011, 2010 and 2009, respectively. Increases in our total average management fee rates are primarily the result of a change in the mix and increased concentration of our assets under management in our equities strategies whose fee rates are higher than those of other investment strategies. Advisory fees are also adjusted for any cash flows into or out of a portfolio, where the cash flow represents greater than 10% of the value of the portfolio. Silvercrest L.P. has authority to take fees directly from external custodian accounts of its separately managed accounts.

Our advisory fees may fluctuate based on a number of factors, including the following:

•

changes in assets under management due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;

•

allocation of assets under management among our investment strategies, which have different fee schedules;

•

allocation of assets under management between separately managed accounts and advised funds, for which we generally earn lower overall advisory fees; and

•

the level of our performance with respect to accounts and funds on which we are paid incentive fees.

Our family office services capabilities enable us to provide comprehensive and integrated services to our clients. Our dedicated group of tax and financial planning professionals provide financial planning, tax planning and preparation, partnership accounting and fund administration and consolidated wealth reporting among other services. Family office services income fluctuates based on both the number of clients for whom we perform these services and the level of agreed-upon fees, most of which are flat fees. Therefore, non-discretionary assets under management, which are associated with family office services, do not typically serve as the basis for the amount of family office services revenue that is recognized. We have experienced a steady increase in family office services fees over the past few years as more of our separately managed accounts relationships have taken advantage of these services. We have also been successful in attracting new clients who have engaged us primarily for our family office services.

Expenses

Our expenses consist primarily of compensation and benefits expenses, as well as general and administrative expense including rent, professional services fees, data-related costs and sub-advisory fees. These expenses may fluctuate due to a number of factors, including the following:

•

variations in the level of total compensation expense due to, among other things, bonuses, awards of equity to our employees and partners of Silvercrest L.P., changes in our employee count and mix, and competitive factors; and

•

the level of management fees from funds that utilize sub-advisors will affect the amount of sub-advisory fees.

We expect our professional services fees to increase after this offering as a result of being a public company.

Compensation and Benefits Expense

(ii) attract, retain and motivate top-tier professionals within the investment management industry; and (iii) align our partner’ interests with those of our equity owners. We have experienced, and expect to continue to experience, a general rise in compensation and benefits expense commensurate with growth in headcount and with the need to maintain competitive compensation levels.

Upon the completion of the reorganization and this offering, we will account for partner incentive payments as an expense in our statement of operations and have reflected the related adjustments in our pro forma financial statements. Accordingly, this will have the effect of increasing compensation expense relative to the amounts that have been recorded historically in our financial statements. See “Unaudited Pro Forma Financial Information.”

The components of our compensation expenses for the three years ended December 31, 2011 and the six months ended June 30, 2012 and 2011 are as follows:


	For the Year Ended December 31,						For the Six Months Ended June 30,
(in thousands)	2011		2010		2009		2012		2011
Cash compensation and benefits	$	16,495	$	15,936	$	15,630	$	8,777	$	7,973
Distributions on liability awards (1)		20		9		—		17		5
Non-cash equity-based compensation expense		977		583		—		806		496

Total compensation expense	$	17,492	$	16,528	$	15,630	$	9,600	$	8,474

(1)	Cash distributions on the portion of unvested deferred equity units that are subject to forfeiture are expensed when paid. Unvested deferred equity units are classified as liability awards.

On February 29, 2012, February 28, 2011 and February 24, 2010, Silvercrest L.P. and Silvercrest GP LLC, our predecessor, granted equity-based compensation awards to certain of their principals based on the fair value of the equity interests of Silvercrest L.P. and Silvercrest GP LLC. Each grant includes a deferred equity unit and performance unit, subject to forfeiture and acceleration of vesting. Each 100 deferred equity units represent the unsecured right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P., subject to vesting over a four-year period beginning on the first-year anniversary of the date of grant. Each deferred equity unit, whether vested or unvested, entitles the holder to receive distributions from Silvercrest L.P. and Silvercrest GP LLC as if such holder held such unit. Upon each vesting date, a holder may receive the number of units vested or the equivalent cash value and units, but in no event may the holder receive more than 50% of the aggregate value in cash. To the extent that holders elect to receive up to 50% of the aggregate value in cash, we could have less cash to utilize. We have accounted for the distributions on the portion of the deferred equity units that are subject to forfeiture as compensation expense. Equity-based compensation expense will be recognized on the February 29, 2012, February 28, 2011 and February 24, 2010 deferred equity unit and performance unit awards through February 29, 2016, February 28, 2015 and February 24, 2014, respectively.

Each performance unit represents the right to receive one unit of Silvercrest L.P. and one unit of Silvercrest GP LLC for each two units of Silvercrest L.P. and Silvercrest GP LLC, respectively, issued upon vesting of the deferred equity units awarded to the employee, in each case subject to the achievement of defined performance goals. Although performance units will only vest upon the achievement of the performance goals, they are expensed over the same vesting period as the deferred equity units that they are associated with because there is an explicit service period. For more information on the terms of the deferred equity units and performance units, see “Compensation Discussion and Analysis—Deferred Equity Units and Performance Units.”

General and Administrative Expenses

maintaining our research, trading and portfolio accounting systems and professional services expenses generally increase or decrease in relative proportion to the number of employees retained by us and the overall size and scale of our business operations. Sub-advisory fees will fluctuate based on the level of management fees from funds that utilize sub-advisors.

Following this offering, we expect that we will incur additional expenses as a result of becoming a public company for, among other things, directors and officers insurance, director fees, SEC reporting and compliance, including Sarbanes-Oxley compliance, transfer agent fees, professional fees and other similar expenses. These additional expenses will reduce our net income.

Other Income

Other income is derived primarily from investment income arising from our investments in various private investment funds that were established as part of our investment strategies. We expect the investment components of other income, in the aggregate, to fluctuate based on market conditions and the success of our investment strategies. Performance fees earned from those investment funds in which we have a partnership interest have been earned over the past few years as a result of the achievement of various high water marks depending on the investment fund. These performance fees are recorded based on the equity method of accounting. The majority of our performance fees over the past few years have been earned from our fixed income-related funds.

Minority and Non-Controlling Interests

After our reorganization, we will be the general partner of Silvercrest L.P. and will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ expected % interest in Silvercrest L.P. (or % if the underwriters exercise in full their option to purchase additional shares) immediately after the consummation of the reorganization and this offering, we will reflect their partnership interests as a non-controlling interest in our consolidated financial statements. As a result, immediately after the consummation of this offering, our net income, after income attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or % if the underwriters exercise in full their option to purchase additional shares), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or % if the underwriters exercise in full their option to purchase additional shares).

Provision for Income Tax

While Silvercrest L.P. has historically not been subject to U.S. federal and certain state income taxes, it has been subject to the New York City Unincorporated Business Tax. As a result of our reorganization, we will become subject to taxes applicable to C-corporations. We expect our effective tax rate, and the absolute dollar amount of our tax expense, to increase as a result of this reorganization offset by the benefits of the tax receivable agreement. For more information on the pro forma income taxes applicable to us under C-corporation status, see “The Reorganization and Our Holding Company Structure” and “Unaudited Pro Forma Consolidated Financial Information.”

Significant Transactions

Milbank

On November 1, 2011, we acquired substantially all of the assets of Milbank Winthrop & Co., Inc., or Milbank, a registered investment adviser that managed approximately $500 million of assets primarily on behalf of ultra-high net worth families. The strategic acquisition of Milbank, a long-standing and highly regarded investment boutique, strengthens Silvercrest L.P.’s presence in the New York market and adds investment managers that have significant experience and knowledge of the industry. Under the terms of the asset purchase

agreement, the purchase price for the assets of Milbank consisted of a cash consideration of $3.4 million (net of cash acquired of $0.8 million), interests in Silvercrest L.P. and Silvercrest GP LLC with a fair value of $3.1 million, and a promissory note issued by Silvercrest Asset Management Group LLC to Milbank for $3.2 million. As part of the asset purchase agreement, we are obligated to make future earnout payments to Milbank should specific financial and performance targets be achieved by the Milbank business. We determined that the acquisition-date fair value of the contingent consideration was $1.7 million based on the likelihood that the financial and performance targets included in the asset purchase agreement will be achieved. Under the terms of the asset purchase agreement, Milbank is entitled to receive six earnout payments for the following periods: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA generated by the Milbank business (as defined in the asset purchase agreement) during the relevant earnout period. The amount of the earnout payment will vary depending on the level of EBITDA that is generated in each respective earnout period. Milbank revenue and operating expenses for the two months ended December 31, 2011 were $0.9 million and $0.4 million, respectively.

LongChamp

In 2009, we entered into a settlement agreement with the former owners of The LongChamp Group, Inc., or LGI, to close the business of LGI, a hedge fund advisory business, which was acquired by Silvercrest L.P. in 2007, and terminate all agreements between them and our company. The termination of these agreements coupled with declining economic conditions resulted in various client redemptions. LGI was ultimately wound down in 2009. For further explanation of the closing of the LGI business, see Note 10 to the audited consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus.

Operating Results

Revenue

Our revenues for the six months ended June 30, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009 are set forth below:


(in thousands)	For the Six Months Ended June 30,
	2012		2011		2012 vs. 2011 ($)			2012 vs. 2011 (%)
Management and advisory fees	$	22,327	$	18,539	$	3,788			20.4	%
Performance fees and allocations		16		31		(15	)		-48.4	%
Family office services		2,444		2,209		235			10.6	%

Total revenue	$	24,787	$	20,779	$	4,008			19.3	%


	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)			2011 vs. 2010 (%)
Management and advisory fees	$	37,869	$	32,442	$	5,427			16.7	%
Performance fees and allocations		85		548		(463	)		-84.5	%
Family office services		4,833		3,841		992			25.8	%

Total revenue	$	42,787	$	36,831	$	5,956			16.2	%


	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)			2010 vs. 2009 (%)
Management and advisory fees	$	32,442	$	29,341	$	3,101			10.6	%
Performance fees and allocations		548		96		452			470.8	%
Family office services		3,841		3,097		744			24.0	%

Total revenue	$	36,831	$	32,534	$	4,297			13.2	%

The growth in our assets under management during the six months ended June 30, 2011 and 2012 and from December 31, 2009 to December 31, 2011 and is described below:


(in billions)	Assets Under Management
	Discretionary			Non-Discretionary			Total
As of December 31, 2010	$	6.3		$	2.9		$	9.2
Gross client inflows		1.5			1.0			2.5
Gross client outflows		(1.1	)		(0.7	)		(1.8	)
Market appreciation (1)		0.4			0.3			0.7

As of June 30, 2011	$	7.1		$	3.5		$	10.6

As of December 31, 2011	$	7.0		$	3.1		$	10.1
Gross client inflows		3.0			0.3			3.3
Gross client outflows		(2.7	)		(0.3	)		(3.0	)
Market appreciation (1)		0.3			—			0.3

As of June 30, 2012	$	7.6		$	3.1		$	10.7

As of January 1, 2009	$	6.0		$	1.8		$	7.8
Gross client inflows		1.4			0.5			1.9
Gross client outflows		(2.5	)		(0.7	)		(3.2	)
Market appreciation (1)		1.2			1.1			2.3

As of December 31, 2009	$	6.1		$	2.7		$	8.8
Gross client inflows		1.5			1.0			2.5
Gross client outflows		(1.7	)		(0.8	)		(2.5	)
Market appreciation (depreciation) (1)		0.5			(0.1	)		0.4

As of December 31, 2010	$	6.4		$	2.8		$	9.2
Gross client inflows		3.6			1.5			5.1
Gross client outflows		(3.1	)		(1.1	)		(4.2	)
Market appreciation (depreciation) (1)		0.1			(0.1	)		—

As of December 31, 2011	$	7.0		$	3.1		$	10.1	(2)

(1)	For additional investment strategy performance information disclosed elsewhere in this prospectus, please see the “Business” section.

(2)	Less than 5% of assets under management generate performance fees.

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

Our total revenue increased by $4.0 million, or 19.3%, to $24.8 million for the six months ended June 30, 2012, from $20.8 million for the six months ended June 30, 2011. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management.

Assets under management increased by $0.6 billion, or 5.9%, to $10.7 billion at June 30, 2012 from $10.1 billion at December 31, 2011. Contributing to the growth in assets under management was $3.3 billion of client inflows and $0.3 billion in market appreciation, partially offset by client outflows of $3.0 billion. Our market appreciation during the six months ended June 30, 2012 constituted a 3.0% rate of increase in our total assets under management compared to the year ended December 31, 2011. Our growth in assets under management for the six months ended June 30, 2012 was primarily attributable to an increase of $0.6 billion in separately managed accounts, which are included in discretionary assets under management. An increase in the concentration of equity securities, which are included in discretionary assets under management and whose fee rates are higher than those of other investments, was the primary driver of increased management and advisory fees revenue for the six months ended June 30, 2012 compared to the same period in the prior year. Sub-advised

fund management revenue decreased by $0.3 million to $0.6 million for the six months ended June 30, 2012 from $0.9 million for the same period in the prior year. While sub-advised fund assets under management remained flat as of June 30, 2012 as compared to December 31, 2011, client redemptions primarily contributed to the decrease in sub-advised fund management revenue. Proprietary fund management revenue increased by $2.1 million to $3.7 million for the six months ended June 30, 2012 from $1.6 million for the same period in the prior year. This increase in proprietary fund management revenue was attributable to a $0.4 billion increase in proprietary fund assets under management from $0.4 billion as of June 30, 2011 to $0.8 billion as of June 30, 2012 primarily as a result of the addition of $0.3 billion of Milbank fund assets under management in November 2011. With respect to our discretionary assets under management, equity and fixed income assets experienced growth of 23.7% and 3.6%, respectively, for the six months ended June 30, 2012. Most of our growth came from our equity income and small cap value strategies with composite returns of 8.0% and 7.7%, respectively. As of June 30, 2012, the composition of our assets under management was 71% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 29% in non-discretionary assets which represent assets on which we provide portfolio reporting but do not have investment discretion.

Assets under management increased by $1.4 billion, or 15.2%, to $10.6 billion at June 30, 2011 from $9.2 billion at December 31, 2010. Contributing to the growth in assets under management was $2.5 billion of client inflows and $0.7 billion in market appreciation partially offset by client outflows at $1.8 billion. Our market appreciation during the six months ended June 30, 2011 constituted a 7.6% rate of increase in our total assets under management compared to the year ended December 31, 2010. Our growth in assets under management for the six months ended June 30, 2011 was attributable to an increase of $0.8 billion in separately managed accounts, which are included in discretionary assets under management, and $0.6 billion in non-discretionary assets. An increase in the concentration of equity securities, which are included in discretionary assets under management and whose fee rates are higher than those of other investments, was the primary driver of increased discretionary assets under management from December 31, 2010 to June 30, 2011. Proprietary fund assets under management as of June 30, 2011 remained flat as compared to December 31, 2010. With respect to our discretionary assets under management, equities experienced growth of 17.6% while fixed income assets remained flat for the six months ended June 30, 2011. Most of our growth came from our equity income, large cap value, multi cap value, and small cap value portfolios with composite returns of 8.0%, 7.3%, 9.1%, and 8.2%, respectively. The increase in non-discretionary assets was primarily driven by a new family office relationship entered into during the six months ended June 30, 2011. As of June 30, 2011, the composition of our assets under management was 67% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 33% in non-discretionary assets which represent assets on which we provide portfolio reporting but do not have investment discretion.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Our total revenue increased by $6.0 million, or 16.2%, to $42.8 million for the year ended December 31, 2011, from $36.8 million for the year ended December 31, 2010. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management.

Assets under management increased by $0.9 billion, or 9.8%, to $10.1 billion at December 31, 2011 from $9.2 billion at December 31, 2010. Contributing to the growth in assets under management was $5.1 billion of net client inflows partially offset by $4.2 billion of client outflows. Our growth in assets under management in 2011 was primarily attributable to an increase of $0.5 billion in separately managed accounts and $0.2 billion in proprietary and sub-advised funds, which are included in discretionary assets under management. An increase in the concentration of equity securities, which are included in discretionary assets under management and whose fee rates are higher than those of other investments, was the primary driver of increased management and advisory fees revenue for the year ended December 31, 2011 compared to the year ended December 31, 2010. Sub-advised fund management revenue increased by $0.2 million to $1.6 million for the year ended December 31, 2011 from $1.4 million for the year ended December 31, 2010 while sub-advised fund assets under management remained flat. Proprietary fund management revenue increased by $0.3 million to $3.8 million for

the year ended December 31, 2011 from $3.5 million for the year ended December 31, 2010. This increase in proprietary fund management revenue was attributable to a $0.2 billion increase in proprietary fund assets under management from $0.5 billion as of December 31, 2010 to $0.7 billion as of December 31, 2011. This increase was primarily the result of the addition of $0.3 billion of Milbank fund assets under management in November 2011, partially offset by $0.1 billion of client fund redemptions. With respect to our discretionary assets under management, equities experienced growth of 9.4% while fixed income assets declined 3.0% for the year ended December 31, 2011. Most of our growth came from our equity income, multi cap value and small cap value strategies with composite returns of 4.4%, 0.5%, and 1.5%, respectively. As of December 31, 2011, the composition of our assets under management was 70% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 30% in non-discretionary assets, which represent assets on which we provide portfolio reporting but do not have investment discretion.

Performance fee revenue decreased by $463 thousand to $85 thousand for the year ended December 31, 2011 from $548 thousand for the year ended December 31, 2010. These performance fees are primarily related to external investment strategies in which we have a revenue sharing arrangement. The decrease in performance fee revenue is directly attributable to lower returns achieved at our external investment strategies. The balance of our performance fees are earned from proprietary funds and are included in equity income from investments, which is discussed below in “—Other Income (Expense).”

Family office services income increased by $1.0 million or 25.8%, from $3.8 million for the year ended December 31, 2010 to $4.8 million for the year ended December 31, 2011, primarily as a result of the addition of significant family relationships in 2011 and increased fees from existing clients because of increased rates in certain cases and a greater amount of services provided in other cases.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Our total revenue increased by $4.3 million, or 13.2%, to $36.8 million for the year ended December 31, 2010, from $32.5 million for the year ended December 31, 2009. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management.

Assets under management increased by $0.4 billion, or 4.5%, to $9.2 billion at December 31, 2010 from $8.8 billion at December 31, 2009. Contributing to the growth in assets under management was $0.4 billion in market appreciation. Our market appreciation during the year ended December 31, 2010 constituted a 4.5% rate of increase in our total assets under management compared to the year ended December 31, 2009. Our growth in assets under management in 2010 was attributable to an increase of $0.3 billion in discretionary separately managed accounts, and $0.2 billion in non-discretionary assets. An increase in the concentration of equity securities, which are included in discretionary assets under management and whose fee rates are higher than those of other investments, was the primary driver of increased management and advisory fees revenue for the year ended December 31, 2010 compared to the year ended December 31, 2009. Sub-advised fund management revenue decreased by $1.0 million to $1.4 million for the year ended December 31, 2010 from $2.4 million for the year ended December 31, 2009. With respect to our discretionary assets under management, equities experienced growth of 13.0% while fixed income assets declined 6.3% for the year ended December 31, 2010. Most of our growth came from our equity income, large cap value, multi cap value and small cap value strategies with composite returns of 17.5%, 15.4%, 19.4%, and 25.7%, respectively. The closing of our LongChamp business contributed to this decrease in sub-advised fund management revenue. Proprietary fund management revenue increased by $0.5 million to $3.5 million for the year ended December 31, 2010 from $3.0 million for the year ended December 31, 2009. As of December 31, 2010, the composition of our assets under management was 69% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 31% in non-discretionary assets, which represent assets on which we provide portfolio reporting but do not have investment discretion.

Assets under management increased by $1.0 billion, or 12.8%, to $8.8 billion at December 31, 2009 from $7.8 billion at December 31, 2008. Contributing to the growth in assets under management was $1.9 billion of

client inflows and $2.3 billion in market appreciation, partially offset by $3.2 billion of client outflows. Our market appreciation during the year ended December 31, 2009 constituted a 29.5% rate of increase in our total assets under management compared to the year ended December 31, 2008. Our growth in assets under management in 2009 was attributable to an increase of $0.2 billion in separately managed accounts, which are included in discretionary assets under management, and $0.9 billion in non-discretionary assets. An increase in the concentration of equity securities, which are included in discretionary assets under management, was the primary driver of increased management and advisory fees revenue for the year ended December 31, 2009 compared to the year ended December 31, 2008. Sub-advised fund management revenue decreased by $5.7 million to $2.4 million for the year ended December 31, 2009 from $8.1 million for the year ended December 31, 2008. This decrease in sub-advised fund management revenue was the result of a decrease in sub-advised fund assets under management from $0.5 billion as of December 31, 2008 to $0.3 billion as of December 31, 2009 because of the closing of our LongChamp business and other client fund redemptions. Proprietary fund management revenue decreased by $1.1 million to $3.0 million for the year ended December 31, 2009 from $4.1 million for the year ended December 31, 2008 primarily as a result of lower revenue from our fixed income funds. With respect to our discretionary assets under management, equity and fixed income assets experienced growth of 34.9% and 43.3%, respectively, for the year ended December 31, 2009. Most of our growth came from our large cap value, multi cap value, and small cap value strategies with composite returns of 29.6%, 30.5%, and 24.7%, respectively. Most of our fixed income asset growth came from our separately managed accounts with composite returns for our taxable high yield and core fixed income strategies of 36.5% and 3.0%, respectively. As of December 31, 2009, the composition of our assets under management was 69% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 31% in non-discretionary assets, which represent assets on which we provide portfolio reporting but do not have investment discretion.

Performance fee revenue increased by $452 thousand to $548 thousand for the year ended December 31, 2010 from $96 thousand for the year ended December 31, 2009. These performance fees are primarily related to external investment strategies in which we have a revenue sharing arrangement. The increase in performance fee revenue is directly attributable to higher returns achieved at our external investment strategies. The balance of our performance fees are included in equity income from investments which is discussed below in “—Other Income (Expense).”

Family office services income increased by $0.7 million, or 24.0%, from $3.1 million for the year ended December 31, 2009 to $3.8 million for the year ended December 31, 2010, primarily as a result of increases to fee rates for existing clients.

Expenses

Our expenses for the six months ended June 30, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009 are set forth below:


(in thousands)	For the Six Months Ended June 30,
	2012		2011		2012 vs. 2011 ($)		2012 vs. 2011 (%)
Compensation and benefits	$	9,600	$	8,474	$	1,126		13.3	%
General and administrative		5,208		4,424		784		17.7	%

Total expenses	$	14,808	$	12,898	$	1,910		14.8	%


	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)		2011 vs. 2010 (%)
Compensation and benefits	$	17,492	$	16,528	$	964		5.8	%
General and administrative		10,849		9,459		1,390		14.7	%

Total expenses	$	28,341	$	25,987	$	2,354		9.1	%


	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)			2010 vs. 2009 (%)
Compensation and benefits	$	16,528	$	15,630	$	898			5.7	%
General and administrative		9,459		13,006		(3,547	)		-27.3	%
Impairment charges		—		1,691		(1,691	)		-100	%

Total expenses	$	25,987	$	30,327	$	(4,340	)		-14.3	%

Our expenses are driven primarily by our compensation costs. The table included in “—Expenses— Compensation and Benefits Expense” describes the components of our compensation expense for the six months ended June 30, 2012 and 2011 and the three years ended December 31, 2011. Other expenses, such as rent, professional service fees, data-related costs, and sub-advisory fees incurred are included in our general and administrative expenses.

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

Total expenses increased by $1.9 million, or 14.8%, to $14.8 million for the six months ended June 30, 2012 from $12.9 million for the six months ended June 30, 2011. This increase was primarily attributable to increases in compensation and benefits expense and general and administrative expenses of $1.1 million and $0.8 million, respectively.

Compensation and benefits expense increased by $1.1 million, or 13.3%, to $9.6 million for the six months ended June 30, 2012 from $8.5 million for the six months ended June 30, 2011. The increase was primarily attributable to an increase in salaries of $0.6 million as a result of both merit increases and increased headcount primarily as a result of the Milbank acquisition, increased incentive compensation expense of $0.1 million, and increased equity-based compensation expense of $0.3 million due to the grant of additional deferred equity units to employees and an increase in the fair value of the deferred equity units.

General and administrative expenses increased by $0.8 million, or 17.7%, to $5.2 million for the six months ended June 30, 2012 from $4.4 million for the six months ended June 30, 2011. This increase was primarily due to an increase in depreciation and amortization expense of $0.3 million due to amortization of intangible assets related to Milbank, a $0.2 million increase in costs related to the development of our portfolio management system and investment research and pricing subscriptions, a $0.1 million increase in rent as a result of the Milbank acquisition and the non-renewal of one of our sub-leases, and a $0.6 million increase in professional fees including acquisition transactions. On May 1, 2012, we reoccupied space at our headquarters that we had previously abandoned in 2009. As a result, we recorded a reversal of a lease abandonment liability of $0.7 million which reduced occupancy expense for the six months ended June 30, 2012.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Total expenses increased by $2.4 million, or 9.1%, to $28.3 million for the year ended December 31, 2011 from $26.0 million for the year ended December 31, 2010. This increase was primarily attributable to increases in compensation and benefits expense and general and administrative expenses of $1.0 million and $1.4 million, respectively.

Compensation and benefits expense increased by $1.0 million, or 5.8%, to $17.5 million for the year ended December 31, 2011 from $16.5 million for the year ended December 31, 2010. The increase was primarily attributable to an increase in equity-based compensation expense of $0.5 million due to the grant of deferred equity units to employees, increased salaries of $0.8 million as a result of both merit increases and increased headcount, and increased benefits and payroll taxes expense of $0.1 million, partially offset by lower employee bonus expense of $0.4 million.

due to an increase in professional fees of $0.8 million for services rendered in connection with this offering and acquisition transactions, $0.7 million in reimbursements to clients and a $0.2 million increase in costs related to the development of our portfolio management system and investment research and pricing subscriptions, offset by decreased occupancy costs of $0.3 million due to increased sub-tenant rent.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Total expenses decreased by $4.3 million, or 14.3%, to $26.0 million for the year ended December 31, 2010 from $30.3 million for the year ended December 31, 2009. This was primarily attributable to decreases in general and administrative expenses and impairment charges of $3.5 million and $1.7 million, respectively, partially offset by a $0.9 million increase in compensation and benefits expense.

Compensation and benefits expense increased by $0.9 million, or 5.7%, to $16.5 million for the year ended December 31, 2010 from $15.6 million for the year ended December 31, 2009. The increase was primarily attributable to a $0.6 million increase in equity-based compensation expense, increased employee bonus expense of $0.1 million, a $0.1 million increase in salaries, and $0.1 million of severance charges related to the termination of two employees.

General and administrative expenses decreased by $3.5 million, or 27.3%, to $9.5 million for the year ended December 31, 2010 from $13.0 million for the year ended December 31, 2009. This $3.5 million decrease was primarily attributable to a one-time $1.2 million lease abandonment charge in 2009 for space at our corporate headquarters, and a $2.3 million decrease in LGI operating expenses as a result of the wind-down of our LGI business in 2009.

Impairment charges decreased by $1.7 million from the year ended December 31, 2009 to the year ended December 31, 2010 as a result of a $1.2 million leasehold improvements impairment charge in 2009 related to the abandonment of a portion of the leased space at our corporate headquarters. Also, a $0.5 million charge was taken in 2009 to write-off goodwill and assets related to the LGI business closure.

Other Income (Expense)


(in thousands)	For the Six Months Ended June 30,
	2012			2011			2012 vs. 2011 ($)			2012 vs. 2011 (%)
Other income (expense)	$	61		$	(176	)	$	237			-134.7	%
Interest income		86			92			(6	)		-6.5	%
Interest expense		(206	)		(75	)		(131	)		174.7	%

Total other income (expense)	$	(59	)	$	(159	)	$	100			-62.9	%


	For the Year Ended December 31,
	2011			2010			2011 vs. 2010 ($)			2011 vs. 2010 (%)
Loss on forgiveness of notes receivable	$	(34	)	$	(508	)	$	474			-93.3	%
Interest income		187			231			(44	)		-19.0	%
Interest expense		(164	)		(241	)		77			-32.0	%
Equity income from investments		950			1,241			(291	)		-23.4	%
Other		(210	)		32			(242	)		-756.3	%

Total other income (expense)	$	729		$	755		$	(26	)		-3.4	%


(in thousands)	For the Year Ended December 31,
	2010			2009			2010 vs. 2009 ($)			2010 vs. 2009 (%)
Gain on extinguishment of debt	$	—		$	3,934		$	(3,934	)		-100.0	%
Gain on settlement with former LGI shareholders		—			1,470			(1,470	)		-100.0	%
Loss on forgiveness of notes receivable		(508	)		—			(508	)		—
Interest income		231			213			18			8.5	%
Interest expense		(241	)		(467	)		226			-48.4	%
Equity income from investments		1,241			274			967			352.9	%
Other		32			134			(102	)		-76.1	%

Total other income (expense)	$	755		$	5,558		$	(4,803	)		-86.4	%

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

Other income (expense) decreased by $100 thousand to ($59) thousand for the six months ended June 30, 2012 from ($159) thousand for the six months ended June 30, 2011. The decrease in other income (expense) is attributable to $0.2 million loss on a sub-lease charge related to a new sub-tenant on our leased space in January 2011. Interest expense increased by $131 thousand to $206 thousand for the six months ended June 30, 2012 from $75 thousand for the six months ended June 30, 2011, primarily due to a write off prepaid interest expense of $86 thousand related to the reversal of the lease abandonment liability in addition to an increase in notes payable issued in connection with the acquisition of Milbank.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Other income (expense) decreased by $26 thousand, or 3.4%, to $0.7 million for the year ended December 31, 2011 from $0.8 million for the year ended December 31, 2010. In 2011 and 2010, we recorded losses on the forgiveness of notes receivable of $34 thousand and $508 thousand, respectively, in connection with the termination of principals and the related termination of existing notes in exchange for the repurchase of units of Silvercrest L.P. and Silvercrest GP LLC. Interest income decreased by $44 thousand or 19.0% to $187 thousand for the year ended December 31, 2011 from $231 thousand for the year ended December 31, 2010. Interest expense decreased by $77 thousand or 32.0% to $164 thousand for the year ended December 31, 2011 from $241 thousand for the year ended December 31, 2010. Equity income from investments decreased by $0.3 million primarily as a result of decreased performance fee allocations from some of our funds. Other income (expense) decreased by $0.2 million as a result of a $0.1 million loss on sub-lease charge related to a new sub-tenant on our leased space in January 2011 and $0.1 million of unrealized and realized losses related to an investment in marketable securities.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Other income (expense) decreased by $4.8 million, or 86.4%, to $0.8 million for the year ended December 31, 2010 from $5.6 million for the year ended December 31, 2009. This decrease was primarily attributable to a $3.9 million gain on extinguishment of debt related to the closing of the LGI business and a $1.5 million gain on settlement with the former owners of the LGI business in 2009. In 2010, we forgave $0.5 million of notes receivable in connection with the termination of a partner. This note was originally issued for the purchase of units in Silvercrest L.P. and Silvercrest GP LLC by a terminated partner at the time he joined our company. Upon termination of the partner, the note was cancelled and we redeemed and cancelled the underlying equity. Interest income increased by $18 thousand or 8.5% to $231 thousand for the year ended December 31, 2010 from $213 thousand for the year ended December 31, 2009. Interest expense decreased by $0.3 million, or 48.4%, to $0.2 million for the year ended December 31, 2010 from $0.5 million for the year ended December 31, 2009 due to a decrease in interest expense from notes issued to principals and as consideration in connection with prior acquisitions. Interest expense decreased as a result of the repayment and scheduled principal payments on notes issued to partners, scheduled principal payments on a note, and the forgiveness of a note in conjunction with the closing of the LGI business. Equity income from investments increased by $1.0 million primarily as a result of increased performance fee allocations from some of our funds.

Provision for Income Taxes

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

The provision for income taxes was $0.5 million and $0.2 million for the six months ended June 30, 2012 and June 30, 2011, respectively. The change was a result of an increase in taxable income. Our provision for income taxes as a percentage of income before provision for income taxes for the six months ended June 30, 2012 was 5.2% compared to 2.3% for the six months ended June 30, 2011.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

The provision for income taxes was $0.6 million and $0.7 million for the years ended December 31, 2011 and December 31, 2010, respectively, representing a decrease of $0.1 million, or 14.3%. The change was a result of a decrease in taxable income due to increased deferred rent, contingent consideration in the Milbank acquisition, and increased amortization of intangible assets. Our provision for income taxes as a percentage of income before provision for income taxes in 2011 was 3.7% compared to 5.7% in 2010.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

The provision for income taxes was $0.7 million for the year ended December 31, 2010 and the benefit from income taxes was $0.3 million for the year ended December 31, 2009. The change was primarily due to an increase in taxable income due to losses recognized in 2009 related to the closing of the LGI business. Our provision for income taxes as a percentage of income before provision for income taxes in 2010 was 5.7%.

Initial Public Offering Costs

As of June 30, 2012, we have incurred and deferred $545 thousand of professional fees associated with this offering. These fees are included in prepaid expenses and other assets in our condensed consolidated statement of financial condition at June 30, 2012 included elsewhere in this prospectus. In the event the offering is not consummated, the deferred offering costs will be expensed.

Liquidity and Capital Resources

Historically, the working capital needs of our business have primarily been met through cash generated by our operations. We expect that our cash and liquidity requirements in the twelve months following the consummation of this offering will be met primarily through cash generated by our operations.

Our ongoing sources of cash primarily consist of management fees and family office services fees, which are principally collected quarterly. We primarily use cash flow from operations to pay compensation and related expenses, general and administrative expenses, income taxes, debt service, capital expenditures and distributions.

Seasonality typically affects cash flow since the first quarter of each year includes as a source of cash, the prior year’s annual performance fee payments, if any, from our various funds and external investment strategies and, as a use of cash, the prior fiscal year’s incentive compensation. We believe that we have sufficient cash from our operations to fund our operations and commitments for the next twelve months.

The following table set forth certain key financial data relating to our liquidity and capital resources as of December 31, 2011, 2010 and 2009 and June 30, 2012 and 2011.


(in thousands)	Years Ended December 31,						Six Months Ended June 30,
	2011		2010		2009		2012		2011
Cash and cash equivalents	$	7,354	$	7,025	$	5,327	$	2,568	$	5,404
Accounts receivable	$	2,238	$	2,247	$	1,213	$	3,554	$	2,424
Due from Silvercrest Funds	$	2,043	$	1,255	$	953	$	2,033	$	1,173

In connection with the reorganization, Silvercrest L.P. intends to make a distribution to its principals of previously undistributed current year earnings in the aggregate amount of $ . Such distribution will be funded from the existing cash balances of Silvercrest L.P. and will not be funded by any of the proceeds of this offering.

We anticipate that distributions to the principals of Silvercrest L.P., which, immediately following this offering, will consist of 37 of our current employees and us will continue to be a material use of our cash resources and will vary in amount and timing based on our operating results and dividend policy. As discussed under “Dividend Policy,” we currently intend to declare quarterly cash dividends to our Class A stockholders. We are a holding company and have no material assets other than our ownership of interests in Silvercrest L.P. As a result, we will depend upon distributions from Silvercrest L.P. to pay any dividends to our Class A stockholders. We expect to cause Silvercrest L.P. to make distributions to us in an amount sufficient to cover dividends, if any, declared by us. Our dividend policy has certain risks and limitations, particularly with respect to liquidity. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy, or at all, if, among other things, we do not have the cash necessary to pay our intended dividends. To the extent we do not have cash on hand sufficient to pay dividends, we may decide not to pay dividends. By paying cash dividends rather than investing that cash in our future growth, we risk slowing that pace of our growth, or not having a sufficient amount of cash to fund our operations or unanticipated capital expenditures, should the need arise.

Our purchase of Class B units in Silvercrest L.P. concurrently with this offering, and the future exchanges of Class B units of Silvercrest L.P., are expected to result in increases in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. at the time of our acquisition and these future exchanges, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of tax that we would otherwise be required to pay in the future. We will enter into a tax receivable agreement with current members of Silvercrest L.P. and any future holders of Class B units pursuant to which we will agree to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize as a result of these increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments thereunder. The timing of these payments is currently unknown. The payments to be made pursuant to the tax receivable agreement will be a liability of Silvercrest and not Silvercrest L.P. This liability will be recorded as an “other liability” on our statement of financial condition. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P.

While the actual increase in tax basis, as well as the amount and timing of any payments under this agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of our income and the tax rates then applicable, we expect that as a result of the size of the increases in the tax basis of our tangible and intangible assets, the payments that we may make under the tax receivable agreement likely will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the increased depreciation and amortization of our assets, we expect that future payments to the selling principals of Silvercrest L.P. in respect of our purchase of Class B units from them will aggregate $ million and range from approximately $ million to $ million per year over the next 15 years. Future payments to current principals of Silvercrest L.P. and future holders of Class B units in respect of subsequent exchanges would be in addition to these amounts and are expected to be substantial. We intend to fund required payments pursuant to the tax receivable agreement from the distributions received from Silvercrest L.P.

Cash Flows

The following table sets forth our cash flows for the years ended December 31, 2011, 2010 and 2009 and the six months ended June 30, 2012 and 2011. Operating activities consist of net income subject to adjustments for changes in operating assets and liabilities, depreciation, and equity-based compensation expense. Investing activities consist primarily of acquiring and selling property and equipment, distributions received from investments in investment funds, and cash paid as part of business acquisitions. Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes and earnout payments related to business acquisitions.


(in thousands)	Years Ended December 31,									For the Six Months Ended June 30,
	2011			2010			2009			2012			2011
Net cash provided by operating activities	$	15,401		$	11,419		$	8,311		$	8,348		$	7,137
Net cash (used in) provided by investing activities		(4,476	)		365			(512	)		(241	)		(391	)
Net cash used in financing activities		(10,596	)		(10,086	)		(8,847	)		(12,893	)		(8,367	)

Net change in cash	$	329		$	1,698		$	(1,048	)	$	(4,786	)	$	(1,621	)

Operating Activities

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

Operating activities provided $8.3 million and $7.1 million for the six months ended June 30, 2012 and 2011, respectively. This difference primarily is the result of an increase in net income of $1.8 million for the six months ended June 30, 2012.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Operating activities provided $15.4 million and $11.4 million for the years ended December 31, 2011 and 2010, respectively. This difference primarily is the result of an increase in net income of $3.7 million for the year ended December 31, 2011 and increased working capital resulting from an increase of $0.7 million in the collection of accounts receivable during the year ended December 31, 2011. The increase in Due from Silvercrest Funds is the result of a change in payment terms from monthly to quarterly in addition to increased fund management fee revenue.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Operating activities provided $11.4 million and $8.3 million for the years ended December 31, 2010 and December 31, 2009, respectively. This difference is partially attributable to higher net income for the year ended December 31, 2010, a $0.7 million increase in the change to accounts payable and accrued expenses, and a decrease of $2.8 million in employee bonuses paid in 2010. These increases in cash provided by operating activities were partially offset by a $4.6 million increase related to the change in accounts receivable for the year ended December 31, 2010. The increase in Due from Silvercrest Funds is the result of a change in payment terms from monthly to quarterly in addition to increased fund management fee revenue.

Investing Activities

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

For the six months ended June 30, 2012, investing activities used $0.2 million primarily as a result of a $0.4 million earnout payment related to the Marathon acquisition partially offset by the $0.2 million sale of securities and partial release of our security deposit on our lease in New York.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Investing activities consist primarily of investments in investment funds as well as capital expenditures. For the year ended December 31, 2011, investing activities used $4.5 million whereas for the year ended December 31, 2010, investing activities provided $0.4 million. The increase in cash used in investing activities from 2010 to 2011 was primarily the result of the cash payment of $3.3 million related to the Milbank acquisition in addition to a $0.4 million increase in earnout payments related to the Marathon acquisition.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

For the year ended December 31, 2010, investing activities provided $0.4 million primarily as a result of the funding of a sub-tenant escrow account.

Financing Activities

Six Months Ended June 30, 2012 versus Six Months Ended June 30, 2011

For the six months ended June 30, 2012 and 2011, financing activities used $12.9 million, and $8.4 million, respectively. The increase in net cash used in financing activities from 2011 to 2012 was primarily the result of higher partner incentive allocations paid in 2012 in addition to higher tax distributions paid during the six months ended June 30, 2012 as compared to the same period in 2011. Incentive allocations and tax distributions increased directly as a result of increased profitability and operating cash flow.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes, and earnout payments related to business acquisitions completed on or subsequent to January 1, 2009. For the years ended December 31, 2011 and 2010, financing activities used $10.6 million, and $10.1 million, respectively. The increase in net cash used in financing activities from 2010 to 2011 was the result of increased distributions of $4.1 million made to principals as a result of higher partner incentive allocations paid in 2011 in addition to higher tax distributions paid in the first quarter of 2011 as compared to the same period in 2010. Incentive allocations and tax distributions increased directly as a result of increased profitability and operating cash flow. These increases were partially offset by lower payments of $2.9 million on notes payable due to the payment in full in 2011 of the note issued in connection with the Marathon acquisition, and the payment in full during 2010 of notes issued to former partners by us for the redemption of units under which we exercised our call right upon their termination of employment. In addition, cash received from principals on notes receivable was $1.1 million for the year ended December 31, 2011 compared to $0.2 million for the year ended December 31, 2010.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

For the years ended December 31, 2010 and 2009, financing activities used $10.1 million, and $8.8 million, respectively. This increase was due to $1.2 million of reduced cash proceeds received from the issuance of interests in Silvercrest L.P. in 2010. Cash payments received from principals on notes receivable was $0.8 million lower in 2010 than in 2009 because payments on certain partner notes that were due in 2010 were extended until 2011. Repayments on notes issued to former principals for the redemption of units held by them under which we exercised our call right upon their termination increased $0.5 million for the year ended December 31, 2010 compared to the year ended December 31, 2009. These increases were partially offset by lower distributions to principals of $1.4 million as a result of lower partner incentive allocations paid in 2010.

We anticipate that distributions to principals of Silvercrest L.P. will continue to be a material use of our cash resources, and will vary in amount and timing based on our operating results and dividend policy.

We have an outstanding fixed rate note payable to Milbank related to the Milbank acquisition, and variable rate notes issued to former principals to redeem units held by them under which we exercised our call right upon their termination.

The aggregate principal amount of the notes related to the Milbank acquisition matures after four annual principal installments payable on each of November 1, 2012, 2013, 2014, and 2015 in the amounts of $0.8 million, $0.9 million, $1.0 million, and $0.6 million, respectively, together with all accrued and unpaid interest. If specified conditions are not met by Milbank prior to November 1, 2014, then the principal payment due on November 1, 2015 will be reduced to $0.1 million. The principal amount outstanding under this note bears interest at the rate of five percent per annum.

As of June 30, 2012, $3.2 million remains outstanding on the notes payable related to the Milbank acquisition. Accrued but unpaid interest on the notes payable related to the Milbank acquisition was approximately $0.1 million as of June 30, 2012.

As of December 31, 2011, $3.2 million remains outstanding on the notes payable related to the Milbank acquisition. Accrued but unpaid interest on the notes payable related to the Milbank acquisition was approximately $0.1 million as of December 31, 2011.

As of June 30, 2012, $1.1 million remains outstanding on the notes issued to former principals. Accrued but unpaid interest on these notes issued to former principals was approximately $23 thousand as of June 30, 2012. The principal amounts outstanding under these notes bear interest at the U.S. Prime Rate plus one percent in effect at the time payments are due.

As of December 31, 2011, $1.6 million remains outstanding on the notes issued to former principals. Accrued but unpaid interest on these notes issued to former principals was approximately $44 thousand as of December 31, 2011. The principal amounts outstanding under these notes bear interest at the U.S. Prime Rate plus one percent in effect at the time payments are due.

Contractual Obligations

The following table sets forth information regarding our consolidated contractual obligations as of December 31, 2011.


	Payments Due by Period
	Less Than								More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(in thousands)
Operating leases	$	19,096	$	3,448	$	6,687	$	6,532	$	2,429
Capital leases		55		21		34		—		—
Notes payable		4,739		1,469		2,706		564		—

Total	$	23,890	$	4,938	$	9,427	$	7,096	$	2,429

Off-Balance Sheet Arrangements

We entered into a guaranty arrangement in October 2011. We act as investment advisor to Silvercrest Strategic Opportunities Fund. In October 2011, Silvercrest Strategic Opportunities Fund entered into a $5,000,000 revolving credit agreement with Pershing LLC for client redemptions. Simultaneously with the execution of the credit agreement, we entered into an indemnification agreement with Pershing whereby we agreed to indemnify Pershing from claims arising out of the non-performance of Silvercrest Strategic Opportunities Fund’s obligations under the related credit agreement. The credit agreement matured on January 15, 2012. See Note 11 to the consolidated financial statements of Silvercrest L.P. for the years ended December 31, 2011, 2010 and 2009 included elsewhere in this prospectus for further disclosure regarding this off-balance sheet arrangement.

We did not have any off-balance sheet arrangements as of June 30, 2012, December 31, 2010 or December 31, 2009.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues, expenses and other income reported in the consolidated financial statements and the accompanying notes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under current circumstances, our results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates. Significant estimates and assumptions made by management include the fair value of acquired assets and liabilities, impairment of goodwill and intangible assets, revenue recognition, equity based compensation, accounting for income taxes, and other matters that affect the consolidated financial statements and related disclosures. Accounting policies are an integral part of our financial statements. An understanding of these accounting policies is essential when reviewing our reported results of operations and our financial condition. Management believes that the critical accounting policies and estimates discussed below involve additional management judgment due to the sensitivity of the methods and assumptions used.

Business Combinations

We account for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the estimated fair values determined by management as of the acquisition date.

For acquisitions completed subsequent to January 1, 2009, we measure the fair value of contingent consideration at each reporting period using a probability-adjusted discounted cash flow method based on significant inputs not observable in the market and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in earnings. In relation to our acquisition of Milbank Winthrop, the fair value of the contingent consideration was based on discounted cash flow models using projected EBITDA for each earnout period. The discount rate applied to the projected EBITDA was determined based on the weighted average cost of capital for the Company and considered that the overall risk associated with the payments was similar to the overall risks of our business as there is no target, floor or cap associated with the contingent payments.

Goodwill and Intangible Assets

purchase price allocation, as if the reporting unit had just been acquired, using currently estimated fair values of the individual assets and liabilities of the reporting unit, together with an estimate of the fair value of the reporting unit taken as a whole. The estimate of the fair value of the reporting unit is based upon information available regarding prices of similar groups of assets, or other valuation techniques including present value techniques based upon estimates of future cash flows. Our reporting unit is not at risk of failing step one as its estimated fair value determined during the company’s annual goodwill impairment test for 2011 exceeded its carrying amount by over 400%.

Identifiable finite-lived intangible assets are amortized over their estimated useful lives ranging from three to 20 years. Intangible assets consist primarily of the contractual right to future management, advisory and performance fees from customer contracts or relationships. Indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the net carrying amount of the asset may not be recoverable. In connection with such review, we also re-evaluate the periods of amortization for these assets. Recoverability of these assets is measured by a comparison of the carrying amount of these assets to undiscounted future net cash flows expected to be generated by these assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value.

Revenue Recognition

Investment advisory fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter, based on a contractual percentage of the assets managed. Family office services fees are also typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter based on a contractual percentage of the assets managed or upon a contractually agreed-upon flat fee arrangement. Revenue is recognized on a ratable basis over the period in which services are performed.

We account for performance based revenue in accordance with ASC 605-20-S99, Accounting for Management Fees Based on a Formula, by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements. In certain arrangements, we are only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. We record performance fees and allocations as a component of revenue.

Because the majority of our revenues are earned based on assets under management that have been determined using fair value methods and since market appreciation/depreciation has a significant impact on our revenue, we have presented our assets under management using the U.S. GAAP framework for measuring fair value. That framework provides a three-level fair value 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) and the lowest priority to unobservable inputs based on company assumptions (Level 3). A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows:

•

Level 1—includes quoted prices (unadjusted) in active markets for identical instruments at the measurement date. The type of financial instruments included in Level 1 include unrestricted securities, including equities listed in active markets.

•

Level 2—includes inputs other than quoted prices that are observable for the instruments, including quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, or inputs other than quoted prices that are observable for the instruments. The type of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and managed funds whose net asset value is based on observable inputs.

•

Level 3—includes one or more significant unobservable inputs. Financial instruments that are included in this category include assets under management primarily comprised of investments in privately-held entities, limited partnerships, and other instruments where the fair value is based on unobservable inputs.

The table below summarizes the approximate amount of assets under management for the periods indicated for which fair value is measured based on Level 1, Level 2 and Level 3 inputs.


	Level 1		Level 2		Level 3		Total
	(in billions)
December 31, 2011 AUM	$	7.5	$	1.1	$	1.5	$	10.1
June 30, 2012 AUM	$	8.1	$	1.1	$	1.5	$	10.7

As substantially all our assets under management are valued by independent pricing services based upon observable market prices or inputs, we believe market risk is the most significant risk underlying valuation of our assets under management, as discussed under the heading “Risk Factors” and “—Quantitative and Qualitative Disclosure About Market Risk.”

The average value of our assets under management for the six months ended June 30, 2012 was approximately $10.4 billion. Assuming a 10% increase or decrease in our average assets under management and the change being proportionately distributed over all our products, the value would increase or decrease by approximately $1.0 billion, which would cause an annualized increase or decrease in revenues of approximately $4.5 million at our current weighted average fee rate of 0.43%.

The average value of our assets under management for the year ended December 31, 2011 was approximately $9.7 billion. Assuming a 10% increase or decrease in our average assets under management and the change being proportionately distributed over all our products, the value would increase or decrease by approximately $1.0 billion, which would cause an annualized increase or decrease in revenues of approximately $3.8 million at the 2011 weighted average fee rate of 0.39%.

Equity-Based Compensation

Equity-based compensation cost relating to the issuance of share-based awards to principals is based on the fair value of the award at the date of grant, which is expensed ratably over the requisite service period, net of estimated forfeitures. The fair value of the award is based upon the calculation of a per unit limited partnership interest of our company utilizing both discounted cash flow and guideline company valuation methodologies. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeiture assumptions may affect the timing of the total amount of expense recognized over the vesting period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that have the potential to be settled in cash at the election of the employee or that pertain to redeemable partnership units are classified as liabilities, or Liability Awards, and are adjusted to fair value at the end of each reporting period. Distributions associated with Liability Awards not expected to vest are accounted for as part of compensation expense in our Consolidated Statements of Operations.

estimated present value is calculated using our weighted average cost of capital, which accounts for the time value of money and the appropriate degree of risks inherent in the business. The market-based approach considers multiples of financial metrics based trading multiples of a selected peer group of companies. These multiples are then applied to our financial metrics to derive a range of indicated values. Once calculated, the discounted cash flow and comparable company methods are then weighted. Estimates of the volatility of our limited partnership interests were based on available information regarding the volatility of common stock of comparable, publicly traded companies.

Prior to this offering, the fair value of the limited partnership interests underlying equity-based compensation awards were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, “Valuation of Privately-Held-Company Equity Securities Issued as Compensation.” The assumptions we used in the valuation model were based on future expectations combined with management judgment. Because there had been no public market for our limited partnership units, management exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our limited partnership interests as of the date of each equity-based compensation award grant, including the following factors:

•

the provisions of our limited partnership agreement;

•

our operating and financial performance;

•

current business conditions and projections;

•

lack of control discount;

•

lack of marketability discount;

•

the likelihood of achieving a liquidity event for the limited partnership interests underlying these equity-based compensation awards, such as an initial public offering or sale of our company, given prevailing market conditions;

•

historical trading activity of comparable publicly traded companies;

•

the market performance of comparable publicly traded companies; and

•

the U.S. and global capital market conditions.

In February 2010, we granted 15,808 units with fair value at grant date of $68.36 per unit. By February 2011, U.S. markets improved which resulted in an increase in our valuation and the market value of comparable companies. As a result of these factors in addition to organic growth, we projected increases in our budget for 2011 as compared to our actual performance in 2010. In February 2011, we granted 10,802 units with fair value at grant date of $148.35 per unit. Our valuation determined a MVIC by weighting the DCF approach at 50% and the market-based approach at 50%. Our MVIC reflected a discount for lack of control of 13% based on the existence of a non-managing partnership interest and a discount for lack of marketability of 20% based on a liquidity event expected to occur within approximately twelve months. In February 2012, we granted 1,000 units with fair value at grant date of $207.71 per unit. U.S. markets continued to improve into the first quarter of 2012 as compared to the end of 2011. As a result, we projected increases in our 2012 budget as compared to actual performance in 2011. Our valuation for the February 2012 grants was determined using a market-based approach and reflected an assumed initial public offering discount of 15%.

Income Taxes

our incorporated entity, the annual tax rate is based on the income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Judgment is required in determining the tax expense and in evaluating tax positions. The tax effects of an uncertain tax position, or UTP, taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. We recognize estimated interest and penalties related to UTPs in income tax expense.

We recognize the benefit of a UTP in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update, or ASU, 2010-06, “Improving Disclosures About Fair Value Measurements,” or ASU 2010-06. ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures were effective as of January 1, 2010, except for the Level III gross reporting which was effective for our company January 1, 2011. The adoption of ASU 2010-06 did not have a material impact on our financial statements.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” or ASU 2010-20. ASU 2010-20 requires additional disclosures about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. The new disclosures were effective for our interim and annual reporting periods beginning January 1, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles—Goodwill and Other (Topic 350) When to Perform Step Two of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts,” which enhanced guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires step two to be performed if it is more likely than not that a goodwill impairment exists. This guidance was effective for our interim and annual reporting periods beginning January 1, 2011. As our reporting unit does not currently have a zero or negative carrying value, the adoption of this guidance did not have any impact on our financial statements.

value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and financial liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) are not permitted in a fair value measurement.

The guidance also requires enhanced disclosures about fair value measurements, including, among other things, (a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

The amended guidance is effective for interim and annual periods beginning after December 15, 2011. As the impact of the guidance is primarily limited to enhanced disclosures, the adoption did not have a material impact on our financial statements.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment,” which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for our interim and annual periods commencing January 1, 2012. Early adoption is permitted. We will consider the guidance when performing our annual impairment assessment in 2012.

Subsequent Event

On September 18, 2012, three of Silvercrest L.P.’s executives repaid outstanding notes payable and accrued interest of $1,897 thousand that were initially issued in connection with the acquisition of their partnership interests.

Qualitative and Quantitative Disclosures Regarding Market Risk

Our exposure to market risk is directly related to our role as investment adviser for the separate accounts we manage and the funds for which we act as sub-investment adviser. Most of our revenue for the year ended December 31, 2011 and the six months ended June 30, 2012 were derived from advisory fees, which are typically based on the market value of assets under management. Accordingly, a decline in the prices of securities would cause our revenue and income to decline due to a decrease in the value of the assets we manage. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenue and income to decline further. Please see our discussion of market risks in “—Critical Accounting Policies and Estimates—Revenue Recognition.”

BUSINESS

Our Guiding Principles

•

We will create, build and maintain an environment that encourages innovation and original thought and apply this fresh thinking to the needs of our clients and firm.

•

We will attract, motivate and retain unusually talented and ambitious professionals who share a passion for the investment business and an antipathy for corporate bureaucracy and office politics.

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We will conduct ourselves in all our dealings as highly ethical, responsible and competent professionals who always place our clients’ financial interests ahead of our own.

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We will encourage and nurture an entrepreneurial, collegial and action-oriented business culture in which “fun” is inevitable and decisions are generally consensual.

Our Company

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance together with high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of June 30, 2012, our top 375 client relationships had an average size of $28 million and represented approximately 98% of our assets under management. Our top 50 relationships averaged $151 million in size as of June 30, 2012. As a boutique, we are large enough to provide an array of comprehensive capabilities, yet agile enough to coordinate and deliver highly personalized client service.

We consider these to be our competitive strengths:

•

We are a company offering independent, unconflicted advice, which is principally employee-owned.

•

We have a strong record of organic and acquired growth and we have a scalable platform.

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We have a long-term track record of superior investment performance.

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We have a diverse and highly loyal clientele.

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We have proven senior management which has successfully executed our growth strategy.

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LOGO

Our organic growth has been complemented by selective hiring and by four strategic acquisitions which have expanded not only assets under management, but also our professional ranks, geographic footprint and service capabilities. We believe additional acquisitions will allow us to extend our geographic presence nationally. As we grow, we will maintain our value proposition to continue to deliver to our clients excellent investment performance together with excellent client service, the essence of what differentiates us from our competitors.

Our clients engage us to advise them on traditional investment strategies focused on equities, fixed income and cash as well as non-traditional investment strategies including hedge funds, private equity funds, real estate and commodities. Our clients receive a full menu of proprietary investment capabilities together with a focused array of complementary non-proprietary capabilities offered by unaffiliated firms selected by us. In addition to our investment capabilities, we also provide our clients with family office services and related administrative services, which include financial planning, tax planning and preparation, partnership accounting and fund administration, and consolidated wealth reporting. Our fees for our investment advisory services, non-proprietary services, and family office and related administrative services are structured to align our financial incentives with those of our clients to ensure they receive unconflicted advice. The vast majority of our fees are for discretionary asset management, and are based on the value of the assets we manage for our clients. These fee revenues increase if our clients’ assets grow in value; these revenues decrease if our clients’ assets decline in value. We charge a management fee based on assets under management for our investment advisory services. Unlike our management fees, our fees for family office services and related administrative services are generally not based on or correlated to market values. For these services, we generally charge our clients a negotiated fee based on the scope of work. These services create strong client relationships and contribute meaningfully to our record of client retention.

As of June 30, 2012, approximately 94% of our assets under management were held for individual clients and 6% for institutional clients. Based on the strong results we have achieved in a number of our equity strategies, we have begun to attract a significant amount of institutional investor interest. After almost four years of dedicated effort, our equity capabilities are now on the approved lists of several prominent institutional consultants and, as a result, we believe significant institutional growth is likely in future years.

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History, Organization and Philosophy

When forming our company, our founders had the objective of creating a large full-service boutique operation focused on managing portfolios and delivering financial advice to wealthy individuals and select institutions. We commenced operations in April of 2002. Our first partners and employees came almost entirely from Donaldson, Lufkin & Jenrette (DLJ) Asset Management Group which had been acquired by Credit Suisse Asset Management in late 2000. In 2002, we carefully recruited and hired the same equity, fixed income and client service teams with whom our clients had worked at DLJ Asset Management Group. As of June 30, 2012, more than a quarter of our 87 employees are veterans of DLJ. Many of our principals, therefore, have worked together for 20 years and, in some cases, even longer.

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. Since 2004, we have acquired four separate registered investment advisers and we have integrated and rebranded their operations into our company. The following is a summary of these acquisitions:

•

James C. Edwards Asset Management Inc., acquired in March 2004 with $889 million in assets under management, helped build out our New York presence;

•

Heritage Financial Management LLC, acquired in March 2005 with $330 million in assets under management, created an office in Charlottesville, VA and enhanced our family office and tax planning and preparation capabilities;

•

Marathon Capital Group LLC, acquired in October 2008 with $552 million in assets under management, established a Boston office for our company; and

•

Milbank Winthrop & Co., acquired in November 2011 with approximately $478 million in assets under management, strengthened our presence in the New York market and allowed us to add commodity and new funds of funds investment capabilities.

In structuring our business we anticipated that we would quickly become a large boutique operation. Accordingly, from inception we have embraced an organizational structure in which the primary functions of client service, investments, technology and operations and business administration were organized and staffed with professionals who specialize in each of those functions. This structure permits each professional to focus on his or her area of expertise without the distraction of other business responsibilities. At many other firms the senior professionals are expected to serve multiple roles simultaneously, which we believe dilutes the value to clients and makes scaling the business effectively unachievable. We firmly believe that our business structure represents a better approach and will permit us to greatly expand our business on our existing platform.

In meeting our primary objective to deliver strong investment results, we seek to add value through our asset allocation advice, as well as through our proprietary equity and fixed income strategies and outsourced investment capabilities. We recruited and hired a team of seasoned securities analysts who have an institutional caliber approach to security selection and a long record of success in implementing their strategies. We encourage them to focus 100% of their professional time on the task of securities selection. Our in-house equity analysts are focused on U.S. large cap, small cap, smid cap, multi cap, equity income and focused value equity strategies. On the fixed income side, our analysts are focused on high-grade municipals, high-yield municipals and high-grade taxables.

In order to deliver excellent client service, our portfolio managers are charged with the responsibility of working individually with each client to help define investment objectives, risk tolerance, cash flow requirements and other financial needs. The portfolio manager is responsible for developing a portfolio strategy designed to meet these predetermined client goals. Thereafter, the portfolio manager becomes the client’s primary point of contact with our company in all matters, including assessing the client’s need for family office services, and then introducing and overseeing the family office services professionals engaged for that work. Client-facing portfolio managers, their support staffs and the family office services group account for 50% of our total employees, a reflection of our high commitment to excellent client service. The ratio of our total client relationships to client-facing professionals is, therefore, approximately nine to one. We are staffed to assure that each client receives senior level personal attention.

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We have a staff of ten professionals who work with our portfolio managers to deliver family office services to interested clients. The fees for family office services are negotiated with the client and generally are not asset-based. For this reason, the revenues generated by our family office services are non-correlated to market movements and provide us with a diversified source of earnings. We believe these family office services have been an attractive component of our overall value proposition and engender a stronger relationship with the client, leading to greater client retention and the institutionalization of client relationships.

Prior to the financial crisis of 2008, we enjoyed a triple digit annualized growth rate of assets under management from inception through August 2008. Subsequent to the onset of the financial crisis in 2008, we have recovered more rapidly than many of our large, independent competitors, according to RIA Data Center, and our assets under management now exceed our pre-financial crisis high. Importantly, we remained profitable throughout the downturn. We expect to continue our pattern of complementing our organic growth in assets through selective hiring and acquisitions. We expect our growth to further accelerate as a direct result of growing client referrals and increasing our presence in the institutional marketplace.

Our Market Opportunity

Overview

Our client relationships with ultra-high net worth individuals currently represent less than 1% of U.S. families with investable assets over $25 million. Our assets represent less than 5% of the $356 billion multi-family office (MFO)/registered investment adviser (RIA) channel, which, according to data from Cerulli Associates, itself represents 8% of the estimated $4.6 trillion high net worth market. Even modest improvements in our penetration of this market will lead to significant further growth.

Domestic High Net Worth Market

The Spectrem Group estimates there were 1.1 million households in the United States with a net worth of over $5 million in 2011 and 107,000 with a net worth in excess of $25 million. Over the last 14 years, the number of households with over $5 million in net worth has grown at an annual rate of 12% per year. Cerulli Associates estimates that 92% of the $4.6 trillion high net worth market is at firms outside the MFO/RIA channel. With our focus on taking market share from these firms, we believe that there is a significant growth opportunity for us.

LOGO

Source: The Spectrem Group

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The Spectrem Group found that high net worth clients and families, in selecting an adviser, valued qualities such as honesty, trustworthiness, transparency and responsive service ahead of an adviser’s investment performance track record. When these highly valued characteristics are coupled with superior performance, the result can be an unusually loyal client base. During one of the most turbulent periods of U.S. financial history our clients proved to be highly loyal: our annual client retention rate for the years 2006 through 2011 was 98%.

The Wealth Management Industry

The wealth management industry is highly competitive and comprised of many players. We compete directly with some of the largest financial service companies, as well as some of the smallest. Substantially all of our new business to date has resulted from our success in taking market share from these firms. In general, these competitors fall into one of the following categories:

•

Diversified Financial Institutions have divisions aimed at providing wealth management solutions to the high net worth segment that are usually staffed by brokers with many sources of compensation.

•

Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

•

Trust Companies combine fiduciary and investment services as well as ancillary financial services with little emphasis on performance.

•

MFO/RIAs focus exclusively on the high net worth segment and, in the case of MFOs, are frequently dominated by one or two families.

Cerulli Associates estimates that MFO/RIAs are the fastest growing firms in the wealth management industry. Assets have doubled over the last five years as they have taken greater market share, primarily from large financial institutions. Assets managed by MFO/RIAs grew from 2005-2010 at a CAGR of 14.9% as compared with a 4.3% CAGR for all high net worth providers. Cerulli Associates further estimates that high net worth managed assets will grow at a 9.4% CAGR from 2010 through 2014. We are an RIA which is also regarded as an MFO, and thus we are well positioned to benefit from the growth Cerulli Associates foresees.

Institutional Market

The asset management industry has experienced significant growth in worldwide assets under management during the past 15 years, fueled in significant respects by aging populations in both developed and emerging markets around the world, which have increased the pools of savings and particularly pension assets. For example, total pension assets in the United States grew from $6.8 trillion at the end of 1996 to $16.1 trillion at the end of 2011, according to Towers Watson. Furthermore, Towers Watson estimates that U.S. pension funds allocate 44% of year-end total assets to equities or $7.1 trillion. As of June 30, 2012, institutional assets only represented approximately 6% of our total assets under management or $661 million but, after a focused multi-year investment effort to make our capabilities known to institutional investment consultants, we believe we are now well positioned to attract meaningful institutional assets. As a result, we expect this percentage to increase significantly.

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Competitive Strengths

Our key competitive strengths are as follows:

Independent, Unconflicted Advice

We are an independent registered investment adviser and are not affiliated with a broker/dealer or a commercial bank. As a result, our financial incentives are directly aligned with those of our clients. The vast majority of our fees are for discretionary asset management, and are based on the value of the assets we manage for our clients. These fee revenues increase if our clients’ assets grow in value; these revenues decrease if our clients’ assets decline in value. We do not receive commissions, rebates, spreads or any other indirect or undisclosed forms of compensation. We are not controlled by any client or family and all of our investment decisions are made in the best interests of our clients. All of our fees are fully disclosed and transparent to our clients who have an unrestricted right to accept or reject them.

We employ a partnership culture and mindset fostered through widespread employee equity ownership. As of June 30, 2012, 37 of our employees owned equity in our company. Each of our principals purchased this equity by making a substantial personal investment in our company. We believe that employee equity aligns our employees’ interests both with our company’s and our clients’ interests. It further motivates and dedicates employees to the task of satisfying our clients’ objectives. We believe that this partnership approach maximizes teamwork and collegiality and when issues and opportunities arise, all of our principals take an active interest in them.

Demonstrated Track Record of Growing Assets Under Management

We have expanded our business through a combination of organic growth and acquired growth, which combined with strong investment returns, have produced a CAGR in total client assets of 49% since our inception.

Our organic growth in our individual client business has been fueled by client referrals and through the hiring of portfolio managers with substantial client relationships. Our institutional client business has resulted from a multi-year effort to make our equity capabilities known to institutional investment consultants. Our acquired growth is the result of four strategic acquisitions we have consummated in New York, Boston and Charlottesville. Following this offering, we expect the number and frequency of acquisitions to increase.

We have adopted a scalable structure in which the primary functions of client service, investments, technology and operations and business administration are organized and staffed with professionals who specialize in each of those functions. Our organization not only permits the efficient and scalable growth of our business but fosters the integration of acquired firms. Our ultra-high net worth business is scalable and our institutional business is even more so. We can add significant institutional assets without any further significant investment in infrastructure.

Long-Term Track Record of Superior Investment Performance

We have a proven ability to deliver excellent investment performance through both our asset allocation work on behalf of clients as well as through security selection. We believe that the superior investment returns we have generated for investors over many years and through all types of economic conditions are a key reason for our success in growing assets. The following chart summarizes the performance of each of our principal equity strategies relative to their appropriate benchmarks.

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PROPRIETARY EQUITY PERFORMANCE AS OF 6/30/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

-2.2

14.3

0.6

4.8

5.6

Russell 1000 Value Index

3.0

15.8

-2.2

2.9

4.2

Small Cap Value Composite

4/1/02

1.9

19.9

7.9

9.7

9.6

Russell 2000 Value Index

-1.4

17.5

-1.1

3.4

6.1

Smid Cap Value Composite

10/1/05

-0.4

17.4

3.6

—

6.5

Russell 2500 Value Index

-1.5

18.8

-0.2

—

3.7

Multi Cap Value Composite

7/1/02

-1.3

16.5

3.0

6.4

7.0

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

5.4

Equity Income Composite

12/1/03

4.5

17.3

4.9

8.0

9.9

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

5.2

Focused Value Composite

9/1/04

-5.2

15.9

2.4

6.5

8.2

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

4.4

Loyal, Diverse Base of Clients

As a result of our focus on delivering outstanding investment performance combined with highly personalized client service, we have developed significant long-term relationships with a large majority of our clients. Many of our client relationships pre-date the formation of our company. Since 2006, our annual client retention rate has averaged 98%.

Our suite of family office services has been an important component to building a strong relationship with our clients, leading to greater client retention. Nine out of our ten largest relationships use one or more components of our family office services. In addition to assisting in client retention, these capabilities have been instrumental in attracting new clients from families which seek a comprehensive and efficient approach to overseeing their wealth beyond investment management.

Our assets under management are highly diversified among clients. As of June 30, 2012, approximately 98% of our business was comprised of clients whose average relationship size is $28 million and our top 50 relationships averaged $151 million. As of June 30, 2012, our clients were represented in 43 states and the District of Columbia and no single client represented more than 5% of our revenue.

Dedicated, Proven Senior Management

Our entire business is overseen by an Executive Committee comprising our Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer and General Counsel. This group meets weekly to discuss our overall business. In particular, the Executive Committee focuses on developing and implementing our strategy as well as solving problems and seizing opportunities effectively and efficiently. At present, no one on the Executive Committee has direct client or investment responsibility and, as a result, each member of the Executive Committee commits his full resources to managing the business and executing our growth strategy.

Our Growth Strategy

We built our company to take market share from financial services firms whose wealth management models we believe are flawed. To date, we attracted substantially all of our new client relationships from our competitors due to client dissatisfaction with service and/or investment performance. Our growth strategy has been and will continue to be to grow our business organically, to complement our organic growth with strategic hires and acquisitions and to expand our presence in the institutional market. In support of each of these initiatives we plan to continue to invest in establishing our brand through continued selective advertising and public relations.

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Organic Growth

We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm designed to deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown on average in excess of $1 billion per year without a commensurate increase in headcount. Importantly, we have achieved our growth while maintaining our profitability during one of the most challenging periods in the history of the U.S. financial markets. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients.

The business of attracting ultra-high net worth clients is the business of obtaining referrals and gaining trust. At our company these responsibilities reside principally with our portfolio managers. Our senior portfolio managers have on average nearly 30 years of experience and they have a wealth of contacts and professional referral sources as a result of that experience. In spearheading the effort to deliver excellent performance and service to their clients, these portfolio managers develop very close relationships with their clients and in many cases these relationships are much older than our company itself. Much of our new business results from referrals from existing clients. In this regard, it is critical that our portfolio managers work closely with each of their clients to establish the trust that is at the heart of the relationship.

Where appropriate, our portfolio managers are also encouraged to introduce our clients to our family office services capabilities and we expect to see growth in client utilization of these services in the future. Nine of our ten largest clients use our family office services and some of these have closed their own family offices to consolidate those activities with us. This is a profitable business for us and it serves to tighten our ties to those clients who avail themselves of the services we offer. It is also extremely useful to us in new business competitions where we use these services as a differentiator from our competitors. We expect much greater penetration with our current clients in future years and we expect that many of our new clients will use these services extensively.

Complementing the efforts of our senior portfolio managers to cultivate client referrals, our recently created business development team is charged with identifying newly formed wealth (resulting from merger, acquisition or corporate finance) and then creating customized solicitations. Our objective is two-fold: we will expand awareness of our company and its capabilities by distributing our marketing materials to this new audience and we will attract a certain amount of new business. The basis of this effort is careful research designed to ascertain if the prospect has any relationship with us—or any of our clients or friends—and then our solicitation is tailored to those circumstances. This effort is relatively new but we are very encouraged by its early results.

In all of our business development efforts we devote a great deal of time and effort to developing highly customized and detailed proposals for our prospects. In order to do so, we spend as much time as is required to thoroughly understand the prospect’s circumstances and goals as well as the sources of its dissatisfaction with its existing adviser. Where appropriate our proposals include the integration of our entire suite of family office services. We believe very few of our competitors invest the time and labor to create comparable proposals and we believe these customized proposals have underpinned much of our new business success. Simultaneously, our customized new business presentations distinguish us from both our much larger competitors who have major resources but cannot easily tailor solutions to suit clients’ needs as well as from our smaller competitors who do not have our depth of resources or capabilities.

Acquired Growth

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currently not available internally to us. We have used acquisitions to extend our presence into new geographies (Boston, Charlottesville) and to gain new investment expertise. The four strategic acquisitions we have completed have allowed us to benefit from economies of scale and scope.

In making acquisitions, we look for compatible professionals of the highest integrity who believe in our high service-high performance model for the business. It is important that their clientele be principally clients of high net worth and it is helpful if they have a similar value-based investment methodology. These firms are attracted to our company by the strength of our brand, the breadth of our services and the integrity of our people. Often these firms are extremely limited in the investment products and client services they can offer their clients and it is not uncommon that they have succession or other management issues to resolve. In addition, the high and growing cost of compliance with federal and state laws governing their business is often an added inducement. Following this offering, we believe we will become the partner of choice for many such firms.

Continuing our short-term growth strategy, we intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest in order to be closer to both our clients and to prospective clients. The following chart identifies those U.S. cities which contain the greatest number of families with net worth of $30 million or more:


RANK	CITY	RESIDENTS WITH A NET WORTH > $30 MILLION
1	New York, NY		7,270
2	Los Angeles, CA		4,350
3	San Francisco, CA		4,230
4	Chicago, IL		2,550
5	Washington, DC		2,300
6	Houston, TX		2,250
7	Dallas, TX		1,855
8	Atlanta, GA		960
9	Boston, MA		890
10	Seattle, WA		885

Source: Cerulli Associates/Wealth-X

While we have been able to consummate acquisitions largely on the strength of our brand and culture without the benefit of publicly traded stock, we believe additional cash and a publicly traded stock will greatly enhance our acquisition prospects. Our past acquisitions have sharpened our ability to integrate acquired businesses, and we believe that once we identify an acquisition target we will be able to complete the acquisition and the integration of the acquired business expeditiously.

We have a strong brand and trusted reputation. Unlike pure “roll up” firms, we believe we appeal to like-minded professionals who wish to remain independent, autonomous and focused on their clients. In-line with our previous acquisitions, we envision future targets will be rebranded as Silvercrest.

Institutional Growth

After four years of effort focused on cultivating relationships with institutional investment consultants, we are now regularly making new business presentations to institutional investors, including public and corporate pension funds, endowments, foundations, and their consultants.

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manage a new equity mutual fund which is presently in the early stages of its national marketing campaign. We expect this trend to continue once it is publicly known that these and other institutions have engaged us to manage significant portfolios for them. The importance of institutional growth to our company is noteworthy: institutional assets will likely expand not only our assets under management but also our profit margins; and the painstaking due diligence conducted by these institutions before selecting us will ratify and confirm the decisions to hire us made by our individual clients.

Brand Management

We have invested heavily to build, maintain and extend our brand. We have done so in the belief that creating awareness of our company and its differentiated characteristics would support all aspects of our business but most notably our growth.

With limited resources, we have created a focused national advertising campaign, which has drawn praise from clients, prospects and competitors alike. We have carefully chosen media outlets that reach our target audience efficiently and we estimate that the new business, which we get directly as a result of our advertising, now finances its cost.

Complementing our advertising strategy and again with limited resources, we have also invested in an effort to get media coverage of our company in some of the nation’s most prestigious national publications as well as in industry journals and newsletters. This effort has resulted in press coverage by the Wall Street Journal, Barron’s, Bloomberg, the Financial Times and The New York Times as well as various trade publications distributed within our industry. This public relations effort has very proven helpful in establishing our company as a leader in our industry.

Following this offering we expect to increase our spending in both advertising and public relations as part of our effort to further build our brand and to increase the market’s awareness of our company, particularly in the geographic markets which we expect to enter.

Our Business Model

We were founded in 2002 to provide independent investment advisory and related family office services to ultra-high net worth individuals and endowments, foundations and other institutional investors. To this end, we are structured to provide our clients with institutional-quality investment management with a level of service that wealthy individuals have difficulty obtaining elsewhere.

To provide a high level of service, we rely on portfolio management teams and our family office services team to provide objective, conflict-free investment management selection and a fully integrated, customized family-centric approach to wealth management. We believe the combination of comprehensive family office service, excellent investment capabilities and a high level of personal service allows us to take advantage of economies of scale to service the needs of our ultra-high net worth clients.

We have dedicated investment management teams tasked with successfully implementing their respective investment strategies. To increase the probability of success in meeting this objective, our analysts are not responsible for client interaction, management of our business, marketing or compliance oversight. This enables us to effectively serve ultra-high net worth clients as well as institutions which typically perform in-depth due diligence before selecting a manager.

Delivering Investment Performance

The Investment Policy & Strategy Committee, or IPSC, which is comprised of our chief strategist and several of our senior portfolio managers, is charged with the responsibility of adding value through asset allocation and manager selection. This is done through the use of our proprietary investment management by internal analysts, and best-of-breed external managers.

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The IPSC develops model asset allocations assuming differing levels of risk, liquidity and income tolerance as well as conducting outside manager due diligence. Our proprietary model portfolio structures are not merely a backward-looking, mechanical exercise based on the past performance of different asset classes. Instead, our IPSC overlays our judgment on the likely future performance of different asset classes in arriving at optimal portfolio structures. None of our dedicated investment analysts serves on this committee, which safeguards the independence of the IPSC’s recommendations.

Our portfolio managers are responsible for creating a customized investment program for each client based upon the IPSC’s work. An interactive dialogue ensures that each portfolio plan is based upon each client’s defined written objectives. Each client’s portfolio strategy takes into account that client’s risk tolerance, income and liquidity requirements as well as the effect of diversifying out of low-basis and/or sentimental holdings.

Historically, the IPSC has added value to our clients’ portfolios through asset allocation weightings and manager selection. The chart below shows the performance results of our company’s basic asset allocation model portfolios developed by the IPSC using our proprietary and outsourced investment capabilities.

ANNUALIZED PERFORMANCE

MODEL PORTFOLIO PERFORMANCE AS OF 6/30/12

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Income Portfolio

5/1/03

2.3

10.9

4.8

5.7

6.5

U.S. Stock/Bond Mix (50/50) ¹

6.5

11.7

3.5

4.8

5.9

Balanced Portfolio

5/1/03

0.6

12.9

4.3

6.0

7.4

U.S. Stock/Bond Mix (60/40) ¹

6.3

12.6

2.9

4.7

6.0

Growth Portfolio

5/1/03

-1.7

14.9

3.1

6.1

8.2

U.S. Stock/Bond Mix (90/10) ¹

5.7

15.5

0.9

4.2

6.4

¹	The equity benchmark is the S&P 500 Index and the fixed income benchmark is the Barclays Aggregate Bond Index.

From inception, we have employed a system of peer group reviews to ensure that client portfolios have been constructed in a manner consistent with our best collective thinking. In annual peer group reviews, the asset allocation within client portfolios is compared with the portfolios’ defined objectives and portfolios which are not fully aligned with the investment objective, which are then singled out for further review and discussion. Our objective is for all clients to receive our best thinking and that portfolio managers are managing portfolios consistently with our policy. As a combination of these various factors, the client relationship is with us and not merely with an individual at our company.

Our outsourced investment capabilities include alternative investments as well as traditional investment approaches in the categories of domestic large, mid and small cap growth equity, international equities and high yield bonds.

Proprietary Equity Strategies

Our equity strategies rely on a team-based investment approach and a rigorous investment process. This approach has resulted in returns that exceed relevant market benchmarks. We believe this team approach has

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provided and will continue to provide consistency to our investment process and results over the long-term. Our investment analysts are generalists who employ a “bottom-up” value oriented equity selecting methodology. Our analysts collectively monitor a universe of approximately 100 stocks which are deemed to be attractively valued relative to their business outlook and management’s history of adding value. Each proprietary equity strategy is built from the same body of research. Below is an illustration of the equity team’s investment process:

LOGO

Once stocks have been approved for investment from this body of research, they become part of one or more model equity portfolios. These are generally large cap, small cap, smid cap, multi-cap, equity income and focused value. Each stock position is continually monitored against its investment thesis to ensure investment discipline, and we employ a strict discipline to trim or sell securities in the following circumstances:

•

When a stock is excessively valued in our models or the best case scenario is reflected in the stock price;

•

Due to a stock’s outperformance, which can adversely affect a portfolio’s diversification;

•

Due to underperformance, when a stock trails relevant benchmarks by more than 10%;

•

When the investment thesis changes, due to a loss of confidence in management, a change in business prospects, or the deterioration in earnings quality.

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Below is a breakdown of assets among the various proprietary equity strategies as of June 30, 2012:

LOGO

Each of our equity strategies has outperformed its benchmark as illustrated by the following chart:

PROPRIETARY EQUITY PERFORMANCE
AS OF 6/30/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

-2.2

14.3

0.6

4.8

5.6

Russell 1000 Value Index

3.0

15.8

-2.2

2.9

4.2

Small Cap Value Composite

4/1/02

1.9

19.9

7.9

9.7

9.6

Russell 2000 Value Index

-1.4

17.5

-1.1

3.4

6.1

Smid Cap Value Composite

10/1/05

-0.4

17.4

3.6

—

6.5

Russell 2500 Value Index

-1.5

18.8

-0.2

—

3.7

Multi Cap Value Composite

7/1/02

-1.3

16.5

3.0

6.4

7.0

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

5.4

Equity Income Composite

12/1/03

4.5

17.3

4.9

8.0

9.9

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

5.2

Focused Value Composite

9/1/04

-5.2

15.9

2.4

6.5

8.2

Russell 3000 Value Index

2.6

16.0

-2.1

3.0

4.4

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Proprietary Fixed Income Strategies

In the management of fixed income investments, clients typically give us the mandate to produce stable returns to dampen the volatility of their portfolios as a counter-weight to equities as part of their complete asset allocation. For those investors who can take advantage of the tax exemption of municipal bonds, we have developed two high-yield municipal bond products designed to add value to the returns possible from high-grade bonds in a low interest rate environment. Below is the breakdown of assets under management by strategy as of June 30, 2012:

LOGO

Our fixed income strategy employs a bottom-up fundamental value approach designed to minimize the risk of loss. Almost all of our bond portfolios are highly customized and focused on income and liquidity generation as opposed to capital appreciation.

Outsourced Manager Selection

Recognizing the value of diversification to our clients, we offer a variety of outsourced investment capabilities designed to complement our proprietary capabilities. These outsourced capabilities include managers who have long records of success in managing growth equities, international equities, taxable high yield bonds, hedge funds and other strategies not offered on a proprietary basis by us. In selecting these managers, we utilize an investment manager database for initial screening and then a dedicated staff conducts on-site due diligence. Potential managers are reviewed and selected by our IPSC. Our selection criteria include the following:

•

Highly Consistent Returns. We emphasize consistency of performance over strong performance marked by high volatility.

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Tax Sensitivity. We seek managers with a low turnover style of management designed to achieve attractive after-tax rates of return.

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Solid Operations, Technology. We require each manager to produce evidence that it has strong technology and operations capabilities as well as vigorous compliance adherence.

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Alignment of Interest. We require evidence that the strategy’s key people have significant equity in their company and are motivated to stay in place.

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Will Negotiate Fees. We require our traditional managers to accept a significant discount in their management fees because we expect to manage all aspects of the client relationship. Their only responsibility is to manage the capital entrusted to them. No manager has refused to offer the discounts we seek.

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In the case of hedge fund selection, for several years we have engaged the services of an outside hedge fund consultant whose team of analysts assists us in making formal hedge fund decisions. For large clients with significant hedge fund exposure, we offer a hedge fund advisory service to create customized hedge fund portfolios. Each of our funds of funds capabilities appears below:

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Silvercrest Hedged Equity Fund is designed to complement and diversify long-only equity portfolios through investments with managers who employ long and short strategies;

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Silvercrest Emerging Markets Fund provides international and non-dollar exposure and diversification focused on long, short, credit and other managers who invest in emerging markets;

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Silvercrest Commodity Strategies Fund seeks to give investors comprehensive commodity exposure; and

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Silvercrest Special Situations Fund is designed to outperform traditional benchmarks with less volatility.

We have two types of fee arrangements with outsourced managers. With respect to separately managed accounts, clients pay a discounted fee, negotiated by us, directly to the manager. With respect to outsourced fund consultants, clients pay a discounted fee negotiated by us, directly to the manager and the manager distributes a portion of the fee to us. Clients are informed of this arrangement and have signed a written acknowledgement.

Delivering Client Service

We take a holistic approach to client service, whereby a senior portfolio manager spearheads the coordination of the IPSC recommendations, family office services work and the investment management team in order to deliver the full range of our capabilities to the client. The portfolio manager helps the client define his or her portfolio needs, develop a portfolio plan designed to achieve them and execute an agreed upon plan to accomplish our client’s financial objectives. The portfolio manager has regular contact with our clients to make sure our clients thoroughly understand the decisions that are made.

Portfolio managers are supported by junior portfolio managers and portfolio assistants who are thoroughly knowledgeable about a client’s portfolio, investment strategy and relationship with us. Junior portfolio managers are young professionals whom we seek to train and develop as portfolio managers. This approach frees senior managers to handle more client business, without compromising service, while developing the next generation of portfolio managers to develop and handle new client accounts. The majority of our organic growth is due to client referrals and we believe the structure of our portfolio management teams, investments in technology and integrated portfolio trading programs enable us to scale future growth.

Nine out of our ten largest clients use one or more component of our family office services. We believe that this is an attractive growth area for our company and have initiated plans to increase the provision of these services to both broaden relationships with existing clients and to attract potential clients. Our family office services are profitable and are not used as a loss-leader for attracting clients. Our family office capabilities include the following:

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Financial Planning;

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Tax Planning and Preparation;

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Partnership Accounting and Fund Administration;

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Consolidated Wealth Reporting;

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Estate or Trust Agency; and

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Art Consultancy, Management.

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For institutional client relationships, all day-to-day interfacing with our clients is handled by a dedicated institutional client service team headed by a Managing Director who also maintains our relationships with institutional investment consultants. This structure permits our investment professionals to maintain their focus on achieving superior investment results without the distraction of client demands. For the regularly scheduled portfolio review sessions with a client, generally a senior investment professional attends the face-to-face meetings with the head of institutional client services. The result is an efficient client-oriented service approach that is significantly scalable in size.

Competition

The wealth management industry is highly competitive and is comprised of many players. We compete directly with some of the largest financial service companies, as well as some of the smallest. Virtually all of our new business is gained from our success in taking market share from these firms. We primarily compete on the basis of several factors, including our level of service, the quality of our advice, independence, stability, performance results, breadth of our capabilities and fees. In general, these competitors fall into one of the following categories:

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Diversified Financial Institutions have divisions aimed at providing wealth management solutions to the high net worth segment that are usually staffed by brokers.

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Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

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Trust Companies combine fiduciary and investment services as well as ancillary financial services.

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MFO/RIAs focus exclusively on the high net worth segment and are frequently dominated by one or two families.

As a registered investment adviser that is not affiliated with other financial firms, we are free from the conflicts associated with brokerage or investment banking firms. In advising our clients on portfolio strategies, we are motivated to meet our clients’ investment objectives—not to generate commissions or placement fees—and to focus solely on providing excellent service and investment performance.

We have the size and resources to compete with larger organizations, and unlike many smaller firms, to provide our clients with fully customized, full-service wealth management and integrated family office solutions. While many competitors outsource investment management, we have chosen to compete with excellent proprietary investment capabilities coupled with a focused array of complementary non-proprietary capabilities offered by unaffiliated firms. This combination enables us to compete for and win the business of wealthy investors. We believe this is a key to our past and future success.

Employees

As of June 30, 2012, we had 85 full-time employees and two part-time employees.

Facilities

Our corporate headquarters are principally located at 1330 Avenue of the Americas, 38th Floor, New York, New York 10019, where we occupy approximately 41,000 square feet of space under a lease, the terms of which expire on September 30, 2017. We believe our current facilities are adequate for our current needs and that suitable additional space will be available as and when needed.

Legal Proceedings

In the normal course of business, we may be subject to various legal and administrative proceedings. Currently, there are no legal proceedings pending or threatened against us.

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REGULATORY ENVIRONMENT

Our business is subject to extensive regulation in the United States at the federal level and, to a lesser extent, the state level. Under these laws and regulations, agencies that regulate investment advisers have broad administrative powers, including the power to limit, restrict or prohibit an investment adviser from carrying on its business in the event that it fails to comply with such laws and regulations. Possible sanctions that may be imposed include the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment adviser and other registrations, censures and fines.

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries have resulted in increased scrutiny of the industry and new rules and regulations for investment advisers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of recent market events, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, the CFTC, other U.S. or non-U.S. regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct our business.

SEC Regulation

Silvercrest Asset Management Group LLC is registered with the SEC as an investment adviser under the Advisers Act. The Advisers Act, together with the SEC’s regulations and interpretations thereunder, imposes substantive and material restrictions and requirements on the operations of investment advisers. The SEC is authorized to institute proceedings and impose sanctions for violations of the Advisers Act, ranging from fines and censures to termination of an adviser’s registration.

The Advisers Act imposes substantive regulation on virtually all aspects of our business and relationships with our clients. As a registered investment adviser, we are subject to many requirements that cover, among other things, disclosure of information about our business to clients; maintenance of written policies and procedures; maintenance of extensive books and records; restrictions on the types of fees we may charge, including performance fees; solicitation arrangements; engaging in transactions with clients; maintaining an effective compliance program; custody of client assets; client privacy; advertising; and proxy voting. The SEC has authority to inspect any registered investment adviser and typically inspects a registered investment adviser periodically to determine whether the adviser is conducting its activities (i) in accordance with applicable laws, (ii) consistent with disclosures made to clients and (iii) with adequate systems and procedures to ensure compliance.

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authority to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates. In connection with these transactions, we receive soft dollar credits from broker-dealers that have the effect of reducing certain of our expenses. Section 28(e) of the Exchange Act provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services. To rely on the safe harbor offered by Section 28(e), (i) we must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to us in carrying out our investment decision-making responsibilities. In permissible circumstances, we may receive technology-based research, market quotation and/or market survey services which are paid for in whole or in part by soft dollar brokerage arrangements. If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations, our operating expenses would increase.

Under the Advisers Act, our investment management agreements may not be assigned without the client’s consent. The term “assignment” is broadly defined and includes direct assignments as well as assignments that may be deemed to occur upon the transfer, directly or indirectly, of a controlling interest in an investment adviser.

The failure of Silvercrest Asset Management Group LLC to comply with the requirements of the Advisers Act, and the regulations and interpretations thereunder, could have a material adverse effect on us.

CFTC Regulation

Due to recent rule amendments by the CFTC, Silvercrest Asset Management Group LLC and certain of its affiliates may be required to register with the CFTC and the National Futures Association, or the NFA, as a commodity pool operator and/or commodity trading advisor. Registration will subject us and our affiliates to substantive and material restrictions and requirements, including, among other things, reporting, recordkeeping, disclosure, self-examination and training requirements. Registration may also subject us to periodic on-site audits, and the CFTC is authorized to institute proceedings and impose sanctions for violations of the Commodity Exchange Act and/or CFTC rules.

Dodd-Frank

While the Dodd-Frank Act has not yet caused us to reconsider our business model, certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act are being determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the CFTC jointly issued final rules that require investment advisers registered with the SEC that advise one or more private funds, as well as commodity pool operators and commodity trading advisors registered with the CFTC, to provide certain information on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information, which will be used by the Financial Stability Oversight Council for purposes of assessing the systemic risk posed by private funds and by the SEC and CFTC for other purposes. We are subject to these rules and will have to provide a Form PF to the SEC. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding further implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

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ERISA-Related Regulation

To the extent that Silvercrest Asset Management Group LLC or any other of our affiliates is a “fiduciary” under ERISA with respect to benefit plan clients, it is subject to ERISA and to regulations promulgated thereunder. Among other things, ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving benefit plan clients and provide monetary penalties for violations of these prohibitions. Our failure to comply with these requirements could have a material adverse effect on our business.

Compliance

Our legal and compliance functions are integrated into a team of professionals. This group is responsible for all legal and regulatory compliance matters, as well as monitoring adherence to client investment guidelines. Senior management is involved at various levels in all of these functions.

For information about our regulatory environment, see “Risk Factors—Risks Related to the Regulatory Environment in which We Operate—The regulatory environment in which we operate is subject to continual change and regulatory developments designed to increase oversight may adversely affect our business.”

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MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our directors, nominees to our board of directors and executive officers.


Name	Age		Position
G. Moffett Cochran		61	Chairman, Chief Executive Officer and Director
Richard R. Hough III		42	President, Chief Operating Officer and Director
Scott A. Gerard		44	Chief Financial Officer
David J. Campbell		43	General Counsel and Secretary
Winthrop B. Conrad, Jr.		67	Director
Wilmot H. Kidd III		70	Director
Richard S. Pechter		67	Director

G. Moffett Cochran is our Chief Executive Officer and Chairman of our board of directors. As our Chief Executive Officer, Mr. Cochran is responsible for the oversight and management of our company. Mr. Cochran has been the Chairman and Chief Executive Officer of Silvercrest Asset Management Group LLC, since he co-founded it in 2001. Prior to forming Silvercrest Asset Management Group LLC, Mr. Cochran served as Chairman of Donaldson, Lufkin & Jenrette (DLJ) Asset Management Group and then as President of Credit Suisse Asset Management LLC following the acquisition of DLJ by Credit Suisse in 2000. He also currently serves as Chairman of the Board of Directors of the Jefferson Scholars Foundation and as a member of the Board of Trustees of the Virginia Museum of Fine Arts. Mr. Cochran holds a B.A. from the University of Virginia and a J.D. from the University of Virginia School of Law.

As co-founder of Silvercrest Asset Management Group LLC, Mr. Cochran has been involved in guiding our business since its inception. Mr. Cochran has over 25 years of experience in senior management positions in the investment management industry and has dealt with a wide range of issues that face the industry and us in particular. These two facets provide him with strong insights into all aspects of our business and the types of management issues that face companies in our sector. Based on his experience and qualifications, Mr. Cochran was elected as a member of our board.

Mr. Hough has been involved in the strategy of our company for almost ten years. His various leadership roles enable him to provide valuable insight on the strategic direction of the Company. Based on his experience and qualifications, Mr. Hough was elected as a member of our board.

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December 2008 through November 2009. Previously, he was Chief Financial Officer of Guideline, Inc., a publicly-held business research firm. Prior to Guideline, Mr. Gerard was a Division Controller with Citigroup Inc. and began his career with KPMG LLP. Mr. Gerard is a Certified Public Accountant and received a B.S. in accounting from the University of Buffalo.

David J. Campbell is our General Counsel and Secretary. Mr. Campbell has served as the General Counsel of Silvercrest Asset Management Group LLC since 2009. Prior to joining Silvercrest, Mr. Campbell served as a Managing Director and Associate General Counsel at Jefferies & Company, Inc. from 2006 to 2009. Mr. Campbell began his career at Donaldson, Lufkin & Jenrette Securities Corporation, where as a Senior Vice President he provided advice and counsel to DLJ’s Pershing Division, Investment Services Group and DLJdirect. In 2001, he joined the law firm of Bressler, Amery & Ross, P.C., where he was a partner. He graduated with a B.A. from The George Washington University and a J.D. from Villanova University School of Law.

Winthrop B. Conrad, Jr. is a member of our board of directors. Winthrop B. Conrad, Jr. is Senior Counsel, retired, of Davis Polk & Wardwell, LLP, a New York based global law firm. Prior to July 2007, Mr. Conrad was a senior partner at Davis Polk, specializing in capital markets transactions, mergers and acquisitions and general corporate matters. Mr. Conrad is a graduate of Yale College and received his J.D. from Harvard Law School. Davis Polk has not performed and does not perform legal services for us.

Mr. Conrad has extensive experience with corporate transactions, as well as finance, which provides us with important perspectives in those areas. With his broad experience in corporate legal matters, Mr. Conrad is uniquely equipped to provide the board with insight into capitalization strategies, fiduciary matters, capital markets mechanics and strategic expansion opportunities. Based on his experience and qualifications, Mr. Conrad was elected as a member of our board.

Wilmot H. Kidd III is a member of our board of directors. Mr. Kidd is Chairman of the Board and President of Central Securities Corporation, a non-diversified, publicly traded, investment company. Mr. Kidd has served as its President since 1973 and became Chairman of its Board of Directors in 2010. Mr. Kidd graduated from Washington & Lee University with a B.S. and from Northwestern University with an M.B.A.

Mr. Kidd has been involved in the financial services industry generally and the financial aspects of the investment company environment specifically for many years. He has extensive financial expertise through his various roles in publicly traded investment companies. In addition, Mr. Kidd’s service as chairman of the board of another public company provides our company with valuable insights on corporate governance issues that face the board and our company. Based on his experience and qualifications, Mr. Kidd was elected as a member of our board.

Richard S. Pechter is a member of our board of directors. Mr. Pechter joined Donaldson, Lufkin & Jenrette, or DLJ, in 1969 and spent his career there, retiring in 2000 as a Director of the parent and Chairman of DLJ’s Financial Services Group and DLJdirect. He is currently a Director of the Financial Industry Regulatory Authority, Inc., or FINRA, and the New York Stock Exchange Regulatory Authority. Mr. Pechter graduated from Yale and received his M.B.A. from the Harvard Business School, where he was a Baker Scholar.

Mr. Pechter has 42 years of experience in the investment management sector in various business, finance and strategic leadership roles. He has broad expertise and knowledge of the investment management business. Through his experience, Mr. Pechter has gained and developed extensive business, finance, distribution, marketing and leadership skills. Further, Mr. Pechter possesses an understanding of the regulatory aspects affecting our business through his relationships with FINRA and the New York Stock Exchange Regulatory Authority. These unique characteristics make him an important asset to our board, providing insight into the regulatory developments within our sector. Based on his experience and qualifications, Mr. Pechter was elected as a member of our board.

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Board Composition

Our board of directors currently consists of five directors. Messrs. Conrad, Kidd and Pechter qualify as independent directors under the corporate governance standards of Nasdaq. Our board of directors consists of a majority of independent directors within the meaning of the applicable rules of the SEC and Nasdaq and at least one member, Mr. Kidd, who is an Audit Committee financial expert within the meaning of the applicable rules of the SEC and Nasdaq.

As described under “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders,” the holders of our Class B common stock and our employees who are granted restricted shares of our Class A common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote their shares of Class A common stock and Class B common stock they hold at such time, or may acquire in the future in accordance with the decision of the Executive Committee of Silvercrest L.P. The votes of the members of the Executive Committee will be weighted based upon their relative holdings of Class B units. As a result of his equity ownership and position on the Executive Committee, following this offering, G. Moffett Cochran will initially control the vote of the Executive Committee of Silvercrest L.P., and therefore, the vote of all of the shares of Class A common stock and Class B common stock held by our employees. The parties of the stockholders’ agreement collectively will hold % of the combined voting power of our capital stock immediately after this offering (or approximately % if the underwriters exercise in full their option to purchase additional shares).

Staggered Board

Effective upon the consummation of this offering, our board of directors will be divided into three staggered classes of directors of the same or nearly the same number and each director will be assigned to one of the three classes. At each annual meeting of the stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders to be held during the years 2012 for Class I directors, 2013 for Class II directors and 2014 for Class III directors.

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Our Class I directors will be Mr. Kidd and Mr. Pechter;

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Our Class II directors will be Mr. Conrad and Mr. Hough; and

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Our Class III director will be Mr. Cochran.

Our board of directors is set at five directors. Our amended and restated certificate of incorporation and amended and restated bylaws provide that the number of our board of directors shall be fixed from time to time by a resolution of a majority of our board of directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class shall consist of one-third of the board of directors.

The division of our board of directors into three classes with staggered three-year terms may delay or prevent stockholder efforts to effect a change of our management or a change in control. See “Description of Capital Stock—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation—Classified Board of Directors” and “Risk Factors—Risks Related to this Offering—Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws could discourage a change of control that our stockholders may favor, which also could adversely affect the market price of our Class A common stock.”

Our board of directors currently consists of five directors. Messrs. Conrad, Kidd and Pechter qualify as independent directors under the corporate governance standards of Nasdaq. Silvercrest was incorporated on July 11, 2011. As such, we have had only one annual meeting during the most recent fiscal year in which all directors attended. Upon being registered as a public company, we intend to have required annual meetings.

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Board Leadership Structure

Our board of directors includes our Chief Executive Officer who also serves as Chairman of the board. Our board understands that there is no single, generally accepted approach to providing board leadership and that given the dynamic and competitive environment in which we operate, the right board leadership structure may vary as circumstances warrant. To this end, our board of directors has no policy mandating the combination or separation of the roles of Chairman of the board and Chief Executive Officer and believes the matter should be discussed and considered from time to time as circumstances change. Mr. Cochran will serve as both our Chief Executive Officer and Chairman, which we believe provides strong leadership for us and promotes a close relationship between management and our board of directors and assists in the development and implementation of corporate strategy.

Board Oversight of Risk Management

Our board of directors is responsible for overseeing management in the execution of its responsibilities and for assessing our general approach to risk management. In addition, an overall review of risk is inherent in our board’s consideration of our long-term strategies and other matters presented to our board. Our board exercises its responsibilities periodically as part of its meetings and also through our board’s three committees, which will be established prior to the consummation of this offering, each of which will examine various components of enterprise risk as part of their responsibilities. For example, the Audit Committee has primary responsibility for addressing risks relating to financial matters, particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting. The Audit Committee has primary responsibility for reviewing and discussing our practices regarding risk assessment and management, including any guidelines or policies that govern the process by which we identify, monitor and handle major risks. The Nominating and Corporate Governance Committee oversees risks associated with the independence of our board and potential conflicts of interest. The Compensation Committee has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and the compensation structure generally, including whether it provides appropriate incentives that do not encourage excessive risk-taking. Senior management is responsible for assessing and managing our various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies.

Our board’s role in risk oversight of our company is consistent with our leadership structure, with the Chief Executive Officer and other members of senior management having responsibility for assessing and managing our risk exposure, with our board and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systematic and effective approach for identifying, managing and mitigating risks throughout our company.

Board Committees

Prior to the consummation of this offering, we will establish an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee, each consisting only of independent directors.

Audit Committee

Our Audit Committee will assist our board of directors in its oversight of our internal audit function, the integrity of our financial statements, our independent registered public accounting firm’s qualifications and independence and the performance of our independent registered public accounting firm.

Our Audit Committee’s responsibilities will include, among others:

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reviewing the audit plans and findings of our independent registered public accounting firm and our internal audit and risk review staff, as well as the results of regulatory examinations, and tracking management’s corrective action plans where necessary;

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reviewing our financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent registered public accounting firm;

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reviewing our financial risk and control procedures, compliance programs regarding risk assessment and management and significant tax, legal and regulatory matters; and

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appointing annually our independent registered public accounting firm, evaluating its independence and performance, determining its compensation and setting clear hiring policies for employees or former employees of the independent registered public accounting firm.

We anticipate that Messrs. Conrad, Kidd and Pechter will serve on the Audit Committee and that Mr. Kidd will serve as its chairman. Each of Messrs. Conrad, Kidd and Pechter is independent under Rule 10A-3 of the Exchange Act. Mr. Kidd serves as our Audit Committee “financial expert”, as that term is defined under the SEC rules implementing Section 407 of Sarbanes-Oxley, and has experience that results in his financial sophistication as defined under Nasdaq rules.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee’s responsibilities will include, among others:

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making recommendations to the board regarding the selection of candidates, qualification and competency requirements for service on the board and the suitability of proposed nominees as directors;

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advising the board with respect to the corporate governance principles applicable to us;

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overseeing the evaluation of the board and management;

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reviewing and approving in advance any related party transaction, other than those that are pre-approved pursuant to pre-approval guidelines or rules established by the committee;

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reviewing periodically the form and amounts of director compensation and making recommendations to the board with respect thereto; and

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establishing guidelines or rules to cover specific categories of transactions.

We anticipate that Messrs. Conrad, Kidd and Pechter will serve on the Nominating and Corporate Governance Committee, each of whom qualifies as an “independent” director as defined under the applicable rules and regulations of the SEC, Nasdaq and the Internal Revenue Service. Mr. Conrad will serve as the chairman of the Nominating and Corporate Governance Committee.

Compensation Committee

Our Compensation Committee will assist our board of directors in the discharge of its responsibilities relating to the compensation of our executive officers.

Our Compensation Committee’s responsibilities will include, among others:

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reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our executive officers;

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overseeing and administering, and making recommendations to our board of directors with respect to, our cash and equity incentive plans; and

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reviewing and making recommendations to the board of directors with respect to director compensation.

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We anticipate that Messrs. Conrad, Kidd and Pechter will serve on the Compensation Committee, each of whom qualifies as an “independent” director as defined under the applicable rules and regulations of the SEC, Nasdaq and the Internal Revenue Service. Mr. Pechter will serve as the chairman of the Compensation Committee.

Compensation Committee Interlocks and Insider Participation

Upon the effectiveness of the registration statement of which this prospectus forms a part, our board of directors will form a Compensation Committee as described above. Prior to this offering, the compensation of our executive officers was determined by our Chief Executive Officer and the Executive Committee of Silvercrest L.P. Following this offering, the Compensation Committee of our board of directors will have responsibility for establishing and administering compensation programs and practices with respect to our executive officers, including the named executive officers. None of our executive officers serves as a member of the board of directors or Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more of its executive officers serving as a member of our board of directors or our Compensation Committee.

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COMPENSATION DISCUSSION AND ANALYSIS

The following discussion and analysis of compensation arrangements of our named executive officers for 2011 should be read together with the compensation tables and related disclosures set forth below. This discussion contains certain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt in the future may differ materially from currently planned programs as summarized in this discussion.

This section summarizes the material elements and principles underlying our compensation policies, including those relating to our named executive officers. It generally describes the manner and context in which compensation is earned by, and awarded and paid to, our management and senior executives, who we refer to as our principals, and provides perspective on the tables and narratives that follow. The named executive officers of Silvercrest are G. Moffett Cochran, Chairman and Chief Executive Officer, Richard R. Hough III, President and Chief Operating Officer, Scott A. Gerard, Chief Financial Officer, and David J. Campbell, General Counsel and Secretary. During 2011 and through the consummation of this offering, we were a private company. We expect that some of our policies and practices with respect to compensation will change when we are a public company. This section also highlights some of those expected changes.

References to “we”, “our” or “company” in this Compensation Discussion and Analysis section that describe our historical compensation practices refer to Silvercrest L.P. and our predecessor Silvercrest GP LLC, and references to “we”, “our” or “company” in this Compensation Discussion and Analysis section that describe our compensation practices following the consummation of this offering refer to Silvercrest and its subsidiaries.

Philosophy and Objectives of Compensation Program

Our compensation program is designed to reward past performance on an individual, team, and company level, and encourages future contributions to achieving our strategic goals and enhancing stockholder value. Our method of compensating our principals is intended to meet the following objectives: (i) support our overall business strategy; (ii) attract, retain and motivate top-tier professionals within the investment management industry; and (iii) align the interests of our principals with those of our stockholders.

We believe that to create long-term value for our stockholders, we need a skilled and experienced management team focused on achieving profitable and sustainable financial results, expanding our investment capabilities through disciplined growth, continuing to diversify sources of revenue and delivering superior client service. We depend on our management team to execute the strategic direction of our company and maintain our standards for ethical, responsible and professional conduct. We also rely on our management team to manage our professionals and distribution channels and provide the operational infrastructure that allows our investment professionals to focus on achieving attractive investment returns and superior client service. In addition, we depend on our management team to encourage an entrepreneurial and collegial business culture.

The elements of our compensation and equity participation programs have contributed to our ability to attract and retain a highly qualified team of professionals. For our principals, we use, and expect to continue to use, cash and equity compensation programs and equity participation in a combination that has been successful for us in the past and that we believe will continue to be successful for us as a public company. In addition to cash compensation for our principals, we have recognized performance and value, which enhance our overall compensation objectives, by (i) offering interests in Silvercrest L.P. and its general partner and our predecessor, Silvercrest GP LLC, for purchase by employees at fair market value and (ii) awarding deferred equity units in Silvercrest L.P. and Silvercrest GP LLC which vest over time. In some cases, these deferred equity units are complemented by performance units of additional equity interests in Silvercrest L.P. and Silvercrest GP LLC that vest upon the achievement of defined, long-term company performance hurdles. By doing so, we have enabled our principals to share in the future profits, growth and success of our business.

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Our cash compensation and equity participation programs align the interests of our principals with those of our stockholders and create long-term stockholder value. After becoming a public company, we intend to maintain overall compensation at highly competitive levels. In addition, we expect to award equity-based compensation as part of our compensation programs for our principals.

As a public company, we intend to focus compensation programs on rewarding performance that increases long-term stockholder value, including growing revenues, retaining clients, developing new client relationships, developing new products, improving operational efficiency and managing risks. We intend to periodically evaluate the success of our compensation and equity participation programs in achieving these objectives and adapt these programs as our company grows in order to enable us to better achieve these, and future, objectives.

Determination of Compensation and Role of Directors and Principals in Compensation Decisions

Our executive compensation and equity participation programs were developed and implemented while we were a private company. We have not identified a specific peer group of companies for comparative purposes and have not engaged in formal competitive benchmarking of compensation against specific peer companies. In addition, we have not engaged a compensation consultant to assist in the annual review of our compensation practices or the development of compensation or equity participation programs for our principals.

Compensation of our employees is not determined using rigid metrics or formulae and all compensation decisions are subject to the discretion of the Executive Committee of Silvercrest L.P. and, ultimately, our Chairman and Chief Executive Officer. Historically, base salaries, annual bonuses and incentive compensation of our employees are reviewed by the Executive Committee of Silvercrest L.P. and adjusted as deemed necessary after taking into account both individual and company performance. In addition, pursuant to the terms of our governing documents, aggregate compensation levels historically have been subject to the approval of our independent board member and independent investor when they exceeded a specified percentage of annual revenue.

In connection with this offering, our board of directors will form a Compensation Committee comprised solely of independent directors to assist our board of directors in the discharge of its responsibilities relating to the compensation of our named executive officers. For a discussion of the Compensation Committee’s role and responsibilities, see “Management—Board Committees—Compensation Committee” included in this prospectus. In making its decisions, the Compensation Committee will be guided by the recommendations of the Chief Executive Officer and Executive Committee of Silvercrest L.P.

We have not adopted policies with respect to cash versus non-cash compensation (or among different forms of non-cash compensation), although we have determined that it is important to encourage or provide a meaningful opportunity to acquire an amount of equity ownership by our principals to help align their interests with those of our company. The allocation between cash and non-cash compensation has historically been based on a number of factors, including individual performance, company performance and company liquidity. These determinations vary from year to year. We may decide in future years to pay some or all of short-term and long-term incentives in equity depending upon the facts and circumstances existing at that time.

We have also not adopted policies with respect to current versus long-term compensation, but believe that both elements are necessary for achieving our compensation objectives for all employees. As a public company, we expect that base salaries and performance bonuses will remain competitive for all employees. Equity awards for principals will reward achievement of strategic long-term objectives and we believe will contribute toward overall stockholder value.

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responsibility for our compensation policies, plans and programs, by reviewing our company’s achievements and the achievements of our employees, and providing input and guidance to our Chairman and Chief Executive Officer in the determination of the specific type and level of compensation of our other named executive officers. Our Compensation Committee will also set the compensation of our Chairman and Chief Executive Officer.

Principal Components of Compensation

We have established compensation practices that directly link compensation with individual and company performance, as described below. These practices apply to all of our principals, including our named executive officers. Ultimately, ownership in our company has been the primary tool we have used to attract and retain senior professionals. As of , 2012, on a pro forma basis to take into account the reorganization and the consummation of this offering, our principals indirectly held approximately % of the interests in Silvercrest L.P. The substantial majority of employee-owned interests are held by Mr. Cochran. In connection with the reorganization, all units in Silvercrest GP LLC, our predecessor, held by our principals will be converted into interests in Silvercrest L.P. The interests in Silvercrest L.P. currently held by our principals will continue to be held by them and will entitle them to continue to receive distributions from Silvercrest L.P. after the consummation of this offering.

In 2011, we provided the following elements of compensation to our principals, the relative value of each of these components for individual principals varying based on job role and performance: (i) base salary; (ii) annual cash bonus; (iii) deferred equity-based compensation; and (iv) other benefits and perquisites, each of which is described below.

•

Base Salary. Base salaries are intended to provide the named executive officers with a degree of financial certainty and stability that does not depend entirely upon company or individual performance. The intent behind all salaries is to provide a source of stable and predictable cash flow for each of our principals. The base salaries of our named executive officers for 2011 are set forth below in our “Summary Compensation Table.”

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Annual Cash Bonus. Annual cash bonus is determined at or after the end of each fiscal year and is based on a number of variables that are linked to individual and company-wide performance for that year and over the longer term. Our principals’ annual bonus awards have been granted in the sole and absolute discretion of our Chairman and Chief Executive Officer. Historically, our Chairman and Chief Executive Officer has determined his own bonus, if any, based upon the performance of our company. As a public company, we anticipate that our Compensation Committee will assume oversight for all of our compensation programs, including the approval of compensation of our Chief Executive Officer. The annual cash incentive compensation awarded to our named executive officers for fiscal 2011 is set forth below in our “Summary Compensation Table.”

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Deferred Equity-Based Compensation. All of our named executive officers and all of our principals own equity interests in our company. As part of our annual incentive compensation for some of our named executive officers and other principals, we awarded deferred equity units which vest over a four-year period and performance units in each of 2011 and 2012 for performance in the prior year. Units granted represented 25% of annual incentive compensation in 2011 for all of our named executive officers except Mr. Cochran, whose bonus was comprised entirely of units. In 2012, the percentage varied by officer. Each performance unit represents the unsecured right to receive additional interests in Silvercrest L.P. and Silvercrest GP LLC, but only if: (i) the recipient continues to hold the underlying deferred equity units at the time the performance units vest, which is four years from the date of issuance; and (ii) interests in Silvercrest L.P. and Silvercrest GP LLC have increased in value from date of issuance by at least 15% in year four. The value of the deferred equity and performance units when awarded is set forth below in our “Summary Compensation Table.”

•

Other Benefits and Perquisites. Each of our employees participates in the employee health benefit programs we maintain, including medical, group life and long-term disability insurance, on the same

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basis as all other employees, subject to satisfying any eligibility requirements and applicable law. We also provide other perquisites such as an automobile program, by which our present and former Management Committee members are provided $500 per month toward auto lease or financing payments. In addition, we offer each of our employees our investment management services, if they place their funds in a separately-managed account with us, at a discounted advisory fee typically associated with these services. Currently we do not have plans to change the levels of perquisites received, but continue to monitor them and may make adjustments from time to time. The perquisites provided to our named executive officers in the fiscal year ending December 31, 2011 are described below in our “Summary Compensation Table.”

Stock Ownership Guidelines

While the compensation of our principals has primarily included a set salary and a discretionary bonus, virtually all of our principals own equity interests in Silvercrest L.P. and Silvercrest GP LLC. As stated, we believe that equity ownership in our company causes principals to have a long-term view of our success, and a healthy concern for the entire company, rather than merely improving their own compensation. Principals are incentivized to grow and increase the value of their equity interests by adding to our overall revenue and guarding our expenses in a way that a non-equity owner would not. All of our principals have been offered multiple opportunities to acquire ownership interests in our company value based on a multiple of earnings that serves as a proxy for fair market value, and in many cases, have received annual incentive compensation awards which include such interests.

To date, only those employees who attained the title of Senior Vice President, Managing Director or higher were invited to purchase equity interests in Silvercrest L.P. and Silvercrest GP LLC or receive them as annual incentive compensation awards. These transactions have taken a variety of forms. Some equity owners received equity interests in Silvercrest L.P. and Silvercrest GP LLC upon the acquisition by our company of their prior firm. We have made four of these acquisitions. Some equity owners were invited to purchase equity interests in Silvercrest L.P. and Silvercrest GP LLC upon commencement of employment at our company or upon achieving a specified seniority level at our company. On other occasions, we offered the opportunity to existing principals to purchase equity interests in Silvercrest L.P. and Silvercrest GP LLC that were redeemed by departing principals or issued new equity interests. In these cases, the principals purchased the equity interests by issuing promissory notes to us in the amount of the value of the equity interests purchased, some of which notes provided for annual amortization and others of which provided for a balloon payment. In addition, in 2011 and 2012, some principals received additional equity interests as annual incentive compensation awards.

Our principals have not historically been subject to mandated equity ownership or retention guidelines. It is our belief that the equity component of our compensation program ensures that our principals are also owners whose incentives are directly aligned with those of our company and our clients. As a public company, we intend to continue to promote broad and substantial equity ownership by our principals by using both equity-based compensation awards which may be granted on an annual basis, and performance awards that will be granted in appropriate circumstances. We may expand our equity ownership by creating opportunities for all employees, and not only our principals, to acquire equity interests in our company. In addition, following this offering, while an employee of Silvercrest L.P., our principals will be required to retain at least 25% of the Class B units in Silvercrest L.P. owned by the principal on the date of consummation of this offering.

Each holder’s profits percentage is fixed at the date of acquisition of the equity interests in Silvercrest L.P. and Silvercrest GP LLC, subject to dilution when additional equity interests in these entities are issued or accretion if existing equity interests in their entities are redeemed and not resold. Under the terms of its limited partnership agreement, Silvercrest L.P. may retain profits for future needs of the partnership.

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the date of the grant of the equity interest, by participating in defined capital or liquidity events (as defined in the limited partnership agreement and limited liability company agreement) or by redemption following termination of employment. The redemption of these equity interests is described in detail below under “Potential Payments Upon Termination or Change in Control.”

In connection with the reorganization, the terms of the equity interests held by our named executive officers will change in several significant respects, described in greater detail under “The Reorganization and Our Holding Company Structure” in this prospectus. As part of our reorganization, interests in Silvercrest L.P. will be exchanged for Class B units of Silvercrest L.P. and shares of our Class B common stock. Class A units in Silvercrest L.P. will be held by Silvercrest, the new general partner of Silvercrest L.P. Each Class A unit and Class B unit gives its holder the right to a percentage of the current profits of Silvercrest L.P. (as defined in the limited partnership agreement). Following this offering, a substantial portion of the economic return of our principals will continue to be obtained through their equity ownership in Silvercrest L.P. We believe that the continued link between the economic return they realize and our performance will encourage their continued exceptional performance. In addition, we believe that the restrictions on transfer and the ownership requirements to which they will be subject will align their interests with those of our stockholders. See “The Reorganization and Our Holding Company Structure” for a more detailed described of the ownership structure and the rights of the limited partners in Silvercrest L.P. after this offering.

Following this offering, as an element of compensation we intend to grant equity-based awards to those individuals considered to be critical to our company’s future success.

Tax Considerations

Our Compensation Committee is expected to consider the anticipated tax and accounting treatment of various payments and benefits to us and, when relevant, to our principals, although these considerations are not dispositive. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to a publicly-traded corporation that pays compensation in excess of $1 million to any of its named executive officers (other than the chief financial officer) in any taxable year, unless the compensation plan and awards meet certain requirements. As a private company, Section 162(m) does not currently apply to our compensation program. To the extent Section 162(m) becomes applicable to us, we will endeavor to structure compensation to qualify as performance-based under Section 162(m), where it is reasonable to do so while meeting our compensation objectives. Notwithstanding the foregoing, we reserve the right to pay amounts that are not deductible under Section 162(m) during any period when Section 162(m) is applicable to us.

Risk Considerations in our Compensation Program

In evaluating our compensation program, we have identified two primary risks relating to compensation: (i) the risk that compensation will not be sufficient to retain talent and (ii) the risk that compensation may provide unintended incentives. To combat the risk that our compensation might not be sufficient, we strive to use a compensation structure and set compensation levels for all employees in a way that we believe contributes to low rates of employee attrition. We do not use compensation consultants, but we receive regular and ongoing input from industry representatives and other market sources through our (1) participation on the Pershing Advisor Solutions, a service which provides a customized approach to understanding the RIA business and a range of solutions to help meet demand, with MFO/RIA peers; (2) participation in other custodian advisor forums and industry events; (3) review of compensation surveys by companies such as The Bower Group, which provides international consulting services to a range of clients; (4) review of industry publications featuring stories on compensation practices and metrics; and (5) reviewing the Moss Adams Adviser Compensation and Staffing Study, which is prepared by Pershing Advisor Solutions, Moss Adams LLP and IN Advisor Solutions and includes data on hundreds of advisory firms. We also make equity awards subject to multi-year vesting schedules to provide a long-term component to our compensation program and impose ongoing restrictions on

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the ability of our principals to dispose of their equity holdings acquired through equity awards. We believe that both the structure and levels of compensation have aided us in retaining key personnel as evidenced by the long-term tenure of our principals.

To address the risk that our compensation programs might provide unintended incentives, we keep our compensation programs simple and we tie the long-term component of equity-based compensation to our company-wide results. We have not seen any employee behaviors motivated by our compensation policies and practices that create increased risks for our stockholders or our clients.

Based on the foregoing, we do not believe that our compensation policies and practices motivate imprudent risk taking. Consequently, we are satisfied that any potential risks arising from our employee compensation policies and practices are not reasonably likely to have a material adverse effect on us. As mentioned, our Compensation Committee, which will be comprised entirely of independent directors upon the consummation of this offering, will review our compensation plans and policies periodically to ensure proper alignment with overall company goals and objectives. Our Compensation Committee is also expected to review the risks arising from our compensation policies and practices and assesses whether any such risks are reasonably likely to have a material adverse effect on us.

Summary Compensation Table

The following table shows the annual compensation of our principal executive officer, principal financial officer and the two most highly compensated executive officers other than our principal executive officer and principal financial officer, who were serving as executive officers on December 31, 2011. These officers are referred to in this prospectus as the “named executive officers.” The following table shows four executive officers rather than five because no other executive officer of our company has total compensation in excess of $100,000.


Name and Principal Position	Year		Salary ($) (2)		Bonus ($) (3)		Stock Awards ($) (4)		All Other Compensation Earnings ($) (5)		Total ($)
G. Moffett Cochran, Chief Executive Officer		2011	$	500,000		—	$	409,031	$	230,523	$	1,139,554
Richard R. Hough, President and Chief Operating Officer (1)		2011	$	400,000	$	225,000	$	76,645		—	$	701,645
Scott A. Gerard, Chief Financial Officer		2011	$	325,000	$	200,000	$	67,982		—	$	592,982
David J. Campbell, General Counsel and Secretary		2011	$	325,000	$	175,000	$	59,530		—	$	559,530

(1)	Mr. Hough was named our Chief Operating Officer in July 2010 and was named President in February 2012.

(2)	Amounts represent guaranteed payments made to our named executive officers.

(3)	Amounts represent cash bonuses earned at December 31, 2011 and paid in February 2012.

(4)

Reflects the grant date fair value computed in accordance with FASB ASC Topic 718, or ASC 718, associated with deferred equity units in Silvercrest L.P., including distributions in respect of such units, calculated pursuant to ASC 718. Pursuant to ASC 718, Silvercrest L.P. recognizes compensation expense associated with the granting of equity-based compensation based on the grant-date fair value of the award if it is classified as an equity instrument, and on the changes in settlement amount for awards that are classified as liabilities. Silvercrest L.P.’s deferred equity unit-based awards have redemption features that necessitate their classification as liabilities and, accordingly, changes to their redemption values subsequent to the grant date have been included as a component of compensation expense. For the year ended December 31, 2011, distributions attributable to the deferred equity units held by the named executive

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officers were made as follows: Mr. Cochran—$12,281; Mr. Hough—$2,151; Mr. Gerard—$1,974; and Mr. Campbell—$1,774. See Note 17 to the audited consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus.

(5)

Amounts in this column represent the aggregate dollar amount of all other compensation received by Mr. Cochran, consisting of employer-paid car allowances equal to $6,000, insurance premiums for life and disability insurance benefiting Mr. Cochran equal to $6,200 and the savings of $218,323 to Mr. Cochran for the discounted advisory fee for investment management services on his funds placed in a separately managed account with our company. None of the perquisites received by our other named executive officers exceeded $10,000 in 2011.

Employment Agreements

During fiscal 2011 Silvercrest Asset Management Group LLC was a party to employment agreements with each of Messrs. Gerard and Campbell that provided for at-will employment. These agreements did not provide compensation terms or duration of employment. They did include restrictive covenants concerning the protection of our confidential information and solicitation of our employees and clients. We do not have employment agreements with Mr. Hough or Mr. Cochran. As limited partners of Silvercrest L.P., each of our named executive officers (other than Mr. Cochran) may not, while employed and during the one-year period following termination of employment by the employee, without good reason, (i) contact any of our clients or vendors or otherwise solicit any of our clients or vendors to terminate their relationship with us; (ii) accept any business from any of our clients with whom the employee dealt while at our company; or (iii) hire any of our employees. As a founding partner of our company, Mr. Cochran is bound by more restrictive covenants that prevent him during his employment and for two years following termination of employment from (i) contacting any of our clients or vendors or otherwise soliciting any of our clients or vendors to terminate their relationship with us; (ii) accepting any business from any of our clients with whom he dealt with while at our company; (iii) competing with us; or (iv) hiring any of our employees.

Outstanding Equity Awards at Fiscal Year End 2011

The following table sets forth information relating to equity interests in Silvercrest L.P. and Silvercrest GP LLC issued to our named executive officers subject to vesting provisions.


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested (as of 12/31/2011) ($) (1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
G. Moffett Cochran (2)		2,525	$	611,156		—	$	—
Richard R. Hough (3)		1,391	$	336,747		—	$	—
Scott A. Gerard (4)		420	$	101,678		—	$	—
David J. Campbell (5)		826	$	199,966		—	$	—

(1)	Represents (i) $242.09 per unit, which is the effective per unit value as of December 31, 2011, multiplied by (ii) the number of unvested units.

(2)	420.75 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 842 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(3)

183.50 shares vest on each of February 24, 2011, 2012, 2013 and 2014. 367 shares, which represent performance units, may vest on February 24, 2014 if performance targets are met. 79 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 158 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

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(4)	70 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 140 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(5)

91.75 shares vest on each of February 24, 2011, 2012, 2013 and 2014. 184 shares, which represent performance units, may vest on February 24, 2014 if performance targets are met. 61.25 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 123 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

Option Exercises and Stock Vested Table

The following table sets forth information concerning interests in Silvercrest L.P. acquired upon the vesting of deferred equity units by the named executive officers.


	Equity Awards
Name	Number of L.P. Interests Acquired on Vesting (#)		Value Realized on Vesting ($) (1)
G. Moffett Cochran		—	$	—
Richard R. Hough		184	$	27,296
Scott A. Gerard		—	$	—
David J. Campbell		92	$	13,648

(1)	Reflects the vesting date fair value computed in accordance with ASC 718 associated with deferred equity units in Silvercrest L.P.

Pension Benefits

We do not sponsor or maintain any benefit pension or retirement benefits for the benefit of our employees.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

We do not sponsor or maintain any nonqualified defined contribution or other nonqualified deferred compensation plans for the benefit of our employees.

Potential Payments Upon Termination or Change in Control

The following summarizes the potential payments and benefits that we would provide to our named executive officers in connection with a termination of employment and/or a change in control. In determining amounts payable, we have assumed in all cases that the termination of employment occurred on December 31, 2011 and prior to this offering.

Severance Benefits

We do not offer or have in place any formal retirement, severance, or similar compensation programs providing for additional benefits or payments in connection with a termination of employment, change in job responsibility or change in control. Our named executive officers, therefore, do not have employment, severance, change in control or other agreements with us that would require any payments to them in the event of a termination of employment and/or a change in control. Our named executive officers are all employed on an “at will” basis, which enables us to terminate their employment at any time. Under certain circumstances, a named executive officer may be offered severance benefits to be negotiated at the time of termination.

Deferred Equity Units and Performance Units

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For performance during 2010, the percentage was 25%, except in the case of Mr. Cochran, for whom the percentage in 2010 was 100%. As of December 31, 2011, there were 22,353 deferred equity units and 12,795 performance units outstanding. The deferred equity units and performance units were not issued pursuant to a plan.

Deferred Equity Units

Each deferred equity unit represents the right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P. All deferred equity units receive distributions to the same extent as if underlying units exerciseable therefor were deemed outstanding. As part of the reorganization, all deferred equity units outstanding immediately prior to the consummation of this offering will represent the right to receive an equal number of Class B units of Silvercrest L.P. Each deferred equity unit vests in four annual increments of 25% beginning on the first anniversary of the date of grant. On each vesting date, each deferred equity unit will entitle the holder thereof to receive 100 Class B units of Silvercrest L.P. On each vesting date, the holder of a deferred equity unit will have the right to require Silvercrest Asset Management Group LLC to pay the holder cash for a specified percentage of the deferred equity units in lieu of issuing Class B units to the holder for that percentage. The Executive Committee of Silvercrest L.P. sets the specified percentage that may be paid in cash at the option of the holder of the deferred equity units each year.

Performance Units

Silvercrest Asset Management Group LLC also granted to each employee who received an award of deferred equity units, a number of performance units which represent the right to receive (i) one unit of Silvercrest GP LLC for every two units of Silvercrest GP LLC issued upon vesting of the deferred equity units awarded to the employee and (ii) one unit of Silvercrest L.P. for every two units of Silvercrest L.P. issued upon vesting of the deferred equity units awarded to the employee. Immediately prior to the consummation of this offering, as part of the reorganization, each performance unit will become exercisable for one Class B unit for every two Class B units issued upon vesting of the deferred equity units awarded to the employee. Each performance unit is subject to forfeiture if (i) the Class B units granted to the employee pursuant to the corresponding deferred equity unit are not held by such employee on the earlier of (A) February 28, 2015 for the fiscal 2010 performance units and February 24, 2014 for the fiscal 2009 performance units and (B) the consummation of a change of control transaction or (ii) the value per Class B unit did not increase at least 15% per annum based on the Adjusted EBITDA (as defined in the unit award agreement) of Silvercrest L.P. calculated as of December 31, 2014.

Dividend Equivalents

Each deferred equity unit also entitles the holder to receive distributions from Silvercrest L.P. in the same amounts and at the same times as the holder would have received the distributions had the Class B units underlying the deferred equity units been awarded on the date of grant.

Treatment upon Termination of Employment

Voluntary Resignation and Termination with Cause

All deferred equity units and performance units are automatically forfeited upon a voluntary resignation or termination with cause. The right to receive dividend equivalents on the deferred equity units also terminates upon a termination of employment for the reasons stated above.

Involuntary Termination without Cause, Death, Disability and Retirement

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Committee of Silvercrest L.P. may determine as of the date of termination of employment the percentage of the deferred equity units held by the terminated employee that may be settled in cash. If an employee is terminated for any of the reasons set forth above, the terminated employee will receive a prorated number of Class B units based on the period of time employed between the date of grant and the settlement of the performance units when the performance target is achieved. The performance units will not be settled until the achievement of the performance target, if at all. In addition, the right to receive dividend equivalents on the deferred equity units will continue until the deferred equity units are settled.

Change in Control

All of the deferred equity units automatically vest in full upon the consummation of a change in control transaction. The Executive Committee of Silvercrest L.P. will determine whether the performance target for the performance units was achieved as of the closing date of the change in control transaction. If the performance target is achieved, the holder will receive settlement in full of the performance units upon the closing of the change in control transaction.

Vesting and Redemption of Silvercrest L.P. Interests

Under the terms of the limited partnership agreement, which governs the rights and liabilities of our named executive officers with respect to the ownership of their interests in Silvercrest L.P., those interests are subject to redemption at the option of the employee or Silvercrest L.P. upon the termination of their employment. The terms of the limited partnership agreement governing the redemption of interests held by Mr. Cochran are different from those governing Messrs. Hough, Gerard, and Campbell, as set forth below.

Upon the termination of employment of any of Messrs. Hough, Gerard, or Campbell, the terminated employee and Silvercrest L.P. each have a right to require the redemption of the terminated employee’s interests in Silvercrest L.P. Redemption is typically effected on a date that is at least sixty, but not more than ninety, days after of the date of termination of employment. Payment for the interests is made by issuance of a promissory note by Silvercrest L.P. to the terminated employee and payments under that note are scheduled over a four or five-year period beginning with a payment immediately after the termination date or on the one-year anniversary of the termination date, depending on the circumstances of the termination. The payment amount also differs based on the circumstances of the termination. Payments on the note may be reduced in the event of a violation of non-solicitation or confidentiality covenants applicable to the terminated employee in the limited partnership agreement. Redemption is also triggered upon termination of employment due to death or disability.

Pursuant to the limited partnership agreement, in the event of a termination of employment of Mr. Cochran prior to April 30, 2013, other than due to his death or disability, neither Silvercrest L.P. nor Mr. Cochran has the right to redeem his interests in Silvercrest L.P. In the event of a termination of his employment after April 30, 2013, both Mr. Cochran and Silvercrest L.P. will have the right to redeem Mr. Cochran’s interests. In such event, redemption of Mr. Cochran’s interests will be made by issuance of a note by Silvercrest L.P. to Mr. Cochran which will be payable in either two or three annual installments, depending on the circumstances of his termination.

In the event of termination of employment of a named executive officer due to death or disability on December 31, 2011, the payment upon redemption of his interest in Silvercrest L.P. would be approximately as follows: $27,393,694 for Mr. Cochran; $1,962,382 for Mr. Hough; $733,533 for Mr. Gerard; and $1,128,624 for Mr. Campbell. Those redemption payments may be made over a period of two through five years and, in the case of Mr. Cochran, the first payment may be withheld through April 30, 2013. Those payments would vary in the event of termination of employment of any of the named executive officers for any reason other than death or disability.

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Director Compensation

We did not pay our directors any compensation for their service as directors during the year ended December 31, 2011. Upon completion of this offering, we do not expect to pay our directors who are also our employees any compensation for their services as directors. We anticipate that our independent, non-employee directors will initially be compensated with an annual retainer of $50,000 and an additional $5,000 annually per committee on which the director serves. In addition, all directors will be reimbursed for reasonable out-of-pocket expenses incurred by them in connection with attending board of directors, committee and stockholder meetings, including those for travel, meals and lodging. We reserve the right to change the manner and amount of compensation to our directors at any time.

2012 Equity Incentive Plan

Our board of directors will adopt, and our stockholders will approve, the Silvercrest Asset Management Group Inc. 2012 Equity Incentive Plan, or the 2012 Equity Incentive Plan, prior to the consummation of this offering.

The purposes of the 2012 Equity Incentive Plan are to (i) align the long-term financial interests of our employees, directors, consultants and advisers with those of our stockholders; (ii) to attract and retain those individuals by providing compensation opportunities that are consistent with our compensation philosophy; and (iii) to provide incentives to those individuals who contribute significantly to our long-term performance and growth. To accomplish these purposes, the 2012 Equity Incentive Plan will provide for the grant of units of Silvercrest L.P. (All references to units or interests of Silvercrest L.P. refer to Class B units of Silvercrest L.P. and accompanying shares of Class B common stock of our company). The 2012 Equity Incentive Plan will also provide for the grant of stock options (both stock options intended to be incentive stock options under Section 422 of the Internal Revenue Code and non-qualified stock options), stock appreciation rights, or SARs, restricted stock awards, restricted stock units, performance-based stock awards and other stock-based awards (collectively, stock awards) based on our Class A common stock. Incentive stock options may be granted only to employees; all other awards may be granted to employees, including officers, members, limited partners or partners who are engaged in the business of one or more of our subsidiaries, as well as non-employee directors and consultants.

It is initially anticipated that awards under the 2012 Equity Incentive Plan granted to our employees will be in the form of units of Silvercrest L.P. that will not vest until a specified period of time has elapsed, or other vesting conditions have been satisfied as determined by the Compensation Committee, and which may be forfeited if the vesting conditions are not met. During the period that any vesting restrictions apply, unless otherwise determined by the Compensation Committee, the recipient of the award will be eligible to participate in distributions of income from Silvercrest L.P. In addition, before the vesting conditions have been satisfied, the transferability of such units is generally prohibited and such units will not be eligible to be exchanged for cash or shares of our Class A common stock pursuant to the exchange agreement.

Awards under the 2012 Equity Incentive Plan will be structured to comply with Section 409A of the Internal Revenue Code.

Shares Subject to the 2012 Equity Incentive Plan

A total of shares of our Class A common stock, representing 15% of the shares of our Class A common stock and our Class B common stock outstanding as of the closing of this offering, will be reserved and available for issuance under the 2012 Equity Incentive Plan. The equity interests may be issued in the form of shares of our Class A common stock or Class B units of Silvercrest L.P.

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become available for subsequent issuance under the 2012 Equity Incentive Plan. In addition, equity awards that are forfeited, cancelled, exchanged or surrendered prior to becoming fully vested, may become available for the grant of new equity awards under the 2012 Equity Incentive Plan.

The aggregate number of equity interests that may be granted to any single individual during a calendar year in the form of stock awards may not exceed shares of Class A common stock and/or Class B units.

Administration of the 2012 Equity Incentive Plan

The 2012 Equity Incentive Plan will be administered by our Compensation Committee. Subject to the terms of the 2012 Equity Incentive Plan, the Compensation Committee will determine which employees, directors, consultants and advisers will receive grants under the 2012 Equity Incentive Plan, the dates of grant, the numbers and types of stock awards to be granted, the exercise or purchase price of each award, and the terms and conditions of the stock awards, including the period of their exercisability and vesting and, in certain instances, the fair market value applicable to a stock award. In addition, the Compensation Committee will interpret the 2012 Equity Incentive Plan and may adopt any administrative rules, regulations, procedures and guidelines governing the 2012 Equity Incentive Plan or any awards granted under the 2012 Equity Incentive Plan as it deems appropriate.

The Compensation Committee may cancel, with the consent of the affected participants, any or all of the outstanding stock options or SARs in exchange for (i) new stock options or SARs covering the same or a different number of shares of our Class A common stock, but with an exercise price or base amount per share not less than the fair market value per share of our Class A common stock on the new grant date; or (ii) cash or shares of our Class A common stock, whether vested or unvested, equal in value to the value of the cancelled stock options or SARs.

Types of Equity-Based Awards

The types of awards that may be made under the 2012 Equity Incentive Plan are described below. These awards may be made singly or in combination, as part of compensation awards or ownership awards, or both. All of the awards described below are subject to the conditions, limitations, restrictions, vesting and forfeiture provisions determined by the Compensation Committee, in its sole discretion, subject to certain limitations provided in the 2012 Equity Incentive Plan. Awards under the 2012 Equity Incentive Plan may be granted without any vesting or forfeiture conditions, as determined by the Compensation Committee. Each award granted under the 2012 Equity Incentive Plan will be evidenced by an award agreement, which will govern that award’s terms and conditions.

Non-qualified Stock Options

A non-qualified stock option is an option that does not meet the qualifications of an incentive stock option as described below. An award of a non-qualified stock option grants a participant the right to purchase a certain number of shares of our Class A common stock during a specified term in the future, after a vesting period, at an exercise price equal to at least 100% of the fair market value of our Class A common stock on the grant date. The term of a non-qualified stock option may not exceed ten years from the date of grant. Except as provided in the award agreement or as otherwise determined by the Compensation Committee, an option may only be exercised while the participant is employed by, or providing services to, us or our subsidiaries, or during an applicable period after termination of employment or service.

Incentive Stock Options

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no less than 100% of fair market value on the grant date, a term of no more than ten years, and be granted from a plan that has been approved by our stockholders. No incentive stock option may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates, or more than 10% of the value of all classes of our stock, unless (i) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (ii) the term of the incentive stock option does not exceed five years from the date of grant.

SARs

A SAR entitles the participant to receive an amount equal to the difference between the fair market value of our Class A common stock on the exercise date and the exercise price of the SAR (which may not be less than 100% of the fair market value of a share of our Class A common stock on the grant date), multiplied by the number of shares subject to the SAR. The term of a SAR may not exceed ten years from the date of grant. Payment to a participant upon the exercise of a SAR may be either in cash, shares of our Class A common stock or a combination of the two as determined by the Compensation Committee. Except as provided in the award agreement or as otherwise determined by the Compensation Committee, a SAR may only be exercised while the participant is employed by, or providing services to, us or our subsidiaries, or during an applicable period after termination of employment or service.

Restricted Stock

A restricted stock award is an award of outstanding shares of our Class A common stock that does not vest until a specified period of time has elapsed, or other vesting conditions have been satisfied as determined by the Compensation Committee, and which may be forfeited if the conditions to vesting are not met. During the period that any restrictions apply, the transferability of stock awards is generally prohibited. Participants generally have all of the rights of a stockholder as to those shares, including the right to receive dividend payments on the shares subject to their award during the vesting period (unless the awards are subject to performance-vesting criteria) and the right to vote those shares. Dividends will be subject to the same restrictions as the underlying restricted stock unless otherwise provided by the Compensation Committee. All unvested restricted stock awards are forfeited if the participant’s employment or service is terminated for any reason, unless the Compensation Committee determines otherwise.

Restricted Stock Units

A restricted stock unit is a phantom unit that represents shares of our Class A common stock. Restricted stock units become payable on terms and conditions determined by the Compensation Committee and will be settled either in cash, shares of our Class A common stock or Class B units of Silvercrest L.P. or a combination of any of the three as determined by the Compensation Committee. All unvested restricted stock units are forfeited if the participant’s employment or service is terminated for any reason, unless the Compensation Committee determines otherwise.

Performance Awards

The 2012 Equity Incentive Plan permits the grant of performance-based stock that may qualify as performance-based compensation, not subject to the $1 million limitation on the income tax deductibility of compensation paid per covered principal imposed by Section 162(m) of the Internal Revenue Code, to the extent Section 162(m) is applicable to us. To assure that the compensation attributable to performance-based stock will so qualify, our Compensation Committee can, but will not be required to, structure these awards so that stock will be issued or paid pursuant to the award only upon the achievement of certain pre-established performance goals during a designated performance period.

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economic income, economic net income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) return on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology and goals relating to acquisitions, divestitures, joint ventures and similar transactions and budget comparisons; (xviii) personal professional objectives, including any of the foregoing performance goals, implementation of policies and plans, negotiation of transactions, development of long-term business goals, formation of joint ventures, research or development collaborations, and completion of other corporate transactions; and (xix) any combination of any of the foregoing.

Dividend Equivalents

Dividend equivalents entitle the participant to receive amounts equal to ordinary dividends that are paid on the shares underlying a grant while the grant is outstanding and may be awarded in connection with grants other than stock options or SARs. The Compensation Committee will determine whether dividend equivalents will be paid currently or credited to a bookkeeping account as a dollar amount or in the form of restricted stock units. Dividend equivalents may be paid in cash, in shares of our Class A common stock or in a combination of the two. The Compensation Committee will determine whether dividend equivalents will be conditioned upon the exercise, vesting or payment of the grant to which they relate and the other terms and conditions of the grant.

Class B Units

Under the 2012 Equity Incentive Plan, the Compensation Committee may also grant equity-based incentives related to Class B units of Silvercrest L.P. to encourage ownership in our operating partnership. The Compensation Committee may grant the same types of awards available under the 2012 Equity Incentive Plan related to our Class A common stock as awards related to the Class B units of Silvercrest L.P., including options to purchase Class B units. Any award granted covering units will reduce the overall limit with respect to the number of shares of Class A common stock that may be granted under the 2012 Equity Incentive Plan on a one-for-one basis.

LTIP Awards

The 2012 Equity Incentive Plan allows for the grant of LTIP units that may, upon the occurrence of certain events or the participant’s achievement of certain performance goals, convert into Class B units of Silvercrest L.P. To the extent provided in an award agreement, LTIP units, whether or not vested, would entitle the participant to receive, currently or on a deferred or contingent basis, distributions or distribution equivalent payments with respect to the number of Class B units of Silvercrest L.P. corresponding to the LTIP units. The Compensation Committee may award LTIP units as free-standing awards or in tandem with other awards under the 2012 Equity Incentive Plan. Any award granted covering LTIP units will reduce the overall limit with respect to the number of shares of Class A common stock that may be granted under the 2012 Equity Incentive Plan on a one-for-one basis.

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Other Equity-Based Awards

Under the 2012 Equity Incentive Plan, the Compensation Committee may grant other types of awards that are based on, or measured by reference to, shares of our Class A common stock or Class B units of Silvercrest L.P. The Compensation Committee will determine the terms and conditions of such awards. Other stock-based awards may be settled in either cash or equity, as determined by the Compensation Committee.

Adjustments

In connection with stock splits, stock dividends, recapitalizations and certain other events affecting our Class A common stock, the Compensation Committee will make adjustments as it deems appropriate in (i) the number and kind of shares covered by outstanding grants and (ii) the exercise price of all outstanding stock awards, if applicable.

Change of Control

If we experience a change of control, unless otherwise determined by our Compensation Committee or evidenced in the applicable award or other agreement, our Compensation Committee will have discretion to provide, among other things, (i) for the continuation of outstanding awards after the change in control without change; (ii) the cash-out of outstanding options as of the time of the change in control transaction as part of the transaction; (iii) a requirement that the buyer assume or substitute outstanding awards; and (iv) the acceleration of outstanding options and awards. In the event of a change in control in which the consideration paid to the holders of shares of Class A common stock and Class B units of Silvercrest L.P. is solely cash, our Compensation Committee may, in its discretion, provide that each award shall, upon the occurrence of a change in control, be cancelled in exchange for a payment, in cash or Class A common stock, in an amount equal to (x) the excess of the consideration paid per share of Class A common stock and Class B units of Silvercrest L.P. in the change of control over the exercise or purchase price (if any) per share of Class A common stock or Class B units of Silvercrest L.P. subject to the award, multiplied by (y) the number of shares of Class A common stock or Class B units of Silvercrest L.P. granted under the award.

In general terms, a change of control under the 2012 Equity Incentive Plan occurs:

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if a person, entity or affiliated group (with certain exceptions) acquires more than 50% of our then outstanding voting securities;

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if we merge into another entity, unless the holders of our voting shares immediately prior to the merger have at least 50% of the combined voting power of the securities in the merged entity or its parent;

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if we sell or dispose of all or substantially all of our assets;

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if we are liquidated or dissolved;

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if a majority of the members of our board of directors is replaced during any 12-month or shorter period by directors whose appointment or election is not endorsed by a majority of the incumbent directors; or

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We cease to be the general partner of Silvercrest L.P.

Section 162(m) Stockholder Approval Requirements

In compliance with the transition rules under Section 162(m) of the Internal Revenue Code, and after this offering, to the extent Section 162(m) is applicable to us, our stockholders will approve the 2012 Equity Incentive Plan no later than the first occurrence of: (i) the expiration of the 2012 Equity Incentive Plan; (ii) a material modification of the 2012 Equity Incentive Plan (in accordance with Section 162(m) of the Internal Revenue Code); (iii) the issuance of all our Class A common stock authorized for issuance under the 2012 Equity Incentive Plan; or (iv) our first stockholders’ meeting (during which our directors are elected) that occurs after the end of the third calendar year following the year in which this offering occurs.

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Amendment; Termination

Our board of directors or our Compensation Committee may amend or terminate the 2012 Equity Incentive Plan at any time. Our stockholders must approve any amendment if their approval is required in order to comply with the Internal Revenue Code, applicable laws, or applicable stock exchange requirements. Unless terminated sooner by our board of directors or extended with stockholder approval, the 2012 Equity Incentive Plan will terminate on the day immediately preceding the tenth anniversary of the date on which the board of directors approved the 2012 Equity Incentive Plan, but any outstanding award will remain in effect until the underlying shares are delivered or the award lapses.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Reorganization

Prior to the effectiveness of the registration statement of which this prospectus forms a part, we entered into a series of transactions to reorganize our capital structure. We also entered into agreements with certain related persons in connection with the reorganization. See “The Reorganization and Our Holding Company Structure.”

In addition, we expect to enter into an indemnification agreement with each of our executive officers and directors that provides, in general, that we will indemnify them to the fullest extent permitted by law in connection with their service to us or on our behalf. Due to the nature of the indemnification agreements, they are not the type of agreements that are typically entered into with or available to unaffiliated third parties.

Promissory Notes

On September 18, 2012, Mr. Hough repaid in full the principal amount and all accrued interest on five promissory notes issued by Mr. Hough in favor of Silvercrest L.P. The principal amounts at the time of repayment were $542,220.00, $122,812.50, $44,544.00, $77,520.00, and $222,837.51 with interest accruing at 3.53%, 2.77%, 4.40%, 2.64% and 2.42%, per annum, respectively.

On September 18, 2012, Mr. Gerard repaid in full the principal amount and all accrued interest on two promissory notes issued by Mr. Gerard in favor of Silvercrest L.P. The principal amounts at the time of repayment were $261,513.54 and $133,640.17 with interest accruing at 1.62% and 2.66%, per annum, respectively.

On September 18, 2012, Mr. Campbell repaid in full the principal amount and all accrued interest on two promissory notes issued by Mr. Campbell in favor of Silvercrest L.P. The principal amounts at the time of repayment were $77,520.00 and $270,187.51 with interest accruing at 2.64% and 2.84%, per annum, respectively.

Shares Subject to Redemption

Prior to this offering, under the terms of the limited partnership agreement, which governs the rights and liabilities of our named executive officers with respect to the ownership of their interests in Silvercrest L.P., those interests are subject to redemption at the option of the employee or Silvercrest L.P. upon the termination of their employment. See “Compensation Discussion and Analysis—Potential Payments Upon Termination or Change in Control—Vesting and Redemption of Silvercrest L.P. Interests” for further discussion of these redemption obligations.

Management Fees

Silvercrest Asset Management Group LLC manages the personal funds of many of its employees and members of the families of those employees, including Messrs. Cochran, Hough, Gerard, and Campbell pursuant to investment management agreements in which it has agreed to reduce the advisory fees it charges its employees and members of their families. The value of the discount to the investment advisory services provided to Mr. Cochran by our company in 2011 was approximately $218,000. The value of services provided to other executives by our company was not significant.

Policies and Procedures Regarding Transactions with Related Persons

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calendar year and in which a related person has a direct or indirect interest. A related person is (i) any of our directors, nominees for director or executive officers, (ii) any immediate family member of any of our directors, nominees for director or executive officers and (iii) any person, and his or her immediate family members, or entity, including affiliates, that was a beneficial owner of 5% or more of any of our outstanding equity securities at the time the transaction occurred or existed.

The policy will provide that if advance approval of a transaction subject to the policy is not obtained, it must be promptly submitted to the Audit Committee for possible ratification, approval, amendment, termination or rescission. In reviewing any transaction, the Audit Committee will take into account, among other factors the Audit Committee deems appropriate, recommendations from senior management, whether the transaction is on terms no less favorable than the terms generally available to a third party in similar circumstances and the extent of the related person’s interest in the transaction. Any related person transaction must be conducted at arm’s length. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the Audit Committee that considers a transaction.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

A beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to that security or has the right to obtain voting power and/or investment power within 60 days. Except as otherwise noted, each beneficial owner in the table below has sole voting power with respect to the shares of Class A common stock and Class B common stock listed. The following table sets forth beneficial ownership of our common stock by:

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each person who beneficially owns more than 5% of the shares;

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each of our named executive officers listed in the summary compensation table;

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each member of our board of directors; and

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all executive officers and directors as a group.

Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting and investment power with respect to all shares of Class A common stock and Class B common stock beneficially owned, subject to community property laws where applicable. Unless otherwise indicated in the footnotes below, the address of each stockholder is c/o Silvercrest Asset Management Group Inc., 1330 Avenue of the Americas, 38th Floor, New York, New York 10019.

This beneficial ownership information is presented on the following basis:

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after giving effect to the issuance of an aggregate of shares of Class B common stock to the continuing members of Silvercrest L.P.;

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after giving effect to the issuances of: (i) an aggregate of shares of Class B common stock to the continuing members of Silvercrest L.P., and (ii) shares of Class A common stock in this offering; and

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after giving effect to each of the issuances described in the preceding bullet point, plus the exercise by the underwriters of their option to purchase an additional shares of Class A common stock in this offering to cover over-allotments.

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Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to equity awards held by that person that are currently exercisable or will become exercisable within 60 days after September 1, 2012 are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person.


	Class A								Class B
Beneficial Owner	No. of Shares Before Offering		Percentage		No. of Shares after Offering		Percentage		No. of Shares Before Offering		Percentage			No. of Shares after Offering		Percentage
Officers and Directors
G. Moffett Cochran (1)		—		—		—		—		113,155		21.06	%
Richard R. Hough III		—		—		—		—		8,773		1.63	%
Scott A. Gerard		—		—		—		—		3,252		*
David J. Campbell		—		—		—		—		4,773		*
Winthrop B. Conrad, Jr.		—		—		—		—		—		—			—		—
Wilmot H. Kidd III		—		—		—		—		—		—			—		—
Richard S. Pechter		—		—		—		—		—		—			—		—
All named executive officers and directors as a group (7 people).		—		—		—		—		129,953		24.19	%
5% Security Holders
Martin Jaffe		—		—		—		—		70,781		13.17	%
Vulcan Wealth Management LLC (2)		—		—		—		—		136,364		25.38	%		—		—

*	Less than 1%.

(1)	Includes amount of Class B units owned by The Moffett Cochran GRAT 2010 of which Mr. Cochran is the trustee.

(2)

Vulcan Wealth Management LLC is wholly-owned by Vulcan Capital Private Equity I LLC. Vulcan Capital Private Equity Inc. is the managing member of Vulcan Capital Private Equity Management I LLC, which is the manager of Vulcan Capital Private Equity I LLC. Paul Allen is the sole stockholder of Vulcan Capital Private Equity Inc., and, as such, possesses sole voting and investment power over the shares held by Vulcan Wealth Management LLC. Mr. Allen disclaims beneficial ownership of the shares held by Vulcan Wealth Management LLC except to the extent of his pecuniary interest therein. The address for Vulcan Wealth Management LLC is 505 5th Avenue S, Suite 900, Seattle, Washington 98104.

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DESCRIPTION OF CAPITAL STOCK

The following is a description of the material terms of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect immediately prior to this offering. Copies of the amended and restated certificate of incorporation and the amended and restated bylaws have been filed with the SEC as exhibits to our registration statement of which this prospectus forms a part.

Immediately prior to this offering, our authorized capital stock will consist of million shares of Class A common stock, par value $0.01 per share, million shares of Class B common stock, par value $0.01 per share and million shares of preferred stock, par value $ per share. Upon the consummation of this offering, shares of Class A common stock, shares of Class B common stock and no shares of preferred stock will be outstanding.

Common Stock

Class A Common Stock

Voting Rights

Our Class A stockholders will be entitled to one vote for each share held of record on all matters submitted to a vote of our stockholders. Our Class A stockholders will not be entitled to cumulate their votes in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all holders of Class A common stock and Class B common stock present in person or represented by proxy, voting together as a single class. Except as otherwise provided by law or as described in “—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation—Amendment of Certificate of Incorporation and Bylaws,” amendments to our amended and restated certificate of incorporation must be approved by a majority of the combined voting power of all shares of Class A common stock and Class B common stock, voting together as a single class. However, amendments to our amended and restated certificate of incorporation that would alter or change the powers, preferences or special rights of the Class A common stock, so as to affect them adversely, also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Notwithstanding the foregoing, any amendment to our amended and restated certificate of incorporation to increase or decrease the authorized shares of Class A common stock must be approved by the vote of the holders of a majority of our shares of Class A common stock.

Dividend Rights

Class A stockholders are entitled to receive dividends, when and if declared by our board of directors, out of funds legally available therefor, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Dividends consisting of shares of Class A common stock may be paid only as follows: (i) shares of Class A common stock may be paid only to holders of shares of Class A common stock and (ii) shares will be paid proportionately with respect to each outstanding share of our Class A common stock. See “Dividend Policy.”

Liquidation Rights

Upon our liquidation, dissolution or winding-up, or the sale of all, or substantially all, of our assets, after payment in full of all amounts required to be paid to creditors and to holders of preferred stock having a liquidation preference, if any, the Class A stockholders will be entitled to share ratably in our remaining assets available for distribution to Class A stockholders.

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Other Matters

In the event of our merger or consolidation with or into another company in connection with which shares of common stock are converted into, or exchangeable for, shares of stock, other securities or property (including cash), common stockholders, regardless of class, will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash); provided that, if shares of Class A common stock are exchanged for shares of capital stock, such shares exchanged for, or changed into, may differ between classes to the extent that the shares of Class A common stock and the Class B common stock differ.

No shares of Class A common stock will be subject to redemption or have preemptive rights to purchase additional shares of Class A common stock.

Upon consummation of this offering, all the outstanding shares of Class A common stock will be legally issued, fully paid and non-assessable.

Exchanges of Class B units for Class A Common Stock and Registration Rights

Class B units of Silvercrest L.P. will be exchangeable for shares of our Class A common stock, on a one-for-one basis, subject to customary adjustments for share splits, dividends and reclassifications. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights” for a description of the timing and circumstances under which Class B units may be exchanged for shares of our Class A common stock. Also, see “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement” for a description of circumstances in which these shares may be resold.

Class B Common Stock

Issuance of Class B Common Stock with Class B units

Shares of our Class B common stock are issuable only in connection with the issuance of Class B units of Silvercrest L.P. When a vested or unvested Class B unit is issued by Silvercrest L.P., we will issue the holder one share of our Class B common stock in exchange for the payment of its par value, subject to the holder’s agreement to be bound by the terms of the stockholders’ agreement described in the “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders.” Each share of our Class B common stock will be redeemed for its par value and cancelled by us if the holder of the corresponding Class B unit exchanges or forfeits its Class B unit pursuant to the terms of the second amended and restated limited partnership agreement of Silvercrest L.P., the terms of the 2012 Equity Incentive Plan, or otherwise.

Voting Rights

Our Class B stockholders will be entitled to one vote for each share held of record on all matters submitted to a vote of our stockholders. Class B stockholders will not be entitled to cumulate their votes in the election of directors. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all Class B stockholders and Class A stockholders present in person or represented by proxy, voting together as a single class. Except as otherwise provided by law or as described in “—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation—Amendment of Certificate of Incorporation and Bylaws,” amendments to our amended and restated certificate of incorporation must be approved by a majority of the combined voting power of all shares of Class B common stock and Class A common stock, voting together as a single class. However, amendments to our amended and restated certificate of incorporation that would alter or change the powers, preferences or special rights of the shares of Class B common stock so as to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Notwithstanding the foregoing, any amendment to our amended and restated certificate of incorporation to increase or decrease the authorized shares of Class B common stock must be approved by the vote of the holders of a majority of the shares of Class B common stock.

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See “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders” for a description of the terms of the stockholders’ agreement that the holders of all shares of Class B common stock outstanding immediately after this offering will enter into simultaneously with this offering. Any person who becomes a Class B stockholder after this offering will be required to become a party to the stockholders’ agreement.

Dividend Rights

Our Class B stockholders will not participate in any dividends declared by our board of directors.

Liquidation Rights

Upon our liquidation, dissolution or winding-up, or the sale of all, or substantially all, of our assets, Class B stockholders only will be entitled to receive the par value of our Class B common stock.

Other Matters

In the event of our merger or consolidation with or into another company in connection with which shares of Class B common stock are converted into, or exchangeable for, shares of stock, other securities or property (including cash), all common stockholders will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash); provided that, if shares of Class B common stock are exchanged for shares of capital stock, such shares exchanged for, or changed into, may differ to the extent that the shares of our Class A common stock and Class B common stock differ.

No shares of Class B common stock will have preemptive rights to purchase additional shares of Class B common stock.

Upon consummation of this offering, all outstanding shares of Class B common stock will be legally issued, fully paid and non-assessable.

Preferred Stock

Our board of directors has the authority to issue preferred stock in one or more classes or series and to fix the rights, preferences, privileges and related restrictions, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, or the designation of the class or series, without the approval of our stockholders.

The authority of our board of directors to issue preferred stock without approval of our stockholders may have the effect of delaying, deferring or preventing a change in control of our company and may adversely affect the voting and other rights of the holders of our common stock. The issuance of preferred stock with voting and conversion rights may adversely affect the voting power of the holders of our common stock, including the loss of voting control to others.

Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation

Our amended and restated certificate of incorporation and our amended and restated bylaws, contain provisions which may have the effect of delaying, deterring or preventing a future takeover or change in control of our company. These provisions include the following:

Issuance of Preferred Stock

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and terms of redemption, conversion rights and the designation of any such series, without the approval of our stockholders. As a result, our board of directors could issue preferred stock quickly and easily, which could adversely affect the rights of holders of our common stock. Our board of directors could issue the preferred stock with terms calculated to delay or prevent a change in control or make removal of management more difficult.

Elimination of Stockholder Action by Written Consent

Our amended and restated certificate of incorporation provides that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting.

Elimination of the Ability to Call Special Meetings

Our amended and restated certificate of incorporation provides that, except as otherwise required by law, special meetings of our stockholders can only be called pursuant to a resolution adopted by a majority of our board of directors, a committee of the board of directors that has been duly designated by the board of directors and whose powers and authority include the power to call such meetings, or by the Chairman of our board of directors. Stockholders are not permitted to call a special meeting or to require our board to call a special meeting.

Advance Notice Procedures for Stockholder Proposals

Our amended and restated bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board. Stockholders at our annual meeting may only consider proposals or nominations specified in the notice of meeting, or brought before the meeting by, or at the direction of, our board of directors, or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our secretary timely written notice, in proper form, of the stockholder’s intention to bring that business before the meeting.

Classified Board of Directors

Our board of directors is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. Our amended and restated certificate of incorporation provides that the authorized number of directors may be changed only by resolution of the board. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors.

Removal of Directors; Board of Directors Vacancies

Our amended and restated certificate of incorporation and amended and restated bylaws provide that members of our board of directors may not be removed without cause. Our amended and restated bylaws further provide that only our board of directors may fill vacant directorships, except in limited circumstances. These provisions would prevent a stockholder from gaining control of our board of directors by removing incumbent directors and filling the resulting vacancies with such stockholder’s own nominees.

Amendment of Certificate of Incorporation and Bylaws

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incorporation described in “—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation.” Our amended and restated certificate of incorporation and amended and restated bylaws provide that the holders of at least two-thirds of the voting power of the issued and outstanding shares of our capital stock entitled to vote in connection with the election of directors have the power to amend or repeal our bylaws. In addition, our amended and restated certificate of incorporation grants our board of directors the authority to amend and repeal our bylaws without a stockholder vote in any manner not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation.

The foregoing provisions of our amended and restated certificate of incorporation and amended and restated bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. These provisions are intended to enhance the likelihood of continuity and stability in the policies formulated by our board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our equity securities and, as a consequence, they also may inhibit fluctuations in the market price of our Class A common stock that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management, or delaying or preventing a transaction that might benefit you or other minority stockholders.

Section 203 of the DGCL

We are subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the “business combination” or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior to the determination of interested stockholder status, did own) 15% or more of a corporation’s voting stock. The existence of this provision could have anti-takeover effects with respect to transactions not approved in advance by our board of directors, such as discouraging takeover attempts that might result in a premium over the market price of our common stock.

Limitations on Liability and Indemnification of Officers and Directors

Our amended and restated certificate of incorporation and amended and restated bylaws provide indemnification for our directors and officers to the fullest extent permitted by the DGCL. Prior to the completion of this offering, we intend to enter into indemnification agreements with each of our directors that may, in some cases, be broader than the specific indemnification provisions contained under Delaware law. In addition, as permitted by the DGCL, our amended and restated certificate of incorporation includes provisions that eliminate the personal liability of our directors for monetary damages resulting from breaches of certain fiduciary duties as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of fiduciary duties as a director, except that a director will be personally liable for:

•

any breach of his duty of loyalty to us or our stockholders;

•

acts or omissions not in good faith, or which involve intentional misconduct or a knowing violation of law;

•

any transaction from which the director derived an improper personal benefit; or

•

improper distributions to stockholders.

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If the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of our directors or officers shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

This provision regarding indemnification of our directors and officers in our amended and restated certificate of incorporation generally does not limit liability under state or federal securities laws.

Delaware law and our amended and restated certificate of incorporation and bylaws provide that we will, in certain situations, indemnify any person made or threatened to be made a party to a proceeding by reason of that person’s former or present official capacity with our company against judgments, penalties, fines, settlements and reasonable expenses, including reasonable attorneys’ fees. A person is also entitled, subject to certain limitations, to payment or reimbursement of reasonable expenses in advance of final disposition of the proceeding. Your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.

Transfer Agent and Registrar

The transfer agent and registrar for our Class A common stock will be American Stock Transfer.

Listing

We intend to apply to list our Class A common stock on Nasdaq under the symbol “SAMG.”

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SHARES ELIGIBLE FOR FUTURE SALE

We cannot predict the effect, if any, that market sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the market price of our Class A common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our Class A common stock in the public market, including shares issued and sold upon exchange of Class B units, could adversely affect the market price of our Class A common stock and could impair our future ability to raise capital through the sale of our equity securities.

Class A Common Stock Outstanding Upon Closing

shares of Class A common stock will be outstanding immediately after this offering (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Subject to certain restrictions, following the six-month anniversary of the consummation of this offering, each holder (other than us) and certain permitted transferees will have the right to exchange their Class B units of Silvercrest L.P. for shares of our Class A common stock on a one-for-one basis pursuant to the terms of our second amended and restated limited partnership agreement. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” These shares of our Class A common stock issuable upon exchange of Class B units would be “restricted securities,” as defined in Rule 144. However, we will enter into a resale and registration rights agreement with the holders of the Class B units of Silvercrest L.P. that will require us to register under the Securities Act these shares of Class A common stock. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.”

Of the shares of Class A common stock outstanding following this offering, shares of Class A common stock (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock) sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares of Class A common stock held by our “affiliates”, as defined in Rule 144 under the Securities Act, which would be subject to the limitations and restrictions described below under “—Rule 144.”

The shares of our Class A common stock issuable upon exchange of Class B units of Silvercrest L.P. may be sold only as part of an annual underwritten offering pursuant to the resale and registration rights agreement until the fifth anniversary of the consummation of this offering, subject to the following exceptions:

•

holders at any time may sell a number of shares sufficient to cover taxes due upon exchange of Class B units in any manner of sale permitted under the securities laws; and

•

the estate of any deceased holder or the beneficiaries thereof, at any time, may sell a number of shares sufficient to cover applicable estate and inheritance taxes.

Shares of Class A common stock issuable upon exchange of Class B units held by a principal of Silvercrest L.P. are subject to additional restrictions on transfer as described under “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.”

In addition, our board of directors may at any time waive any restrictions on sale of our Class A common stock.

Lock-Up Agreements

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Our officers and directors will enter into similar lock-up agreements with the underwriters. Sandler O’Neill & Partners, L.P. and Raymond James & Associates, Inc. may, at any time, release us and/or any of our officers and directors from this lock-up agreement and allow us to sell shares of our Class A common stock within this 180-day period. See “Underwriting.” Pursuant to our lock-up agreement with the underwriters, we will not be permitted to waive these restrictions pursuant to the exchange agreement without the prior consent of Sandler O’Neill & Partners, L.P. and Raymond James & Associates, Inc.

Rule 144

In general, under Rule 144 as currently in effect, our affiliates who own shares for at least six months or own shares purchased in the open market are entitled to sell these shares as follows. Within any three-month period, each person may sell a number of shares that does not exceed the greater of 1% of our then-outstanding shares of Class A common stock, which will equal approximately shares immediately after this offering (based on the number of shares of our Class A common stock outstanding upon completion of this offering), or the average weekly trading volume of our Class A common stock on Nasdaq during the four calendar weeks preceding the filing of a notice of the sale on Form 144. Sales under Rule 144 by affiliates also will be subject to manner of sale provisions, notice requirements and the availability of current public information about us.

A person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, and who owns shares of Class A common stock within the definition of “restricted securities” under Rule 144 that were acquired from us or any affiliate at least six months previously, would also be entitled to sell shares under Rule 144. Such sales would be permitted without regard to the volume limitations, manner of sale provisions or notice requirements described above and, after one year, without any limits, including the public information requirement.

Rule 701

In general, and subject to lock-up agreements, any of our employees, consultants or advisers, other than affiliates, who purchased shares of Class A common stock from us under our 2012 Equity Incentive Plan, or other written agreements in accordance with Rule 701 of the Securities Act, are eligible to resell their shares under Rule 144.

Registration of Shares Under 2012 Equity Incentive Plan

We intend to file a registration statement on Form S-8 covering all of the shares of Class A common stock issuable or reserved for issuance under our 2012 Equity Incentive Plan. When issued, these shares of Class A common stock will be freely tradable in the public market, subject to Rule 144 volume limitations applicable to affiliates and, in some cases, the expiration of the lock-up agreements described in “Underwriting.”

Resale and Registration Rights Agreement

In connection with this offering, we will enter into a resale and registration rights agreement with the holders of the Class B units of Silvercrest L.P. pursuant to which the shares of our Class A common stock issued upon exchange or conversion of their Class B units will be eligible for resale, subject to the resale timing and manner limitations described under “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.”

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK

The following is a summary of the material U.S. federal income tax and estate tax consequences applicable to non-U.S. holders (as defined below) with respect to the acquisition, ownership and disposition of shares of our Class A common stock. This summary is based on current provisions of the Internal Revenue Code, the Treasury regulations promulgated thereunder, administrative rulings and judicial opinions, all of which are subject to change, possibly with retroactive effect. We have not sought any ruling from the U.S. Internal Revenue Service, or the IRS, with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS will agree with such statements and conclusions.

This summary is limited to non-U.S. holders (as defined below) who purchase shares of our Class A common stock pursuant to this offering and who hold those shares as capital assets within the meaning of Section 1221 of the Internal Revenue Code.

This discussion does not address all aspects of U.S. federal income or estate taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder’s individual circumstances, nor does it address any aspects of tax considerations arising under the laws of any non-U.S., state or local jurisdiction. This discussion also does not address tax considerations applicable to a non-U.S. holder subject to special treatment under the U.S. federal income tax or estate tax laws, including without limitation:

•

banks, insurance companies or other financial institutions;

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partnerships or other pass-through entities;

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tax-exempt organizations;

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tax-qualified retirement plans;

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dealers in securities or currencies;

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U.S. expatriates and certain former citizens or long-term residents of the U.S.;

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controlled foreign corporations;

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passive foreign investment companies;

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persons that own, or have owned, actually or constructively, more than 5% of our Class A common stock; and

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persons that will hold common stock as a position treated as a hedging transaction, “straddle” or “conversion transaction” for tax purposes.

Accordingly, we urge prospective investors to consult with their own tax advisers regarding the state, local and other tax considerations of acquiring, holding and disposing of shares of our Class A common stock.

In addition, this discussion does not address the tax treatment of partnerships (or entities or arrangements that are treated as partnerships for U.S. federal income tax purposes) or persons who hold their Class A common stock through partnerships or other pass-through entities for U.S. federal income tax purposes. If a partnership (or other entity treated as a pass-through entity for U.S. federal income tax purposes) is a beneficial owner of Class A common stock, the tax treatment of a partner in the partnership (or member in such other entity) will generally depend upon the status of the partner and the activities of the partnership. Any partner in a partnership holding shares of Class A common stock should consult its own tax advisers.

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THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR CLASS A COMMON STOCK ARISING UNDER THE LAWS OF THE U.S., ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Definition of Non-U.S. Holder

In general, a “non-U.S. holder” is any beneficial owner of our Class A common stock (other than an entity treated as a partnership or disregarded as separate from its owner for U.S. federal income tax purposes) that is not a U.S. person. A “U.S. person” is any of the following:

•

an individual citizen or resident of the U.S. as determined for U.S. federal income tax purposes;

•

a corporation (or any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

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an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•

a trust if (a) a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons (as defined in the Internal Revenue Code) have the authority to control all substantial decisions of the trust or (b) it has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

Distributions on Class A Common Stock

If we make cash or other property distributions on our Class A common stock, or effect a redemption that is treated as a distribution with respect to our Class A common stock, then any such distributions or redemptions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current and accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a tax-free return of capital to the extent of the non-U.S. holder’s adjusted tax basis in our Class A common stock and will be applied against and reduce that basis. Any excess will be treated as gain realized on the sale or other disposition of the Class A common stock and will be treated as described under the section titled “—Gain on Sale or Other Disposition of Class A Common Stock” below.

Except as described in the next paragraph, dividends paid to a non-U.S. holder of our Class A common stock generally will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends, or a lower rate specified by an applicable income tax treaty. To receive the benefit of a reduced treaty rate, a non-U.S. holder must furnish to us or our paying agent or withholding agent a properly completed and valid IRS Form W-8BEN (or applicable successor form) certifying, under penalties of perjury, such holder’s qualification for the reduced rate. This certification must be provided to us or our paying agent or other withholding agent prior to the payment of dividends and may be required to be updated periodically. Special certification and other requirements apply if our Class A common stock is held through a non-U.S. intermediary including non-U.S. pass-through entities. Non-U.S. holders that do not timely provide us or our paying agent or other withholding agent with the required certification, but that qualify for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

If a non-U.S. holder holds our Class A common stock in connection with the conduct of a trade or business in the U.S., and dividends paid on the Class A common stock are effectively connected with such holder’s U.S. trade or business (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.), the non-U.S. holder will be exempt from U.S. federal withholding tax, but will be subject to tax as provided below. To claim the exemption, the non-U.S. holder must furnish to us or our paying agent or other withholding agent the required forms, including a properly executed IRS Form W-8ECI (or applicable successor form).

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Any dividends paid on our Class A common stock that are effectively connected with a non-U.S. holder’s U.S. trade or business (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by the non-U.S. holder in the U.S.) generally will be subject to U.S. federal income tax on a net income basis at the regular graduated U.S. federal income tax rates in the same manner as if such holder were a U.S. holder. A non-U.S. holder that is a non-U.S. corporation (or non-U.S. entity treated as a corporation for U.S. federal income tax purposes) also may be subject to an additional branch profits tax equal to 30% (or such lower rate specified by an applicable income tax treaty) of a portion of its effectively connected earnings and profits for the taxable year. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

A non-U.S. holder who provides us with an IRS Form W-8BEN or Form W-8ECI must update the form or submit a new form, as applicable, if there is a change in circumstances that makes any information on such form incorrect. A non-U.S. holder that claims the benefit of an applicable income tax treaty generally will be required to satisfy applicable certification and other requirements prior to the distribution date. Non-U.S. holders should consult their tax advisers regarding their entitlement to benefits under a relevant income tax treaty.

Gain on Sale or Other Taxable Disposition of Class A Common Stock

Subject to the discussion below regarding backup withholding, a non-U.S. holder generally will not be subject to U.S. federal income tax on any gain realized on a sale or other taxable disposition of our Class A common stock unless:

•

the gain is “effectively connected” with the non-U.S. holder’s conduct of a trade or business in the U.S., and, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that the non-U.S. holder maintains in the U.S.,

•

the non-U.S. holder is an individual, holds the Class A common stock as a capital asset, is present in the U.S. for 183 or more days in the taxable year of the sale and certain other conditions exist, or

•

we are or have been a U.S. real property holding corporation, or a USRPHC, for U.S. federal income tax purposes at any time within the shorter of the five-year period preceding the disposition and the non-U.S. holder’s holding period for our Class A common stock, and such non-U.S. holder has actually or constructively held (at any time during the shorter of the five-year period preceding the date of the disposition or the holder’s holding period) 5% or more of our Class A common stock.

We believe we currently are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. However, no assurance can be offered in this regard.

Gain described in the first or third bullet point above will be subject to U.S. federal income tax on a net income basis at regular graduated U.S. federal income tax rates generally in the same manner as if such holder were a U.S. holder. A non-U.S. holder that is a non-U.S. corporation (or non-U.S. entity treated as a corporation for U.S. federal income tax purposes) also may be subject to an additional branch profits tax equal to 30% (or such lower rate specified by an applicable income tax treaty) of a portion of its effectively connected earnings and profits for the taxable year. The gross proceeds from transactions to which the third bullet point above applies will generally be subject to a 10% withholding tax, which may be claimed as a credit against the non-U.S. holder’s federal income tax liability. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

Gain described in the second bullet point above will be subject to U.S. federal income tax at a flat 30% rate (or such lower rate specified by an applicable income tax treaty), but may be offset by U.S. source capital losses (even though the individual is not considered a resident of the U.S.), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

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Federal Estate Taxes

An individual non-U.S. holder who is treated as the owner of, or has made certain lifetime transfers of, an interest in our Class A common stock will be required to include the value thereof in his or her gross estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise, even though such individual was not a citizen or resident of the U.S. at the time of his or her death.

Backup Withholding and Information Reporting

In general (except as described below), backup withholding and information reporting will not apply to a distribution of dividends on our Class A common stock paid to you or to proceeds from the disposition of the Class A common stock by you, in each case, if you certify under penalties of perjury that you are a non-U.S. person, and neither we nor our paying agent (or other payor) have actual knowledge or reason to know to the contrary. In general, if the Class A common stock is not held through a qualified intermediary, the amount of dividends, the name and address of the beneficial owner and the amount, if any, of tax withheld may be reported to the IRS.

Information reporting and backup withholding generally are not required with respect to the amount of any proceeds from the sale or other disposition of our Class A common stock by a non-U.S. holder outside the U.S. through a foreign office of a foreign broker that does not have certain specified connections to the U.S. However, if a non-U.S. holder sells or otherwise disposes of its shares of our Class A common stock through a U.S. broker or the U.S. offices of a foreign broker, the broker will generally be required to report the amount of proceeds paid to the non-U.S. holder to the IRS and also backup withhold on that amount unless such non-U.S. holder provides appropriate certification to the broker of its status as a non-U.S. person (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Internal Revenue Code) or otherwise establishes an exemption. Information reporting will also apply if a non-U.S. holder sells its shares of our Class A common stock through a foreign broker deriving more than a specified percentage of its income from U.S. sources or having certain other connections to the U.S., unless such broker has documentary evidence in its records that such non-U.S. holder is a non-U.S. person (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Internal Revenue Code) and certain other conditions are met, or such non-U.S. holder otherwise establishes an exemption.

Copies of information returns may be made available to the tax authorities of the country in which the non-U.S. holder resides or is incorporated under the provisions of a specific treaty or agreement.

Backup withholding is not an additional tax. Any amounts withheld from a payment to a non-U.S. holder under the backup withholding rules generally can be credited against any U.S. federal income tax liability of the non-U.S. holder, provided that you timely furnish the required information to the IRS.

Foreign Accounts

Recently enacted legislation generally will impose a U.S. federal withholding tax of 30% on dividends paid after December 31, 2013, and the gross proceeds of a disposition of our Class A common stock paid after December 31, 2014 to a “foreign financial institution,” as specially defined under these rules, unless such institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution, which includes certain equity and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners. The legislation also will generally impose a U.S. federal withholding tax of 30% on dividends paid after December 31, 2013, and the gross proceeds of a disposition of our Class A common stock paid after December 31, 2014 to a non-financial foreign entity unless such entity provides the withholding agent with a certification identifying the direct and indirect U.S. owners of the entity. We will not pay any

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additional amounts to non-U.S. holders in respect of any amounts withheld. Under certain circumstances, a non-U.S. holder might be eligible for refunds or credits of such taxes. Prospective investors are encouraged to consult with their own tax advisers regarding the possible implications of this legislation on their investment in our Class A common stock.

The preceding discussion is not tax advice. Each prospective investor should consult the prospective investor’s own tax adviser regarding the particular U.S. federal, state and local and non-U.S. tax consequences of purchasing, holding and disposing of our Class A common stock, including the consequences of any proposed change in applicable laws.

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UNDERWRITING

We are offering the shares of our Class A common stock described in this prospectus in an underwritten offering in which we and Sandler O’Neill & Partners, L.P., as representative of the underwriters for the offering, will enter into an underwriting agreement with respect to the common stock being offered. Subject to the terms and conditions contained in the underwriting agreement, each underwriter named below has severally agreed to purchase the respective number of shares of our common stock set forth opposite its name below:


Name		Number of Shares of Class A common stock
Sandler O’Neill & Partners, L.P.
Raymond James & Associates, Inc.
Total

The underwriting agreement provides that the underwriters’ obligation to purchase shares of our Class A common stock depends on the satisfaction of the conditions contained in the underwriting agreement, including:

•

the representations and warranties made by us are true and agreements have been performed;

•

there is no material adverse change in their determination in the financial markets or in our business; and

•

we deliver customary closing documents.

Subject to these conditions, the underwriters are committed to purchase and pay for all of the shares of our Class A common stock offered by this prospectus, if any such shares are purchased. However, the underwriters are not obligated to take or pay for the shares of our Class A common stock covered by the underwriters’ over-allotment option described below, unless and until that option is exercised.

Over-Allotment Option

We have granted the underwriters an option, exercisable no later than 30 days after the date of the underwriting agreement, to purchase up to an aggregate of additional shares of Class A common stock at the public offering price, less the underwriting discounts and commissions set forth on the cover page of this prospectus.

Commissions and Expenses

The underwriters propose to offer our Class A common stock directly to the public at the offering price set forth on the cover page of this prospectus and to dealers at the public offering price less a concession not in excess of $ per share. The underwriters may allow, and the dealers may re-allow, a concession not in excess of $ per share on sales to other brokers and dealers. After the public offering of our Class A common stock, the underwriters may change the offering price, concessions and other selling terms.

The following table shows the per share and total underwriting discounts and commissions that we will pay to the underwriters and the proceeds we will receive before expenses. These amounts are shown assuming both no exercise and full exercise of the underwriters’ over-allotment option.

Per Share

Total without
over-allotment exercise

Total with
over-allotment exercise

Public offering price

Underwriting discount

Proceeds to us (before expenses)

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also pay for filing fees incident to, and the fees and disbursements (up to an aggregate of $ ) of counsel for the underwriters in connection with, securing any required review of the terms of this offering. We estimate that the total expenses of this offering, exclusive of the underwriting discounts and commissions, will be approximately $ , and are payable by us.

Offering Price Determination

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price will be negotiated between the representative and us. In determining the initial public offering price of our Class A common stock, the representative will consider:

•

the history and prospects for the industry in which we compete;

•

our financial information;

•

our earning prospects;

•

the prevailing securities markets at the time of this offering; and

•

the recent market prices of and the demand for publicly traded stock of comparable companies.

Indemnification

We have agreed to indemnify the underwriters, and persons who control the underwriters, against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of these liabilities.

Lock-Up Agreement

We, our directors and executive officers and certain of our shareholders have entered into lock-up agreements with the underwriters. Under these agreements, for a period of 180 days after the date of the underwriting agreement, we and each of these persons may not, without the prior written approval of the underwriters, subject to limited exceptions:

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any of our Class A common stock or any securities convertible into or exchangeable or exercisable for our Class A common stock, whether now owned or hereafter acquired or with respect to which such person has or hereafter acquires the power of disposition, or file any registration statement under the Securities Act, with respect to any of the foregoing, or

•

enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of our common stock, whether any such swap or transaction is to be settled by delivery of our Class A common stock or other securities, in cash or otherwise.

The 180-day restricted period described in the preceding paragraph will be extended if:

•

during the period that begins on the date that is 15 calendar days plus 3 business days before the last day of the 180-day restricted period and ends on the last day of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs, or

•

prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 17-day period beginning on the last day of the 180-day restricted period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the date that is 15 calendar days plus three business days after the date on which the earnings release is issued or the material news or material event relating to us occurs.

Listing on the Nasdaq Global Market

We have applied to list our Class A common stock on The Nasdaq Global Market under the symbol “SAMG.”

159

Stabilization

In connection with this offering, the underwriters may, but are not obligated to, engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids.

•

Stabilizing transactions permit bids to purchase shares of Class A common stock so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or mitigating a decline in the market price of the Class A common stock while the offering is in progress.

•

Over-allotment transactions involve sales by the underwriters of shares of Class A common stock in excess of the number of shares the underwriters are obligated to purchase. This creates a syndicate short position that may be either a covered short position or a naked short position. In a covered short position, the number of shares of Class A common stock over-allotted by the underwriters is not greater than the number of shares that they may purchase in the over-allotment option. In a naked short position, the number of shares involved is greater than the number of shares in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing shares in the open market.

•

Syndicate covering transactions involve purchases of Class A common stock in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared with the price at which they may purchase shares through exercise of the over-allotment option. If the underwriters sell more shares than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the shares in the open market that could adversely affect investors who purchase in the offering.

•

Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common stock originally sold by that syndicate member is purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our Class A common stock or preventing or mitigating a decline in the market price of our Class A common stock. As a result, the price of our Class A common stock in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of our Class A common stock. These transactions may be effected on The Nasdaq Global Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Directed Share Program

We have directed the underwriters to reserve up to % of the shares of Class A common stock to be issued in this offering for sale to our directors, officers and certain other persons at the initial public offering price through a directed share program. The number of shares Class A common stock available for sale to the public in the offering will be reduced to the extent these persons purchase any reserved shares. Any shares of Class A common stock not so purchased will be offered by the underwriters to the public on the same basis as other shares offered hereby.

Our Relationship with the Underwriters

Certain of the underwriters and/or their affiliates have engaged, and may in the future engage, in commercial and investment banking transactions with us in the ordinary course of their business. They have received, and expect to receive, customary compensation and expense reimbursement for these commercial and investment banking transactions.

160

LEGAL MATTERS

Certain legal matters with respect to the common stock offered hereby will be passed upon for us by Bingham McCutchen LLP. Certain legal matters with respect to this offering will be passed upon for the underwriters by Paul, Weiss, Rifkind, Wharton & Garrison LLP.

EXPERTS

The balance sheet of Silvercrest Asset Management Group Inc. as of May 11, 2012, included in this prospectus, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such Balance Sheet has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Silvercrest L.P. and its subsidiaries as of December 31, 2011 and December 2010, and for each of the years in the three-year period ended December 31, 2011, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein, which report expresses an unqualified opinion on the consolidated financial statements and includes an explanatory paragraph referring to a change in Silvercrest L.P.’s annual goodwill impairment testing date. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Milbank Winthrop & Co., Inc. as of December 31, 2010 and 2009, and for each of the years in the two year period ended December 31, 2010, and the consolidated financial statements of MW Commodity Advisors, LLC as of December 31, 2011 and 2010, and for each of the years in the two-year period ended December 31, 2011, have been included herein in reliance upon the report of Fulvio & Associates, L.L.P., an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to our Class A common stock. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information with respect to us and our Class A common stock, we refer you to the registration statement and the exhibits and schedules filed as a part of the registration statement. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit.

You may read and copy any document we have filed or may file in the future at the SEC’s public reference facility in Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.

Upon completion of this offering, we will be subject to the information and periodic reporting requirements of the Exchange Act and, accordingly, file periodic reports and other information, including proxy statements, with the SEC.

161

INDEX TO FINANCIAL STATEMENTS

SILVERCREST ASSET MANAGEMENT GROUP INC.


	Page
Silvercrest Asset Management Group Inc.
Report of Independent Registered Public Accounting Firm		F-3
Balance Sheet as of May 11, 2012		F-4
Notes to Balance Sheet		F-5
Silvercrest L.P. and Subsidiaries
Report of Independent Registered Public Accounting Firm		F-6
Consolidated Financial Statements of Silvercrest L.P. and its Subsidiaries for the three years ended December 31, 2011, December 31, 2010, and December 31, 2009:
Consolidated Statements of Financial Condition		F-7
Consolidated Statements of Operations		F-8
Consolidated Statements of Partners’ Deficit		F-9
Consolidated Statements of Cash Flows		F-10
Notes to Consolidated Financial Statements		F-12
Condensed Consolidated Financial Statements of Silvercrest L.P. and its Subsidiaries for the six months ended June 30, 2012 and 2011 (Unaudited):
Condensed Consolidated Statements of Financial Condition		F-34
Condensed Consolidated Statements of Operations		F-35
Condensed Consolidated Statements of Partners’ Deficit		F-36
Condensed Consolidated Statements of Cash Flows		F-37
Notes to Condensed Consolidated Financial Statements		F-38
Milbank Winthrop & Co., Inc.
Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the nine month period ended September 30, 2011 (Unaudited):
Consolidated Statements of Financial Condition		F-58
Consolidated Statements of Operations		F-60
Consolidated Statements of Changes in Stockholders’ Equity		F-61
Consolidated Statements of Cash Flows		F-62
Notes to Consolidated Financial Statements		F-64
Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2010:
Independent Auditors’ Report		F-74
Consolidated Statements of Financial Condition		F-75
Consolidated Statements of Income		F-76
Consolidated Statements of Changes in Stockholders’ Equity		F-77
Consolidated Statements of Cash Flows		F-78
Notes to Consolidated Financial Statements		F-80
Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2009:
Independent Auditors’ Report		F-88
Consolidated Statement of Financial Condition		F-89
Consolidated Statement of Income		F-90
Consolidated Statement of Changes in Stockholders’ Equity		F-91
Consolidated Statement of Cash Flows		F-92
Notes to Consolidated Financial Statements		F-94

F-1


MW Commodity Advisors, LLC
Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2011:
Independent Auditors’ Report			F-104
Consolidated Statement of Financial Condition			F-105
Consolidated Statement of Operations			F-106
Consolidated Statement of Changes in Members’ Equity			F-107
Consolidated Statement of Cash Flows			F-108
Notes to Consolidated Financial Statements			F-109
Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2010:
Independent Auditors’ Report			F-116
Consolidated Statement of Financial Condition			F-117
Consolidated Statement of Income			F-118
Consolidated Statement of Changes in Member’s Equity			F-119
Consolidated Statement of Cash Flows			F-120
Notes to Consolidated Financial Statements			F-121

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder of Silvercrest Asset Management Group Inc.:

New York, New York

We have audited the accompanying balance sheet of Silvercrest Asset Management Group Inc. (the “Company”) as of May 11, 2012. This balance sheet is the responsibility of the Company’s management. Our responsibility is to express an opinion on this balance sheet based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the balance sheet presents fairly, in all material respects, the financial condition of Silvercrest Asset Management Group Inc. as of May 11, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012

F-3

Silvercrest Asset Management Group Inc.

Balance Sheet

May 11, 2012


Assets
Cash	$	100

Stockholder’s Equity
Class A common stock, $0.01 par value - 1,000 shares authorized, 10 shares issued and outstanding	$	—
Class B common stock, $0.01 par value - 1,000 shares authorized, 0 shares issued and outstanding		—
Additional paid-in capital		100

Total stockholder’s equity	$	100

See accompanying notes to balance sheet.

F-4

Silvercrest Asset Management Group Inc.

Notes to Balance Sheet

As of May 11, 2012

1.	ORGANIZATION

Silvercrest Asset Management Group Inc. (the “Company”) was formed as a Delaware corporation on July 11, 2011. The Company’s fiscal year end is December 31. The Company was formed for the purpose of completing a public offering and related transactions in order to carry on the business of Silvercrest L.P. The Company will be the sole general partner in Silvercrest L.P. and will operate and control all of the businesses and affairs of Silvercrest L.P. and, through Silvercrest L.P. and its subsidiaries, continue to conduct the business now conducted by these subsidiaries.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting — The Balance Sheet has been prepared in accordance with accounting principles generally accepted in the United States of America. Separate Statements of Operations, Stockholder’s Equity and of Cash Flows have not been presented as there have been no activities by this entity. There were no assets, liabilities, or equity as of December 31, 2011. The Company’s initial issuance of Class A common stock was on May 10, 2012.

3.	STOCKHOLDER’S EQUITY

G. Moffett Cochran, the Chairman, Chief Executive Officer and a Director of the Company is the sole stockholder of the Company, and contributed $100 to the Company on May 10, 2012 to purchase 10 shares of Class A common stock.

Holders of Class A common stock shall be entitled to one vote for each share of Class A common stock held on all matters submitted to stockholders for vote, consent or approval. Holders of Class B common stock shall be entitled to five votes for each share of Class B common stock held. Dividends are payable only to holders of Class A common stock.

F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Silvercrest L.P.:

New York, New York

We have audited the accompanying consolidated statements of financial condition of Silvercrest L.P. and subsidiaries (the “Company”) as of December 2011 and 2010, and the related consolidated statements of operations, partners’ deficit, and cash flows for each of the three years in the period ended December 31, 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Silvercrest L.P. and subsidiaries as of December 31, 2011 and 2010 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company changed its annual goodwill impairment testing date from December 31 to October 1, effective October 1, 2011.

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012 (August 13, 2012 as to the effects of the restatement discussed in Note 2)

F-6

Silvercrest L.P. And Subsidiaries

Consolidated Statements of Financial Condition

(In thousands)


	December 31,
	2011			2010
Assets
Cash and cash equivalents	$	7,354		$	7,025
Restricted certificates of deposit and escrow		1,130			1,465
Investments		1,128			1,316
Receivables, net		2,238			2,247
Due from Silvercrest Funds		2,043			1,255
Furniture, equipment and leasehold improvements, net		2,275			2,107
Goodwill		14,683			10,993
Intangible assets, net		13,810			5,771
Prepaid expenses and other assets		601			900

Total assets	$	45,262		$	33,079

Liabilities, Redeemable Partners’ Capital and Partners’ Deficit
Accounts payable and accrued expenses		4,365			2,236
Accrued compensation		2,915			2,790
Notes payable		4,809			2,957
Deferred rent		3,287			3,552
Deferred tax and other liabilities		375			955

Total liabilities		15,751			12,490

Redeemable partners’ capital		91,201			51,744
Notes receivable from partners		(6,024	)		(6,125	)

Total redeemable partners’ capital		85,177			45,619

Commitments and Contingencies (Note 11)
Partners’ Deficit
Partners’ capital		44,359			41,909
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(100,025	)		(66,939	)

Total partners’ deficit		(55,666	)		(25,030	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	33,079

See accompanying notes to consolidated financial statements.

F-7

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Operations

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Revenue
Management and advisory fees	$	37,869		$	32,442		$	29,341
Performance fees and allocations		85			548			96
Family office services		4,833			3,841			3,097

Total revenue		42,787			36,831			32,534

Expenses
Compensation and benefits		17,492			16,528			15,630
General and administrative		10,849			9,459			13,006
Impairment charges		—			—			1,691

Total expenses		28,341			25,987			30,327

Income before other income (expense)		14,446			10,844			2,207
Other income (expense)
Gain on extinguishment of debt		—			—			3,934
Gain on settlement with former LongChamp shareholders		—			—			1,470
Loss on forgiveness of notes receivable		(34	)		(508	)		—
Change in value of options granted to equity holders		—			2			134
Other (expense) income		(210	)		30			—
Interest income		187			231			213
Interest expense		(164	)		(241	)		(467	)
Equity income from investments		950			1,241			274

Total other income		729			755			5,558

Income before (provision) benefit for income taxes		15,175			11,599			7,765
(Provision) benefit for income taxes		(566	)		(657	)		321

Net income	$	14,609		$	10,942		$	8,086

See accompanying notes to consolidated financial statements.

F-8

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Partners’ Deficit

(In thousands)


	Partners’ Capital			Excess of Liabilities, Redeemable Partners’ Capital and Partners’ Capital over Assets			Total Partners’ Deficit
January 1, 2009	$	37,521		$	(106,461	)	$	(68,940	)
Contributions from partners		—			4,842			4,842
Distributions to partners		—			(7,377	)		(7,377	)
Accretion to redemption value of redeemable partnership units		—			44,241			44,241
Net income		2,239			5,847			8,086

December 31, 2009		39,760			(58,908	)		(19,148	)
Contributions from partners		—			1,090			1,090
Distributions to partners		(823	)		(5,050	)		(5,873	)
Equity-based compensation		—			9			9
Accretion to redemption value of redeemable partnership units		—			(12,050	)		(12,050	)
Net income		2,972			7,970			10,942

December 31, 2010		41,909			(66,939	)		(25,030	)
Contributions from partners		—			849			849
Distributions to partners		(1,271	)		(8,723	)		(9,994	)
Equity-based compensation		—			489			489
Accretion to redemption value of redeemable partnership units		—			(36,589	)		(36,589	)
Net income		3,721			10,888			14,609

December 31, 2011	$	44,359		$	(100,025	)	$	(55,666	)

See accompanying notes to consolidated financial statements.

F-9

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Operating Activities
Net income	$	14,609		$	10,942		$	8,086
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation		977			583			—
Depreciation and amortization		1,469			1,379			1,531
Amortization of acquired deferred revenue		(870	)		—			—
Deferred rent		(265	)		(418	)		647
Deferred income taxes		(275	)		(174	)		293
Goodwill, intangible and fixed asset impairment charge		—			—			1,691
Change in fair value of options granted		—			(2	)		(134	)
Gain on extinguishment of debt		—			—			(3,934	)
Gain on settlement with former LongChamp shareholders		—			—			(219	)
Loss on forgiveness of notes receivable		34			508			—
Non-cash interest income		(180	)		(207	)		(165	)
Non-cash interest expense		—			—			35
Distributions received from investment funds		1,231			274			1,014
Equity income from investments		(950	)		(1,241	)		(274	)
Provision for doubtful receivables		—			104			—
Other		92			—			—
Cash flows due to changes in operating assets and liabilities:
Receivables and due from Silvercrest funds		(780	)		(1,438	)		3,211
Prepaid expenses and other assets		192			422			(49	)
Payables and accrued expenses		644			(261	)		(980	)
Accrued compensation		(360	)		113			(2,702	)
Other liabilities		(282	)		646			(2	)
Interest payable on notes payable		115			189			262

Net cash provided by operating activities		15,401			11,419			8,311

Cash Flows From Investing Activities
Restricted certificates of deposit and escrow	$	335		$	689		$	(14	)
Acquisition of furniture, equipment and leasehold improvements Earn-outs paid related to acquisitions completed before January 1, 2009		(606 (663	) )		(79 (245	) )		(10 (488	) )
Acquisition of Milbank, net of cash acquired		(3,357	)		—			—
Purchase of investments		(419	)		—			—
Proceeds from sale of investments		234			—			—

Net cash (used in) provided by investing activities		(4,476	)		365			(512	)

See accompanying notes to consolidated financial statements.

F-10


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Financing Activities
Proceeds from issuance of partner interests	$	13		$	180		$	1,343
Redemptions of partner interests		(237	)		(225	)		—
Repayments of notes payable		(1,445	)		(4,373	)		(3,895	)
Payments on capital leases		(16	)		(2	)		—
Distributions to partners		(9,994	)		(5,873	)		(7,307	)
Payments from partners on notes receivable		1,083			207			1,012

Net cash used in financing activities		(10,596	)		(10,086	)		(8,847	)


Net increase (decrease) in cash and cash equivalents		329			1,698			(1,048	)
Cash and cash equivalents, beginning of year		7,025			5,327			6,375

Cash and cash equivalents, end of year	$	7,354		$	7,025		$	5,327


Supplemental Disclosures of Cash Flow Information
Net cash paid (refunded) during the year for:
Income taxes	$	855		$	(539	)	$	934
Interest		114			252			285

Supplemental Disclosures of Non-cash Investing and Financing Activities
Earnout accrual for acquisition of Marathon Capital Group, LLC	$	419		$	685		$	321
Earn-out accrual for acquisition of Heritage Financial Management, LLC	$	—		$	—		$	291
Notes receivable:
From partners for capital contributions	$	836		$	187		$	3,500
Satisfied as part of share redemptions		—			734			901
Loss on forgiveness of notes receivable		34			508			—
Earnout accrual for acquisition of Milbank		1,726			—			—
Issuance of notes payable for redemption of partner interests		—			745			1,897
Issuance of notes payable for acquisition of Milbank		3,181			—			—
Issuance of partner interests as satisfaction of notes payable to partners		—			724			—
Issuance of shares for acquisition of Milbank		3,105			—			—

See accompanying notes to consolidated financial statements.

F-11

Silvercrest L.P.

and Subsidiaries

Notes to Consolidated Financial Statements

As of and For the Years Ended December 2011, 2010 and 2009

(Dollars in thousands)

1. ORGANIZATION AND BUSINESS

Silvercrest L.P. (“Silvercrest”), together with its consolidated subsidiaries (collectively the “Company”), provides investment management and family office services to individuals and families and their trusts, and to endowments, foundations and other institutional investors primarily located in the United States of America. The business includes the management of funds of funds, and other investment funds, collectively referred to as the “Silvercrest Funds.”

Silvercrest was formed on December 10, 2008 and commenced operations on January 1, 2009 along with its general partner, Silvercrest GP LLC (“GP LLC”) as part of a restructuring that was completed to organize the Company more in line with industry standards and to increase tax efficiency. Pursuant to the reorganization each of the members of Silvercrest Asset Management Group LLC (“SAMG LLC”) contributed their limited liability company interests in SAMG LLC to Silvercrest L.P. in return for limited partnership interests in Silvercrest L.P. and member interests in Silvercrest GP LLC, such that immediately after giving effect to such issuances each member’s percentage ownership of, and voting interest in, the aggregate limited partnership interests was equal to its ownership and voting interests immediately prior to such issuance, but reduced pro rata to take into account the 1% interest in Silvercrest L.P. owned by Silvercrest GP LLC, the general partner of Silvercrest L.P. As a result of the restructuring, SAMG LLC became a wholly owned subsidiary as of January 1, 2009. The reorganization was accounted for as a transaction between entities under common control and all balances of SAMG LLC were carried over to Silvercrest at their carrying values on December 31, 2008.

On March 11, 2004, the Company acquired 100% of the outstanding shares of James C. Edwards Asset Management, Inc. (“JCE”) and subsequently changed JCE’s name to Silvercrest Financial Services, Inc. (“SFS”). On December 31, 2004, the Company acquired 100% of the outstanding shares of The LongChamp Group, Inc. now SAM Alternative Solutions, Inc. (“LGI”). Effective March 31, 2005, the Company entered into an Asset Contribution Agreement to acquire all of the assets, properties, rights and certain liabilities of Heritage Financial Management, LLC (“HFM”). Effective October 3, 2008, the Company acquired 100% of the outstanding limited liability company interests of Marathon Capital Group, LLC (“MCG”) through a limited liability company interest purchase agreement dated September 22, 2008. On November 1, 2011, the Company acquired certain assets of Milbank Winthrop & Co. (“Milbank”). See Notes 3, 7 and 8 for additional information related to goodwill and intangible assets related to these acquisitions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Silvercrest and its wholly-owned subsidiaries, SAMG LLC, SFS, LGI, MCG, Silvercrest Investors LLC and Silvercrest Investors II LLC as of and for the year ended December 31, 2011. All intercompany transactions and balances have been eliminated.

In addition, Silvercrest evaluates for consolidation those entities it controls through a majority voting interest or otherwise, including those Silvercrest Funds in which the general partner or equivalent is presumed to have control over the fund. The initial step in our determination of whether a fund for which the Company is the general partner is required to be consolidated is assessing whether the fund meets the definition of a variable interest entity (VIE). None of funds for which the Company is the general partner, met the definition of a VIE during the three years ended December 31, 2011, as the total equity at risk of each fund is sufficient for the fund

F-12

to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

The Company then considers whether the fund is a voting interest entities (VoIE) in which the unaffiliated limited partners have substantive “kick-out” rights that provide ability to dissolve (liquidate) the limited partnership or otherwise remove the general partner without cause. The Company considers the “kick-out” rights to be substantive if the general partner for the fund can be removed by the vote of a simple majority of the unaffiliated limited partners and there no significant barriers to the unaffiliated limited partners’ ability to exercise these rights in that among other things (1) there are no conditions or timing limits on when the rights can be exercised, (2) there are no financial or operational barriers associated with replacing the general partner, (3) there are a number of qualified replacement investment advisors that would accept appointment at the same fee level, (4) each fund’s documents provide for the ability to call and conduct a vote, and (5) the information necessary to exercise the kick-out rights and related vote are available from the fund and its administrator.

As of and for the years ended December 2011, 2010 and 2009, all of the funds for which the Company was the general partner have substantive “kick-out” rights and therefore Silvercrest did not consolidate any of the Silvercrest Funds.

Segment Reporting

The Company views its operations as comprising one operating segment. Each of the Company’s acquired businesses have similar economic characteristics and have been fully integrated upon acquisition. Furthermore, our Chief Operating Decision Maker, which is the Company’s Chief Executive Officer, monitors and reviews financial information at a consolidated level for assessing operating results and the allocation of resources.

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents.

Restricted Certificates of Deposit

Certain certificates of deposit held at a major financial institution are restricted and serve as collateral for letters of credit for the Company’s lease obligations as described in Note 11.

Equity Method Investments

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transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist.

The Company evaluates its equity method investments for impairment, whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as impairment when the loss in value is deemed other than temporary. The Company’s equity method investments approximate their fair value at December 31, 2011, 2010 and 2009. The fair value of the equity method investments is estimated based on the Company’s share of the fair value of net assets of the equity method investee which consist of Level I and Level II securities. No impairment charges related to equity method investments were recorded during the years ended December 31, 2011, 2010 and 2009.

Receivables and Due from Silvercrest Funds

Receivables consist primarily of amounts due for advisory fees due from clients and management fees, and are stated at net realizable value. The Company maintains an allowance for doubtful receivables based on estimates of expected losses and specific identification of uncollectible accounts. The Company charges actual losses to the allowance when incurred.

Furniture, Equipment and Leasehold Improvements

Furniture, equipment and leasehold improvements consist primarily of furniture, fixtures and equipment, computer hardware and software and leasehold improvements and are recorded at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the assets’ estimated useful lives, which for leasehold improvements is the lesser of the lease term or the life of the asset, generally 10 years, and 3 to 7 years for other fixed assets.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Contingent consideration is recorded as part of the purchase price when such contingent consideration is not based on continuing employment of the selling shareholders. Contingent consideration that is related to continuing employment is recorded as compensation expense. Payments made for contingent consideration recorded as part of an acquisition’s purchase price are reflected as financing activities in the Company’s statements of cash flows.

For acquisitions completed subsequent to January 1, 2009, the Company remeasures the fair value of contingent consideration at each reporting period using a probability-adjusted discounted cash flow method based on significant inputs not observable in the market and any change in the fair value from either the passage of time or events occurring after the acquisition date, is recorded in earnings. Contingent consideration payments that exceed the acquisition date fair value of the contingent consideration are reflected as an operating activity in the consolidated statements of cash flows.

Correction of Immaterial Error

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restated to correct this error. Cash payments for contingent consideration of $663, $245, and $488 for December 31, 2011, 2010, and 2009, respectively, have been reclassified in the consolidated statement of cash flows from financing activities to investing activities.

Goodwill and Intangible Assets

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Goodwill is not amortized and is evaluated for impairment using a two-step process that is performed at least annually, or whenever events or circumstances indicate that impairment may have occurred. During 2011, the Company changed its annual impairment test date from December 31 to October 1, effective October 1, 2011. The change in the impairment testing date was not made with the intent of accelerating or delaying an impairment charge. The change was made in anticipation of the Company having a requirement to issue its annual financial statements on an accelerated basis as compared to prior years. The change had no impact on the Company’s results of operations or any other financial statement line item. The first step is a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied fair value of the goodwill. If the carrying amount of the goodwill is greater than the implied value, an impairment loss is recognized for the difference. The implied value of the goodwill is determined as of the test date by performing a purchase price allocation, as if the reporting unit had just been acquired, using currently estimated fair values of the individual assets and liabilities of the reporting unit, together with an estimate of the fair value of the reporting unit taken as a whole. The estimate of the fair value of the reporting unit is based upon information available regarding prices of similar groups of assets, or other valuation techniques including present value techniques based upon estimates of future cash flows.

The Company has one reporting unit at December 31, 2011, 2010 and 2009. No goodwill impairment charges were recorded during the years ended December 31, 2011 and 2010. As discussed in Notes 7 and 8, goodwill and intangible assets related to the acquisition of LGI were determined to be impaired as of December 31, 2009.

Identifiable finite-lived intangible assets are amortized over their estimated useful lives ranging from 3 to 20 years. Intangible assets consist primarily of the contractual right to future management, advisory and performance fees from customer contracts or relationships.

Long-lived Assets

Long-lived assets of the Company are reviewed for impairment whenever events or changes in circumstances indicate that the net carrying amount of the asset may not be recoverable. In connection with such review, the Company also re-evaluates the periods of depreciation and amortization for these assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value.

Derivative Instruments

Derivative instruments are recorded at fair value as either assets or liabilities in the Company’s consolidated balance sheet. The Company’s derivatives are not designated as hedging instruments and are used as “economic hedges” to manage certain risks in the Company’s business.

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arrangements in place with the counterparties. To mitigate the counterparty credit risk, the Company has a policy of entering into contracts only with carefully selected major financial institutions based upon their credit ratings and other factors.

The Company records the changes in fair value of derivative instruments in “Other income (expenses)” in the consolidated statement of operations.

The Company does not purchase, hold or sell derivative financial instruments for trading and speculative purposes.

Partner Distributions

Partner incentive allocations, which are determined by the general partner and approved by a vote of the partners, can be formula based or discretionary. Incentive allocations are considered distributions of net income as stipulated by Silvercrest’s Amended and Restated Limited Partnership Agreement and are recognized in the period in which they are paid. In the event there is insufficient distributable cash flow to make incentive distributions, the general partner in its sole and absolute discretion may determine not to make any distributions called for under the partnership agreement. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership.

Redeemable Partnership Units

Redeemable partnership units in our Company consist of units issued to our founders and those purchased by certain of our employees. These capital units entitle the holder to a share of the distributions of our Company. Units are subject to certain redemption features. Upon the termination of employment of the Terminated Employee, as defined, the Company has a right to call the Units. In addition, the terminated employee has a right to put the Units to the Company upon termination or death, provided the terminated employee has complied with certain restrictions as described in the partnership agreement. In accordance with the provisions of our partnership and operating agreements, the put described above expires with the consummation of an IPO or Sale Transaction, as defined in our partnership and operating agreements.

As the units are redeemable at the option of the holder and are not mandatorily redeemable, the redeemable partnership units have be classified outside of permanent partner’s capital. The units are adjusted to their current redemption value at the end of each reporting period with the increase or decrease in redemption value being charged to excess of liabilities, redeemable partners’ capital and partner’s capital over assets.

The Company also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions.

Revenue Recognition

Revenue is recognized ratably over the period in which services are performed. Revenue consists primarily of investment advisory fees, family office services fees and fund management fees. Investment advisory fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter, based on a contractually specified percentage of the assets managed. For investment advisory fees billed in advance, the value of assets managed is determined based on the value of the customer’s account as of the last trading day of the preceding quarter. For investment advisory fees billed in arrears the value of assets managed is determined based on the value of the customer’s account on the last day of the quarter being billed. Family office services fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter based on a contractual percentage of the assets managed or based on a fixed fee arrangement. Management fees from proprietary and non-proprietary funds is calculated as a percentage of net asset values measured at the beginning of a month or quarter or at the end of a quarter, depending on the fund.

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The Company accounts for performance based revenue in accordance with ASC 605-20-S99, “Accounting for Management Fees Based on a Formula”, by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements, and no contingencies remain. Performance fee contingencies are typically resolved at the end of each annual period. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company records performance fees and allocations as a component of revenue.

Equity-Based Compensation

Equity-based compensation cost relating to the issuance of share-based awards to partners is based on the fair value of the award at the date of grant, which is expensed ratably over the requisite service period, net of estimated forfeitures. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeiture assumptions may affect the timing of the total amount of expense recognized over the vesting period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that have the potential to be settled in cash at the election of the employee or which relate to redeemable partnership units are classified as liabilities (“Liability Awards”) and are adjusted to fair value at the end of each reporting period. Distributions associated with Liability Awards not expected to vest are accounted for as part of compensation expense in the Consolidated Statement of Operations.

Leases

The Company expenses the net lease payments associated with operating leases on a straight-line basis over the respective leases’ term including any rent-free periods. Leasehold improvements are recorded at cost and are depreciated using the straight-line method over the lesser of the estimated useful lives of the improvements (generally 10 years) or the remaining lease term.

Income Taxes

Silvercrest is not subject to federal and state income taxes, since all income, gains and losses are passed through to its partners. Silvercrest is subject to New York City unincorporated business tax. SFS is subject to federal and state corporate tax, which requires an asset and liability approach to the financial accounting and reporting of income taxes. With respect to the Company’s incorporated entity, the annual tax rate is based on the income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Judgment is required in determining the tax expense and in evaluating tax positions. The tax effects of an uncertain tax position (“UTP”) taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes estimated accrued interest and penalties related to UTPs in income tax expense.

The Company recognizes the benefit of a UTP in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

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Recent Accounting Developments

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06, “Improving Disclosures About Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level I and Level II categories and the reasons for the transfers and it requires that Level III purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level II and Level III measurements. These disclosures were effective for the Company as of January 1, 2010, except for the Level III gross reporting which was effective for the Company January 1, 2011. The adoption of ASU 2010-06 did not have a material impact on the Company’s consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses” (“ASU 2010-20”). ASU 2010-20 requires additional disclosures about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. The new disclosures were effective for the Company January 1, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles – Goodwill and Other (Topic 350) When to Perform Step Two of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”, which enhanced guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts. The updated guidance modifies existing requirements under step one of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires step two to be performed if it is more likely than not that a goodwill impairment exists. This guidance was effective for the Company January 1, 2011. As the Company’s reporting unit does not currently have a zero or negative carrying value, the adoption of this guidance did not have any impact on the Company’s financial statements.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting Standards (“IFRS”)”, which amended guidance on fair value measurements to achieve common fair value measurement and disclosure requirements in GAAP and IFRS. The amended guidance specifies that the concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets and are not relevant when measuring the fair value of financial assets or of liabilities. The amendments include requirements specific to measuring the fair value of those instruments, such as equity interests used as consideration in a business combination. An entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds the instrument as an asset. With respect to financial instruments that are managed as part of a portfolio, an exception to fair value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and financial liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) is not permitted in a fair value measurement.

F-18

in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

The amended guidance is effective for interim and annual periods beginning after December 15, 2011. As the impact of the guidance is primarily limited to enhanced disclosures, adoption is not expected to have a material impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit's fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit's fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing January 1, 2012. Early adoption is permitted. The Company will consider this guidance when performing its annual impairment assessment in 2012.

3. ACQUISITION

On November 1, 2011, the Company acquired certain assets of Milbank, a registered investment advisor that oversees approximately $500 million of assets primarily on behalf of high-net-worth families. The strategic acquisition of Milbank, a long-standing and highly regarded investment boutique, strengthens the Company’s presence in the New York market and the Company obtains investment managers that have significant experience and knowledge of the industry. Milbank’s clients will gain access to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. Under the terms of the Asset Purchase Agreement, the Company paid cash consideration of $3,357 (net of cash acquired of $813), issued units of the Company with a fair value of $3,105, and issued a promissory note to Milbank for $3,181. The promissory note bears interest at a rate of 5% per annum and is payable in four annual installments (see Note 9). The purchase price allocation includes an estimate of the fair value of the 19,757 units issued to the former owners of Milbank which was determined by calculating a per unit limited partnership interest fair value in the Company utilizing both discounted cash flow and guideline company valuation methodologies. Furthermore, as part of the Asset Purchase Agreement, the Company is obligated to make future earnout payments to Milbank. The Company determined that the acquisition-date fair value of the contingent consideration was $1,726 based on the likelihood that the financial and performance targets will be achieved. Under the terms of the Asset Purchase Agreement, Milbank is entitled to receive six earnout payments. The earnout periods are as follows: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA, as defined in the Asset Purchase Agreement. There is no required EBITDA milestone that needs to be achieved in order for an earnout payment to be made. The amount of the earnout payments will vary depending on the level of EBITDA that is generated in each respective earnout period. The fair value of the contingent consideration was based on discounted cash flow models using projected EBITDA for each earnout period. The discount rate applied to the to the projected EBITDA was determined based on the weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments. During 2011, the Company incurred $222 in costs related

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to the acquisition of Milbank, and has included these in general, administrative and other in the Consolidated Statement of Operations.


Shares issued	$	3,105
Note payable due to Milbank		3,181
Cash paid on date of acquisition		4,170
Contingent consideration		1,726

Total purchase consideration	$	12,182

The following table summarizes the final amounts allocated to the acquired assets and assumed liabilities. The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill and intangible assets.


Cash	$	813
Prepaid expenses		57
Furniture and equipment		20
Deferred revenue		(871	)
Net deferred tax liability		(107	)
Capital lease		(17	)

Total fair value of net tangible assets acquired		(105	)
Goodwill		3,271
Customer relationships (20 years)		8,200
Non-compete agreements (3-5 years)		816

Total purchase consideration	$	12,182

The Company believes the recorded goodwill is supported by the anticipated revenues and expected synergies of integrating the operations of Milbank into the Company. Furthermore, there are expected synergies with respect to compensation and benefits and general and administrative costs. The goodwill that is expected to be deductible for tax purposes is goodwill that originates from contingent consideration.

The pro forma information below represents consolidated results of operations as if the acquisition of Milbank occurred on January 1, 2010. The pro forma information has been included for comparative purposes and is not indicative of results of operations of the consolidated Company had the acquisition occurred as of January 1, 2010, nor is it necessarily indicative of future results.


	Pro Forma Twelve Months Ended December 31, 2011		Pro Forma Twelve Months Ended December 31, 2010
Total Revenue	$	47,522	$	41,617
Net Income	$	15,896	$	12,122

Milbank revenue and income before provision for income taxes for the two months ended December 31, 2011 that are included in the Consolidated Statement of Operations are $871 and $367, respectively.

4. INVESTMENTS AND FAIR VALUE MEASUREMENTS

range up to 2%. Despite the Company’s insignificant financial interest, the Company exerts significant influence

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over these funds as the Company typically serves as the general partner, managing member or equivalent for these funds. During 2007, the Silvercrest Funds granted rights to the unaffiliated investors in each respective fund to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent of that fund or to accelerate the liquidation date of that fund in accordance with certain procedures. At December 31, 2011, 2010 and 2009, the Company determined none of the Silvercrest Funds were required to be consolidated. The Company’s involvement with these entities began on the dates that they were formed, which ranges from July 2003 to July 2008.

Summarized financial information for investments accounted for under the equity method as of and for the years ended December 31, 2011, 2010 and 2009 are as follows:


	As of and for the Years Ended
			December 31,
	2011		2010		2009
Total assets	$	257,349	$	266,979	$	268,770

Total liabilities	$	20,412	$	1,712	$	7,385

Income	$	17,398	$	18,771	$	19,433
Operating expenses		2,161		2,236		2,045
Realized and unrealized gain (loss) on investments		5,675		6,533		49,415

Net increase in members capital resulting from operations	$	20,913	$	23,068	$	66,802

In 2011, the Company entered into derivative contracts that were not designated as accounting hedges. The fair value of these derivative assets is recorded within Investments in the Consolidated Statement of Financial Condition. The Company entered into these derivative instruments in order to mitigate the risk of any exposure during the fourth quarter between the values of certain investor redemptions and the actual proceeds received by one of our funds when the underlying securities to these redemptions were sold. As of December 31, 2011, Investments include put options with notional and fair values of $795 and $94, respectively. For the year ended December 31, 2011, realized gains and (losses) for options and other derivative contracts were $2 and ($81), respectively. The net change in unrealized gains and (losses) on the put options was ($13) for the year ended December 31, 2011.

Fair Value Measurements

U.S. generally accepted accounting principles (“GAAP”) establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is affected by a number of factors, including the type of investment, the characteristics specific to the investment and the state of the marketplace including the existence and transparency of transactions between market participants. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices in an orderly market generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories.

•

Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives.

•

Level II: Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Investments which are generally included in Level II include corporate bonds and loans, less liquid and restricted equity securities, certain over-the counter derivatives, and

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certain fund of hedge funds investments in which the Company has the ability to redeem its investment at net asset value at, or within three months of, the reporting date.

•

Level III: Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in Level III generally include general and limited partnership interests in private equity and real estate funds, credit-oriented funds, certain over-the counter derivatives, funds of hedge funds which use net asset value per share to determine fair value in which the Company may not have the ability to redeem its investment at net asset value at, or within three months of, the reporting date, distressed debt and non-investment grade residual interests in securitizations and collateralized debt obligations.

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 investment.

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2011:


	Level I		Level II		Level III		Total
Assets
Cash equivalents - Money Market Funds	$	1,037	$	—	$	—	$	1,037
Free Standing Derivatives - Put Options		94		—		—		94

	$	1,131	$	—	$	—	$	1,131

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2010:

Level I

Level II

Level III

Total

Assets

Cash equivalents - Money Market Funds

1,034

—

1,034

5. RECEIVABLES, NET

The following is a summary of receivables as of December 31, 2011 and 2010:


	2011			2010
Management and advisory fees receivable	$	1,433		$	1,442
Unbilled receivables		1,134			1,196
Other receivables		57			2

Receivables		2,624			2,640
Allowance for doubtful receivables		(386	)		(393	)

Receivables, net	$	2,238		$	2,247

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6. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of December 31, 2011 and 2010:


	2011			2010
Leasehold improvements	$	3,466		$	2,982
Furniture and equipment		3,360			3,190
Artwork		338			332

Total cost		7,164			6,504
Accumulated depreciation and amortization		(4,889	)		(4,397	)

Furniture, equipment and leasehold improvements, net	$	2,275		$	2,107

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $492, $463 and $522, respectively.

In 2009, the Company abandoned a portion of its unutilized space at 1330 Avenue of Americas and recorded a leasehold improvements impairment charge of $1,202, which was the net book value as of the date of abandonment.

In 2009, the Company dissolved LGI and wrote off all related fixed assets, totaling $43.

7. GOODWILL

The following is a summary of the changes to the carrying amount of goodwill as of December 31, 2011 and 2010:


	2011			2010
January 1,
Gross balance	$	28,408		$	26,731
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance		10,993			9,316
Purchase price adjustments from earnouts		419			929
Acquisition of Milbank		3,271			—
Deferred tax liability adjustment		—			748
December 31,
Gross balance		32,098			28,408
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance	$	14,683		$	10,993

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8. INTANGIBLE ASSETS

The following is a summary of intangible assets as of December 31, 2011 and 2010:


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, January 1, 2011	$	7,710		$	750		$	8,460
Acquisition of certain assets of Milbank		8,200			816			9,016

Balance, December 31, 2011		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years
Accumulated amortization
Balance, January 1, 2011		(2,351	)		(338	)		(2,689	)
Amortization expense		(793	)		(184	)		(977	)

Balance, December 31, 2011		(3,144	)		(522	)		(3,666	)

Net book value	$	12,766		$	1,044		$	13,810

Cost
Balance, January 1, 2010	$	7,710		$	750		$	8,460

Balance, December 31, 2010		7,710			750			8,460
Useful lives		15-20 years			5 years
Accumulated amortization
Balance, January 1, 2010		(1,585	)		(188	)		(1,773	)
Amortization expense		(766	)		(150	)		(916	)

Balance, December 31, 2010		(2,351	)		(338	)		(2,689	)

Net book value	$	5,359		$	412		$	5,771

Amortization expense related to the intangible assets was $1,009 for the year ended December 31, 2009.

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:


2012	$	1,447
2013		1,370
2014		1,229
2015		1,100
2016		1,044
Thereafter		7,620

Total	$	13,810

9. NOTES PAYABLE

The following is a summary of notes payable:


	December 31, 2011
	Interest Rate			Amount
Principal on fixed rate notes		5.0	%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		1,558
Interest payable					70

Total, December 31, 2011				$	4,809

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	December 31, 2010
	Interest Rate			Amount
Principal on fixed rate notes		2.38	%	$	450
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		2,438
Interest payable					69

Total, December 31, 2010				$	2,957

The carrying value of notes payable approximates fair value. The fixed rate note, which is related to the Milbank acquisition, approximates fair value because the note, which was part of an arm’s length transaction, was executed on November 1, 2011. The variable rate notes are based on a multiple of the U.S. Prime Rate.

Future amounts payable under the notes payable are as follows:


2012	$	1,469
2013		1,556
2014		1,150
2015		564

Total	$	4,739

10. SETTLEMENT WITH FORMER SHAREHOLDERS OF THE LONGCHAMP GROUP, INC.

In settlement of a dispute between the Company and the sellers of LGI, on August 14, 2009, the parties agreed to release each other from all claims and obligations under the agreements between the parties, except for claims and obligations related to the termination of one of the sellers’ employment with LGI (the “2009 Settlement”). Furthermore, all agreements between the parties were terminated including the agreement under which LGI acted as the sub-advisor for the funds managed by LongChamp Advisors Limited and LongChamp Management International Limited. In addition, the Company agreed to sell to Virgil Limited various marks, including The LongChamp Group, Inc. name, designs and logos, goodwill of the business associated therewith, physical signage and domain names. Under the 2009 Settlement, the Company continues to own 100% of the LGI legal entity, which was renamed to SAM Alternative Solutions, Inc. in August 2009. As a result of the 2009 Settlement the Company recognized a gain on the extinguishment of debt in the amount of $3,934 and a gain on the sale of the LongChamp Group name, designs, logo and other intangibles (with no carrying value) of $1,470.

Primarily as a result of declining economic conditions and the redemption of various client accounts in 2009, all of the remaining goodwill and intangible assets from the acquisition of LGI, in the amount of $193 and $252, respectively, were impaired and written off in 2009. The SAM Alternative Solutions, Inc. legal entity was also dissolved in December 2009.

11. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the years ended December 31, 2011, 2010 and 2009 amounted to $3,304, $3,273 and $4,428, respectively The Company received sub-lease income from subtenants for the years ended December 31, 2011, 2010 and 2009 of $1,006, $682 and $441, respectively. Therefore, for the years ended December 31, 2011, 2010 and 2009, net rent expense amounted to $2,298, $2,591 and $3,987, respectively, and is included in general, administrative and other expenses in the Consolidated Statement of Operations.

F-25

provides for rent free periods of 6 to 9 months and a leasehold improvement allowance of $1,538 provided the Company spends at least an additional $513 on improvements. The Company spent $3,284 on leasehold improvements and received $1,499 of the allowance during 2007; the remaining $39 of the allowance was received in 2008. As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $2,023 that were reduced to $1,013 on August 31, 2010 and can be further reduced to $506 on August 31, 2014. The letter of credit is collateralized by a certificate of deposit in an equal amount.

Future minimum lease payments and rentals under lease agreements which expire through 2017 are as follows:


	Minimum Lease Commitments		Non-cancellable Subleases			Minimum Net Rentals
2012	$	3,448	$	(757	)	$	2,691
2013		3,342		(724	)		2,618
2014		3,345		(453	)		2,892
2015		3,293		(473	)		2,820
2016		3,239		(473	)		2,766
Thereafter		2,429		(354	)		2,075

Total	$	19,096	$	(3,234	)	$	15,862

In 2009, the Company formally abandoned a portion of its unutilized space at its headquarters and subleased the space through September 29, 2017. The Company has the right to cancel the sublease no earlier than September 1, 2011 under certain conditions which the Company does not expect to occur. The Company recorded a lease abandonment charge in 2009 in the amount of $1,154 (on a net present value basis). The balance of the related liability at January 1, 2011 and 2010 was $894 and $1,067, respectively, which was reduced by lease payments during 2011 and 2010 of $174 and $173, respectively, resulting in an ending balance at December 31, 2011 and 2010 of $720 and $894, respectively. The liability is included in Deferred Rent on the Consolidated Statement of Financial Condition.

In 2010, an escrow account was funded by a sub-tenant whose sub-lease with the Company commenced on January 1, 2011. Pursuant to the sub-lease, the tenant was required to deposit the first 16 months of rent into the escrow account totaling $452. This account has been recorded as restricted certificates of deposit and escrow on the consolidated balance sheet. As of December 31, 2011, the balance in the escrow account was $114.

The Company recorded a loss on sub-lease charge in 2011 of $150 (on a net present value basis). The related liability that was established in January 2011 was $247 and was reduced by lease payments during the year of $85, resulting in an ending balance at December 31, 2011 of $162. This liability is included in Deferred Rent on the Consolidated Statement of Financial Condition.

The Company has capital leases for certain office equipment. The principal balance of these leases was $55 and $9 as of December 31, 2011 and 2010, respectively.

Partners’ Interests and Options Granted

In April 2007, certain former investor members of SAMG LLC sold their membership interests in SAMG LLC to Vulcan Wealth Management Group LLC (“Vulcan”) which acquired an approximately 30% interest in SAMG LLC. In addition, Vulcan invested an additional $10,000 in SAMG LLC in 2007, for an approximately 8% interest, and SAMG LLC incurred $592 of capital issuance costs associated with the transaction that were charged against the proceeds.

F-26

20% per annum to a maximum of $0.475 per share. The options vest on and are exercisable for a 30 day period beginning on the earlier of April 30, 2010, fifteen consecutive trading days after an initial public offering, or the date on which a sale of control is consummated. The options can only be settled by the physical delivery of shares to the investor members.

The Company used a Black-Scholes-Merton model to value the options and recorded the fair value of the options of $827 at grant date and the increase in the fair value of $104 from the date of grant until December 31, 2007 as a liability and corresponding expense in its consolidated financial statements. As of December 31, 2008, the fair value of the options had declined to $135 which resulted in a decrease to the liability and recognition of income in the Company’s consolidated financial statements. As of December 31, 2009, the combined fair value of the options had declined to $2 based on the Black-Scholes-Merton model, the option expired unexercised in May 2010.

Contingent Consideration

In connection with its acquisition of MCG in October 2008, the Company entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of the closing of the acquisition. The contingent consideration related to the MCG acquisition is recorded on the date when the contingency is resolved. Contingent consideration payments made during the three years ended December 31, 2011, 2010 and 2009 were reflected in investing activities in the consolidated statement of cash flows.

Indemnification Agreement

On October 13, 2011, Silvercrest Strategic Opportunities Fund (“SSOF”) entered into a $5,000,000 revolving credit agreement (the “SSOF Credit Agreement”) with Pershing LLC (“Pershing”). Simultaneously with the execution of the SSOF Credit Agreement, SAMG LLC, the investment advisor to SSOF, entered into an indemnification agreement (the “Indemnification Agreement”) with Pershing whereby SAMG LLC agreed to indemnify Pershing from claims arising out of the exercise by Pershing of any rights and remedies under the security agreement related to the obligations of SSOF under the SSOF Credit Agreement. The SSOF Credit Agreement matured on January 15, 2012 and as of December 31, 2011 $3,224 inclusive of interest was outstanding on the revolving credit line.

12. PARTNERS’ INCENTIVE ALLOCATIONS AND ALLOCATION OF INCOME AND LOSSES

Pursuant to Silvercrest’s Operating Agreement as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the years ended December 31, 2011, 2010 and 2009 amounted to $5,073, $2,691 and $7,171, respectively, and are included in excess of liabilities, redeemable partners’ capital and partners’ capital over assets in the Consolidated Statements of Financial Condition.

13. NOTES RECEIVABLE FROM PARTNERS

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are paid in full plus all costs and expenses required to be paid by the borrower and all amounts required to be paid pursuant to a pledge agreement associated with each note issued. Certain notes receivable are payable in annual installments and are collateralized by the Company’s shares that are purchased with the note.

Notes receivable from partners are as follows:


	2011			2010
Balance, January 1,	$	6,125		$	7,179
Repayment of notes		(1,083	)		(940	)
Forgiveness of notes receivable		(34	)		(508	)
Interest accrued and capitalized on notes receivable		180			207
New notes receivable issued to partners		836			187

Balance, December 31,	$	6,024		$	6,125

Full recourse and limited recourse notes receivable from partners as of December 31, 2011 and 2010 are $3,549 and $2,475 and $3,707 and $2,418, respectively. There is no allowance for credit losses on notes receivable from partners as of December 31, 2011 and 2010. During 2011 and 2010, the Company forgave $34 and $508, respectively, of notes receivable in connection with the termination of partners whose corresponding capital was forfeited.

14. RELATED PARTY TRANSACTIONS

During 2011, 2010 and 2009, the Company provided services to the domesticated Silvercrest Hedged Equity Fund LP (formed in 2011 and formerly Silvercrest Hedged Equity Fund), Silvercrest Hedged Equity Fund (International), Silvercrest Hedged Equity Fund Ltd (formed in 2011 and includes ERISA investors of Silvercrest Hedged Equity Fund LP), the domesticated Silvercrest Emerging Markets Fund LP (formed in 2011 and formerly Silvercrest Emerging Markets Fund), Silvercrest Emerging Markets Fund (International), Silvercrest Emerging Markets Fund Ltd (formed in 2011 and includes ERISA investors of Silvercrest Emerging Markets Fund LP), Silvercrest Market Neutral Fund (currently in liquidation), Silvercrest Market Neutral Fund (International) (currently in liquidation), Silvercrest Municipal Advantage Portfolio A LLC, Silvercrest Municipal Advantage Portfolio P LLC, the domesticated Silvercrest Strategic Opportunities Fund LP (formed in 2011 and formerly Silvercrest Strategic Opportunities Fund), and Silvercrest Strategic Opportunities Fund (International) (terminated in 2011). These entities operate as feeder funds investing through master-feeder structures except for Silvercrest Hedged Equity Fund LP, Silvercrest Hedged Equity Fund Ltd, Silvercrest Emerging Markets Fund LP, Silvercrest Emerging Markets Fund Ltd, and Silvercrest Strategic Opportunities Fund LP which operate and invest as stand-alone funds.

Silvercrest also provides services for the Silvercrest Global Opportunities Fund, L.P. (currently in liquidation), Silvercrest Global Opportunities Fund (International), Ltd. (currently in liquidation), Silvercrest Capital Appreciation Fund LLC (currently in liquidation), Silvercrest International Equity Fund, L.P., Silvercrest Municipal Special Situations Fund LLC, Silvercrest Municipal Special Situations Fund II LLC, Silvercrest Select Growth Equity Fund, L.P., Silvercrest Global Partners, L.P., Silvercrest Small Cap, L.P. and Silvercrest Special Situations, L.P., which operate and invest separately as stand-alone funds.

Pursuant to agreements with the above entities, the Company provides investment advisory services and receives an annual management fee of 0% to 1.75% of assets under management and a performance fee or allocation of 0% to 10% of the above entities’ net appreciation over a high-water mark.

F-28

and $85, $138 and $96, respectively, is included in performance fees in the Statement of Operations. As of December 31, 2011 and 2010, the Company was owed $2,043 and $1,255, respectively, from its various funds.

For the years ended December 31, 2011, 2010 and 2009, the Company earned advisory fees of $427, $683 and $662, respectively, from assets managed on behalf of certain of its partners. As of December 31, 2011 and 2010, the Company is owed approximately $19 and $10, respectively, from certain of its partners.

15. INCOME TAXES

For the years ended December 31, 2011, 2010 and 2009, the current tax expense was $841, $974 and $96, respectively, and the deferred tax benefit for the years ended December 31, 2011, 2010 and 2009 was $275, $317 and $417, respectively, which resulted in an income tax provision (benefit) for the years ended December 31, 2011, 2010 and 2009 of $566, $657 and ($321), respectively, recognized in the Consolidated Statements of Operations.


	Year Ended December 31,
	2011			2010			2009
Current Provision:
Federal	$	6		$	(9	)	$	8
State and local		835			983			88

Total Current Provision		841			974			96

Deferred (Benefit) Provision:
Federal		(281	)		(224	)		(152	)
State and local		6			(93	)		(265	)

Total Deferred Benefit		(275	)		(317	)		(417	)

Total Provision (Benefit) for Income Taxes	$	566		$	657		$	(321	)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their bases for income tax purposes.

As of December 31, 2011 and 2010, the Company had a net deferred tax liability of $109 and $279, respectively. Temporary differences giving rise to the net deferred tax liability include deferred tax assets associated with deferred rent offset by deferred tax liabilities, primarily intangible assets. The change from December 31, 2010 to December 31, 2011 is attributable primarily to the decrease in the projected tax rate applicable to the future operations of SFS offset by the long-term deferred tax liability established through acquisition accounting for the book over tax basis of acquired intangible assets.

A summary of the tax effects of the temporary differences is as follows:

The following table reconciles the provision for income taxes to the U.S. Federal statutory tax rate:


	Year Ended December 31,
	2011			2010			2009
Statutory U.S. federal income tax rate		35.00	%		35.00	%		35.00	%
Income passed through to Partners		(35.00	)%		(35.00	)%		(35.00	)%
State and local income taxes		5.72	%		5.68	%		-1.41	%
Other		-1.99	%		-0.02	%		-2.72	%

Effective income tax rate		3.73	%		5.66	%		-4.14	%

F-29

As of December 31, 2011, the Company had a tax receivable of $2 resulting from amending the 2007 tax returns of a former corporate subsidiary in order to carry back net operating losses incurred during tax year 2009. As of December 31, 2011, the Company also had taxes payable of $318, primarily consisting of NYC UBT liability of $306.

The Company files U.S. Federal, state and local tax returns. The 2009, 2010, and 2011 tax years of the Company remain subject to examination by U.S. Federal and most state and local tax authorities.

The guidance for accounting for uncertainty in income taxes prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. As of December 31, 2011 and 2010, the Company does not have any material uncertain tax positions.

16. REDEEMABLE PARTNERSHIP UNITS

Upon the termination of employment of the Terminated Employee, as defined, of the Company, the Company has a right to call the employee’s partnership units. In addition, the terminated employee also has a right to put the partnership units back to the Company upon termination or death, provided the terminated employee has complied with certain restrictions as described in the partnership agreement. With respect to the two founders of the Company, their estate, heirs or other permitted related parties cannot require the Company to redeem their units prior to April 1, 2013. In accordance with the provisions of the Company’s partnership and operating agreements, the put described above expires with the consummation of an IPO or Sale Transaction, as defined in our partnership and operating agreements. The redemption value per share is based on a multiple of historical EBITDA, pursuant to the Company’s partnership agreement. Once units are called or put back to the Company, the redemption results in the issuance of a promissory note by the Company which is typically paid in installments over four years. The Company has recognized redeemable partners’ capital of $91,201 and $51,744 as of December 31, 2011 and December 31, 2010, respectively, which represents the amount of partners’ capital subject to both put and call rights.

17. EQUITY-BASED COMPENSATION

Determining the appropriate fair value model and calculating the fair value of equity compensation awards requires the input of complex and subjective assumptions, including the expected life of the equity compensation awards and the stock price volatility. In addition, determining the appropriate amount of associated periodic expense requires management to estimate the amount of employee forfeitures and the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair value of equity compensation awards and the associated periodic expense represent management’s best estimates, but these estimates involve inherent uncertainties and the application of judgment. As a result, if factors change and the Company deems it necessary in the future to modify the assumptions it made or to use different assumptions, or if the quantity and nature of the Company’s equity-based compensation awards changes, then the amount of expense may need to be adjusted and future equity compensation expense could be materially different from what has been recorded in the current period.

The Company has granted equity-based compensation awards to certain partners under the Company’s 2010 and 2011 Deferred Equity programs (the “Equity Programs”). The Equity Programs allow for the granting of deferred equity units based in whole on the fair value of the Company’s units. These deferred equity units contain both service and performance requirements.

F-30

Equity Unit and Performance Unit, subject to forfeiture and acceleration of vesting. Each 100 Deferred Equity Units represent the unsecured right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P. The Deferred Equity Unit represents the unsecured right to receive one unit of the Company or the equivalent cash value of up to fifty percent (50%) (or such other percentage as may be determined by the Company’s Executive Committee) of the Company’s units issuable upon the vesting of any such Deferred Equity Units and the remaining fifty percent (50%) in units upon the vesting of any such Deferred Equity Units. Such cash amount is to be calculated using the redemption price of such units as of the applicable vesting date. The Performance Unit represents the unsecured right to receive one unit of the Company for every two units of the Company issuable upon the vesting of any such Deferred Equity Units.

Twenty-five percent of the Deferred Equity Units shall vest on each of the first, second, third, and fourth anniversaries of the grant date until the Deferred Equity Units are fully vested. The Performance Units shall be subject to forfeiture and subject to the satisfaction of a predetermined performance target at the end of the four year vesting period. If the performance target is achieved, then the Performance Units shall vest at the end of the four year vesting period. The rights of the partners with respect to the Performance Units shall remain subject to forfeiture at all times prior to the date on which such rights become vested and will be forfeited if the performance target is not achieved.

Distributions related to Deferred Equity Units that are paid to partners are charged to excess of liabilities, redeemable partners’ capital and partners’ capital over assets. Distributions related to the unvested portion of Deferred Equity Units that are assumed to be forfeited are recognized as additional compensation expense because these distributions are not required to be returned by partners to the Company upon forfeiture.

The Company utilized both discounted cash flow and guideline company valuation methods to determine the grant date fair value of the Deferred Equity Units. The grant date fair values of Performance Units were determined by applying a performance probability factor to the Deferred Equity Unit Value. These methodologies included the use of third party data and discounts for lack of control and marketability. All Deferred Equity Units are considered to be liability awards and are adjusted to fair value at the end of each reporting period. For the years ended December 31, 2011 and 2010, the Company recorded compensation expense of $1,060 and $669, respectively, of which $128 and $123, respectively, relates to the Performance Units given that there is an explicit service period associated with the deferred Equity Units, and the likelihood that the performance target will be met is considered probable. Distributions include cash distributions paid on Liability Awards. Cash distributions paid on awards expected to be forfeited were $20 and $9 for the years ended December 31, 2011 and 2010, respectively, and are part of total compensation expense for the years then ended. During the year ended December 31, 2011, $82 of vested Deferred Equity Units were settled in cash. As of December 31, 2011 and 2010, there was $2,260 and $2,114, respectively, of estimated unrecognized compensation expense related to unvested awards. As of December 31, 2011 and 2010, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 2.65 and 3.17 years, respectively.

F-31

A summary of this equity grant by the Company as of December 31, 2011 and 2010 during the periods then ended is presented below:


	Deferred Equity Units						Performance Units
	Units			Fair Value per unit			Units			Fair Value per unit
Deferred equity unit awards outstanding at January 1, 2010		—						—
Granted		15,808						7,904
Vested		—						—
Forfeited		—						—
Deferred equity unit awards outstanding at December 31, 2010		15,808		$	148.35			7,904		$	81.19
Granted		10,802		$	157.16			5,401		$	60.24
Vested		(4,257	)	$	(157.16	)		—		$	(60.24	)
Forfeited		—						(541	)
Deferred equity unit awards outstanding at December 31, 2011		22,353		$	157.16			12,764		$	60.24

The Company expects 10% of all awards to be forfeited and the related service period is four years.

18. DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

SAMG LLC has a defined contribution 401(k) savings plan (the “Plan”) for all eligible employees who meet the minimum age and service requirements as defined in the Plan. The Plan is designed to be a qualified plan under sections 401(a) and 401(k) of the Internal Revenue Code. For employees who qualify under the terms of the Plan, on an annual basis Silvercrest matches dollar for dollar an employee’s contributions up to the first four percent of compensation. For the years ended December 31, 2011, 2010 and 2009, Silvercrest made matching contributions of $71, $46 and $44, respectively, for the benefit of employees.

LGI had an annual bonus and deferred compensation plan (the “Deferred Plan”). The amount of a Participant’s Award (as defined) for any Plan Year (as defined) shall equal the product of the Net Revenues (as defined) for such Plan Year multiplied by a percentage, the numerator of which shall be the number of Units (as defined) allocated to such Participant for such Plan Year, and the denominator of which shall be the aggregate number of Units allocated under the Plan (as defined) for such Plan Year; provided, however, that (i) the Award for any Participant in any Plan Year shall, in no event, exceed $10 per Unit and (ii) the aggregate number of Units is subject to increase or decrease, by the Administrator (as defined) in his sole discretion, during such Plan Year to reflect the addition of new employees becoming Participants or to reflect the termination of employment of any Participant. Each Participant may elect to receive their Award in cash, on a deferred basis, or a combination of both subject to various provisions in the Deferred Plan. The Deferred Plan was discontinued as of December 31, 2009. During the year ended December 31, 2010, $154 of payments were made to participants under the plan. The remaining liability at December 31, 2010 was $70, which was paid in full in March 2011.

19. SOFT DOLLAR ARRANGEMENTS

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make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities. If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services. For the years ended December 31, 2011, 2010 and 2009, the Company utilized “soft dollar” credits of $861, $812 and $724, respectively.

20. SUBSEQUENT EVENT

ACQUISITION

On January 5, 2012, the Company signed a Limited Liability Company Purchase Agreement (the “LLC Agreement”) with MW Commodity Advisors, LLC (“Commodity Advisors”) to acquire the LLC interests (“LLC Interests”) of Commodity Advisors. Commodity Advisors is the general partner of MW Commodity Strategies, L.P. (the “Commodity Fund”), a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. The strategic acquisition of Commodity Advisors adds another strategy to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. Under the terms of the LLC Agreement, the Company, in exchange for the LLC Interests, issued shares of the Company, at closing, with an estimated fair value of $100, which is equal to the difference between the Closing Revenue, as defined, attributable to all limited partners minus Closing Revenue attributable to those limited partners who give notice that they want to withdraw from the Commodity Fund. Furthermore, as part of the LLC Agreement, the Company could be obligated to make a future one-time earnout payment in shares equal to the difference between $800 and the annualized revenue at closing only if incremental revenue, as defined, reaches an amount equal to $400 prior to March 31, 2014, as defined in the LLC Agreement.

The Company has evaluated subsequent events through May 11, 2012, which is the date the consolidated financial statements were available to be issued.

* * * * *

F-33

Silvercrest L.P. And Subsidiaries

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(In thousands)


	June 30,			December 31,
	2012			2011
Assets
Cash and cash equivalents	$	2,568		$	7,354
Restricted certificates of deposit and escrow		1,018			1,130
Investments		74			1,128
Receivables, net		3,554			2,238
Due from Silvercrest Funds		2,033			2,043
Furniture, equipment and leasehold improvements, net		2,103			2,275
Goodwill		14,830			14,683
Intangible assets, net		13,087			13,810
Prepaid expenses and other assets		1,152			601

Total assets	$	40,419		$	45,262


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit
Accounts payable and accrued expenses	$	3,525		$	4,365
Accrued compensation		2,067			2,915
Notes payable		4,414			4,809
Deferred rent		2,399			3,287
Deferred tax and other liabilities		336			375

Total liabilities		12,741			15,751


Redeemable partners’ capital		96,360			91,201
Notes receivable from partners		(5,268	)		(6,024	)

Total redeemable partners’ capital		91,092			85,177


Commitments and Contingencies (Note 10)

Partners’ Deficit
Partners’ capital		45,660			44,359
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(109,074	)		(100,025	)

Total partners’ deficit		(63,414	)		(55,666	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	40,419		$	45,262

See accompanying notes to condensed consolidated financial statements.

F-34

Silvercrest L.P. And Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands)


	Six months ended June 30,
	2012			2011
Revenue
Management and advisory fees	$	22,327		$	18,539
Performance fees and allocations		16			31
Family office services		2,444			2,209

Total revenue		24,787			20,779

Expenses
Compensation and benefits		9,600			8,474
General and administrative		5,208			4,424

Total expenses		14,808			12,898

Income before other income (expense)		9,979			7,881
Other income (expense)
Other income (expense)		61			(176	)
Interest income		86			92
Interest expense		(206	)		(75	)

Total other income (expense)		(59	)		(159	)

Income before provision for income taxes		9,920			7,722
Provision for income taxes		(516	)		(178	)

Net income	$	9,404		$	7,544

See accompanying notes to condensed consolidated financial statements

F-35

Silvercrest L.P. And Subsidiaries

Condensed Consolidated Statements of Partners’ Deficit

(Unaudited)

(In thousands)


	Partners’ Capital			Excess of Liabilities, Redeemable Partners’ Capital and Partners’ Capital over Assets			Total Partners’ Deficit
January 1, 2011	$	41,909		$	(66,939	)	$	(25,030	)
Contribution from partners		—			535			535
Distributions to partners		(943	)		(7,794	)		(8,737	)
Equity-based compensation		—			490			490
Accretion to redemption value of redeemable partnership units		—			(24,080	)		(24,080	)
Net income		1,996			5,548			7,544

June 30, 2011	$	42,962		$	(92,240	)	$	(49,278	)

January 1, 2012	$	44,359		$	(100,025	)	$	(55,666	)
Contribution from partners		—			245			245
Distributions to partners		(1,085	)		(12,109	)		(13,194	)
Equity-based compensation		—			1,019			1,019
Accretion to redemption value of redeemable partnership units		—			(5,222	)		(5,222	)
Net income		2,386			7,018			9,404

June 30, 2012	$	45,660		$	(109,074	)	$	(63,414	)

See accompanying notes to condensed consolidated financial statements.

F-36

Silvercrest L.P. And Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Six months ended June 30,
	2012			2011
Cash Flows From Operating Activities
Net income	$	9,404		$	7,544
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation		806			496
Depreciation and amortization		955			645
Deferred rent		(876	)		(9	)
Deferred income taxes		22			(242	)
Non-cash interest income		(81	)		(88	)
Distributions received from investment funds		961			1,227
Other		(4	)		—
Cash flows due to changes in operating assets and liabilities:
Receivables and due from Silvercrest funds		(1,306	)		(96	)
Prepaid expenses and other assets		(260	)		(157	)
Payables and accrued expenses		(667	)		(648	)
Accrued compensation		(635	)		(1,382	)
Other liabilities		(75	)		(202	)
Interest payable on notes payable		104			49

Net cash provided by operating activities		8,348			7,137

Cash Flows From Investing Activities
Restricted certificates of deposit and escrow	$	112		$	167
Earn-outs paid related to acquisitions completed before January 1, 2009		(390	)		(362	)
Acquisition of furniture, equipment and leasehold improvements		(60	)		(196	)
Purchase of investments		(42	)		—
Proceeds from sale of investments		139			—

Net cash used in investing activities		(241	)		(391	)

Cash Flows From Financing Activities
Earn-outs paid related to acquisitions completed on or after January 1, 2009	$	(75	)	$	—
Proceeds from issuance of partner interests		—			13
Redemptions of partner interests		(63	)		—
Repayments of notes payable		(499	)		(722	)
Payments on capital leases		(12	)		(4	)
Distributions to partners		(13,194	)		(8,737	)
Payments from partners on notes receivable		950			1,083

Net cash used in financing activities		(12,893	)		(8,367	)

Net increase decrease in cash and cash equivalents		(4,786	)		(1,621	)
Cash and cash equivalents, beginning of period		7,354			7,025

Cash and cash equivalents, end of period	$	2,568		$	5,404

Supplemental Disclosures of Cash Flow Information
Net cash paid during the period for:
Income taxes	$	866		$	889
Interest		46			74
Supplemental Disclosures of Non-cash Financing Activities
Notes receivable:
From partners for capital contributions	$	112		$	522
Shares issued as part of acquisition of MW Commodity Advisors, LLC		132			—

See accompanying notes to condensed consolidated financial statements.

F-37

Silvercrest L.P.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of and For the Six Months Ended June 30, 2012 and 2011

(Dollars in thousands)

1. ORGANIZATION AND BUSINESS

Silvercrest was formed on December 10, 2008 and commenced operations on January 1, 2009 along with its general partner Silvercrest GP LLC (“GP LLC”) as part of a restructuring that was completed to organize the Company more in line with industry standards and to increase tax efficiency. Pursuant to the reorganization each of the members of Silvercrest Asset Management Group LLC (“SAMG LLC”) contributed their limited liability company interests in SAMG LLC to Silvercrest L.P. in return for limited partnership interests in Silvercrest L.P. and member interests in Silvercrest GP LLC, such that immediately after giving effect to such issuance each member’s percentage ownership of, and voting interest in, the aggregate limited partnership interests was equal to its ownership and voting interests immediately prior to such issuance, but was reduced pro rata to take into account the 1% interest in Silvercrest L.P. owned by Silvercrest GP LLC, the general partner of Silvercrest L.P. As a result of the restructuring, SAMG LLC became a wholly owned subsidiary of Silvercrest. The reorganization was accounted for as a transaction between entities under common control and all balances of SAMG LLC were carried over to Silvercrest at their carrying values on December 31, 2008.

On March 11, 2004, the Company acquired 100% of the outstanding shares of James C. Edwards Asset Management, Inc. (“JCE”) and subsequently changed JCE’s name to Silvercrest Financial Services, Inc. (“SFS”). On December 31, 2004, the Company acquired 100% of the outstanding shares of The LongChamp Group, Inc. now SAM Alternative Solutions, Inc. (“LGI”). Effective March 31, 2005, the Company entered into an Asset Contribution Agreement to acquire all of the assets, properties, rights and certain liabilities of Heritage Financial Management, LLC (“HFM”). Effective October 3, 2008, the Company acquired 100% of the outstanding limited liability company interests of Marathon Capital Group, LLC (“MCG”) through a limited liability company interest purchase agreement dated September 22, 2008. On November 1, 2011, the Company acquired certain assets of Milbank Winthrop & Co. (“Milbank”). On April 1, 2012, the Company acquired the LLC interests (“LLC Interests”) of MW Commodity Advisors, LLC (“Commodity Advisors”). See Notes 3, 7 and 8 for additional information related to goodwill and intangible assets related to these acquisitions.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Silvercrest and its wholly-owned subsidiaries, SAMG LLC, SFS, LGI, MCG, Silvercrest Investors LLC and Silvercrest Investors II LLC as of and for the six months ended June 30, 2012. All intercompany transactions and balances have been eliminated.

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The initial step in the Company’s determination of whether a fund for which Silvercrest is the general partner is required to be consolidated is assessing whether the fund meets the definition of a variable interest entity (VIE). None of funds for which the Company is the general partner, met the definition of a VIE during the six months ended June 30, 2012 and 2011 and two years ended December 31, 2011, as the total equity at risk of each fund is sufficient for the fund to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

As of and for the six month periods ended June 30, 2012 and 2011 and the year ended December 2011, all of the funds for which we are the general partner have substantive “kick-out” rights and therefore Silvercrest did not consolidate any of the Silvercrest Funds.

Segment Reporting

The Company views its operations as comprising one operating segment. Each of the Company’s acquired businesses has similar economic characteristics and has been fully integrated upon acquisition. Furthermore, our Chief Operating Decision Maker, which is the Company’s Chief Executive Officer, monitors and reviews financial information at a consolidated level for assessing operating results and the allocation of resources.

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents.

Restricted Certificates of Deposit

Certain certificates of deposit held at a major financial institution are restricted and serve as collateral for letters of credit for the Company’s lease obligations as described in Note 10.

F-39

Equity Method Investments

Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, “Investments-Equity Method and Joint Ventures”, (“ASC 323”), whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist.

The Company evaluates its equity method investments for impairment, whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as impairment when the loss in value is deemed other than temporary. The Company’s equity method investments approximate their fair value at June 30, 2012 and 2011. The fair value of the equity method investments is estimated based on the Company’s share of the fair value of net assets of the equity method investee which consist of Level I and Level II securities. No impairment charges related to equity method investments were recorded during the six months ended June 30, 2012 and 2011.

Receivables and Due from Silvercrest Funds

Furniture, Equipment and Leasehold Improvements

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Contingent consideration is recorded as part of the purchase price when such consideration is not based on continuing employment of the selling shareholders. Contingent consideration that is related to continuing employment is recorded as compensation expense. Payments made for contingent consideration recorded as part of an acquisition’s purchase price are reflected as financing activities in the Company’s statements of cash flows.

F-40

Goodwill and Intangible Assets

The Company has one reporting unit at June 30, 2012 and 2011. No goodwill impairment charges were recorded during the six months ended June 30, 2012 and 2011.

Long-lived Assets

Initial Public Offering Costs

As of June 30, 2012, the Company has incurred and deferred $545 of professional fees associated with its planned initial public offering. These fees are included in prepaid expenses and other assets in the condensed consolidated statement of financial condition at June 30, 2012. In the event the offering is not consummated, the deferred offering costs will be expensed.

Derivative Instruments

F-41

As a result of the use of derivative instruments, the Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. The Company does not hold collateral or other security from its counterparties supporting its derivative instruments. In addition, there are no netting arrangements in place with the counterparties. To mitigate the counterparty credit risk, the Company has a policy of entering into contracts only with carefully selected major financial institutions based upon their credit ratings and other factors.

The Company records the changes in fair value of derivative instruments in “Other income (expenses)” in the consolidated statement of operations.

The Company does not purchase, hold or sell derivative financial instruments for trading and speculative purposes.

Partner Distributions

Partner incentive allocations, which are determined by the general partner and approved by a vote of the partners, can be formula based or discretionary. Incentive allocations are considered distributions of net income as stipulated by the Company’s Amended and Restated Limited Partnership Agreement and are recognized in the period in which they are paid. In the event there is insufficient distributable cash flow to make incentive distributions the general partner in its sole and absolute discretion can determine not to make any distributions called for under the partnership agreement. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership.

Redeemable Partnership Units

The Company also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions.

Revenue Recognition

F-42

of the quarter based on a contractual percentage of the assets managed or based on fixed fee arrangement. Management fees from proprietary and non-proprietary funds is calculated as a percentage of net asset values measured at the beginning of a month or quarter or at the end of a quarter, depending on the fund.

The Company accounts for performance based revenue in accordance with ASC 605-20-S99, “Accounting for Management Fees Based on a Formula”, by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements and no contingencies remain. Performance fee contingencies are typically resolved at the end of each annual period. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company records performance fees and allocations as a component of revenue.

Equity-Based Compensation

Leases

Income Taxes

F-43

Recent Accounting Developments

The guidance also requires enhanced disclosures about fair value measurements, including, among other things, (a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity, and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

The amended guidance was effective for the Company on January 1, 2012 and did not have a material impact on the Company’s financial statements.

3. ACQUISITIONS

F-44

presence in the New York market and the Company obtains investment managers that have significant experience and knowledge of the industry. Milbank’s clients will gain access to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. Under the terms of the Asset Purchase Agreement, the Company paid cash consideration of $3,357 (net of cash acquired of $813), issued units of the Company with a fair value of $3,105, and issued a promissory note to Milbank for $3,181. The promissory note bears interest at a rate of 5% per annum and is payable in four annual installments (see Note 9). The purchase price allocation includes an estimate of the fair value of the 19,757 units issued to the former owners of Milbank which was determined by calculating a per unit limited partnership interest fair value in the Company utilizing both discounted cash flow and guideline company valuation methodologies. Furthermore, as part of the Asset Purchase Agreement, the Company is obligated to make future earnout payments to Milbank. The Company determined that the acquisition-date fair value of the contingent consideration was $1,726 based on the likelihood that the financial and performance targets will be achieved. As of March 31, 2012, the Company determined that no fair value adjustments to contingent consideration were required as the likelihood that the financial and performance targets will be achieved has not changed since the acquisition date. Under the terms of the Asset Purchase Agreement, Milbank is entitled to receive six earnout payments. The earnout periods are as follows: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA, as defined in the Asset Purchase Agreement. There is no required EBITDA milestone that needs to be achieved in order for an earnout payment to be made. The amount of the earnout payments will vary depending on the level of EBITDA that is generated in each respective earnout period. The fair value of the contingent consideration was based on discounted cash flow models using projected EBITDA for each earnout period. The discount rate applied to the to the projected EBITDA was determined based on the weighted average cost of capital for the Company and considered that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments. During 2011, the Company incurred $222 in costs related to the acquisition of Milbank, and has included these in general, administrative and other in the Consolidated Statement of Operations.


Shares issued	$	3,105
Note payable due to Milbank		3,181
Cash paid on date of acquisition		4,170
Contingent consideration		1,726

Total purchase consideration	$	12,182


Cash	$	813
Prepaid expenses		57
Furniture and equipment		20
Deferred revenue		(871	)
Net deferred tax liability		(107	)
Capital lease		(17	)

Total fair value of net tangible assets acquired		(105	)
Goodwill		3,271
Customer relationships (20 years)		8,200
Non-compete agreements (3-5 years)		816

Total purchase consideration	$	12,182

F-45

On April 1, 2012, the Company acquired the LLC Interests of Commodity Advisors. Commodity Advisors is the general partner of MW Commodity Strategies, L.P. (the “MW Commodity Fund LLC”), a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. The strategic acquisition of Commodity Advisors adds another strategy to the Company’s investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. On April 1, 2012, the Company, in exchange for the LLC Interests, issued 631 and 6 units of Silvercrest L.P. and Silvercrest GP LLC, respectively, at closing, with a fair value of $132. Furthermore, as part of the LLC Agreement, the Company could be obligated to make a future one-time earnout payment in shares equal to the difference between $800 and the annualized revenue at closing only if incremental revenue, as defined, reaches an amount equal to $400 prior to March 31, 2014, as defined in the LLC Agreement.


Shares issued	$	132
Call rights option issued		15

Total purchase consideration	$	147


Receivables	$	7
Liabilities		(7	)

Total fair value of net tangible assets acquired		—
Goodwill		147

Total purchase consideration	$	147

The pro forma information below represents consolidated results of operations as if the acquisitions of Milbank and Commodity Advisors occurred on January 1, 2011. The pro forma information has been included for comparative purposes and is not indicative of results of operations of the consolidated Company had the acquisition occurred as of January 1, 2011, nor is it necessarily indicative of future results.


	Pro Forma Six Months Ended June 30, 2011
Total Revenue	$	23,520
Net Income	$	8,443

4. INVESTMENTS AND FAIR VALUE MEASUREMENTS

Investments include $74 and $1,034 as of June 30, 2012 and December 31, 2011, respectively, representing the Company’s equity method investments in affiliated investment funds which have been established and managed by the Company and its affiliates. The Company’s financial interest in these funds can range up to 2%. Despite the Company’s insignificant financial interest, the Company exerts significant influence over these funds as the Company typically serves as the general partner, managing member or equivalent for these funds. During 2007, the Silvercrest Funds granted rights to the unaffiliated investors in each respective fund to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or

F-46

equivalent of that fund or to accelerate the liquidation date of that fund in accordance with certain procedures. At June 30, 2012 and 2011, the Company determined none of the Silvercrest Funds were required to be consolidated. The Company’s involvement with these entities began on the dates that they were formed, which ranges from July 2003 to July 2008.

The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the six months ended June 30, 2012, no individual equity method investment held by the Company met the significance criteria. As such, the Company is not required to present summarized financial information for investments accounted for under the equity method.

In 2011, the Company entered into derivative contracts that were not designated as accounting hedges. The fair value of these derivative assets is recorded within Investments in the Consolidated Statement of Financial Condition as of December 31, 2011. The Company entered into these derivative instruments in order to mitigate the risk of any exposure during the fourth quarter between the values of certain investor redemptions and the actual proceeds received by one of our funds when the underlying securities to these redemptions were sold. As of June 30, 2012, all derivative assets had been sold. For the six months ended June 30, 2012, realized gains for options and other derivative contracts were $8 and realized (losses) were ($10).

Fair Value Measurements

Investments measured and reported at fair value are classified and disclosed in one of the following categories.

•

Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives.

•

F-47

assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of June 30, 2012:

Level I

Level II

Level III

Total

Assets

Cash equivalents – Money Market Funds

1,038

—

1,038

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2011:


	Level I		Level II		Level III		Total
Assets
Cash equivalents – Money Market Funds	$	1,037	$	—	$	—	$	1,037
Free Standing Derivatives – Put Options		94		—		—		94

	$	1,131	$	—	$	—	$	1,131

5. RECEIVABLES, NET

The following is a summary of receivables as of June 30, 2012 and December 31, 2011:


	2012			2011
Management and advisory fees receivable	$	1,996		$	1,433
Unbilled receivables		1,942			1,134
Other receivables		1			57

Receivables		3,939			2,624
Allowance for doubtful receivables		(385	)		(386	)

Receivables, net	$	3,554		$	2,238

6. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of June 30, 2012 and December 31, 2011:


	2012			2011
Leasehold improvements	$	3,466		$	3,466
Furniture and equipment		3,420			3,360
Artwork		338			338

Total cost		7,224			7,164
Accumulated depreciation and amortization		(5,121	)		(4,889	)

Furniture, equipment and leasehold improvements, net	$	2,103		$	2,275

Depreciation expense for the six months ended June 30, 2012 and 2011 was $231 and $208, respectively.

F-48

7. GOODWILL

The following is a summary of the changes to the carrying amount of goodwill as of June 30, 2012 and December 31, 2011:


	2012			2011
Beginning of Period:
Gross balance	$	32,098		$	28,408
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance		14,683			10,993
Purchase price adjustments from earnouts		—			419
Acquisition of Milbank		—			3,271
Acquisition of MW Commodity Advisors		147			—
End of period
Gross balance		32,245			32,098
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance	$	14,830		$	14,683

8. INTANGIBLE ASSETS

The following is a summary of intangible assets as of June 30, 2012 and December 31, 2011:


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, June 30, 2012	$	15,910		$	1,566		$	17,476
Useful lives		15-20 years			3-5 years
Accumulated amortization
Balance, January 1, 2012		(3,144	)		(522	)		(3,666	)
Amortization expense		(547	)		(176	)		(723	)

Balance, June 30, 2012		(3,691	)		(698	)		(4,389	)

Net book value	$	12,219		$	868		$	13,087


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, January 1, 2011	$	7,710		$	750		$	8,460
Acquisition of certain assets of Milbank		8,200			816			9,016

Balance, December 31, 2011		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years
Accumulated amortization
Balance, January 1, 2011		(2,351	)		(338	)		(2,689	)
Amortization expense		(793	)		(184	)		(977	)

Balance, December 31, 2011		(3,144	)		(522	)		(3,666	)

Net book value	$	12,766		$	1,044		$	13,810

F-49

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:


Remainder of 2012	$	724
2013		1,370
2014		1,229
2015		1,100
2016		1,044
Thereafter		7,620

Total	$	13,087

9. NOTES PAYABLE

The following is a summary of notes payable:


	June 30, 2012
	Interest Rate	Amount
Principal on fixed rate notes	5.0%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)	Prime plus 1%		1,104
Interest payable			129

Total, June 30, 2012		$	4,414


	December 31, 2011
	Interest Rate	Amount
Principal on fixed rate notes	5.0%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)	Prime plus 1%		1,558
Interest payable			70

Total, December 31, 2011		$	4,809

Future amounts payable under the notes payable are as follows:


Remainder of 2012	$	1,202
2013		1,556
2014		963
2015		564

Total	$	4,285

10. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the six months ended June 30, 2012 and 2011 amounted to $1,737 and $1,675,

F-50

respectively . The Company received sub-lease income from subtenants for the six months ended June 30, 2012 and 2011 of $466 and $511, respectively. Therefore, for the six months ended June 30, 2012 and 2011, net rent expense amounted to $1,270 and $1,164, respectively, and is included in general, administrative and other expenses in the Consolidated Statement of Operations.

During 2006, the Company entered into a lease agreement for office space for its headquarters. The lease commenced on January 1, 2007 and expires September 30, 2017. The lease is subject to escalation clauses and provides for rent free periods of 6 to 9 months and a leasehold improvement allowance of $1,538 provided the Company spends at least an additional $513 on improvements. The Company spent $3,284 on leasehold improvements and received $1,499 of the allowance during 2007; the remaining $39 of the allowance was received in 2008. As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $2,023 that were reduced to $1,013 on August 31, 2010 and can be further reduced to $506 on August 31, 2014. The letter of credit is collateralized by a certificate of deposit in an equal amount.

Future minimum lease payments and rentals under lease agreements which expire through 2017 are as follows:


	Minimum Lease Commitments		Non- cancellable Subleases			Minimum Net Rentals
Remainder of 2012	$	1,755	$	(274	)	$	1,481
2013		3,342		(600	)		2,742
2014		3,345		(317	)		3,028
2015		3,293		(331	)		2,962
2016		3,239		(331	)		2,908
Thereafter		2,429		(248	)		2,181

Total	$	17,403	$	(2,101	)	$	15,302

In 2009, the Company abandoned a portion of its unutilized space at its headquarters and subleased the space through September 29, 2017. The Company recorded a lease abandonment charge in 2009 in the amount of $1,154 (on a net present value basis). The balance of the related liability at January 1, 2011 was $894, which was reduced by lease payments during 2011 of $174, resulting in an ending balance at December 31, 2011 of $720. This liability was further reduced by lease payments during the six months ended June 30, 2012 of $58. On May 1, 2012, the Company reoccupied space at its headquarters that it had previously abandoned in 2009. As a result, the Company released the remaining abandonment-related liability of $662, and wrote off prepaid interest expense of $86, resulting in a net lease abandonment reversal of $576. This reversal was recorded in general and administrative expense in the consolidated statement of operations. The liability is included in Deferred Rent on the Condensed Consolidated Statement of Financial Condition at December 31, 2011.

In 2010, an escrow account was funded by a sub-tenant whose sub-lease with the Company commenced on January 1, 2011. Pursuant to the sub-lease, the tenant was required to deposit the first 16 months of rent into the escrow account totaling $452. The initial deposit was depleted as of April 2012, and an additional deposit of $99 was made by the sub-tenant. This account has been recorded as restricted certificates of deposit and escrow on the consolidated balance sheet. As of June 30, 2012, the remaining balance in the escrow account was $99.

The Company recorded a loss on sub-lease charge in 2011 of $150 (on a net present value basis). The related liability of $247, established in January 2011, was reduced by lease payments during the year of $85, resulting in an ending balance at December 31, 2011 of $162. This liability was further reduced by lease payments during the six months ended June 30, 2012 of $42, resulting in an ending balance at June 30, 2012 of $120. This liability is included in Deferred Rent on the Consolidated Statement of Financial Condition.

F-51

The Company has capital leases for certain office equipment. The principal balance of these leases was $43 and $55 as of June 30, 2012 and December 31, 2011, respectively.

Contingent Consideration

In connection with its acquisition of MCG in October 2008, the Company entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of acquisition. Contingent consideration payments made during the six months ended June 30, 2012 and 2011 related to MCG were reflected in investing activities in the consolidated statement of cash flows.

Indemnification Agreement

11. PARTNERS’ INCENTIVE ALLOCATIONS AND ALLOCATION OF INCOME AND LOSSES

Pursuant to Silvercrest’s Operating Agreement as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the six months ended June 30, 2012 and 2011 amounted to $8,775 and $5,073, respectively, and are included in excess of liabilities, redeemable partners’ capital and partners’ capital over assets in the Consolidated Statements of Financial Condition.

12. NOTES RECEIVABLE FROM PARTNERS

Partner contributions are made in cash, in the form of five or six year interest-bearing promissory notes and/or in the form of nine year interest-bearing limited recourse promissory notes. Limited recourse promissory notes were issued in January 2008, August 2009 and September 2009 with interest rates of 3.53%, 2.77% and 2.84%, respectively. The recourse limitation includes a stated percentage of the initial principal amount of the limited recourse note plus a stated percentage of the accreted principal amount as of the date upon which all amounts due are paid in full plus all costs and expenses required to be paid by the borrower and all amounts required to be paid pursuant to a pledge agreement associated with each note issued. Certain notes receivable are payable in annual installments and are collateralized by the Company’s shares that are purchased with the note.

F-52

Notes receivable from partners as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012			December 31, 2011
Balance, beginning of period	$	6,024		$	6,125
Repayment of notes		(950	)		(1,083	)
Forgiveness of notes receivable		–			(34	)
Interest accrued and capitalized on notes receivable		82			180
New notes receivable issued to partners		112			836

Balance, end of period	$	5,268		$	6,024

Full recourse and limited recourse notes receivable from partners as of June 30, 2012 and December 31, 2011 are $2,756 and $2,512 and $3,549 and $2,475, respectively. There is no allowance for credit losses on notes receivable from partners as of June 30 2012 and December 31, 2011. During 2011, the Company forgave $34 of notes receivable in connection with the termination of a partner whose corresponding capital was forfeited.

13. RELATED PARTY TRANSACTIONS

During 2012 and 2011, the Company provided services to the domesticated Silvercrest Hedged Equity Fund LP (formed in 2011 and formerly Silvercrest Hedged Equity Fund), Silvercrest Hedged Equity Fund (International), Silvercrest Hedged Equity Fund Ltd (formed in 2011 and includes ERISA investors of Silvercrest Hedged Equity Fund LP), the domesticated Silvercrest Emerging Markets Fund LP (formed in 2011 and formerly Silvercrest Emerging Markets Fund), Silvercrest Emerging Markets Fund (International), Silvercrest Emerging Markets Fund Ltd (formed in 2011 and includes ERISA investors of Silvercrest Emerging Markets Fund LP), Silvercrest Market Neutral Fund (currently in liquidation), Silvercrest Market Neutral Fund (International) (currently in liquidation), Silvercrest Municipal Advantage Portfolio A LLC, Silvercrest Municipal Advantage Portfolio P LLC, the domesticated Silvercrest Strategic Opportunities Fund LP (formed in 2011 and formerly Silvercrest Strategic Opportunities Fund), and Silvercrest Strategic Opportunities Fund (International) (terminated in 2011). These entities operate as feeder funds investing through master-feeder structures except for Silvercrest Hedged Equity Fund LP, Silvercrest Hedged Equity Fund Ltd, Silvercrest Emerging Markets Fund LP, Silvercrest Emerging Markets Fund Ltd, and Silvercrest Strategic Opportunities Fund LP which operate and invest as stand-alone funds.

For the six months ended June 30, 2012 and 2011, the Company earned from the above activities management fee income, which is included in Management and advisory fees in the Consolidated Statement of Operations, of $4,235 and $2,445, respectively, and performance fees and allocations of $16 and $31, respectively, which is included in performance fees in the Statement of Operations. As of June 30, 2012 and December 31, 2011, the Company was owed $2,033 and $2,043, respectively, from its various funds which are included in Due from Silvercrest Funds in the Consolidated Statements of Financial Condition.

F-53

For the six months ended June 30, 2012 and 2011, the Company earned advisory fees of $215 and $364, respectively, from assets managed on behalf of certain of its partners. As of June 30, 2012 and December 31, 2011, the Company is owed approximately $29 and $19, respectively, from certain of its partners.

14. INCOME TAXES

As of June 30, 2012, the Company had net deferred tax liabilities of $105, which is recorded as a non-current deferred tax asset of $28 (specific to SLP which consists primarily of assets for deferred rent expense and equity-based compensation offset by a liability for the excess of book over tax basis of intangible assets) and a non-current deferred tax liability of $135 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets. These amounts are included in the “prepaid expenses and other assets” and “deferred tax and other liabilities” on the balance sheet, respectively.

As of June 30, 2011, the Company had net deferred tax liabilities of $53, which is recorded as a non-current deferred tax asset of $95 (specific to SLP which consists primarily of assets for deferred rent expense and equity-based compensation offset by a liability for the excess of book over tax basis of intangible assets) and non-current deferred tax liability of $148 related to the corporate activity of SFS which is primarily related to temporary differences between the financial statement and tax bases of intangible assets. These amounts are included in the “prepaid expenses and other assets” and “deferred tax and other liabilities” on the balance sheet, respectively.

The change in the deferred tax asset for SLP from June 30, 2011 to June 30, 2012 is attributable primarily to the long-term deferred tax liability established through purchase accounting for the book over tax basis of Milbank intangible assets in the fourth quarter of 2011.

The current tax expense was $519 and $404 for the six months ended June 30, 2012 and 2011, respectively. The deferred tax benefit for the six months ended June 30, 2012 and 2011 was ($3) and ($226), respectively, which when combined with current tax expense, resulted in an income tax provision for the six months ended June 30, 2012 and 2011 of $516 and $178, respectively, recognized in the Consolidated Statement of Operations. The current expense increased from the comparable period for 2011 mainly due to increased profitability during 2012. The deferred benefit difference is attributable primarily to the decrease in the projected tax rate applicable to the future operations of SFS which was recorded during the first quarter of 2011.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of June 30, 2012, the Company’s U.S. federal income tax returns for the years 2008 through 2010 are open under the normal three-year statute of limitations and therefore subject to examination.

The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

15. REDEEMABLE PARTNERSHIP UNITS

F-54

installments over four years. The Company has recognized redeemable partners’ capital of $96,360 and $91,201 as of June 30, 2012 and December 31, 2011, respectively, which represents the amount of partners’ capital subject to both put and call rights.

16. EQUITY-BASED COMPENSATION

Each grant includes a deferred equity unit (“Deferred Equity Unit”) and performance unit (“Performance Unit”) subject to various terms including terms of forfeiture and acceleration of vesting. Each grant includes a Deferred Equity Unit and Performance Unit, subject to forfeiture and acceleration of vesting. Each 100 Deferred Equity Units represent the unsecured right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P. The Deferred Equity Unit represents the unsecured right to receive one unit of the Company or the equivalent cash value of up to fifty percent (50%) (or such other percentage as may be determined by the Company’s Executive Committee) of the Company’s units issuable upon the vesting of any such Deferred Equity Units and the remaining fifty percent (50%) in units upon the vesting of any such Deferred Equity Units. Such cash amount is to be calculated using the redemption price of such units as of the applicable vesting date. The Performance Unit represents the unsecured right to receive one unit of the Company for every two units of the Company issuable upon the vesting of any such Deferred Equity Units.

F-55

Deferred Equity Units are considered to be liability awards and are adjusted to fair value at the end of each reporting period. For the six months ended June 30, 2012 and 2011, the Company recorded compensation expense of $793 and $487, respectively, of which $110 and $169, respectively, relates to the Performance Units given that there is an explicit service period associated with the Deferred Equity Units, and the likelihood that the performance target will be met is considered probable. Distributions include cash distributions paid on Liability Awards. Cash distributions paid on awards expected to be forfeited were $17 and $8 for the six months ended June 30, 2012 and 2011, respectively, and are part of total compensation expense for each of the six months then ended. During the six months ended June 30, 2012 and 2011, $63 and $82, respectively, of vested Deferred Equity Units were settled in cash. As of June 30, 2012 and December 31, 2011, there was $2,481 and $2,222, respectively, of estimated unrecognized compensation expense related to unvested awards. As of June 30, 2012 and December 31, 2011, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 3.67 and 3.17 years, respectively.

A summary of this share activity for the Company as of June 30, 2012 and 2011 and changes during the periods then ended is presented below:


	Deferred Equity Units						Performance Units
	Units			Fair Value per unit			Units			Fair Value per unit
Balance at January 1, 2012		22,353		$	157.16			12,764		$	60.24
Granted		1,000		$	241.39			500		$	92.27
Vested		(6,565	)	$	(241.39	)		—		$	(92.27	)
Forfeited		—						(140	)

Balance at June 30, 2012		16,788		$	241.39			13,124		$	92.27

Balance at January 1, 2011		15,808		$	148.35			7,904		$	81.19
Granted		10,802		$	148.35			5,401		$	81.19
Vested		(3,952	)	$	(148.35	)		—		$	(81.19	)
Forfeited		—						(418	)

Balance at June 30, 2011		22,658		$	148.35			12,887		$	81.19

The Company expects 10% of all awards to be forfeited and the related service period is 4 years.

17. DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

SAMG LLC has a defined contribution 401(k) savings plan (the “Plan”) for all eligible employees who meet the minimum age and service requirements as defined in the Plan. The Plan is designed to be a qualified plan under sections 401(a) and 401(k) of the Internal Revenue Code. For employees who qualify under the terms of the Plan, on an annual basis Silvercrest matches dollar for dollar an employee’s contributions up to the first four percent of compensation. For the six months ended June 30, 2012 and 2011, Silvercrest accrued matching contributions of $36 and $26, respectively, for the benefit of employees.

F-56

ended December 31, 2010, $154 of payments was made to participants under the plan. The remaining liability at December 31, 2010 of $70 was paid in full in March 2011.

18. SOFT DOLLAR ARRANGEMENTS

The Company obtains research and other services through “soft dollar” arrangements. The Company receives credits from broker-dealers whereby technology-based research, market quotation and/or market survey services are effectively paid for in whole or in part by “soft dollar” brokerage arrangements. Section 28(e) of the Securities Exchange Act of 1934, as amended, provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services. To rely on the safe harbor offered by Section 28(e), (i) the Company must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities. If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services. For the six months ended June 30, 2012 and 2011, the Company utilized “soft dollar” credits of $446 and $430, respectively.

19. SUBSEQUENT EVENTS

On September 18, 2012 three of the Company’s executives repaid outstanding notes payable and accrued interest of $1,897 that were initially issued in connection with the acquisition of their partnership interest.

The Company has evaluated subsequent events through September 18, 2012, which is the date the consolidated financial statements were available to be issued.

* * * * * *

F-57

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010


	SEPTEMBER 30, 2011				DECEMBER 31, 2010
	(unaudited)
ASSETS
Cash and cash equivalents			$	339,099			$	163,256
Investments in securities and partnerships				8,247				7,818
Accounts receivable				710,965				97,148
Prepaid taxes				—				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $285,068 and $284,168)				28,426				27,073
Security deposit				15,220				15,220
Prepaid expenses and other				79,552				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	11,708,030			$	18,066,684
Investments in securities		102,190,687				123,483,737
Investments in Funds		167,976,499				198,373,114
Redemptions receivable from investments in Funds		395,139				9,624,700
Accrued income		101,398				173,463
Due from partner		81,402				—
Prepaid expenses and other		119,190		282,572,345		153,628		349,875,326

TOTAL ASSETS			$	283,753,854			$	350,326,654

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued expenses			$	39,210			$	21,400
Taxes payable				293,543				—
Deferred taxes				53,668				91,122
Consolidated Milbank Partnerships:
Contributions received in advance		—				500,000
Accrued expenses		287,743				639,584
Redemptions payable		2,211,744				34,305,163
Securities sold short		2,541,031		5,040,518		4,434,420		39,879,167

Total Liabilities			$	5,426,939			$	39,991,689

Commitments and Contingencies (see Note 5)

The accompanying notes are an integral part of these consolidated financial statements.

F-58

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

(continued)


	September 30, 2011		December 31, 2010
	(unaudited)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized;
3,922 shares issued and outstanding	$	196	$	196
7,000 Class B par $0.05 shares authorized;
2,496 shares issued and outstanding		125		125
Additional paid in capital		454,839		454,839
Retained earnings		1,190,660		867,957

Total Milbank Winthrop & Co., Inc.
Stockholders’ Equity		1,645,820		1,323,117
Minority interests in Consolidated Milbank Partnerships		276,681,095		309,011,848

Total Stockholders’ Equity		278,326,915		310,334,965


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	283,753,854	$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-59

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011						2010
	(unaudited)						(unaudited)
REVENUES:
Investment advisory fees				$	1,501,604				$	1,355,072
Other income					535					1,016
Consolidated Milbank Partnerships
Dividends	$	1,629,197					$	1,477,273
Interest		394,230			2,023,427			521,669		1,998,942

Total revenues					3,525,566					3,355,030

EXPENSES:
Compensation and benefits					3,780,024					3,551,485
Rent					130,348					130,157
Insurance					105,167					99,247
Office and administrative					138,384					152,014
Computer services					80,251					69,574
Professional fees					134,371					27,806
Depreciation					900					900
Consolidated Milbank Partnerships:
Management and advisory fees		1,409,795						1,240,705
Interest and dividends		232,863						223,503
Professional fees		266,334						285,558
Office and administrative		42,694						127,245
Other expenses		83,436			2,035,122			90,158		1,967,169

Total expenses					6,404,567					5,998,352

LOSS BEFORE NET GAIN (LOSS) FROM CONSOLIDATED
MILBANK PARTNERSHIPS					(2,879,001	)				(2,643,322	)
Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,987,983						6,703,204
Realized gain on investments in Funds, net		766,884						—
Unrealized gain (loss) on investments in securities, net change		(19,574,394	)					2,940,362
Unrealized gain (loss) on investments in Funds, net change		(21,155,552	)		(34,975,079	)		14,582,651		24,226,217

INCOME (LOSS) BEFORE INCOME TAX EXPENSE					(37,854,080	)				21,582,895
Income tax expense					330,019					232,567

NET INCOME (LOSS)					(38,184,099	)				21,350,328

Minority interest in Consolidated Milbank Partnerships					(38,506,802	)				21,093,366

NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.				$	322,703				$	256,962

The accompanying notes are an integral part of these consolidated financial statements.

F-60

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (unaudited)

AND THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at December 31, 2010		3,922		196		2,496		125		454,839		867,957		309,011,848			310,334,965
Contributions		—		—		—		—		—		—		12,539,311			12,539,311
Withdrawals		—		—		—		—		—		—		(6,363,262	)		(6,363,262	)
Net Income (Loss)		—		—		—		—		—		322,703		(38,506,802	)		(38,184,099	)

Balance at September 30, 2011 (unaudited)		3,922	$	196		2,496	$	125	$	454,839	$	1,190,660	$	276,681,095		$	278,326,915

The accompanying notes are an integral part of these consolidated financial statements.

F-61

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	322,703		$	256,962
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income (loss)		(38,506,802	)		21,093,366
Depreciation		900			900
Deferred taxes		(37,454	)		26,942
Sales of securities and partnerships		—			17,130
Unrealized (gain) on investments in securities and partnerships, net change		(429	)		(8,076	)
Realized loss on investments in securities and partnerships, net		—			8,119
Consolidated Milbank Partnerships:
Realized (gain) on investments in securities, net		(4,987,983	)		(6,703,204	)
Realized (gain) on investments in Funds, net		(766,884	)		—
Unrealized (gain) loss on investments in securities, net change		19,574,394			(2,940,362	)
Unrealized (gain) loss on investments in Funds, net change		21,155,552			(14,582,651	)
Purchases of investments in securities		(62,909,399	)		(146,801,804	)
Purchases of investments in Funds		(7,000,000	)		—
Sales of investments in securities		67,722,649			152,615,257
Sales of investments in Funds		17,007,947			4,060,065
(Increase) decrease in operating assets:
Accounts receivable		(613,817	)		(507,379	)
Prepaid taxes		34,915			43,955
Prepaid expenses and other		26,346			(22,391	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		6,358,654			6,075,279
Redemptions receivable from investments in Funds		9,229,561			82,760,368
Accrued income		72,065			137,334
Prepaid expenses and other		34,438			(22,572	)
Increase (decrease) in operating liabilities:
Accrued expenses		17,810			1,731
Taxes payable		293,543			130,337
Consolidated Milbank Partnerships:
Accrued expenses		(351,841	)		(1,299,427	)

Net cash provided by operating activities	$	26,676,868		$	94,339,879

The accompanying notes are an integral part of these consolidated financial statements.

F-62

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:

(continued)


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	$	(2,253	)	$	(665	)

Net cash used in investing activities		(2,253	)		(665	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions to Milbank Partnerships		11,957,909			775,000
Withdrawals from Milbank Partnerships		(38,456,681	)		(95,064,326	)

Net cash used in financing activities		(26,498,772	)		(94,289,326	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		175,843			49,888
Cash and cash equivalents at beginning of period:		163,256			126,858

Cash and cash equivalents at end of period:	$	339,099		$	176,746

Supplemental cash flow information:
Cash paid during the period for taxes	$	1,561		$	31,333

Cash paid during the period for interest	$	215,690		$	200,505

The accompanying notes are an integral part of these consolidated financial statements.

F-63

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 1. ORGANIZATION

Milbank Winthrop & Co., Inc. (“Milbank”) was incorporated in Delaware in 1980. “Milbank” conducts an investment advisory business in New York City and is registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

Milbank is the general partner (the “General Partner”) of three investment partnerships, MW Global Partners, L.P., MW Small Cap, L.P. and MW Special Situations, L.P. (the “Partnerships”) which are consolidated in these financial statements (collectively the “Company”).

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

The Company follows the accrual method of accounting. Income is recorded when earned, and expenses are recorded when incurred in the period to which they pertain. Purchases and sales of securities are recorded on the trade date basis. Purchases and sales of Funds are recorded on the effective dates as specified in the Funds’ investment agreements.

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying consolidated financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and liquid investments with maturities of less than 90 days. For purposes of the statement of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-64

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to value techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Investments in securities, option contracts, and securities sold short which are traded on a national securities exchange or listed on NASDAQ are valued at the last reported sales price on the last business day of the year. Investments in securities and securities sold short which are traded in the over-the-counter market are valued at the last reported bid and ask prices, respectively.

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

Although the General Partner and the Funds’ administrators use their best judgment in estimating the fair value of the investments in the Funds, there are inherent limitations in any estimation technique. Therefore, the values presented herein are not necessarily indicative of the amount that could be realized in a current transaction. Future events will also affect the estimates of fair value, and the effects of such events on the estimates of fair value could be material. The valuation of the Funds has been deemed reasonable based on inquiry and the documentation provided from the Funds’ general partners or administrators.

The Funds may carry investments for which market quotations are not readily available and are valued at their fair values as determined in good faith by their respective general partners or administrators. A change in the estimated values may occur in the near term.

F-65

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

securities markets of emerging countries, lack of uniform reporting standards, and political, economic and legal uncertainties.

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

Furniture, equipment and leasehold improvements are capitalized at cost. Depreciation is calculated using accelerated methods applied over the expected lives of the assets. The difference between these accelerated methods and the straight line depreciation required by GAAP is deemed immaterial in comparison to these consolidated financial statements taken as a whole.

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

The Company is subject to federal and state corporate income taxes. The Company calculates both current and deferred taxes based on the difference between the financial statement carrying value of assets and liabilities versus their tax basis. A provision for these taxes has been made and is reflected on the consolidated statement of operations.

Management has determined that the Company has no uncertain tax positions that would require financial statement adjustment or disclosure. The tax years that remain subject to examination by taxing authorities are 2008, 2009 and 2010.

Foreign Securities

F-66

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Securities (continued)

dividend income and expenses, which are denominated in foreign currencies, are recorded at the exchange rate as of the date of the transactions. For financial statement purposes, the Company does not isolate that portion of the gain or loss on securities resulting from exchange rate fluctuation. Such changes are combined with changes in market prices and shown as realized or unrealized gain or loss.

Accounting Developments

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 167, Amendments to FASB Interpretation No. 46(R), which changes the approach to determining the primary beneficiary of a Variable Interest Entity (“VIE”) and requires companies to more frequently assess whether they must consolidate VIEs. This pronouncement is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. In November 2009, the FASB agreed to defer the effective date of this pronouncement for certain types of asset manager funds until the completion of its consolidation project. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures about Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. The Company does not anticipate that the adoption of ASU 2010-06 will have a material impact on its consolidated financial statements.

F-67

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

(a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity, and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial condition but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial condition but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. As the impact of the guidance is primarily limited to enhanced disclosures, adoption is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE 3. FAIR VALUE MEASUREMENTS

The following table summarizes investments under the fair value hierarchy the valuation of the Company’s as of September 30, 2011:


Assets	Level 1			Level 2			Level 3			Total
Investments in Securities and Partnerships	$	3,247		$	—		$	5,000		$	8,247

From Consolidated Milbank Partnerships:
Investments in Securities		96,449,023			5,059,848			681,816			102,190,687
Investments in Funds		—			154,867,659			13,108,840			167,976,499

Total	$	96,452,270		$	159,927,507		$	13,795,656		$	270,175,433

Liabilities
Securities Sold Short	$	(927,955	)	$	(1,281,162	)	$	(331,914	)	$	(2,541,031	)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2011:


Assets	Investments
Beginning balance, December 31, 2010	$	8,568,283
Total gains or (losses), realized and unrealized		(188,890	)
Purchases and sales, net		5,416,263

Ending balance, September 30, 2011	$	13,795,656

The amount of gain (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at September 30, 2011	$	(267,353	)

F-68

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3. FAIR VALUE MEASUREMENTS (continued)


Liabilities	Securities Sold Short
Beginning balance, December 31, 2010	$	(312,096	)
Total gains or (losses), realized and unrealized		17,419
Purchases and sales, net		(37,237	)

Ending balance, September 30, 2011	$	(331,914	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at September 30, 2011	$	17,419

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818
From consolidated affiliated Partnerships:
Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669

Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments
Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)

Ending balance, December 31, 2010	$	8,568,283

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210

F-69

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3. FAIR VALUE MEASUREMENTS (continued)


Liabilities	Securities Sold Short
Beginning balance, December 31, 2009	$	(71,500	)
Total gains or (losses), realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250

Ending balance, December 31, 2010	$	(312,096	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

Gains (losses), realized and unrealized, if any, are included in the net realized gain (loss) on investments or Funds and net change in unrealized gain (loss) on investments or Funds in the consolidated statement of operations.

The Company values its Level 2 investments in securities based on the last price in non-active markets. The Company values its Level 2 and 3 investments in Funds based on their proportionate share of the net assets of the Funds. Transfers between levels are recognized at the end of the reporting period.

NOTE 4. INVESTMENTS IN FUNDS

As of September 30, 2011 and December 31, 2010, the Partnerships invested in other Funds, none of which were related parties. The investment objectives of the Funds primarily relate to the maximization of appreciation through the investments in equity, debt and related instruments. The Funds utilize one of the following strategies:

a.	Long Only Strategy - This category includes Funds that invest in long positions only, primarily in common stocks. Management of the Funds has the ability to shift the investments from value to growth strategies and from small to large capitalization stocks,

Equity Long/Short Strategy - This category includes Funds that invest both long and short, primarily in common stocks. Management of the Funds has the ability to shift investments from value to growth strategies, from small to large capitalization stocks, and from a net long position to a net short position.

Multi-strategy Funds - This category includes Funds that pursue multiple strategies to diversify risks and reduce volatility. The Funds’ composite portfolio for this category includes investments in U.S. common stocks, non-U.S. common stocks, distressed debt, commodities and arbitrage investments. In addition, some of the Funds invest in various special situation investments.

Global Strategy Funds - This category includes Funds that hold investments in non-U.S. common stocks, primarily in the energy, information technology, utilities, and telecommunications sectors. They also hold investments in emerging markets and real estate sectors as well as investments in diversified currencies.

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

F-70

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 4. INVESTMENTS IN FUNDS (continued)

Substantially all of the Funds in which the Partnerships invest charge management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

Substantially all of the Funds in which the Partnerships invest provide for a specific allocation or fee to their respective general partner or affiliate, which is calculated at various rates, primarily 20% of appreciation, as defined in their respective partnership agreements.

Some of the Funds permit partial withdrawals during the year on either a monthly, quarterly or semiannual basis; however, substantially all of the Funds permit full withdrawals only at the end of the year.

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of financial condition of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

The Partnerships, through their investment in other Funds, are subject to certain inherent risks arising from their investing activities of short selling and entering into forward contracts. The ultimate cost to acquire these securities or settle these contracts may exceed the liability reflected in their financial statements.

NOTE 5. LEASE COMMITMENT

The Company is subject to a lease for office space in New York City through April 30, 2012. The base rent is $149,400 per year and includes electricity. It is also subject to real estate tax and operating cost escalations. Future minimum lease commitments are as follows:


	September 30, 2011		December 31, 2010
2011	$	37,350	$	149,400
2012		49,800		49,800

Total	$	87,150	$	199,200

Total rent expense for the nine months ended September 30, 2011 and 2010 was $130,348 and $130,157, respectively.

NOTE 6. PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employees’ compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the nine months ended September 30, 2011 and 2010 were $8,460 and $10,013, respectively.

F-71

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 7. PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at September 30, 2011 and December 31, 2010, respectively, are as follows:


	September 30, 2011		December 31, 2010
Insurance	$	59,091	$	86,685
Rent		12,450		12,450
Other		8,011		6,763

	$	79,552	$	105,898

NOTE 8. RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. For the nine months ending September 30, 2011 and 2010, Milbank earned $3,251,445 and $2,737,402, respectively, in advisory fees and $379,170 and $356,062, respectively, in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9. INCOME TAXES

The Company’s income tax expenses for the nine months ended September 30, 2011 and 2010 has been determined as follows:


	2011			2010
Current taxes
Federal	$	257,231		$	143,938
State and local		110,242			61,687

		367,473			205,625
Deferred taxes
Federal		(37,454	)		26,942

	$	330,019		$	232,567

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-72

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 10. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Furniture, equipment and leasehold improvements are stated at cost less accumulated depreciation. As discussed in Note 2, the Company applies accelerated methods of depreciation over the estimated useful lives of the assets.


Assets at cost:	September 30, 2011			December 31, 2010
Furniture and equipment	$	222,796		$	220,543
Leasehold improvements		90,698			90,698

Total cost		313,494			311,241
Less: accumulated depreciation		(285,068	)		(284,168	)

Net fixed assets	$	28,426		$	27,073

Depreciation expense for both the nine months ended September 30, 2011 and 2010 was $900.

NOTE 11. SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At September 30, 2011 and December 31, 2010, 3,922 shares were issued and outstanding.

Also under the Certificate, 7,000 shares of Class B Common Stock, having a par value of $0.05 per share, were authorized. Class B Common Stock is non-voting stock. At September 30, 2011 and December 31, 2010, 2,496 shares were issued and outstanding.

NOTE 12. SUBSEQUENT EVENTS

Subsequent events have been evaluated through March 14, 2012, which is the date the consolidated financial statements were available to be issued. Milbank was purchased by Silvercrest Asset Management Group LLC on November 1, 2011.

F-73

INDEPENDENT AUDITORS’ REPORT

To the Stockholders of

Milbank Winthrop & Co., Inc.:

We have audited the accompanying consolidated statement of financial condition of Milbank Winthrop & Co., Inc. (the “Company”), as of December 31, 2010, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Milbank Winthrop & Co., Inc. as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

September 2, 2011

F-74

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

YEAR ENDED DECEMBER 31, 2010


ASSETS
Cash and cash equivalents			$	163,256
Investments in securities and partnerships				7,818
Accounts receivable				97,148
Prepaid taxes				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $284,168)				27,073
Security deposit				15,220
Prepaid expenses and other				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	18,066,684
Investments in securities		123,483,737
Investments in Funds		198,373,114
Redemptions receivable from investments in Funds		9,624,700
Accrued income		173,463
Prepaid expenses and other		153,628		349,875,326

TOTAL ASSETS			$	350,326,654

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued expenses			$	21,400
Deferred taxes				91,122
Consolidated Milbank Partnerships:
Contributions received in advance	$	500,000
Accrued expenses		639,584
Redemptions payable		34,305,163
Securities sold short		4,434,420		39,879,167

Total Liabilities				39,991,689

Commitments and Contingencies (see Note 5)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				867,957

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,323,117

Minority interests in Consolidated Milbank Partnerships				309,011,848

Total Stockholders’ Equity				310,334,965

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-75

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:
Investment advisory fees			$	1,822,748
Other income				755
Consolidated Milbank Partnerships:
Dividends	$	1,996,373
Interest		663,103		2,659,476

Total revenues				4,482,979


EXPENSES:
Compensation and benefits				5,505,058
Rent				167,506
Insurance				133,034
Office and administrative				132,650
Computer services				93,653
Professional fees				39,606
Depreciation				6,751
Other				83,703
Consolidated Milbank Partnerships:
Management and advisory fees		1,591,767
Office and administrative		538,045
Professional fees		377,634
Interest and dividends		318,727		2,826,173

Total expenses				8,988,134


LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,505,155	)

Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		11,004,979
Unrealized gain on investments in securities, net change		9,205,034
Unrealized gain on investments in Funds, net change		28,901,005		49,111,018

INCOME BEFORE INCOME TAX EXPENSE				44,605,863
Income tax expense				76,383

NET INCOME				44,529,480

Minority Interests in Consolidated Milbank Partnerships				(44,462,064	)

NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	67,416

The accompanying notes are an integral part of these consolidated financial statements.

F-76

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at September 30, 2011		3,922	$	196		2,496	$	125	$	454,839	$	867,957	$	309,011,848		$	310,334,965

The accompanying notes are an integral part of these consolidated financial statements.

F-77

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	67,416
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	44,462,064
Depreciation		6,751
Deferred taxes		34,905
Sales of securities and partnerships		17,173
Unrealized gain on investments in securities and partnerships, net change		(331	)
Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(11,004,979	)
Unrealized gain on investments in securities, net change		(9,205,034	)
Unrealized gain on investments in funds, net change		(28,901,005	)
Purchases of investments in securities		(164,514,871	)
Purchases of investments in funds		(13,524	)
Sales of investments in securities		174,448,934
Sales of investments in funds		14,502,312
(Increase) decrease in operating assets:
Accounts receivable		57,783
Prepaid taxes		9,040
Security deposit		(203	)
Prepaid expenses and other		1,668
Consolidated Milbank Partnerships
Cash and cash equivalents		(473,962	)
Redemption receivable from investments in funds		74,517,538
Prepaid investments		61,430
Accrued income		18,754
Prepaid expenses and other		(36,671	)
Increase (decrease) in operating liabilities:
Accrued expenses		(18,081	)
Consolidated Milbank Partnerships
Accrued expenses		(1,009,006	)

Total Adjustments				$	92,960,685

Net Cash Provided by Operating Activities				$	93,028,101

The accompanying notes are an integral part of these consolidated financial statements.

F-78

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010

(continued)


CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	$	(5,627	)

Net cash used in investing activities		(5,627	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions to Milbank Partnerships		3,375,000
Redemptions from Milbank Partnerships		(96,361,076	)

Net cash used in financing activities		(92,986,076	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		36,398
Cash and Cash Equivalents at December 31, 2009		126,858

Cash and Cash Equivalents at December 31, 2010	$	163,256


Supplemental cash flow information:
Cash paid during the period for taxes	$	32,438

The accompanying notes are an integral part of these consolidated financial statements.

F-79

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1. ORGANIZATION

Milbank is the General Partner (the “General Partner”) of three investment partnerships, MW Global Partners, L.P., MW Small Cap, L.P. and MW Special Situations, L.P. (the “Partnerships”) which are consolidated in these financial statements (collectively the “Company”).

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-80

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Investments in securities, option contracts, and securities sold short which are traded on a national securities exchange or listed on. NASDAQ are valued at the last reported sales price on the last business day of the year. Investments in securities and securities sold short which are traded in the over-the-counter market are valued at the last reported bid and ask prices, respectively.

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

The Funds may carry investments for which market quotations are not readily available and are valued at their fair value as determined in good faith by their respective general partners or administrators. A change in the estimated value may occur in the near term.

Certain Funds invest in emerging markets. The risks of investments are often increased in developing countries. These risks include repatriation restrictions, foreign exchange fluctuations, low trading volume in securities markets of emerging countries, lack of uniform reporting standards, and political, economic and legal uncertainties.

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

F-81

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

The value of securities and cash equivalents which are denominated in foreign currencies are stated using the exchange rate in effect on the last business day of the year. Purchases and sales of securities, interest and dividend income and expenses, which are denominated in foreign currencies, are recorded at the exchange rate as of date of the transactions. For financial statement purposes, the Company does not isolate that portion of the gain or loss on securities resulting from exchange rate fluctuation. Such changes are combined with changes in market prices and shown as realized or unrealized gain or loss.

F-82

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments

In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. We do not anticipate that the adoption of ASU 2010-06 will have a material impact on the Company’s financial statements.

NOTE 3. FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818
From consolidated affiliated Partnerships:
Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669

Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

F-83

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 3. FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments
Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)

Ending balance, December 31, 2010	$	8,568,283

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210


Liabilities	Securities Sold Short
Beginning balance, December 31, 2009	$	(71,500	)
Total gains or (losses), realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250

Ending balance, December 31, 2010	$	(312,096	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

NOTE 4 INVESTMENTS IN FUNDS

As of December 31, 2010, the Partnerships invested in other Funds, none of which were related parties. The investment objectives of the Funds primarily relate to the maximization of appreciation through the investments in equity, debt and related instruments. The Funds utilize one of the following strategies:

a	Long Only Strategy - This category includes Funds that invest in long positions only, primarily in common stocks. Management of the Funds has the ability to shift the investments from value to growth strategies and from small to large capitalization stocks.

F-84

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 4. INVESTMENTS IN FUNDS (continued)

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

The Partnerships, through their investment in other Funds, is subject to certain inherent risks arising from their investing activities of short selling and entering into forward contracts. The ultimate cost to acquire these securities or settle these contracts may exceed the liability reflecting in their financial statements.

NOTE 5. LEASE COMMITMENT


2011	$	149,400
2012		49,800

	$	199,200

Total rent expense for the year ended December 31, 2010 was $167,506.

F-85

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 6. PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2010 were $13,350.

NOTE 7. PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2010 are as follows:


Insurance	$	86,685
Rent		12,450
Other		6,763

	$	105,898

NOTE 8. RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2010, Milbank earned $3,829,228 in advisory fees and $505,200 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9. INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2010 has been determined as follows:


Current taxes
Federal	$	(11,820	)
State and local		53,298

		41,478
Deferred taxes
Federal		34,905

	$	76,383

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-86

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 10. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Asset at cost:
Furniture and equipment	$	220,543
Leasehold improvement		90,698
Total cost
		311,241
Less accumulated depreciation		(284,168	)

Net fixed assets	$	27,073

Depreciation expense for the year ended December 31, 2010 was $6,751.

NOTE 11. SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2010, 3,922 shares were issued and outstanding.

Also under the Certificate, 7,000 shares of Class B Common Stock, having a par value of $0.05 per share, were authorized. Class B Common Stock is non-voting stock. At December 31, 2010, 2,496 shares were issued and outstanding.

NOTE 12. SUBSEQUENT EVENTS

Subsequent events have been evaluated through September 2, 2011, which is the date the financial statements were available to be issued. The Company is engaged in negotiations to merge with an outside entity.

F-87

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

Milbank Winthrop & Co., Inc.:

We have audited the accompanying consolidated statement of financial condition of Milbank Winthrop & Co., Inc. (the “Company”), as of December 31, 2009, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Milbank Winthrop & Co., Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

August 30, 2011

F-88

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2009


ASSETS
Cash and cash equivalents			$	126,858
Investments in securities and partnerships				24,660
Accounts receivable				18,173
Prepaid taxes				43,955
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $277,417)				28,197
Security deposit				15,017
Prepaid expenses and other				107,566
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	17,592,722
Investments in securities		112,117,035
Investments in Funds		183,960,896
Redemptions receivable from investments in Funds		84,142,238
Accrued income		253,647
Prepaid expenses and other		116,957		398,183,495

TOTAL ASSETS			$	398,547,921

LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued expenses			$	39,481
Deferred taxes				56,217
Consolidated Milbank Partnerships:
Contributions received in advance	$	25,000
Accrued expenses		1,511,832
Redemptions payable		92,803,029
Securities sold short		3,343,667		97,683,538

Total Liabilities				97,779,226

Commitments and Contingencies (see Note 5)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				800,541

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,255,701

Minority interests in Consolidated Milbank Partnerships				299,512,994

Total Stockholders’ Equity				300,768,695

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	398,547,921

The accompanying notes are an integral part of these consolidated financial statements.

F-89

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2009


REVENUES:
Investment advisory fees			$	1,732,854
Other income				5,074
Consolidated Milbank Partnerships:
Dividends	$	1,837,732
Interest		1,134,922		2,972,654

Total revenues				4,710,582

EXPENSES:
Compensation and benefits				5,293,535
Rent				164,251
Insurance				140,120
Office and administrative				134,206
Professional fees				109,482
Depreciation				2,097
Other				156,041
Consolidated Milbank Partnerships:
Management and advisory fees		1,582,597
Office and administrative		1,226,115
Professional fees		396,815
Interest and dividends		295,978		3,501,505

Total expenses				9,501,237

LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,790,655	)
Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		2,239,337
Unrealized gain on investments in securities, net change		36,511,370
Realized gain on investments in Funds, net		1,861,609
Unrealized gain on investments in Funds, net change		56,060,996		96,673,312

INCOME BEFORE INCOME TAX EXPENSE				91,882,657
Income tax expense				138,669

NET INCOME				91,743,988

Minority Interests in Consolidated Milbank Partnerships				(91,653,265	)

NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	90,723

The accompanying notes are an integral part of these consolidated financial statements.

F-90

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2009


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2008		3,922	$	196		2,496	$	125	$	454,839	$	709,818	$	299,398,031		$	300,563,009
Contributions		—		—		—		—		—		—		2,150,000			2,150,000
Redemptions		—		—		—		—		—		—		(93,688,302	)		(93,688,302	)
Net Income		—		—		—		—		—		90,723		91,653,265			91,743,988

Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695

The accompanying notes are an integral part of these consolidated financial statements.

F-91

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	90,723
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	91,653,265
Depreciation		2,097
Deferred taxes		56,217
Purchases of securities and partnerships		(28,808	)
Sales of securities and partnerships		103
Unrealized gain on investments in securities and partnerships, net change		(4,514	)
Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(2,239,337	)
Unrealized gain on investments in securities, net change		(36,511,370	)
Realized gain on investments in funds, net		(1,861,609	)
Unrealized gain on investments in funds, net change		(56,060,996	)
Purchases of investments in securities		(122,598,527	)
Purchases of investments in funds		(10,000,000	)
Sales of investments in securities		150,623,210
Sales of investments in funds		84,466,655
(Increase) decrease in operating assets:
Accounts receivable		16,348
Prepaid taxes		(43,955	)
Security deposit		(203	)
Prepaid expenses and other		(2,488	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		(7,342,804	)
Redemption receivable from investments in funds		(52,342,738	)
Prepaid investments		7,000,000
Accounts receivable		159,750
Accrued income		215,963
Prepaid expenses and other		10,596
Increase (decrease) in operating liabilities:
Accrued expenses		16,792
Consolidated Milbank Partnerships:
Accrued expenses		805,938

Total Adjustments					45,989,585

Net cash provided by Operating Activities				$	46,080,308

The accompanying notes are an integral part of these consolidated financial statements.

F-92

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009

(continued)


CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions to Milbank Partnerships	$	2,175,000
Redemption from Milbank Partnerships		(48,233,273	)

Net cash used in financing activities		(46,058,273	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		22,035
Cash and Cash Equivalents at December 31, 2008		104,823

Cash and Cash Equivalents at December 31, 2009	$	126,858

Supplemental cash flow information:
Cash paid during the period for taxes	$	88,729

The accompanying notes are an integral part of these consolidated financial statements.

F-93

MILBANK WINTHROP & CO., INC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 1. ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-94

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-95

MILBANK WINTHROP & CO., INC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

F-96

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation Number (“FIN”) 48 which is part of ASC 740, Income Taxes. ASC 740 clarifies the accounting for income taxes recognized in financial statements. This interpretation prescribes a comprehensive model for how an entity should recognize, measure, present and disclose in its financial statements uncertain tax positions that the entity has taken or expects to take on a tax return. In February 2008, the FASB issued Staff Position FIN 48-2, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises, deferring the effective date for certain nonpublic enterprises, including the Company, to annual financial statements beginning after December 15, 2007. In January 2009, the FASB issued Staff Position FIN 48-3, Effective Date of FASB Interpretation No. 48 for Certain Nonpublic Enterprises, to provide another one-year delay of the effective date for certain nonpublic entities including the Company. Eligible entities that elect the deferral will be required to apply the uncertain tax position guidance of ASC 740 to annual financial statements for fiscal years beginning after December 15, 2008. Effective January 1, 2009, the Company adopted the application of uncertain tax positions which did not have a material effect on its consolidated financial statements.

In May 2007, the FASB issued FASB Staff Position FIN 46(R)-7, Application of FIN 46(R) to Investment Companies (incorporated into ASC 810) (“ASC 810 Interpretation”) which amends ASC 810 to make permanent the temporary deferral of the application of ASC 810 to entities within the scope of the revised audit guide under Statement of Position (“SOP”) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies (formerly SOP 07-1 and now incorporated into ASC 946-10 Financial Services – Investment Companies) (“ASC 946-10”). ASC 810 Interpretation is effective upon adoption of ASC 946-10. In February 2008, the FASB indefinitely deferred the effective date of ASC 946-10. The Company does not expect the adoption of ASC 810 Interpretation to have a material impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations, now ASC 805 (“ASC 805”). ASC 805 requires the acquiring entity in a business combination to recognize the full fair value of assets, liabilities, contractual contingencies and contingent consideration obtained in the transaction (whether for a full or partial acquisition); establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. ASC 805 applies to all transactions or other events in which the Company obtains control of one or more businesses, including those sometimes referred to as “true mergers” or “mergers of equals” and combinations achieved without the transfer of consideration, for example, by contract alone or through the lapse of minority veto rights. ASC 805 applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009. The adoption of ASC 805 did not have an impact on the Company’s consolidated financial statements.

In December 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin No. 51, now incorporated into ASC 810. This pronouncement requires reporting entities to present non-controlling (minority) interests as equity (as opposed to as a liability or mezzanine equity) and provides guidance on the accounting for transactions between an entity and noncontrolling interests. This pronouncement applies prospectively as of January 1, 2009, except for the presentation and disclosure requirements which will

F-97

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

be applied retrospectively for all periods presented. The adoption of this pronouncement did not have an impact on the Company’s consolidated financial statements.

In April 2008, the FASB issued Staff Position Financial Accounting Standards (“FAS”) 142-3, Determination of the Useful Life of Intangible Assets (incorporated into ASC 350) (“ASC 350 Interpretation”). ASC 350 Interpretation amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under ASC 350, Goodwill and Other Intangible Assets. ASC 350 Interpretation affects entities with recognized intangible assets and is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The new guidance applies prospectively to (1) intangible assets that are acquired individually or with a group of other assets and (2) both intangible assets acquired in business combinations and asset acquisitions. The adoption of ASC 350 Interpretation by the Company did not have an impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R), which changes the approach to determining the primary beneficiary of a Variable Interest Entity (“VIE”) and requires companies to more frequently assess whether they must consolidate VIEs. This pronouncement is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. In November 2009, the FASB agreed to defer the effective date of this pronouncement for certain types of asset manager funds until the completion of its consolidation project. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

In July 2009, the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (the “Codification”) were issued. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification combines the previous GAAP hierarchy which included four levels of authoritative accounting literature distributed among a number of different sources. The Codification does not by itself create new accounting standards but instead reorganizes existing GAAP accounting rules into approximately 90 accounting topics. All existing accounting standard documents are superseded by the Codification and all other accounting literature not included in the Codification is now considered nonauthoritative. The Codification is now the single source of authoritative nongovernmental accounting standards in the United States of America.

In 2009, FASB amended ASC 855, Subsequent Events (“ASC 855”). ASC 855 establishes the period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity shall recognize events or transactions occurring after the balance sheet date in its financial statements and the disclosures that an entity shall make about events or transactions that occurred after the balance sheet date. We have evaluated events that have occurred subsequent to December 31, 2009 as prescribed by the FASB.

F-98

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

NOTE 3. FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2009:


Assets	Level 1		Level 2		Level 3		Total
Investments in securities and partnerships	$	2,487	$	—	$	22,173	$	24,660
From Consolidated affiliated Partnerships:
Investments in securities		99,416,010		10,239,480		2,461,545		112,117,035
Investments in Funds		—		18,051,193		165,909,703		183,960,896

Total	$	99,418,497	$	28,290,673	$	168,393,421	$	296,102,591

Liabilities
Securities sold short	$	1,844,370	$	1,427,797	$	71,500	$	3,343,667

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2009:


Assets	Investments
Beginning balance, December 31, 2008	$	203,148,415
Total gains or (losses), realized and unrealized		51,669,953
Purchases and sales, net		(70,575,571	)
Transferred in/out of Level 3		(15,849,376	)

Ending balance, December 31, 2009	$	168,393,421

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2009	$	52,044,937

F-99

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 3. FAIR VALUE MEASUREMENTS (continued)


Liabilities	Securities Sold Short
Beginning balance, December 31, 2008	$	(179,100	)
Total gains or (losses), realized and unrealized		52,368
Purchases and sales, net		55,232

Ending balance, December 31, 2009	$	(71,500	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2009	$	7,300

NOTE 4. INVESTMENTS IN FUNDS

As of December 31, 2009, the Partnerships invested in other Funds, none of which were related parties. The investment objectives of the Funds primarily relate to the maximization of appreciation through the investments in equity, debt and related instruments. The Funds utilize one of the following strategies:

Long Only Strategy - This category includes Funds that invest in long positions only, primarily in common stocks. Management of the Funds has the ability to shift the investments from value to growth strategies and from small to large capitalization stocks.

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-100

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 4. INVESTMENTS IN FUNDS (continued)

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

NOTE 5. LEASE COMMITMENT


2010	$	149,400
2011		149,400
2012		49,800

	$	348,600

Total rent expense for the year ended December 31, 2009 was $164,251.

NOTE 6. PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2009 were $15,150.

F-101

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 7. PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2009 are as follows:


Insurance	$	84,116
Rent		12,450
Other		11,000

	$	107,566

NOTE 8. RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2009, Milbank earned $3,807,621 in advisory fees and $474,750 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9. INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2009 has been determined as follows:


Current taxes
Federal	$	14,347
State and local		68,100

		82,447
Deferred taxes
Federal		56,222

	$	138,669

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

NOTE 10. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Assets at cost:
Furniture and equipment	$	214,916
Leasehold improvement		90,698

Total cost		305,614
Less accumulated depreciation		(277,417	)

Net fixed assets	$	28,197

Depreciation expense for the year ended December 31, 2009 was $2,097.

F-102

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 11. SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2009, 3,922 shares were issued and outstanding.

NOTE 12. SUBSEQUENT EVENTS

Subsequent events have been evaluated through August 30, 2011, which is the date the financial statements were available to be issued. The Company is engaged in negotiations to merge with an outside entity.

F-103

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

We have audited the accompanying consolidated statement of financial condition of MW Commodity Advisors, LLC (the “Company”), as of December 31, 2011, and the related consolidated statements of operations, changes in member’s equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MW Commodity Advisors, LLC as of December 31, 2011, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

March 15, 2012

F-104

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2011


ASSETS
Cash and cash equivalents			$	2,919
Accounts receivable				4,000
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	141,356
Investments in Funds		29,919,624
Other assets		488		30,061,468

TOTAL ASSETS			$	30,068,387


LIABILITIES AND MEMBER’S EQUITY
Liabilities:
Professional fees payable			$	4,915
MW Commodity Strategies, L.P.:
Redemptions payable		194,946
Professional fees payable		27,325
Other liabilities		20,614		242,885

Total Liabilities				247,800

Member’s Equity:
Member’s Equity				71,811
Minority interests in MW Commodity Strategies, L.P.				29,748,776

Total Member’s Equity				29,820,587

TOTAL LIABILITIES AND MEMBER’S EQUITY			$	30,068,387

The accompanying notes are an integral part of these consolidated financial statements.

F-105

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011


REVENUES:
MW Commodity Strategies, L.P.:				$	203

Interest
					203

Total revenues
EXPENSES:
Account fees					27,164
Other					9,703
MW Commodity Strategies, L.P.:
Professional fees	$	41,138
Other		17,031			58,169

Total expenses					95,036

LOSS BEFORE NET GAINS (LOSS) FROM
MW COMMODITY STRATEGIES, L.P.					(94,833	)
Net loss from MW Commodity Strategies, L.P.:
Realized loss on investments in Funds, net		(288,915	)
Unrealized loss on investments in Funds, net change		(2,287,676	)		(2,576,591	)

NET LOSS					(2,671,424	)

Minority Interests in MW Commodity Strategies, L.P.					2,793,270

NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC				$	121,846

The accompanying notes are an integral part of these consolidated financial statements.

F-106

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2011


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total
Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726
Contributions-		—			5,650,000			5,650,000
Withdrawals		(220,000	)		(758,715	)		(978,715	)
Net Income (Loss)		121,846			(2,793,270	)		(2,671,424	)

Member’s Equity - December 31, 2011	$	71,811		$	29,748,776		$	29,820,587

The accompanying notes are an integral part of these consolidated financial statements.

F-107

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	121,846
Adjustments to reconcile net income to net cash used in operating activities:
MW Commodity Strategies, L.P.:
Net loss	$	(2,793,270	)
Realized loss on investments in Funds, net		288,915
Unrealized loss on investments in Funds, net change		2,287,676
Purchase of investments in Funds		(8,500,000	)
Proceeds from investments in Funds		4,273,076
(Increase) decrease in operating assets:
Accounts receivable		(4,000	)
MW Commodity Strategies, L.P.:
Cash and cash equivalents		909,153
Redemptions receivable from investments in Funds		100,000
Other assets		6,893
Increase (decrease) in operating liabilities:
Professional fees payable		4,915
MW Commodity Strategies, L.P.:
Professional fees payable		(46,575	)
Other liabilities		7,857

Total adjustments					(3,465,360	)

Net Cash Used in Operating Activities					(3,343,514	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(220,000	)
MW Commodity Strategies, L.P.:
Contributions		5,650,000
Withdrawals		(2,155,810	)

Net Cash Provided by Financing Activities					3,274,190

NET CHANGE IN CASH AND CASH EQUIVALENTS					(69,324	)
Cash and Cash Equivalents at December 31, 2010					72,243

Cash and Cash Equivalents at December 31, 2011				$	2,919

The accompanying notes are an integral part of these consolidated financial statements.

F-108

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

NOTE 1. ORGANIZATION

MW Commodity Advisors, LLC (“Advisors”), a single member limited liability company formed in Delaware on June 17, 2005, conducts an investment advisory business in New York City and is an affiliate of Milbank Winthrop & Co., an investment advisor registered under the Investment Advisers Act of 1940, as amended.

Advisors is the general partner (the “General Partner”) of MW Commodity Strategies, L.P., an investment partnership (the “Partnership”) which is consolidated in these financial statements (collectively, the “Company”).

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

The Company follows the accrual method of accounting. Income is recorded when earned, and expenses are recorded when incurred in the period to which they pertain. Purchases and sales of securities are recorded on the trade date basis. Purchases and sales of Funds are recorded on the effective date as specified in the Funds’ investment agreements.

Use of Estimates

The presentation of financial statements in conformity with GAAP may require 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

Basis of Consolidation

Advisors consolidates the Partnership in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Advisors holds non-substantive equity-at-risk in the Partnership, Advisors’ related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnership or have substantive kick out rights or participating rights that would overcome the presumption of control by Advisors. Accordingly, Advisors consolidates the assets, liabilities and operating results of the Partnership and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

F-109

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-110

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

•

Securities held and sold short listed on a national securities exchange are valued at the last sale price on the date of valuation, or if no sale occurred on such date, at the last bid or ask price thereon or at an appropriate discount from such price if such securities are restricted.

•

Non-marketable securities are carried at estimated fair value as determined by the management of the Funds. Trade debt, bank debt, and warrants for which market quotations are not readily available are generally valued by the management of the Funds at fair value after consideration of a variety of factors including quotations available from dealers who make a market in these financial instruments and model produced valuations. Private equity investments are carried at fair value, which may be estimated using methods such as comparable companies’ earnings multiples, cash flow analyses, and review of underlying financial conditions. Loan participations are interests in short-term loans valued at fair value, which generally approximates cost plus accrued interest.

•

Options for the purchase or sale of securities traded on an exchange are valued at the mean of the last report bid and ask prices. Forward contracts are valued by adjusting the spot market price of the underlying security for the cost of carrying from the trade date to the settlement date.

•

All other securities are valued initially at cost, with subsequent adjustment to value which reflect either the basis of meaningful third party transactions in the private market or the fair value deemed appropriate by the general partner of each of the Funds. In such instances, consideration is also given to the financial condition and operating results of the issuer, the amount that Funds can reasonably expect to realize upon the sale of the securities and any other factors deemed relevant.

The Fund’s general partners’ estimates and assumptions of fair value of the non-marketable securities may differ significantly from the values that would have been used had a ready market existed, and the differences could be material.

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

Income Taxes

Advisors and the Partnership themselves are not subject to U.S. Federal income taxes. Each member/partner is individually liable for income taxes, if any, on its share of the entity’s net taxable income. Interest, dividends and other income realized by the Partnership from non-U.S. sources and capital gains realized on the sale of securities of non-U.S. issuers may be subject to withholding and other taxes levied by the jurisdiction in which the income is sourced.

The General Partner determined that there are no uncertain tax positions which would require adjustments or disclosures on the financial statements. The tax years that remain subject to examination by taxing authorities are 2008, 2009 and 2010.

F-111

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 167, Amendments to FASB Interpretation No. 46(R), which changes the approach to determining the primary beneficiary of a Variable Interest Entity (“VIE”) and requires companies to more frequently assess whether they must consolidate VIEs. This pronouncement is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. In November 2009, the FASB agreed to defer the effective date of this pronouncement for certain types of asset manager funds until the completion of its consolidation project. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

In January 2010, the FASB issued. Accounting Standards Update 201006, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. The Company does not anticipate that the adoption of ASU 2010-06 will have a material impact on its consolidated financial statements.

In May 2011, the FASB issued amended guidance on fair value measurements to achieve common fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards. The amended guidance specifies that the concepts of highest and best use and valuation premise in a fair value measurement are relevant only when measuring the fair value of nonfinancial assets and are not relevant when measuring the fair value of financial assets or liabilities. The amendments include requirements specific to measuring the fair value of those instruments, such as equity interests used as consideration in a business combination. An entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds the instrument as an asset. With respect to financial instruments that are managed as part of a portfolio, an exception to fair value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) are not permitted in a fair value measurement. The guidance also requires enhanced disclosures about fair value measurements, including, among other things, (a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity, and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial condition but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial condition but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now

F-112

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

requires disclosure of all transfers between Levels I and II in the fair value hierarchy. The amended guidance is effective for interim and annual periods beginning after December 15, 2011. As the impact of the guidance is primarily limited to enhanced disclosures, adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued a deferral of the effective date for certain disclosures relating to the comprehensive income, specifically with respect to the presentation of reclassifications of items out of accumulated other comprehensive income. The deferral is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. As the amendments are limited to presentation only, adoption is not expected to have a material impact on the Company’s financial statements.

NOTE 3. INVESTMENTS IN FUNDS

As of December 31, 2011, the Company was invested in 13 Funds, none of which are related parties. The Funds employ, to varying degrees, directional, volatility and relative value based strategies for investments in the commodity and macro markets. See detailed descriptions of the Fund strategies below.

The partnership agreements of the Funds provide for compensation to the investment managers in the form of management fees ranging from 0% to 2% annually of net assets and an incentive allocation not exceeding 30% of net new profits earned.


Fund and (Strategy)	Fair Value at December 31, 2011		Capital Liquidity
Covepoint Emerging Markets Macro Fund, L.P. CI. A. (d)	$	2,258,119		Quarterly
Covepoint Emerging Markets Macro Fund, L.P. CI. B. (d)		448,619		Quarterly
Dynamic Domestic Fund L.P. (d)		2,898,050		Monthly
Goldfinch Capital Management, L.P. (b)		1,939,801		Monthly
Hard Assets Partners 2X L.P. (d)		2,112,717		Quarterly
Peak Partners, L.P. (d)		1,922,912		Monthly
Tiverton Investments, LLC (d)		4,432,502		Monthly
Vardana Partners, LP (d)		2,728,342		Quarterly
Wexford Catalyst Fund, L.P. (d)		3,180,816		Quarterly
Bocage Global Resource Fund, L.P. (b)		4,257,486		Monthly
Taylor Woods (b)		3,250,111		Quarterly
Other Funds (a), (c)		490,149

Total Investments in Funds	$	29,919,624

F-113

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 3. INVESTMENTS IN FUNDS (continued)

As of December 31, 2011, the investments in Funds had no remaining significant lockups and all Funds qualified as Level 2 investments. The Partnership values Level 2 investments based on its proportionate share of the net asset value of the Funds. Gains and losses (realized and unrealized), if any, are included in the net realized gain (loss) on investments in Funds and net change in unrealized gain (loss) on investments in Funds in the statement of operations. Transfers between levels are recognized at the end of the reporting period.

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

This category includes investments in Funds that invest both long and short primarily in U.S. common stocks. Portfolio managers have the ability to shift investments from value to growth strategies, from small to large capitalization stocks, and from a net long position to a net short position. The fair values of the investments in this category have been estimated using the net asset value per share of the investments which are provided by the Fund’s associated administrators.

b) Futures and Derivatives Funds:

This category includes investments in Funds that invest primarily in commodity futures and derivatives. The Portfolio manager’s investment strategy may use fundamental analysis, technical analysis or a combination of the two. Investment decisions target both short and long term price movement in the commodity and associated markets. In certain instances, managers may use relative value based strategies, weighing different time horizons or commodities against each other. The fair values of the investments in this category have been estimated using the net asset value per share of the investments which are provided by the Fund’s associated administrators.

c) Macro Funds:

The category is similar to Futures and Derivatives Funds above but with a focus on using macro-based strategies, which may include commodity futures and derivatives, currencies (including “commodity” currencies), fixed income instruments and securities. The economics of the commodity markets may influence the portfolio manager’s decisions in this category. The fair value of the investments in this category have been estimated using the net asset value per share of the investments which are provided by the Fund’s associated administrators.

d) Multi-Strategy Funds:

This category includes investments in Funds which utilize a combination of the preceding Equity Long/Short, Futures and Derivatives and Macro Funds approaches. Portfolio managers will determine allocations to such strategies based on their expectations of return and risk. The fair values of the investments in this category have been estimated using the net asset value per share of the investments which are provided by the Fund’s associated administrators.

F-114

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 4. OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

In the normal course of business, the Funds in which the Partnership invests trade various financial instruments and enter into various investment activities with off-balance sheet risk. These include, but are not limited to, short selling activities, writing option contracts, and equity swaps. To the extent that the Partnership’s investment activity is limited to making investments in Funds via limited partnership interests or limited liability company holdings, the Partnership’s risk of loss in these Funds is generally limited to the value of these investments reported by the Partnership. To date, the Partnership has only invested in such limited partnership interests and limited liability company holdings.

There are a number of other risks to the Partnership. Three principal types of risk that can adversely affect the Partnership’s investment approach are market risk, strategy risk, and manager risk. The Partnership is also subject to multiple manager risks, possible limitations in investment opportunities, allocation risks, illiquidity, lack of diversification, and other risks for the Partnership and potentially for each Fund.

NOTE 5. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The general indemnifications apply not only to the extent such representations and warranties are untrue but also may cover third parties such as the Partnership’s Administrator for claims related to the services performed for the Partnership. The Company’s maximum exposure under any such arrangements are unknown, as exposure only arises to the extent further claims that have not yet occurred are made against the Company.

NOTE 6. RELATED PARTY TRANSACTIONS

Advisors earned $158,015 in management fees from the Partnership during 2011. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 7. SUBSEQUENT EVENTS

Subsequent events have been evaluated through March 15, 2012, which is the date the consolidated financial statements were available to be issued. In January, 2012, Advisors signed an agreement to sell its assets to Silvercrest Asset Management Group LLC on March 31, 2012.

F-115

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

We have audited the accompanying consolidated statement of financial condition of MW Commodity Advisors, LLC (the “Company”), as of December 31, 2010, and the related consolidated statements of income, changes in member’s equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MW Commodity Advisors, LLC as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

October 28, 2011

F-116

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2010


ASSETS
Cash and cash equivalents			$	72,243
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	1,050,509
Investments in Funds		28,269,291
Redemptions receivable		100,000
Other assets		7,381		29,427,181

TOTAL ASSETS			$	29,499,424

LIABILITIES AND MEMBER’S EQUITY
Liabilities:
MW Commodity Strategies, L.P.:
Redemptions payable	$	1,592,041
Professional fees payable		73,900
Other liabilities		12,757

Total Liabilities			$	1,678,698

Member’s Equity:
Member’s Equity				169,965

Minority interests in MW Commodity Strategies, L.P.				27,650,761

Total Member’s Equity				27,820,726

TOTAL LIABILITIES AND MEMBER’S EQUITY			$	29,499,424

The accompanying notes are an integral part of these consolidated financial statements.

F-117

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:
MW Commodity Strategies, L.P.:
Interest			$	679

Total revenues				679

EXPENSES:
Account fees				26,384
Liability fees				18,648
Filing fees				783
Other				2,211
MW Commodity Strategies, L.P.:
Professional fees	$	86,482
Other		14,510		100,992

Total expenses				149,018

LOSS BEFORE NET GAINS FROM MW COMMODITY STRATEGIES, L.P.				(148,339	)
Net gains from investment activities of MW Commodity Strategies, L.P.:
Realized gain on investments in Funds, net		84,434
Unrealized gain on investments in Funds, net change		1,125,925		1,210,359

NET INCOME			$	1,062,020

Minority Interests in MW Commodity Strategies, L.P.				(939,734	)

NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC			$	122,286

The accompanying notes are an integral part of these consolidated financial statements.

F-118

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total
Member’s Equity - December 31, 2009	$	167,590		$	26,957,046		$	27,124,636
Contributions		—			4,708,688			4,708,688
Withdrawals		(119,911	)		(4,954,707	)		(5,074,618	)
Net Income		122,286			939,734			1,062,020

Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726

The accompanying notes are an integral part of these consolidated financial statements.

F-119

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	122,286
Adjustments to reconcile net income to net cash provided by operating activities:
MW Commodity Strategies, L.P.:
Net income	$	939,734
Proceeds from investments		69,911
Realized gain on investments in Funds, net		(84,434	)
Unrealized gain on investments in Funds, net change		(1,125,925	)
Purchase of investments in Funds		(4,000,000	)
Proceeds from investments in Funds		2,018,051
(Increase) decrease in operating assets:
Accounts receivable		8,669
MW Commodity Strategies, L.P.:
Cash and cash equivalents		9,101,694
Redemptions receivable from investments in Funds		1,235,938
Other assets		6,887
Increase (decrease) in operating liabilities:
MW Commodity Strategies, L.P.:
Professional fees payable		(92,106	)
Other liabilities		5,435

Total adjustments					8,083,854

Net Cash Flows Provided by Operating Activities					8,206,140

CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(119,911	)
MW Commodity Strategies, L.P.:
Contributions		2,408,688
Withdrawals		(10,464,144	)

Net Cash Used in Financing Activities					(8,175,367	)

NET CHANGE IN CASH AND CASH EQUIVALENTS					30,773
Cash and Cash Equivalents at December 31, 2009					41,470

Cash and Cash Equivalents at December 31, 2010				$	72,243

The accompanying notes are an integral part of these consolidated financial statements.

F-120

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1. ORGANIZATION

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Use of Estimates

Cash and Cash Equivalents

Basis of Consolidation

F-121

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

•

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•

The Fund’s general partners’ estimate and assumption of fair value of the non-marketable securities may differ significantly from the values that would have been used had a ready market existed, and the differences could be material.

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

Income Taxes

Accounting Developments

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basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. We do not anticipate that the adoption of ASU 2010-06 will have a material impact on the Company’s financial statements.

NOTE 3. INVESTMENTS IN FUNDS

As of December 31, 2010, the Partnership was invested in 12 Funds, none of which are related parties. The Funds employ to varying degrees directional, volatility and relative value based strategies for investment in the commodity and macro markets. See detailed descriptions of the Fund strategies below.


Fund and (Strategy)	Fair Value at December 31, 2010		Liquidity Capital
Covepoint Emerging Markets Macro Fund, L.P. (d)	$	4,005,911		Quarterly
Dynamic Domestic Fund L.P. (d)		2,711,778		Monthly
Goldfinch Capital Management, L.P. (b)		1,611,218		Monthly
Hard Assets Partners 2X L.P. (d)		2,440,332		Quarterly
Peak Partners, L.P. (d)		2,941,146		Monthly
Quantitative Global 1X Fund LLC (b)		2,795,278		Monthly
Tiverton Investments, LLC (d)		4,606,234		Monthly
Vardana Partners, LP (d)		1,731,625		Quarterly
Wexford Catalyst Fund, L.P. (d)		3,442,623		Quarterly
Other Investments (a),(c)		1,983,146

	$	28,269,291

As of December 31, 2010, the investments in the Funds had no remaining significant lockups.

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

b) Futures and Derivatives Funds:

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c) Macro Funds:

d) Multi-Strategy Funds:

NOTE 4. FAIR VALUE MEASUREMENTS

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


	Investments in Funds
Beginning balance, December 31, 2009	$	25,076,983
Total gains or losses (realized and unrealized)		1,210,359
Purchases and sales, net		1,981,949
Transfer in (out) of Level 3		(28,269,291	)

Ending balance, December 31, 2010	$	—

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	—

Gains and losses (realized and unrealized), if any, are included in the net realized gain on investments in Funds and net change in unrealized gain on investments in Funds in the statement of income.

The Partnership values Level 2 investments based on its proportionate share of the net asset value of the Funds. At December 31, 2010, all investments were valued using Level 2 inputs. Transfers between levels are recognized at the end of the reporting period.

NOTE 5. OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

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NOTE 6. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The general indemnifications apply not only to the extent such representations and warranties are untrue but also may cover third parties such as the Partnership’s Administrator for claims related to the services performed for the Partnership. The Company’s maximum exposure under any such arrangements is unknown, as exposure only arises to the extent further claims that have not yet occurred are made against the Company.

NOTE 7. RELATED PARTY TRANSACTIONS

Advisors earned $132,685 in management fees from the Partnership during 2010. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 8. SUBSEQUENT EVENTS

Subsequent events have been evaluated through October 28, 2011, which is the date the financial statements were available to be issued. The Company is in negotiations to merge with an outside entity.

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LOGO

Silvercrest Asset Management Group Inc.

Until , all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

The following table sets forth the estimated expenses payable by the registrant in connection with the sale and distribution of the securities registered hereby. All amounts are estimates except for the SEC registration fee, the FINRA filing fee and Nasdaq listing fee.


SEC Registration Fee	$	*
FINRA Filing Fee	$	*
Nasdaq Listing Fee	$	*
Accounting Fees and Expenses	$	*
Legal Fees and Expenses	$	*
Printing Fees and Expenses	$	*
Miscellaneous	$	*
Total:	$	*

*	To be filed by amendment.

Item 14. Indemnification of Directors and Officers.

Our amended and restated certificate of incorporation provides that we, to the full extent permitted by Section 145 of the DGCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. It further provides that expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by us in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by us as authorized thereby.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 15. Recent Sales of Unregistered Securities.

On May 7, 2012, the Registrant issued 10 shares of its common stock, par value $0.01 per share, to Mr. Cochran in exchange for $100. The issuance was exempt from registration under Section 4(2) of the Securities Act, as a transaction by an issuer not involving any public offering.

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Item 16. Exhibits and Financial Statements Schedules.


Exhibit Number			Description of Document

	1.1	*	Form of Underwriting Agreement.

	3.1		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

	3.2		Bylaws of Silvercrest Asset Management Group Inc.

	4.1	*	Specimen stock certificate for shares of Class A common stock.

	4.2	*	2012 Exchange Agreement.

	4.3	*	Resale and Registration Rights Agreement.

	4.4	*	2012 Equity Incentive Plan.

	4.5	*	Stockholders Agreement.

	4.6		Form of Deferred Equity Unit Award Agreement.

	4.7	*	Form of Award Agreement under 2012 Equity Incentive Plan

	5.1	*	Opinion of Bingham McCutchen LLP.

	10.1	*	Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

	10.2	*	Tax Receivable Agreement.

	10.3		Form of Indemnification Agreement with directors.

	21.1		List of Subsidiaries.

	23.1		Consent of Deloitte & Touche LLP.

	23.2		Consent of Deloitte & Touche LLP.

	23.3		Consent of Fulvio & Associates, LLP.

	23.4	*	Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

	23.5	*	Consent of Cerulli Associates.

	24.1		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

Item 17. Undertakings.

(1)

The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each person.

(2)

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel, the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether

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such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

(3)

The undersigned registrant hereby undertakes that:

(a)

For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(b)

For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of New York, state of New York on September 18, 2012.


SILVERCREST ASSET MANAGEMENT GROUP INC.

By:		/s/ G. Moffett Cochran
		G. Moffett Cochran
		Chief Executive Officer

By:		/s/ Scott A. Gerard
		Scott A. Gerard
		Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of G. Moffett Cochran and Scott A. Gerard his true and lawful attorney-in-fact, with full power of substitution, for him and his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such said attorneys-in-fact and agents with full power and authority to do so and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following:


Signature	Title	Date

/s/ G. Moffett Cochran G. Moffett Cochran	(Principal Executive Officer) and Director	September 18, 2012

/s/ Scott A. Gerard Scott A. Gerard	(Principal Financial and Accounting Officer)	September 18, 2012

/s/ Richard R. Hough III Richard R. Hough III	Director	September 18, 2012

/s/ Winthrop B. Conrad, Jr. Winthrop B. Conrad, Jr.	Director	September 18, 2012

/s/ Wilmot H. Kidd III Wilmot H. Kidd III	Director	September 18, 2012

/s/ Richard S. Pechter Richard S. Pechter	Director	September 18, 2012

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Exhibit Number			Description of Document

	1.1	*	Form of Underwriting Agreement.

	3.1		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

	3.2		Bylaws of Silvercrest Asset Management Group Inc.

	4.1	*	Specimen stock certificate for shares of Class A common stock.

	4.2	*	2012 Exchange Agreement.

	4.3	*	Resale and Registration Rights Agreement.

	4.4	*	2012 Equity Incentive Plan.

	4.5	*	Stockholders Agreement.

	4.6		Form of Deferred Equity Unit Award Agreement.

	4.7	*	Form of Award Agreement under 2012 Equity Incentive Plan

	5.1	*	Opinion of Bingham McCutchen LLP.

	10.1	*	Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

	10.2	*	Tax Receivable Agreement.

	10.3		Form of Indemnification Agreement with directors.

	21.1		List of Subsidiaries.

	23.1		Consent of Deloitte & Touche LLP.

	23.2		Consent of Deloitte & Touche LLP.

	23.3		Consent of Fulvio & Associates, LLP.

	23.4	*	Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

	23.5	*	Consent of Cerulli Associates.

	24.1		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

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EX-3.1 2 d411733dex31.htm AMENDED AND RESTATED CERTIFICATE OF INCORPORATION Amended and Restated Certificate of Incorporation

EXHIBIT 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

SILVERCREST ASSET MANAGEMENT GROUP INC.

Silvercrest Asset Management Group Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:

WHEREAS, the Corporation was formed on July 11, 2011 under the name Silvercrest Asset Management Group Inc.;

WHEREAS, this Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL; and

NOW, THEREFORE, the text of the Certificate of Incorporation of the Corporation is hereby restated and amended to read in its entirety as follows:

FIRST: The name of the Corporation is:

Silvercrest Asset Management Group Inc.

SECOND: The address of its registered office in the State of Delaware is located at 615 S. Dupont Highway, Dover, Delaware 19901, County of Kent. The name of its registered agent at such address is Capitol Services, Inc.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is [ ] shares. The total number of shares of all classes of common stock which the Corporation shall have authority to issue is [ ], consisting solely of [ ] shares of Class A Voting Common Stock, par value $0.01 per share (the “Class A Common Stock”); and [ ] shares of Class B Voting Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with Class A Common Stock, “Common Stock”). The total number of shares of all classes of preferred stock which the Corporation shall have authority to issue is [ ] shares (the “Preferred Stock”).

The following is a statement of the designations, powers, privileges and rights, and the qualifications, limitations and restrictions, in respect of each class of capital stock of the Corporation.

1. Dividend and Other Rights of Common Stock.

(a) Dividends. Subject to the provisions of this Amended and Restated Certificate of Incorporation, as it may be amended from time to time, the holders of Class A Common Stock shall be entitled to receive ratably, in proportion to the number of shares held by them, such dividends and other distributions in cash, stock or property of the Corporation when, as and if

declared by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor. Except as otherwise provided in this Amended and Restated Certificate of Incorporation, the holders of Class B Common Stock shall not be entitled to receive any dividends or distributions.

(b) Liquidation; Dissolution. In the event of any liquidation, dissolution or winding up (either voluntarily or involuntarily) of the Corporation, after payments to creditors and to the holders of any Preferred Stock that may at the time be outstanding, the holders of shares of Class B Common Stock shall be entitled to receive an amount per share of Class B Common Stock equal to the par value thereof, following which the holders of shares of Class A Common Stock shall be entitled to receive all remaining assets and funds of the Corporation available for distribution in proportion to the number of shares held by them.

(c) Reclassification. Neither the Class A Common Stock nor the Class B Common Stock may be subdivided, consolidated, reclassified, or otherwise changed unless contemporaneously therewith the other class of Common Stock and the Class A Units (as defined in the Second Amended and Restated Limited Partnership Agreement, dated as of [ ], of Silvercrest L.P. as may be amended from time to time (the “Silvercrest L.P. Agreement”)) and the Class B Units (as defined in the Silvercrest L.P. Agreement) are subdivided, consolidated, reclassified, or otherwise changed in the same proportion and in the same manner.

(d) Exchange and Redemption. The holder of each Class B Unit shall, pursuant to the Silvercrest L.P. Agreement, have the right, under certain circumstances, to exchange such Class B Unit for one fully paid and nonassessable share of Class A Common Stock, on and subject to the terms and conditions set forth hereunder and in the Silvercrest L.P. Agreement.

(1) Any holder of a Class B Unit who wishes to exercise the exchange privilege under the Silvercrest L.P. Agreement shall present and surrender, or cause to be presented and surrendered to Silvercrest L.P., for further surrender and presentation to the Corporation, the certificate or certificates representing the number of shares of Class B Common Stock that corresponds to such Class B Units surrendered for exchange during the Corporation’s normal business hours at any office or agency of the Corporation maintained for the transfer of Class B Common Stock. If so required by the Corporation, any certificate for shares surrendered for redemption and exchange shall be accompanied by instruments of transfer, in a form reasonably satisfactory to the Corporation, duly executed by the holder of such share or shares or his or its duly authorized representative. Each redemption and exchange of shares of Class B Common Stock shall be deemed to have been effected on the date on which the certificate or certificates representing such shares shall have been surrendered and any required instruments of transfer shall have been received as aforesaid.

(2) As promptly as practicable after the presentation and surrender for redemption and cancellation, as herein provided, of any certificate for a share or shares of Class B Common Stock, the Corporation shall redeem such shares in cash (to the extent that the Corporation shall have funds legally available for such payment) at a redemption value equal to the par value of the share or shares surrendered for redemption. In case any certificate for shares of Class B Common Stock shall be surrendered for redemption or cancellation for a part of the share or shares represented thereby, the Corporation shall deliver at such office or agency of the

Corporation maintained for the transfer of Class B Common Stock, to or upon the written order thereof, a certificate or certificates for the number of shares of Class B Common Stock represented by such surrendered certificate that are not being redeemed.

(3) If the Corporation has insufficient funds legally available on the redemption date to redeem a share of Class B Common Stock, the Corporation shall accept any and all shares properly surrendered for redemption and shall hold such shares of Class B Common Stock in trust until the Corporation has sufficient funds legally available for payment of the redemption price for such shares, and the shares of Class B Common Stock so surrendered and so held in trust shall be cancelled only upon payment of the redemption price for such shares of Class B Common Stock. Notwithstanding the foregoing, shares of Class B Common Stock so surrendered and so held in trust shall be deemed to have been redeemed and cancelled for purposes of the Silvercrest L.P. Agreement, and the tendering holder of such shares shall have no voting rights with respect to such shares.

(4) In connection with the exercise of the exchange privilege of a holder of Class B Units pursuant to the Silvercrest L.P. Agreement, the Corporation, upon the request of Silvercrest L.P., shall issue the number of shares of Class A Common Stock equal to the number of Class B Units surrendered by such holder to Silvercrest L.P. for exchange and deliver such shares of Class A Common Stock to Silvercrest L.P., provided that such number of shares of Class A Common Stock delivered shall not exceed the number of Class B Units surrendered to Silvercrest L.P. by such holder.

(5) All shares of Class B Common Stock that shall have been surrendered for redemption and cancellation as herein provided shall be deemed to be retired and may not be reissued, and all rights with respect to such shares, including the rights, if any, to receive notices and to vote, shall thereupon cease and terminate.

(6) Such number of shares of Class A Common Stock as may from time to time be required for exchange of Class B Units pursuant to the Silvercrest L.P. Agreement shall be reserved for issuance upon exchange of outstanding Class B Units.

(e) Transfers.

(1) No holder of shares of Class B Common Stock may transfer shares of Class B Common Stock to any Person unless (i) such holder obtains the consent of the Corporation, in its capacity as the General Partner of Silvercrest L.P., and (ii) such holder transfers an equal number of Class B Units to the same Person. If a holder of shares of Class B Common Stock transfers Class B Units pursuant to the Silvercrest L.P. Agreement, such holder must transfer an equal number of shares of Class B Common Stock to the same Person. The term “Person” means both natural persons and legal entities.

(2) Any purported transfer of shares of Class B Common Stock not permitted hereunder shall be null and void. The Corporation may, as a condition to the transfer or the registration of transfer of shares of Class B Common Stock, require the furnishing of such affidavits or other proof as it deems necessary to establish that such transferee is permitted to hold such shares of Class B Common Stock under the terms hereof.

2. Voting Rights of Common Stock.

(a) Class A Common Stock. Except as otherwise provided by law, the holders of Class A Common Stock shall have full voting rights and powers to vote on all matters submitted to stockholders of the Corporation for vote, consent or approval. Each holder of Class A Common Stock shall be entitled to one (1) vote for each share of Class A Common Stock held of record by such holder.

(b) Class B Common Stock. Except as otherwise provided by law, the holders of Class B Common Stock shall have full voting rights and powers to vote on all matters submitted to stockholders of the Corporation for vote, consent or approval. Each holder of Class B Common Stock shall be entitled to one (1) vote for each share of Class B Common Stock held of record by such holder.

(d) Increases and Decreases in Authorized Shares. The number of authorized shares of each class or series of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of at least a majority of the shares of capital stock of such affected class.

3. Preferred Stock.

(a) Authority to Issue Preferred Stock. Shares of Preferred Stock may be issued from time to time in one or more series, each of such series to have such powers, designations, preferences, and relative, participating, optional, or other special rights, if any, and such qualifications and restrictions, if any, of such preferences and rights, as are stated or expressed in the resolution or resolutions of the Board of Directors providing for such series of Preferred Stock. Different series of Preferred Stock shall not be construed to constitute different classes of shares for the purposes of voting by classes unless expressly so provided in such resolution or resolutions.

(b) Increases and Decreases in Authorized Shares. The Board of Directors may, from time to time, issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions to determine and fix the powers, designations, preferences, and relative, participating, optional, or other special rights, if any, and the qualifications and restrictions, if any, of such preferences and rights, including without limitation dividend rights, conversion rights, voting rights (if any), redemption privileges, and liquidation preferences, of such series of Preferred Stock (which need not be uniform among series), all to the fullest extent now or hereafter permitted by the DGCL. Without limiting the generality of the foregoing, the resolution or resolutions providing for the creation or issuance of any series of Preferred Stock may provide that such series shall be superior to, rank equally with, or be junior to the Preferred Stock of any other series, all to the fullest extent permitted by the DGCL, as amended from time to time. No resolution, vote, or consent of the holders of the capital stock of the Corporation shall be required in connection with the creation or issuance of any shares of any series of Preferred Stock authorized by and complying with the conditions of this Amended and Restated Certificate of Incorporation, the right to any such resolution, vote, or consent being

expressly waived by all present and future holders of the capital stock of the Corporation. Any resolution or resolutions adopted by the Board of Directors pursuant to the authority vested in them by this section shall be set forth in a certificate of designation along with the number of shares of stock of such series as to which the resolution or resolutions shall apply and such certificate shall be executed, acknowledged, filed, recorded, and shall become effective, in accordance with Section 103 of the DGCL. Unless otherwise provided in any such resolution or resolutions, the number of shares of stock of any such series to which such resolution or resolutions apply may be increased (but not above the total number of authorized shares of the class) or decreased (but not below the number of shares thereof then outstanding) by a certificate likewise executed, acknowledged, filed and recorded, setting forth a statement that a specified increase or decrease therein has been authorized and directed by a resolution or resolutions likewise adopted by the Board of Directors. In case the number of such shares shall be decreased, the number of shares so specified in the certificate shall resume the status which they had prior to the first resolution or resolutions pursuant to which such shares were issued. When no shares of any such class or series are outstanding, either because none were issued or because none remain outstanding, a certificate setting forth a resolution or resolutions adopted by the Board of Directors that none of the authorized shares of such class or series are outstanding, and that none will be issued subject to the certificate of designations previously filed with respect to such class or series, may be executed, acknowledged, filed and recorded in the same manner as previously described and it shall have the effect of eliminating from the Amended and Restated Certificate of Incorporation all matters set forth in the certificate of designations with respect to such class or series of stock. If no shares of any such class or series established by a resolution or resolutions adopted by the Board of Directors have been issued, the voting powers, designations, preferences and relative, participating, optional or other rights, if any, with the qualifications, limitations or restrictions thereof, may be amended by a resolution or resolutions adopted by the Board of Directors. In the event of any such amendment, a certificate which (i) states that no shares of such class or series have been issued, (ii) sets forth the copy of the amending resolution or resolutions and (iii) if the designation of such class or series is being changed, indicates the original designation and the new designation, shall be executed, acknowledged, filed, recorded, and shall become effective, in accordance with Section 103 of the DGCL.

4. Provisions of Common Application.

(a) Registration of Transfer. The Corporation will keep at its principal office a register for the registration of all classes of Common Stock and Preferred Stock. Upon the surrender of any certificate representing Common Stock or Preferred Stock at such place, the Corporation will, at the request of the record holder of such certificate, execute and deliver a new certificate or certificates in exchange therefor representing in the aggregate the number of shares of Common Stock or Preferred Stock represented by the surrendered certificate. Each such new certificate will be registered in such name and will represent such number of shares of Common Stock or Preferred Stock as is requested by the holder of the surrendered certificate and will be substantially identical in form to the surrendered certificate. The issuance of new certificates will be made without charge to the holders of the surrendered certificates for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such issuance, unless such issuance is made in connection with a transfer of Common Stock or Preferred Stock, in which case the transferring holder will pay all taxes arising from such transfer.

(b) Replacement. Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder will be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Common Stock or Preferred Stock, and in the case of any such loss, theft or destruction upon receipt of indemnity reasonably satisfactory to the Corporation, or, in the case of any such mutilation upon surrender of such certificate, the Corporation will (at its expense) execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares and class of Common Stock or Preferred Stock represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.

(c) Notices. Except as otherwise expressly provided, all notices referred to herein will be in writing and will be deemed properly delivered if either personally delivered or sent by overnight courier or mailed certified or registered mail, return receipt requested, postage prepaid, to the recipient (i) in the case of any stockholder of the Corporation, at such holder’s address as it appears in the stock records of the Corporation (unless otherwise indicated in a writing delivered to the Corporation by any such holder) and (ii) in the case of the Corporation, at its principal office. Any such notice shall be effective (A) if delivered personally or by facsimile, when received, (B) if sent by overnight courier, when receipted for, and (C) if mailed, five (5) days after being mailed as described above.

(d) Power to Sell and Purchase Shares. Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law; provided, however, that the Corporation shall only be permitted to issue and sell shares of (i) Class A Common Stock to the extent such issuance and sale complies with the Silvercrest L.P. Agreement, and (ii) Class B Common Stock in connection with the issuance by Silvercrest L.P. of Class B Units. In furtherance of the foregoing, each time Silvercrest L.P. shall issue Class B Units, the Corporation shall issue and sell to the holder of such Class B Unit an equal number of shares of Class B Common Stock at a purchase price equal to the par value of such shares, subject only to (i) the payment of the applicable purchase price therefor by the holder thereof, and (ii) such holder’s agreement to be bound by the terms of the Class B Stockholders’ Agreement, dated as of [ ], as may be amended from time to time. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law.

(e) Amendments. No amendment, modification or waiver of any provision of this Article Fourth that adversely affects the rights of the holders of one particular Class (as hereinafter defined) of the Corporation’s capital stock in a manner different from the rights of such holder’s existing Class rights shall be effective against the holders of such adversely affected Class unless approved in writing by the holders of at least a majority of the then outstanding shares of capital stock of such adversely affected Class. As used in this Section 4(e), the term “Class” shall mean any of the Class A Common Stock or the Class B Common Stock, taken individually.

FIFTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation and for defining and regulating the powers of the Corporation and its directors and stockholders and are in furtherance and not in limitation of the powers conferred upon the Corporation by statute:

1. Election of the Board of Directors.

(a) The Board of Directors shall consist of not less than three (3) nor more than eleven (11) directors, the exact number of which shall be fixed from time to time by resolution adopted by the affirmative vote of a majority of the entire Board of Directors.

(b) The election of directors need not be by written ballot.

(c) Subject to the rights of holders of any class or series of Common Stock or Preferred Stock to elect directors, the Board of Directors shall be and is divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The Board of Directors is authorized to assign members of the Board of Directors already in office to Class I, Class II or Class III at the time such classification becomes effective.

(d) Subject to the rights of holders of any class or series of Common Stock or Preferred Stock to elect directors, each director shall serve for a term ending on the date of the third annual meeting of stockholders following the annual meeting of stockholders at which such director was elected; provided that each director initially assigned to Class I shall serve for a term expiring at the Corporation’s first annual meeting of stockholders held after the effectiveness of this Amended and Restated Certificate of Incorporation; each director initially assigned to Class II shall serve for a term expiring at the Corporation’s second annual meeting of stockholders held after the effectiveness of this Amended and Restated Certificate of Incorporation; and each director initially assigned to Class III shall serve for a term expiring at the Corporation’s third annual meeting of stockholders held after the effectiveness of this Amended and Restated Certificate of Incorporation; provided further, that the term of each director shall continue until the election and qualification of his or her successor and be subject to his or her earlier death, resignation or removal.

(e) Except as may otherwise be provided by the DGCL, any director or the whole Board of Directors may be removed only for cause by the vote of the holders of a majority of the shares of the Corporation’s Common Stock and Preferred Stock entitled to vote for the election of directors.

2. Power of the Board of Directors. The Board of Directors shall have the power and authority (i) to adopt, amend or repeal by-laws of the Corporation, subject only to such limitation, if any, as may be from time to time imposed by law or by the by-laws, (ii) to the fullest extent permitted or not prohibited by law, and without the consent of or other action by the stockholders, to authorize or create mortgages, pledges or other liens or encumbrances upon any or all of the assets, real, personal or mixed, and franchises of the Corporation, including

after-acquired property, and to exercise all of the powers of the Corporation in connection therewith and (iii) subject to any provision of the by-laws, to determine whether, to what extent, at what times and places and under what conditions and regulations the accounts, books and papers of the Corporation (other than the stock ledger), or any of them, shall be open to the inspection of the stockholders, and no stockholder shall have any right to inspect any account, book or paper of the Corporation except as conferred by statute or authorized by the by-laws or by the Board of Directors.

3. Action by Stockholders; Stockholder Meeting. Any action required or permitted to be taken by the stockholders of the Corporation may be taken only at a duly called annual or special meeting of the stockholders, and not by written consent in lieu of such meeting, and special meetings of stockholders may only be called (i) pursuant to a resolution adopted by a majority of the Board of Directors, (ii) by a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings or (iii) by the Chairman of the Board of Directors. Stockholders are not permitted to call a special meeting or to require the Board of Directors to call a special meeting.

SIXTH: Unless the Board of Directors consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation, the Corporation’s stockholders or its creditors, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the by-laws or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

SEVENTH: No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages for breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability; provided, however, that to the extent required from time to time by applicable law, this Article Seventh shall not eliminate or limit the liability of a director, to the extent such liability is provided by applicable law, (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to the effective date of such amendment or repeal. If the DGCL hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to the effective date of such amendment or repeal.

EIGHTH: The Corporation shall, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including any employee benefit plan), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such action, suit or proceeding and any appeal therefrom.

Indemnification shall include payment by the Corporation of expenses in defending an action or proceeding in advance of the final disposition of such action or proceeding upon (i) receipt of an undertaking by the person indemnified to repay such payment if it is ultimately determined that such person is not entitled to indemnification under this Article Eighth, which undertaking may be accepted without reference to the financial ability of such person to make such repayment, (ii) receipt of a written affirmation of the director’s or officer’s good faith belief that the director or officer has met the standard of conduct prescribed by Delaware law and (iii) a determination that the facts then known to those making the determination would not preclude indemnification under the DGCL.

The Corporation shall not indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person unless the initiation thereof was approved by the Board of Directors.

The indemnification rights provided in this Article Eighth (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, agreement or vote of stockholders or disinterested directors or otherwise, and (ii) shall inure to the benefit of the heirs, executors and administrators of such persons. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article Eighth.

NINTH: This Amended and Restated Certificate of Incorporation may be altered, amended or repealed at any meeting of the stockholders by the vote of the holders of at least 66 2/3% of the stock issued and outstanding and entitled to vote at such meeting in accordance with the provision of this Amended and Restated Certificate of Incorporation and the laws of Delaware.

[signature page to follow]

In WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation this [ ] day of [ ], 2012.


Silvercrest Asset Management Group Inc.

By:
		Name:
		Title:

EX-3.2 3 d411733dex32.htm BYLAWS OF SILVERCREST ASSET MANAGEMENT GROUP INC. Bylaws of Silvercrest Asset Management Group Inc.

EXHIBIT 3.2

AMENDED AND RESTATED BY-LAWS

SILVERCREST ASSET MANAGEMENT GROUP INC.

(the “Corporation”)

Adopted as of [ ], 2012

Article I. - General.

1.1. Offices. The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.

1.2. Seal. The seal of the Corporation, if any, shall be in the form of a circle and shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”.

1.3. Fiscal Year. The fiscal year of the Corporation shall be the period from January 1 through December 31.

Article II. - Stockholders.

2.1. Place of Meeting. All meetings of the stockholders may be held in or outside the State of Delaware as determined by the Board of Directors and, upon the determination of the Board of Directors, may be held solely by means of remote communication, in which cases meetings may be held upon notice as hereinafter provided at such other place or places within or without the State of Delaware or by remote communication as the Board of Directors shall have determined and as shall be stated in such notice.

2.2. Annual Meetings. The annual meeting of the stockholders shall be held each year on such date and at such time as the Board of Directors may determine. The Board of Directors shall have the power to postpone the annual meeting from time to time without notice other than announcement at the meeting and may authorize either the Chairman or the President to adjourn the meeting, whether a quorum is present or not. At each annual meeting the stockholders entitled to vote shall elect a single Class of Directors in the manner specified in the Certificate of Incorporation and Article III of these by-laws and they may transact such other corporate business as may properly be brought before the meeting. At the annual meeting any business may be transacted, irrespective of whether the notice calling such meeting shall have contained a reference thereto, except where notice is required by law, the Certificate of Incorporation, or these by-laws.

2.3. Quorum. At all meetings of the stockholders, the holders of a majority of the shares of stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum requisite for the transaction of business except as otherwise provided by law, by the Certificate of Incorporation or by these by-laws. If, however, such majority shall not be present or represented at any meeting of the stockholders, the Chairman of the Board of Directors shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until the requisite amount of voting stock shall be present. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting, at which the requisite amount of voting stock shall be represented, any business may be transacted which might have been transacted if the meeting had been held as originally called. Furthermore, the Chairman of the Board of Directors may postpone any annual or special meeting of the stockholders at his discretion, even after notice thereof has been mailed, regardless of whether a quorum is present or not.

2.4. Proxies. Any stockholder entitled to vote at any meeting of stockholders may vote either in person or by proxy, but no proxy which is dated more than three (3) years prior to the meeting at which it is offered shall confer the right to vote thereat unless the proxy provides that it shall be effective for a longer period. A proxy may be granted by a writing executed by the stockholder or his authorized officer, director, employee or agent or by transmission or authorization of transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, subject to the conditions set forth in Section 212 of the Delaware General Corporation Law, as it may be amended from time to time (the “DGCL”).

2.5. Voting. At all meetings of stockholders, except as otherwise expressly provided for by statute, the Certificate of Incorporation or these by-laws, (i) in all matters other than the election of directors, each holder of shares of Class A Voting Common Stock of the Corporation having the right to vote at such meeting shall be entitled to one (1) vote for each such share of Class A Voting Common Stock held by such holder and each holder of shares of Class B Voting Common Stock of the Corporation having the right to vote at such meeting shall be entitled to one (1) vote for each such share of Class B Voting Common Stock held by such holder, and the affirmative vote of a majority of the votes represented by the shares present in person or by means of remote communication or represented by proxy at the meeting and entitled to vote on such matter shall be the act of the stockholders and (ii) directors shall be elected by a plurality of the votes of the shares present in person or by means of remote communication or represented by proxy at the meeting and entitled to vote on the election of directors. Except as otherwise expressly provided by law, the Certificate of Incorporation or these by-laws, at all meetings of stockholders the voting shall be taken by ballot which may be by electronic transmission by any stockholder present by means of remote communication, each of which shall state the name of the stockholder voting and the number of shares voted by him, and, if such ballot be cast by a proxy, it shall also state the name of the proxy.

2.6. Notice of Annual Meetings. Written notice of the annual meeting of the stockholders, stating the time, the place, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, shall be sent not less than ten (10) nor more than sixty (60) days prior to the meeting. It shall be the duty of every stockholder to furnish to the Secretary of the Corporation or to the transfer agent, if any, of the class of stock owned by him, his post-office address and to notify said Secretary or transfer agent of any change therein.

2.7. Stockholders’ List. A complete list of the stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder, and the number and class of shares registered in the name of each stockholder, shall be prepared by the Secretary and shall be open to examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days before such meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours at the principal office of the Corporation, and said list shall be open to examination during the whole time of said meeting, at the place of said meeting, or, if the meeting held is by remote communication, on a reasonably accessible electronic network and the information required to access such list shall be provided with the notice of the meeting.

2.8. Special Meetings. Special meetings of the stockholders for any purpose or purposes, unless otherwise provided by statute, may be called by a majority of the Board of Directors, the Chairman of the Board of Directors or a committee of the Board of Directors that has been duly designated by the Board of Directors and whose authority includes the ability to call a special meeting of stockholders. The business conducted at such special meeting shall be limited to the purpose or purposes stated in the notice of meeting. Stockholders are not permitted to call a special meeting or require the Board of Directors or any duly appointed committee thereof or the Chairman to call a special meeting.

2.9. Notice of Special Meetings. Written notice of a special meeting of stockholders, stating the time, the place, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting and the object thereof, shall be sent not less than ten (10) nor more than sixty (60) days before such meeting, to each stockholder entitled to vote thereat, either in paper form or electronic form pursuant to each stockholder’s instructions on record with the Corporation. No business may be transacted at such meeting except that referred to in said notice, or in a supplemental notice given also in compliance with the provisions hereof, or such other business as may be germane or supplementary to that stated in said notice or notices.

2.10. Inspectors.

(a) One or more inspectors may be appointed by the Board of Directors before or at any meeting of stockholders, or, if no such appointment shall have been made, the presiding officer may make such appointment at the meeting. At the meeting for which the inspector or inspectors are appointed, he or they shall open and close the polls, receive and take charge of the proxies and ballots, and decide all questions touching on the qualifications of voters, the validity of proxies and the acceptance and rejection of votes. If any inspector previously appointed shall fail to attend or refuse or be unable to serve, the presiding officer shall appoint an inspector in his place.

(b) At any time at which the Corporation has a class of voting stock that is (i) listed on a national securities exchange, (ii) authorized for quotation on an inter-dealer quotation system of a registered national securities association, or (iii) held of record by more than two thousand (2,000) stockholders, the provisions of Section 231 of the DGCL with respect to inspectors of election and voting procedures shall apply, in lieu of the provisions of paragraph (a) of this Section 2.10.

2.11. Ability to Act by Written Consent. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called Annual or Special Meeting of Stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically declined.

2.12. Advance Notice of Stockholder Nominations and Proposals.

(a) At a meeting of the stockholders, only such nominations of persons for the election of directors and such other business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, nominations or such other business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or any committee thereof, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or any committee thereof, or (iii) otherwise properly brought before an annual meeting by a stockholder who is a stockholder of record of the Corporation at the time such notice of meeting is delivered, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.12. In addition, any proposal of business (other than the nomination of persons for election to the board of directors) must be a proper matter for stockholder action. For business (including, but not limited to, director nominations) to be properly brought before an annual meeting by a stockholder, the stockholder or stockholders of record intending to propose the business (the “Proposing Stockholder”) must have given timely notice thereof pursuant to this Section 2.12(a) or Section 2.12(c) below, as applicable, in writing to the secretary of the Corporation. To be timely, a Proposing Stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation: (x) not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day in advance of the anniversary of the previous year’s annual meeting if such meeting is to be held on a day which is not more than 30 days in advance of the anniversary of the previous year’s annual meeting or not later than 70 days after the anniversary of the previous year’s annual meeting; and (y) with respect to any other annual meeting of stockholders, the close of business on the tenth day following the date of public announcement of the date of such meeting. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new notice time period (or extend any notice time period).

(b) For the nomination of any person or persons for election to the Board of Directors, a Proposing Stockholder’s notice to the secretary of the Corporation shall set forth (i) the name, age, business address and residence address of each nominee proposed in such notice, (ii) the principal occupation or employment of each such nominee, (iii) the number of shares of

capital stock of the Corporation which are owned of record and beneficially by each such nominee (if any), (iv) such other information concerning each such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved) or that is otherwise required to be disclosed, under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, (v) the consent of the nominee to being named in the proxy statement as a nominee and to serving as a director if elected, and (vi) as to the Proposing Stockholder: (A) the name and address of the Proposing Stockholder as they appear on the Corporation’s books and of the beneficial owner, if any, on whose behalf the nomination is being made, (B) the class and number of shares of the Corporation which are owned by the Proposing Stockholder (beneficially and of record) and owned by the beneficial owner, if any, on whose behalf the nomination is being made, as of the date of the Proposing Stockholder’s notice, and a representation that the Proposing Stockholder will notify the Corporation in writing of the class and number of such shares owned of record and beneficially as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (C) a description of any agreement, arrangement or understanding with respect to such nomination between or among the Proposing Stockholder and any of its affiliates or associates, and any others (including their names) acting in concert with any of the foregoing, and a representation that the Proposing Stockholder will notify the Corporation in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (D) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of the Proposing Stockholder’s notice by, or on behalf of, the Proposing Stockholder or any of its affiliates or associates, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of the Proposing Stockholder or any of its affiliates or associates with respect to shares of stock of the Corporation, and a representation that the Proposing Stockholder will notify the Corporation in writing of any such agreement, arrangement or understanding in effect as of the record date for the meeting promptly following the later of the record date or the date notice of the record date is first publicly disclosed, (E) a representation that the Proposing Stockholder is a holder of record of shares of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and (F) a representation whether the Proposing Stockholder intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the nomination and/or otherwise to solicit proxies from stockholders in support of the nomination. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(c) For all business other than director nominations, a Proposing Stockholder’s notice to the secretary of the Corporation shall set forth as to each matter the Proposing Stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such

business at the annual meeting, (ii) any other information relating to such stockholder and beneficial owner, if any, on whose behalf the proposal is being made, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal and pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder and (iii) the information required by Section 2.12(b)(vi) above.

(d) The foregoing notice requirements of Section 2.12(c) shall be deemed satisfied by a stockholder with respect to business other than a nomination if the stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with the applicable rules and regulations promulgated under Section 14(a) of the Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting.

(e) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (x) by or at the direction of the Board of Directors or any committee thereof or (y) provided that the board of directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time the notice provided for in this Section 2.12 is delivered to the secretary of the Corporation, who is entitled to vote at the meeting and upon such election and who complies with the notice procedures set forth in this Section 2.12. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the board of directors, any such stockholder entitled to vote in such election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by this Section 2.12 shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day prior to such special meeting and not earlier than the close of business on the later of the 120th day prior to such special meeting or the tenth (10th) day following the public announcement of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any notice time period).

(f) Notwithstanding anything in these By-laws to the contrary: (i) no nominations shall be made or business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 2.12, and (ii) unless otherwise required by law, if a Proposing Stockholder intending to propose business or make nominations at an annual meeting pursuant to this Section 2.12 does not provide the information required under this Section 2.12 to the Corporation promptly following the later of the record date or the date notice of the record date is first publicly disclosed, or the Proposing Stockholder (or a qualified representative of the Proposing Stockholder) does not appear at the meeting to present the proposed business or nominations, such business or nominations shall not be considered, notwithstanding that proxies in respect of such business or nominations may have been received by the Corporation. The requirements of this Section 2.12 shall apply to any business or

nominations to be brought before an annual meeting by a stockholder whether such business or nominations are to be included in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Exchange Act or presented to stockholders by means of an independently financed proxy solicitation. The requirements of Section 2.12 are included to provide the Corporation notice of a stockholder’s intention to bring business or nominations before an annual meeting and shall in no event be construed as imposing upon any stockholder the requirement to seek approval from the Corporation as a condition precedent to bringing any such business or make such nominations before an annual meeting.

Article III. - Directors.

3.1. Number of Directors. Except as otherwise provided by law, the Certificate of Incorporation or these by-laws, the property and business of the Corporation shall be managed by or under the direction of a board of not less than three (3) nor more than eleven (11) directors. Within the limits specified, the number of directors shall be determined from time to time by resolution of the Board of Directors. Directors need not be stockholders, residents of Delaware or citizens of the United States. A single class of directors, as designated in Article Sixth of the Amended and Restated Certificate of Incorporation, shall be elected by ballot at the annual meeting of the stockholders and each director shall be elected to serve until his successor shall be elected on the date of the third annual meeting of stockholders following the annual meeting of stockholders at which such director was elected and shall qualify or until such director’s earlier resignation or removal; provided, that in the event of a failure to hold such meeting or to hold such election at such meeting, such election may be held at any special meeting of the stockholders called for that purpose. Newly created directorships resulting from any increase in the number of directors or any vacancies occurring in the Board of Directors for any reason whatsoever shall be solely filled by vote of the Board of Directors. If the number of directors then in office is less than a quorum, such newly created directorships and vacancies shall be solely filled by a vote of a majority of the directors then in office.

3.2. Change in Number of Directors; Vacancies. The maximum number of directors may be increased by an amendment to these by-laws and the Certificate of Incorporation. Subject to the provisions of the Certificate of Incorporation, any vacancy on the Board of Directors that results from an increase in the number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any other vacancy occurring on the Board of Directors may be filled only by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy not resulting from an increase in the number of directors of such class shall hold office for a term that shall coincide with the remaining term of that class or until his earlier death, resignation or removal. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the same remaining term as that of his predecessor.

3.3. Resignation. Any director of the Corporation may resign at any time by giving notice in writing or by electronic transmission to the Chairman of the Board, if any, the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, at the time of receipt if no time is specified therein and at the time of

acceptance if the effectiveness of such resignation is conditioned upon its acceptance. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

3.4. Removal. Any director or the entire Board of Directors may be removed only for cause by the holders of a majority of the shares then entitled to vote at an election of directors.

3.5. Place of Meetings and Books. The Board of Directors may hold their meetings and keep the books of the Corporation outside the State of Delaware, at such places as they may from time to time determine.

3.6. General Powers. In addition to the powers and authority expressly conferred upon them by these by-laws, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these by-laws directed or required to be exercised or done by the stockholders.

3.7. Executive Committee. There may be an executive committee of one or more directors designated by resolution of the Board of Directors. The act of a majority of the members of such committee shall be the act of the committee. Said committee may meet at stated times or on notice to all by any of their own number, and shall have and may exercise those powers of the Board of Directors in the management of the business affairs of the Corporation as are provided by law and may authorize the seal of the Corporation to be affixed to all papers which may require it. Vacancies in the membership of the committee shall be filled by the Board of Directors at a regular meeting or at a special meeting called for that purpose.

3.8. Other Committees. The Board of Directors may also designate one or more committees in addition to the executive committee, by resolution or resolutions of the Board of Directors. Such committee or committees shall consist of one or more directors of the Corporation, and to the extent provided in the resolution or resolutions designating them, shall have and may exercise specific powers of the Board of Directors in the management of the business and affairs of the Corporation to the extent permitted by statute and shall have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

3.9. Powers Denied to Committees. Committees of the Board of Directors shall not, in any event, have any power or authority to amend the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares adopted by the Board of Directors as provided in Section 151(a) of the DGCL, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of the shares of any series), adopt an agreement of merger or consolidation, recommend to the stockholders the sale,

lease or exchange of all or substantially all of the Corporation’s property and assets, recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution or to amend the by-laws of the Corporation. Further, no committee of the Board of Directors shall have the power or authority to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the DGCL, unless the resolution or resolutions designating such committee expressly so provides.

3.10. Substitute Committee Member. In the absence or on the disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Any committee shall keep regular minutes of its proceedings and report the same to the Board as may be required by the Board.

3.11. Compensation of Directors. The Board of Directors shall have the power to fix the compensation of directors and members of committees of the Board. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

3.12. Annual Meeting. The newly elected Board of Directors may meet at such place and time as shall be fixed and announced by the presiding officer at the annual meeting of stockholders, for the purpose of organization or otherwise, and no further notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present, or they may meet at such place and time as shall be stated in a notice given to such directors two (2) days prior to such meeting, or as shall be fixed by the consent in writing of all the directors.

3.13. Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board.

3.14. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, if any, or the President, on two (2) days notice to each director, or such shorter period of time before the meeting as will nonetheless be sufficient for the convenient assembly of the directors so notified; special meetings shall be called by the Secretary in like manner and on like notice, on the written request of two (2) or more directors.

3.15. Quorum; Voting. A majority of the total number of members of the Board of Directors shall constitute a quorum for the transaction of business. Each member of the Board of Directors shall have one (1) vote each in all matters presented to the Board of Directors for approval. The vote of the members of the Board of Directors present at a meeting at which a quorum is present that together have the right to vote a majority of the number of votes held by such members present at such meeting shall be the act of the Board of Directors. If at any meeting of the Board there shall be less than a quorum present, the vote of holders of a majority of the votes present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at said meeting which shall be so adjourned.

3.16. Telephonic Participation in Meetings. Members of the Board of Directors or any committee designated by such Board may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section shall constitute presence in person at such meeting.

3.17. Action by Consent. Unless otherwise restricted by the Certificate of Incorporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and such consent is filed in paper form with the minutes of proceedings of the Board or committee.

Article IV. - Officers.

4.1. Selection; Statutory Officers. The officers of the Corporation shall be chosen by the Board of Directors. There shall be a President (who may also be referred to as the Chief Executive Officer), a Secretary and a Treasurer, and there may be a Chairman of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries, and one or more Assistant Treasurers, as the Board of Directors may elect. Any number of offices may be held by the same person.

4.2. Time of Election. The officers above named shall be chosen by the Board of Directors at its first meeting after each annual meeting of stockholders. None of said officers need be a director.

4.3. Additional Officers. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

4.4. Terms of Office. Each officer of the Corporation shall hold office until his successor is chosen and qualified, or until his earlier resignation or removal. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors.

4.5. Compensation of Officers. The Board of Directors shall have power to fix the compensation of all officers of the Corporation. It may authorize any officer, upon whom the power of appointing subordinate officers may have been conferred, to fix the compensation of such subordinate officers.

4.6. Chairman of the Board. The Chairman of the Board of Directors shall preside at all meetings of the stockholders and directors, and shall have such other duties as may be assigned to him from time to time by the Board of Directors.

4.7. President. Unless the Board of Directors otherwise determines, the President shall be the Chief Executive Officer and head of the Corporation. Unless there is a Chairman of the Board, the President shall preside at all meetings of directors and stockholders. Under the supervision of the Board of Directors and of the executive committee, the President shall have the general control and management of its business and affairs, subject, however, to the right of the Board of Directors and of the executive committee to confer any specific power, except such as may be by statute exclusively conferred on the President, upon any other officer or officers of the Corporation. The President shall perform and do all acts and things incident to the position of President and such other duties as may be assigned to him from time to time by the Board of Directors or the executive committee.

4.8. Vice-Presidents. The Vice-Presidents shall perform such of the duties of the President on behalf of the Corporation as may be respectively assigned to them from time to time by the Board of Directors or by the executive committee or by the President. The Board of Directors or the executive committee may designate one of the Vice-Presidents as the Executive Vice-President, and in the absence or inability of the President to act, such Executive Vice-President shall have and possess all of the powers and discharge all of the duties of the President, subject to the control of the Board and of the executive committee.

4.9. Treasurer. The Treasurer shall have the care and custody of all the funds and securities of the Corporation which may come into his hands as Treasurer, and the power and authority to endorse checks, drafts and other instruments for the payment of money for deposit or collection when necessary or proper and to deposit the same to the credit of the Corporation in such bank or banks or depository as the Board of Directors or the executive committee, or the officers or agents to whom the Board of Directors or the executive committee may delegate such authority, may designate, and he may endorse all commercial documents requiring endorsements for or on behalf of the Corporation. He may sign all receipts and vouchers for the payments made to the Corporation. He shall render an account of his transactions to the Board of Directors or to the executive committee as often as the Board or the committee shall require the same. He shall enter regularly in the books to be kept by him for that purpose full and adequate account of all moneys received and paid by him on account of the Corporation. He shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors and of the executive committee. He shall when requested, pursuant to vote of the Board of Directors or the executive committee, give a bond to the Corporation conditioned for the faithful performance of his duties, the expense of which bond shall be borne by the Corporation. Unless the Board of Directors determines otherwise, the Treasurer shall also be the Chief Financial Officer of the Corporation.

4.10. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and of the stockholders; he shall attend to the giving and serving of all notices of the Corporation. Except as otherwise ordered by the Board of Directors or the executive committee, he shall attest the seal of the Corporation upon all contracts and instruments executed under such seal and shall affix the seal of the Corporation thereto and to all certificates of shares of capital stock of the Corporation. He shall have charge of the stock certificate book, transfer book and stock ledger, and such other books and papers as the Board of Directors or the executive committee may direct. He shall, in general, perform all the duties of Secretary, subject to the control of the Board of Directors and of the executive committee.

4.11. Assistant Secretary. The Board of Directors or any two (2) of the officers of the Corporation acting jointly may appoint or remove one or more Assistant Secretaries of the Corporation. Any Assistant Secretary upon his appointment shall perform such duties of the Secretary, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice-President or the Treasurer or the Secretary may designate.

4.12. Assistant Treasurer. The Board of Directors or any two of the officers of the Corporation acting jointly may appoint or remove one or more Assistant Treasurers of the Corporation. Any Assistant Treasurer upon his appointment shall perform such of the duties of the Treasurer, and also any and all such other duties as the executive committee or the Board of Directors or the President or the Executive Vice-President or the Treasurer or the Secretary may designate.

4.13. Subordinate Officers. The Board of Directors may select such subordinate officers as it may deem desirable. Each such officer shall hold office for such period, have such authority, and perform such duties as the Board of Directors may prescribe. The Board of Directors may, from time to time, authorize any officer to appoint and remove subordinate officers and to prescribe the powers and duties thereof.

Article V. - Stock.

5.1. Stock. Each stockholder shall be entitled to a certificate or certificates of stock of the Corporation in such form as the Board of Directors may from time to time prescribe. The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall certify the holder’s name and number and class of shares and shall be signed by both of (i) either the Chairperson or Vice Chairperson of the Board of Directors, or the President or Vice President, and (ii) any one of the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, and may, but need not, be sealed with the corporate seal of the Corporation. If such certificate is countersigned (A) by a transfer agent other than the Corporation or its employee, or, (B) by a registrar other than the Corporation or its employee, the signature of the officers of the Corporation and the corporate seal may be facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature shall have been used thereon had not ceased to be such officer or officers of the Corporation.

5.2. Fractional Share Interests. The Corporation may, but shall not be required to, issue fractions of a share. If the Corporation does not issue fractions of a share, it shall (i) arrange for the disposition of fractional interests by those entitled thereto, (ii) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined, or (iii) issue scrip or warrants in registered or bearer form which shall entitle the

holder to receive a certificate for a full share upon the surrender of such scrip or warrants aggregating a full share. A certificate for a fractional share shall, but scrip or warrants shall not unless otherwise provided therein, entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation. The Board of Directors may cause scrip or warrants to be issued subject to the conditions that they shall become void if not exchanged for certificates representing full shares before a specified date, or subject to the conditions that the shares for which scrip or warrants are exchangeable may be sold by the Corporation and the proceeds thereof distributed to the holders of scrip or warrants, or subject to any other conditions which the Board of Directors may impose.

5.3. Transfers of Stock. Subject to any transfer restrictions then in force, the shares of stock of the Corporation shall be transferable only upon its books by the holders thereof in person or by their duly authorized attorneys or legal representatives and upon such transfer the old certificates shall be surrendered to the Corporation by the delivery thereof to the person in charge of the stock and transfer books and ledgers or to such other person as the directors may designate by whom they shall be cancelled and new certificates shall thereupon be issued. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and accordingly shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof save as expressly provided by the laws of Delaware.

5.4. Record Date. For the purpose of determining the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or the allotment of any rights, or entitled to exercise any rights in respect of any change, conversion, or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. If no such record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; and the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at any meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

5.5. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or transfer clerks and one or more registrars and may require all certificates of stock to bear the signature or signatures of any of them.

5.6. Dividends.

(a) Power to Declare. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and the laws of Delaware.

(b) Reserves. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the directors shall think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

5.7. Lost, Stolen or Destroyed Certificates. No certificates for shares of stock of the Corporation shall be issued in place of any certificate alleged to have been lost, stolen or destroyed, except upon production of such evidence of the loss, theft or destruction and upon indemnification of the Corporation and its agents to such extent and in such manner as the Board of Directors may from time to time prescribe.

5.8. Inspection of Books. The Board of Directors shall have power from time to time to determine whether and to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation (other than the stock ledger) or any of them, shall be open to inspection of stockholders; and no stockholder shall have any right to inspect any account or book or document of the Corporation except as conferred by statute or authorized by the Board of Directors.

Article VI. - Miscellaneous Management Provisions.

6.1. Checks, Drafts and Notes. All checks, drafts or orders for the payment of money, and all notes and acceptances of the Corporation shall be signed by such officer or officers, agent or agents as the Board of Directors may designate.

6.2. Notices.

(a) Unless otherwise provided in the Certificate of Incorporation or these by-laws, notices to directors and stockholders may be (i) in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation, (ii) by facsimile telecommunication, when directed to a number at which the director or stockholder has consented to receive notice, (iii) by electronic mail, when directed to an electronic mail address at which the director or stockholder has consented to receive notice, or (iv) by other electronic transmission, when directed to the director or stockholder. Notice by mail shall be deemed to be given at the time when the same shall be mailed.

(b) Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation of the Corporation or of these by-laws, a written waiver signed by the person or persons entitled to said notice, or waiver by electronic transmission by the person entitled to said notice, whether before or after the time stated therein or the meeting or action to which such notice relates, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

6.3. Conflict of Interest. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or of a committee thereof which authorized the contract or transaction, or solely because his or their votes are counted for such purpose, if: (i) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or such committee and the Board of Directors or such committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders of the Corporation entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of such stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee or the stockholders. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

6.4. Corporate Opportunity. The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (a) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (b) any holder of Class A Common Stock or Class B Common Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, “Covered Persons”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.

6.5. Voting of Securities owned by the Corporation. Subject always to the specific directions of the Board of Directors, (i) any shares or other securities issued by any other corporation and owned or controlled by the Corporation may be voted in person at any meeting of security holders of such other corporation by the President of the Corporation if he is present at such meeting, or in his absence by the Treasurer of the Corporation if he is present at such meeting, and (ii) whenever, in the judgment of the President, it is desirable for the Corporation to execute a proxy or written consent in respect to any shares or other securities issued by any other corporation and owned by the Corporation, such proxy or consent shall be executed in the name of the Corporation by the President, without the necessity of any authorization by the Board of Directors, affixation of corporate seal or countersignature or attestation by another officer, provided that if the President is unable to execute such proxy or consent by reason of sickness, absence from the United States or other similar cause, the Treasurer may execute such proxy or consent. Any person or persons designated in the manner above stated as the proxy or proxies of

the Corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by the Corporation the same as such shares or other securities might be voted by the Corporation.

Article VII. - Indemnification.

7.1. Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of being or having been a director or officer of the Corporation or serving or having served at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (an “Indemnitee”), whether the basis of such proceeding is alleged action or failure to act in an official capacity as a director, trustee, officer, employee or agent or in any other capacity while serving as a director, trustee, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto) (as used in this Article VII, the “Delaware Law”), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith and such indemnification shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators; provided, however, that, except as provided in Section 7.2 hereof with respect to Proceedings to enforce rights to indemnification, the Corporation shall indemnify any such Indemnitee in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Article VII shall be a contract right and shall include the right to be paid by the Corporation the expenses (including attorneys’ fees) incurred in defending any such Proceeding in advance of its final disposition (an “Advancement of Expenses”); provided, however, that, if the Delaware Law so requires, an Advancement of Expenses incurred by an Indemnitee shall be made only upon delivery to the Corporation of an undertaking (an “Undertaking”), by or on behalf of such Indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (a “Final Adjudication”) that such Indemnitee is not entitled to be indemnified for such expenses under this Article VII or otherwise.

7.2. Right of Indemnitee to Bring Suit. If a claim under Section 7.1 hereof is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an Advancement of Expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the Indemnitee

to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an Advancement of Expenses) it shall be a defense that, and (ii) in any suit by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking the Corporation shall be entitled to recover such expenses upon a Final Adjudication that, the Indemnitee has not met the applicable standard of conduct set forth in the Delaware Law. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in the Delaware Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to enforce a right to indemnification or to an Advancement of Expenses hereunder, or by the Corporation to recover an Advancement of Expenses pursuant to the terms of an Undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such Advancement of Expenses, under this Article VII or otherwise shall be on the Corporation.

7.3. Non-Exclusivity of Rights. The rights to indemnification and to the Advancement of Expenses conferred in this Article VII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, by-laws, agreement, vote of stockholders or disinterested directors or otherwise.

7.4. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under this Article VII or under the Delaware Law.

7.5. Indemnification of Employees and Agents of the Corporation. The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification, and to the Advancement of Expenses, to any employee or agent of the Corporation to the fullest extent of the provisions of this Article VII with respect to the indemnification and Advancement of Expenses of directors and officers of the Corporation.

Article VIII. - Amendments.

8.1. Amendments. The by-laws of the Corporation may be altered, amended or repealed at any meeting of the Board of Directors upon notice thereof in accordance with these by-laws, or at any meeting of the stockholders by the vote of the holders of at least 66 2/3% of the stock issued and outstanding and entitled to vote at such meeting in accordance with the provisions of the Certificate of Incorporation of the Corporation and of the laws of Delaware.

EX-4.6 4 d411733dex46.htm FORM OF DEFERRED EQUITY UNIT AWARD AGREEMENT Form of Deferred Equity Unit Award Agreement

EXHIBIT 4.6

THE FEBRUARY 2010 DEFERRED EQUITY AGREEMENT

This FEBRUARY 2010 DEFERRED EQUITY AGREEMENT (this “Agreement”) is made and entered into as of February 24, 2010, by and among Silvercrest Asset Management Group LLC (the “Company”), Silvercrest L.P. (the “LP”), and Silvercrest GP LLC (the “GP”), and [name] (the “Employee”).

WHEREAS, the Employee is an employee of the Company, which is a wholly-owned subsidiary of the LP, and the GP is the general partner of the LP;

WHEREAS, the Employee is an Additional Partner of the LP and an Additional Member of the GP, and is bound by all of the terms and conditions of the Amended and Restated Limited Partnership Agreement of the LP dated as of April 15, 2009 (the “LP Agreement”) and the Amended and Restated Limited Liability Company Agreement of the GP dated as of April 15, 2009 (the “GP Agreement”, and together with the LP Agreement, the “Constituent Documents”). All capitalized terms used, but not defined, herein shall have the meanings given to such terms in the Constituent Documents; and

WHEREAS, the Company, LP and GP intend to grant to the Employee an award (the “Award”) comprised of Deferred Equity Units (as hereinafter defined) and Performance Units (as hereinafter defined), each subject to the restrictions and in accordance with the terms and conditions hereof;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein set forth, and other good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, the parties hereto mutually covenant and agree as follows:

1. Grant of Award.

The LP and GP, as applicable, hereby issue to the Employee as of the date hereof an award consisting of Deferred Equity Units and Performance Units, each in such amount as set forth on Schedule A attached hereto.

Each one hundred Deferred Equity Units represents the unsecured right to receive, as applicable: (x) (i) one (1) Common Share of the GP and (ii) ninety-nine (99) Common Shares of the LP or (y) (i) the equivalent cash value of up to fifty percent (50%) (or such other percentage as may be determined by the Committee, as defined below) of the Common Shares issuable upon the vesting of any such Deferred Equity Units under this Agreement, such cash amount to be calculated using the Redemption Price of such Common Shares as of the applicable Vesting Date or Separation Date, as applicable, and (ii) one (1) Common Share of the GP and ninety-nine (99) Common Shares of the LP for the balance of the Deferred Equity Units vesting as of the applicable Vesting Date or Separation Date.

Each Performance Unit represents the unsecured right to receive either: (x) one (1) Common Share of the GP for two (2) Common Shares of the GP issued upon the vesting of the Deferred Equity Units granted to the Employee under this Agreement, but only if such Common

Shares of the GP continue to be held by the Employee on the earlier of the Closing Date, as defined below, and February 24, 2014, or (y) one (1) Common Share of the LP for two (2) Common Shares of the LP issued upon the vesting of the Deferred Equity Units granted to the Employee under this Agreement, but only if such Common Shares of the LP continue to be held by the Employee on the earlier of the Closing Date and February 24, 2014. For the avoidance of doubt, if and to the extent that the Employee does not hold, as of the earlier of the Closing Date and February 24, 2014, two (2) Common Shares of the GP or two (2) Common Shares of the LP for each Performance Unit awarded to the Employee, any such excess Performance Units shall be forfeited as of such date and shall be of no further effect.

2. Vesting, Cash Election, and Forfeiture of Deferred Equity Units.

(a) Twenty-five percent of the Deferred Equity Units shall vest on each of the first, second, third, and fourth anniversaries of the date hereof (each, a “Vesting Date”), until the Deferred Equity Units are fully vested, except as provided in Section 2(d) below.

(b) A reasonable time prior to any Vesting Date of the Deferred Equity Units, the Company shall determine and certify the Redemption Price of the Deferred Equity Units as of such Vesting Date. No later than five (5) days after the Company’s determination of the Redemption Price of the Deferred Equity Units, the Employee shall give notice to the Company setting forth the percentage of Deferred Equity Units, up to such maximum percentage as may be permitted by the Committee, that that Employee elects to receive in cash.

(c) Subject to the provisions of this Section 2, the Company shall deliver to the Employee, or the Employee’s legal representatives, beneficiaries or heirs, as the case may be, (i) the equivalent cash value, equal to the Redemption Price as of the applicable Vesting Date, of the Common Shares of the GP and Common Shares of the LP issuable upon the vesting of Deferred Equity Units under this Agreement that the Employee has elected to receive in cash pursuant to Section 2(b) hereof, if any, and (ii) that number of Common Shares of the GP and that number of Common Shares of the LP as are equal to the number of GP Common Shares and LP Common Shares comprising the Deferred Equity Units covered by this Agreement that have become vested and nonforfeitable on the applicable Vesting Date (less the equivalent value of any cash paid to the Employee pursuant to Section 2(c)(i) hereof). Such cash payment and/or transfer of Common Shares of the GP and Common Shares of the LP shall be made as soon as administratively practicable after the applicable Vesting Date, but in no event later than one hundred-eighty (180) days after the date on which such Vesting Date occurs.

(d) If the Employee incurs a “separation from service,” as defined in Section 409A of the Code and Treas. Reg. Section 1.409A-1(h), from the Company and its affiliates (a “Separation from Service”) for any reason other than (i) involuntary termination by the Company or its affiliates without Cause; (ii) termination by reason of Employee’s Disability; (iii) retirement in good faith, or (iv) Employee’s death, all Deferred Equity Units unvested as of such date shall automatically be forfeited without consideration to the Employee and shall no longer be deemed to be outstanding. If the Employee incurs a Separation from Service for any of the reasons enumerated in (i) through (iv) of this Section 2(d), the Deferred Equity Units shall become fully and immediately vested. Settlement of such vested Deferred Equity Units, in Common Shares of the LP and Common Shares of the GP, or in cash equal to the Redemption

Price of such Common Shares as of the date of the Employee’s Separation from Service (the “Separation Date”), in the sole discretion of the Committee, shall be made at such date within 70 days following the Separation Date as the Committee shall determine.

(e) Notwithstanding anything to the contrary herein, all of the then remaining unvested Deferred Equity Units will vest upon the closing date of the consummation of a Sale of Control that also constitutes a “change in control” within the meaning of Section 409A of the Code and the regulations thereunder (the “Closing Date”), and settlement of such vested Deferred Equity Units shall be made on the Closing Date; provided, however, that the Employee shall not be permitted to elect the equivalent cash value of such Deferred Equity Units.

(f) During the period commencing on the date of this Agreement and ending on the earliest of, as applicable: (i) the Vesting Date, in the case of Deferred Equity Units which are settled in cash, (ii) the date on which the GP Common Shares and the LP Common Shares, as applicable, are transferred to the Employee following a Vesting Date, or (iii) the Separation Date, (iv) the Closing Date, and (v) the date of forfeiture of Deferred Equity Units for any reason, the Employee shall be entitled to receive payments from the Company in such amounts, and at such times, as the Employee would have received from the GP or the LP, respectively, had the GP Common Shares and the LP Common Shares underlying the Deferred Equity Units been transferred to the Employee on the date hereof.

3. Vesting and Forfeiture of Performance Units.

(a) The Performance Units shall be subject to forfeiture, subject to the satisfaction of the “Performance Target.” Such “Performance Target” will have been achieved, and the Performance Units shall vest, if (i) the Per Share Value of the Common Shares of the GP calculated as of December 31, 2013 (based on Adjusted EBITDA of the GP for the quarter ending on such date) shall have increased by at least fifteen percent (15%) per annum over the Per Share Value of the Common Shares of the GP calculated as of the date hereof, which is $136.07, and (ii) the Per Share Value of the Common Shares of the LP calculated as of December 31, 2013 (based on Adjusted EBITDA of the LP for the quarter ending on such date) shall have increased by at least fifteen percent (15%) per annum over the Per Share Value of the Common Shares of the LP calculated as of the date hereof, which is $136.07. The rights of the Employee with respect to the Performance Units shall remain subject to forfeiture at all times prior to the date on which such rights become vested in accordance with this Section 3 and will be forfeited if the Performance Target is not achieved.

(b) As soon as reasonably practicable following the Company’s release of financial statements indicating that the Performance Target may have been achieved, the Company shall determine and, if applicable certify the achievement of the Performance Target. Upon certification by the Company of the achievement of the Performance Target, the risk of forfeiture with respect to any Performance Units shall lapse and the Employee shall become entitled to settlement of the Performance Units.

(c) Following the vesting of Performance Units (pursuant to the achievement of the Performance Target), the Company shall deliver to the Employee, or the Employee’s legal representatives, beneficiaries or heirs, as the case may be, in settlement of such vested

Performance Units that number of Common Shares of the GP and that number of Common Shares of the LP as are necessary to satisfy the Performance Units covered by this Agreement. Settlement of such vested Performance Units shall be made as soon as administratively practicable after certification by the Company of attainment of the Performance Target but in no event later than the end of 2014. Each such transfer of Common Shares of the GP and Common Shares of the LP will be effective as of January 1, 2014.

(d) Notwithstanding anything to the contrary herein, upon the consummation of a Sale of Control that also constitutes a “change in control” within the meaning of Section 409A of the Code and the regulations thereunder, the Committee shall determine whether the Performance Target has been achieved as of the Closing Date. The Performance Target shall have been achieved as of the Closing Date and the Performance Units shall vest if: (i) the Per Share Value of the Common Shares of the GP calculated as of the Closing Date shall have increased by at least fifteen percent (15%) per annum over the Per Share Value of the Common Shares of the GP calculated as of the date hereof, which is $136.07, and (ii) the Per Share Value of the Common Shares of the LP calculated as of the Closing Date shall have increased by at least fifteen percent (15%) per annum over the Per Share Value of the Common Shares of the LP calculated as of the date hereof, which is $136.07. If the Performance Target is achieved as of the Closing Date, the Company shall deliver to the Employee, or the Employee’s legal representatives, beneficiaries or heirs, as the case may be, in settlement of such vested Performance Units that number of Common Shares of the GP and that number of Common Shares of the LP as are necessary to satisfy the Performance Units covered by this Agreement. Settlement of such vested Performance Units shall be effective as of the Closing Date, and shall be made on or as soon as administratively practicable after the Closing Date but in no event later than the end of the calendar year in which such Closing Date occurs.

(e) If the Employee separates from the Company or its affiliates prior to the earlier of the Closing Date and February 24, 2014 for any reason other than (i) involuntary termination by the Company or its affiliates without Cause, (ii) termination by reason of the Employee’s Disability, (iii) good faith retirement, or (iv) Employee’s death, the Performance Units shall automatically be forfeited without consideration to the Employee and shall no longer be deemed to be outstanding. If the Employee separates from the Company or its affiliates for any of the reasons enumerated in (i) through (iv) of this Section 3(e), Employee shall not forfeit the Performance Units and settlement of such Performance Units shall be made, subject to achievement of the Performance Target, at such time as would otherwise have occurred in accordance with Section 3(c) or (d) above; provided, however, that the Employee shall only be entitled to settlement of a pro-rated number of Common Shares of the GP and Common Shares of the LP based upon the period of time elapsing between the date hereof and the date of the Employee’s separation from service from the Company and its affiliates as a percentage of the period of time elapsing between the date hereof and the date upon which the Employee becomes entitled to settlement of the Performance Units pursuant to Section 3(c) or (d) above.

(f) For purposes of calculating the Per Share Value solely in connection with determining whether the Performance Target has been achieved pursuant to Sections 3(a) or 3(d) hereof, the Performance Units will not be included among the aggregate number of Common Shares outstanding of the GP or the LP, but the Deferred Equity Units will.

4. Restrictions on Transfer.

(a) No Deferred Equity Unit or Performance Units shall be transferrable except upon the death of the Employee to the Employee’s heirs or estate in accordance with the relevant provisions of the Constituent Documents.

(b) Any Common Share of the GP and/or the LP awarded under this Agreement or issued upon the vesting of the Deferred Equity Units or the Performance Units is subject to all restrictions on transfer imposed by the LP Agreement, the GP Agreement, by applicable state or federal securities laws, or by any agreement to which the Employee is now or may hereafter become bound, including, but not limited to:

With respect to the LP:

(i) without the express written consent of the General Partner, the Employee may not transfer all or any portion of such Employee’s Common Shares other than (i) to a Specified Permitted Transferee, (ii) pursuant to Section 8.6 of the LP Agreement, or (ii) to the Partnership as set forth in Section 8.5 of the LP Agreement; and

(ii) the put and call rights of the LP, Additional Partners and Founding Partners (as each such term is defined in the LP Agreement) under certain circumstances as set forth in Section 8.6 of the LP Agreement.

THE DESCRIPTION OF CERTAIN TRANSFER RESTRICTIONS SET FORTH ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE LP AGREEMENT.

With respect to the GP:

(i) without the express written consent of the Board of Directors, including the Chief Executive Officer, and the Investor Director, the Employee may not transfer all or any portion of such Employee’s Common Shares other than (i) to a Specified Permitted Transferee subject to Section 7.1.3 of the GP Agreement, (ii) pursuant to Section 8.6 of the GP Agreement, or (ii) to the GP as set forth in Section 8.5 of the GP Agreement; and

(ii) the put and call rights of the GP, Additional Members and Founding Members (as each such term is defined in the GP Agreement) under certain circumstances as set forth in Section 8.6 of the GP Agreement.

THE DESCRIPTION OF CERTAIN TRANSFER RESTRICTIONS SET FORTH ABOVE IS QUALIFIED IN ITS ENTIRETY BY THE GP AGREEMENT.

5. Taxation and Withholding.

(a) The Employee shall remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements prior to the settlement date with respect to any Deferred Equity Unit or Performance Units. The Employee further acknowledges that the Company has the right to deduct from payments of any kind otherwise due to the Employee any federal, state, local or other taxes of any kind required by law to be withheld with

respect to the grant, vesting or settlement of the Deferred Equity Units or Performance Units. However, the Employee may elect, subject to the approval of the Company, acting in its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold shares of Common Shares of the GP and/or LP to satisfy his or her tax obligations, subject to any restrictions or limitations that the Company deems appropriate.

(b) In the event and to the extent the Company determines that it is not obligated to withhold taxes payable by the Employee with respect to the Deferred Equity Units or Performance Units but the Company is later held liable due to any non-payment of taxes on the part of the Employee, the Employee shall indemnify and hold the Company harmless from the amount of any payment made by them in respect of such liability.

6. Representations of the Employee. The Employee represents and warrants to the GP and the LP as follows:

(a) The Employee is an “accredited investor” as such term is defined in Regulation D promulgated by the Securities Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) because (A) the Employee is a natural person with an individual net worth, or with the Employee’s spouse have a combined net worth, in excess of U.S. $1,000,000, (B) the Employee is a natural person and had individual income (exclusive of any income attributable to the Employee’s spouse) of more than U.S. $200,000 in the prior two calendar years or joint income with the Employee’s spouse in excess of U.S. $300,000 for each of those years and the Employee reasonably expects to reach the same income level in the current calendar year or (C) the Employee is a knowledgeable Employee as referred to in Rule 506 under the Securities Act.

(b) The Employee is a sophisticated investor, able and accustomed to handling sophisticated financial matters for himself/herself, has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of his/her investment in the Shares and the Employee is capable of bearing the economic risks of such investment and is able to bear a complete loss of his/her investment in the Shares.

(c) THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS RELIED SOLELY UPON HIS/HER OWN TAX AND OTHER LEGAL ADVISORS CONCERNING THE TAX AND OTHER LEGAL ASPECTS OF AN INVESTMENT IN THE SHARES AND THE EMPLOYEE ACKNOWLEDGES THAT NEITHER THE LP NOR THE GP HAS MADE REPRESENTATIONS OR WARRANTIES RELATING TO THE TAX LEGAL CONSEQUENCES OF AN INVESTMENT IN THE SHARES.

7. Section 409A. Payments made pursuant to this Agreement are intended to be exempt from or comply with Section 409A of the Code, and the regulations and other guidance promulgated thereunder (“Section 409A”). The provisions of this section shall qualify and supersede all other provisions of this Agreement as necessary to fulfill the foregoing intention. The Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify this Agreement to ensure that the Award is made in a manner that qualifies for exemption from or complies with the provisions of Section 409A(a)(2), (3) and (4) of the Code. The Company makes no representations that this Award

will be exempt from Section 409A and makes no undertaking to preclude Section 409A from applying to this Award. To the extent applicable, each and every payment to be made pursuant to this Agreement shall be treated as a separate payment and not as one of a series of payments treated as a single payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).

8. Notices. All notices and other communications hereunder shall be in writing and shall be given by facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given three days after mailing or twenty-four (24) hours after transmission by facsimile to the respective parties named below:


If to the Company, the
GP or the LP:		c/o Silvercrest Asset Management Group LLC 1330 Avenue of the Americas New York, NY 10019 Attn: Office of the General Counsel Telephone: (212) 649-0623 Facsimile: (212) 649-0625

with a copy to:		Bingham McCutchen LLP 399 Park Avenue New York, NY 10022 Attention: Michael F. Mavrides, Esq. Telephone: (212) 705-7000 Facsimile: (212) 752-5378

If to the Employee:		*[name]* *[address]*

Any party hereto may change such party’s address for notices by notice duly given to the other parties pursuant hereto.

9. Miscellaneous.

(a) Acceptance of Award. Employee must accept this Award by executing this Agreement and delivering the same to the Company within fifteen (15) days of the date hereof. Otherwise the Company may, at its discretion, rescind the Award in its entirety.

(b) No Rights to Employment. The Employee acknowledges that the grant of the Deferred Equity Units and/or Performance Units and this Agreement do not constitute an express or implied promise of continued engagement as an employee or consultant of, or provider of services to, the Company or any of its affiliates for any period or at all. Nothing contained in this Agreement shall interfere in any way with the right of the Company and its affiliates, subject to the terms of any separate employment or consulting agreement or provision of law, at any time to terminate such employment or consulting arrangement or other association or to modify the terms and conditions of the Employee’s employment or other association with the Company and its Affiliates.

10. Administration. The Operating Committee of the Company (or successor to such committee) (the “Committee”) shall administer this Agreement and interpret, construe and apply its provisions, and determine entitlement to benefits, all in its sole discretion, and any determination hereunder shall be binding on the Employee, the Company and all other persons. The Committee may temporarily suspend all cash payments under this Agreement in the event that it deems such suspension in the best interests of the Company, the GP and the LP, provided that it shall reinstate such cash payments as soon as practicable, in the Committee’s sole discretion, following such suspension.

11. Common Share Adjustments. In the event of any reclassification, recapitalization, split-up, reverse split or similar readjustment in any Common Shares of the GP or Common Shares of the LP, appropriate adjustments shall be made with respect to the Common Shares of the GP or the LP, as applicable, underlying the Deferred Equity Units and the Performance Units and the Per Share Value, but only for purposes of determining whether the Performance Target has been achieved pursuant to Sections 3(a) or 3(d) hereof.

12. Consent to Jurisdiction and Service of Process. All judicial proceedings brought against Employee with respect to this Subscription Agreement may be brought in any state or federal court of competent jurisdiction sitting in New York, and by execution and delivery of this Subscription Agreement, Employee accepts for himself or herself and in connection with its properties, generally and unconditionally, the nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Subscription Agreement. The parties hereby agree to waive their respective rights to trial by jury in connection with any dispute between them arising out of this Agreement. A copy of any process served shall also be mailed by registered mail to Employee at his or her address referred to in Section 8 hereof, except that unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of process. If any person appointed by Employee refuses to accept service, Employee hereby agrees that service upon him or her by mail shall constitute sufficient notice. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Company, LP or the GP to bring proceedings against Employee in the courts of any other jurisdiction.

[Signature Page Follows]

The undersigned Employee hereby executes this Agreement, as of February 24, 2010.

[name]

[address]


SILVERCREST ASSET MANAGEMENT GROUP LLC

By:
Name:
Title:


SILVERCREST L.P.

By:		SILVERCREST GP LLC
Its:		General Partner

		By:
		Name: G. Moffett Cochran
		Title: Chief Executive Officer


SILVERCREST GP LLC

By:
Name: G. Moffett Cochran
Title: Chief Executive Officer

Schedule A

[number] Deferred Equity Units, representing the right to receive, subject to vesting:

•

[number] Common Shares of the GP

•

[number] Common Shares of the LP

[number] Performance Units, representing the right to receive, subject to vesting:

•

[number] Common Shares of the GP

•

[number] Common Shares of the LP

Sched. A-1

EX-10.3 5 d411733dex103.htm FORM OF INDEMNIFICATION AGREEMENT WITH DIRECTORS Form of Indemnification Agreement with directors

Exhibit 10.3

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (“Agreement”) is made as of [ ], 2011 by and between Silvercrest Asset Management Group Inc., a Delaware corporation (the “Company”), and [ ] (“Indemnitee”).

RECITALS

WHEREAS, highly competent persons have become more reluctant to serve on the board of directors of corporations as independent directors unless they are provided with adequate protection through insurance and adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

WHEREAS, the Company maintains on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities, the Certificate of Incorporation of the Company (the “Certificate”) requires indemnification of the directors, and Indemnitee may also be entitled to indemnification pursuant to the Delaware General Corporation Law, as amended (the “DGCL”);

WHEREAS, Section 145 of the DGCL expressly provides that the indemnification provisions set forth therein are not exclusive, and thereby contemplates that contracts may be entered into between the Company and members of the Board of Directors of the Company (the “Board”), and other persons with respect to indemnification;

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining independent directors, which is a result of the uncertainties relating to insurance and statutory indemnification, is detrimental to the best interests of the Company’s stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

WHEREAS, the Board has determined that it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, the Indemnitee to the fullest extent permitted by applicable law so that he will serve or continue to serve the Company free from undue concern that he will not be so indemnified;

WHEREAS, this Agreement is a supplement to and in furtherance of the Certificate and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder;

WHEREAS, Indemnitee may not be willing to continue to serve as a director without the protection of a contractual obligation on the part of the Company to indemnify Indemnitee, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be indemnified as set forth in this Agreement; and

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. Services to the Company. Indemnitee agrees to serve as a director of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise (as defined below)) and Indemnitee. Indemnitee acknowledges that he may be removed as a director at any time in accordance with the Certificate, the Company’s By-laws, and the DGCL. The foregoing notwithstanding, this Agreement shall continue in force after Indemnitee has ceased to serve as a director of the Company.

Section 2. Definitions. As used in this Agreement:

(a) A “Change in Control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following events:

i. Acquisition of Stock by Third Party. Any Person (as defined below), is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding securities;

ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(a)(i), 2(a)(iii) or 2(a)(iv)) whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board;

iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 51% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of such surviving entity;

iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and

v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement.

For purposes of this Section 2(a), the following terms shall have the following meanings:

(A) “Affiliate” shall have the meaning given to such term pursuant to Rule 12b-2 promulgated under the Exchange Act (as defined below).

(B) “Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner shall exclude any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.

(D) “Person” shall have the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person shall exclude (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(b) “Corporate Status” describes the status of a person who is or was a director, employee or agent of the Company or of any other corporation, limited liability company, partnership or joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.

(c) “Disinterested Director” means a director of the Company who is not and was not a party to, nor an officer, a director or partner of a party to, the Proceeding in respect of which indemnification is sought by Indemnitee.

(d) “Enterprise” shall mean the Company and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, employee, agent or fiduciary.

(e) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also shall include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, (ii) any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, (iii) all interest, assessments and other charges paid or payable in connection with or in respect of the Expenses, and (iv) for purposes of Section 12(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(f) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

(g) The term “Proceeding” shall include any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director of the Company, by reason of any action taken by him or of any action on his part while acting as director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement; except one initiated by an Indemnitee to enforce his rights under this Agreement.

(h) References to “other enterprise” shall include employee benefit plans; references to “fines” shall include any excise tax assessed with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in manner “not opposed to the best interests of the Company” as referred to in this Agreement.

Section 3. Indemnity in Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3, if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein; provided that it is determined (in accordance with Section 10(a)) in the specific case that indemnification of such person is permissible under the circumstances because such person has met the standard of conduct for indemnification specified in Section 145 of the DGCL.

Section 4. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provisions of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. If the Indemnitee is not wholly successful in such Proceeding, the Company also shall indemnify Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which the Indemnitee was successful. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 5. Indemnification For Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the fullest extent permitted by applicable law and to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

Section 6. Additional Indemnification.

(a) Notwithstanding any limitation in Section 3 or Section 4, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee in connection with the Proceeding.

(b) For purposes of Section 6(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

i. to the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL, and

ii. to the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its directors.

Section 7. Exclusions. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or

(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (as defined in Section 2(a)), or similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act; or

(c) except as provided in Section 12(d), in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

Section 8. Advances of Expenses. Notwithstanding any provision of this Agreement to the contrary, upon (i) receipt of a written affirmation of Indemnitee’s good faith belief that he has met the standard of conduct prescribed by the DGCL; (ii) receipt

of an undertaking of Indemnitee to repay the amount paid by the Company if it is ultimately determined that Indemnitee is not entitled to indemnification by the Company; and (iii) a determination (made in accordance with Section 10(a)) that the facts then known to those making the determination would not preclude indemnification under the DGCL, the Company shall advance, to the extent not prohibited by law, the expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Advances shall be unsecured and interest free. Advances shall be made without regard to Indemnitee’s ability to repay the expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing an action to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. This Section 8 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 7.

Section 9. Procedure for Notification and Defense of Claim.

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such action, suit or proceeding. The delay or omission to notify the Company will not relieve the Company from any liability which it may have to Indemnitee otherwise than under this Agreement. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.

(b) The Company will be entitled to participate in the Proceeding at its own expense.

Section 10. Procedure Upon Application for Indemnification.

(a) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 9(a) or for advances pursuant to the first sentence of Section 8, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, provided that such directors constitute a quorum of the Board, (B) if a quorum of the Board cannot be obtained under the foregoing clause (A), by a committee of two (2) or more Disinterested Directors designated by a majority vote of members of the Board (including directors other than Disinterested Directors) constituting a quorum of the Board, (C) if there are not at least two (2) Disinterested Directors or, if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered

to Indemnitee or (D) if so directed by the Board, by the stockholders of the Company (excluding shares owned by or voted under the control of directors that are at the time parties to the Proceeding); provided, however, that if Independent Counsel makes the determination that Indemnitee is entitled to indemnification under the DGCL, the authorization of indemnification and the evaluation as to reasonableness of expenses shall be made by the persons set forth in the foregoing clause (ii)(A) or, if necessary, clause (ii)(B). If, upon written request made by Indemnitee pursuant to Section 9(a), it is so determined that Indemnitee is entitled to indemnification under the DGCL, payment to Indemnitee of all authorized indemnification amounts, including expenses determined to be reasonable, shall be made within thirty (30) days after such determination.

(b) Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.

Section 11. Presumptions and Effect of Certain Proceedings.

(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

(b) Subject to Section 12(e), if the person, persons or entity empowered or selected under Section 10(a) to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty (60) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request

for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 60-day period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 11(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 10(a) and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board has resolved to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy-five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a).

(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful.

(d) Reliance as Safe Harbor. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with the reasonable care by the Enterprise. The provisions of this Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(e) Actions of Others. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

Section 12. Remedies of Indemnitee.

(a) Subject to Section 12(e), in the event that (i) a determination is made pursuant to Section 10 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8, (iii)

no determination of entitlement to indemnification shall have been made pursuant to Section 10(a) within ninety (90) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 4 or Section 5 or the last sentence of Section 10(a) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor, (v) payment of indemnification pursuant to Section 3 or Section 6 is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of his entitlement to such indemnification or advancement of Expenses. Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such Proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply in respect of a Proceeding brought by Indemnitee to enforce his rights under Section 4. The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

(b) In the event that a determination shall have been made pursuant to Section 10(a) that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 12, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 10(a) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

(d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement. It is the intent of the Company that the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company shall

indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within thirty (30) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

(e) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

Section 13. Non-exclusivity; Survival of Rights; Insurance; Subrogation.

(a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate, the Company’s By-laws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Certificate, the Company’s By-laws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

(b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

(c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable (or for which advancement is provided hereunder) hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

(e) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, employee or agent of any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise.

Section 14. Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) six (6) years after the date that Indemnitee shall have ceased to serve as a director of the Company or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 12 relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his heirs, executors and administrators.

Section 15. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 16. Enforcement.

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director of the Company.

(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate, the By-laws of the Company and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

Section 17. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties thereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

Section 18. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.

Section 19. Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (b) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed, (c) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (d) sent by facsimile or other electronic transmission, with receipt of oral confirmation that such transmission has been received:

(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide to the Company.

(b) If to the Company to:

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

Attention: David J. Campbell

Fax: (212) 649-0625

Email: dcampbell@silvercrestgroup.com

or to any other address as may have been furnished to Indemnitee by the Company.

Section 20. Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

Section 21. Applicable Law. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.

Section 22. Identical Counterparts. This Agreement may be executed in one or more counterparts and by facsimile or other electronic transmission, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 23. Miscellaneous. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

IN WITNESS WHEREOF, the parties have caused this Indemnification Agreement to be signed as of the day and year first above written.


Silvercrest Asset Management Group Inc.		INDEMNITEE:

By:
	Name:	Name:
	Title:
		Address:

EX-21.1 6 d411733dex211.htm LIST OF SUBSIDIARIES List of Subsidiaries

EXHIBIT 21.1

Subsidiaries of Silvercrest Asset Management Group Inc.


Subsidiary		Organization and Jurisdiction
Silvercrest LP		Delaware Limited Partnership
Silvercrest Investors LLC		Delaware Limited Liability Company
Silvercrest Investors II LLC		Delaware Limited Liability Company
Silvercrest Asset Management Group LLC		Delaware Limited Liability Company
Silvercrest Financial Services Inc.		New York Corporation
MW Commodity Advisors, LLC		Delaware Limited Liability Company

EX-23.1 7 d411733dex231.htm CONSENT OF DELOITTE & TOUCHE LLP <![CDATA[Consent of Deloitte & Touche LLP]]>

Exhibit 23.1

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the use in this Registration Statement on Form S-1 of our report dated May 11, 2012 relating to the balance sheet of Silvercrest Asset Management Group Inc. as of May 11, 2012 appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

New York, New York

September 18, 2012

EX-23.2 8 d411733dex232.htm CONSENT OF DELOITTE & TOUCHE LLP <![CDATA[Consent of Deloitte & Touche LLP]]>

Exhibit 23.2

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the use in this Registration Statement on Form S-1 of our report dated May 11, 2012 (August 13, 2012 as to the effects of the restatement discussed in Note 2) relating to the consolidated financial statements of Silvercrest L.P. and subsidiaries (which report expresses an unqualified opinion and includes an explanatory paragraph referring to a change in the annual goodwill impairment testing date) appearing in the Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the heading “Experts” in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

New York, New York

September 18, 2012

EX-23.3 9 d411733dex233.htm CONSENT OF FULVIO & ASSOCIATES, LLP <![CDATA[Consent of Fulvio & Associates, LLP]]>

Exhibit 23.3

LOGO

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated September 2, 2011 for Milbank Winthrop and Co., Inc., in the Registration Statement on Form S-1 and related Prospectus of Silvercrest Asset Management Group Inc. for the registration of shares of Class A common stock.

LOGO

New York, New York

September 14, 2012

LOGO

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated August 30, 2011 for Milbank Winthrop and Co., Inc., in the Registration Statement on Form S-1 and related Prospectus of Silvercrest Asset Management Group Inc. for the registration of shares of Class A common stock.

LOGO

New York, New York

September 14, 2012

LOGO

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated March 15, 2012 for MW Commodity Advisors, LLC, in the Registration Statement on Form S-1 and related Prospectus of Silvercrest Asset Management Group Inc. for the registration of shares of Class A common stock.

LOGO

New York, New York

September 14, 2012

LOGO

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated October 28, 2011 for MW Commodity Advisors, LLC, in the Registration Statement on Form S-1 and related Prospectus of Silvercrest Asset Management Group Inc. for the registration of shares of Class A common stock.

LOGO

New York, New York

September 14, 2012

EX-99.1 10 d411733dex991.htm FORM S-1 FORM S-1

EXHIBIT 99.1

The Registrant is submitting this draft registration statement confidentially as an emerging growth company pursuant to Section 6(e) of the Securities Act of 1933.

As filed with the Securities and Exchange Commission on , 2012

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM S-1

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933

Silvercrest Asset Management Group Inc.

(Exact name of each registrant as specified in its charter)

Delaware

6282

45-5146560

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

David J. Campbell

General Counsel

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Floyd I. Wittlin

Christina E. Melendi

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

(212) 705-7000

Robert D. Goldbaum

David S. Huntington

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be Registered(1)	Proposed Maximum offering price per share	Proposed maximum aggregate offering price(2)	Amount of registration fee
Class A common stock, par value, $0.01 per share

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)	Including shares of Class A common stock which may be purchased by the underwriters to cover over-allotments, if any.

The information in this preliminary prospectus is not compete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2012

PRELIMINARY PROSPECTUS

Shares

LOGO

Silvercrest Asset Management Group Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of Silvercrest Asset Management Group Inc. We are offering shares of Class A common stock and the selling stockholders identified in this prospectus are offering an additional shares of Class A common stock. Silvercrest Asset Management Group Inc. will not receive any of the proceeds from the sale of the shares being sold in this offering by the selling stockholders.

The underwriters have the option to purchase up to an additional shares of our Class A common stock from G. Moffett Cochran, our Chairman and Chief Executive Officer, within 30 days of the date of this prospectus on the same terms and conditions set forth below at the initial public offering price, less the underwriting discounts and commissions.


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions (1)	$	$
Proceeds, before expenses, to Silvercrest Asset Management Group Inc.	$	$

(1)	See “Underwriting” beginning on page 131.

Sandler O’Neill + Partners, L.P., on behalf of the underwriters, expects to deliver the shares of Class A common stock on or about , 2012, subject to customary closing conditions.



Sandler O’Neill + Partners, L.P.		Raymond James

The date of this prospectus is , 2012.

TABLE OF CONTENTS


	Page

PROSPECTUS SUMMARY		1

RISK FACTORS		13

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE		36

USE OF PROCEEDS		47

DIVIDEND POLICY		48

CAPITALIZATION		49

DILUTION		50

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		51

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION		55

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		64

BUSINESS		80

REGULATORY ENVIRONMENT		95


	Page

MANAGEMENT		97

COMPENSATION DISCUSSION AND ANALYSIS		102

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		116

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		118

DESCRIPTION OF CAPITAL STOCK		120

SHARES ELIGIBLE FOR FUTURE SALE		125

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK		127

UNDERWRITING		131

LEGAL MATTERS		134

EXPERTS		134

WHERE YOU CAN FIND MORE INFORMATION		134

INDEX TO FINANCIAL STATEMENTS		F-1

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your decision to invest in our Class A common stock. This summary is qualified in its entirety by the more detailed information, and consolidated financial statements and notes thereto included in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding to invest in our Class A common stock. Unless otherwise indicated, “Silvercrest” refers solely to Silvercrest Asset Management Group Inc. The terms “we,” “us” and “our” refer to Silvercrest L.P. and its consolidated subsidiaries when referring to events occurring prior to this offering and these terms refer to Silvercrest Asset Management Group Inc. and its consolidated subsidiaries, when referring to events occurring after this offering.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. As of March 31, 2012, we managed assets totaling $11.1 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance together with high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of March 31, 2012, we had 375 client relationships with an average size of $28 million which represented approximately 98% of our assets under management and our top 50 relationships averaged $157 million.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Our organic growth has been complemented by selective hiring and by four accretive acquisitions which have expanded not only our assets under management, but also our professional ranks, geographic footprint and service capabilities. Client assets have grown on average more than $1 billion per year since our founding and our annual client retention rate has averaged 98% since 2006. As shown below, this results in a compound annual growth rate in assets under management since inception in excess of 50%.

LOGO

Our clients engage us to advise them on traditional and alternative investment strategies. Our clients receive a full menu of proprietary investment capabilities together with a focused array of complementary non-proprietary capabilities offered by unaffiliated firms selected by us. Our fees for our non-proprietary services, investment advisory services, and family office and related administrative services are structured to align our financial incentives with those of our clients to ensure they receive unconflicted advice. Our revenues increase if our clients’ assets grow in value; our revenues decrease if our clients’ assets decline in value. Our fees for family office services and related administrative services are generally not based on or correlated to market values. These services create strong client relationships and contribute meaningfully to our record of client retention.

As of year-end 2011, approximately 95% of our assets under management were held for individual clients and 5% for institutional clients. Based on the strong investment results of our proprietary equity strategies, we have begun to attract a significant amount of institutional investor interest. The following chart summarizes the performance of each of our principal equity strategies relative to their appropriate benchmarks since inception.

LOGO

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. We believe our track record of superior performance and our trusted reputation within the wealth management industry and among our clients is solely attributable to the talent and pedigree of our employees. As of March 31, 2012, we had 88 employees, including 37 employee-owners.

Our Market Opportunity

Key Competitive Strengths

•

Independent, Unconflicted Advice. We are an independent registered investment adviser and are not affiliated with a broker/dealer or a commercial bank. We employ a partnership culture and mindset with 37 of our employees owning equity in our company. We do not receive commissions, rebates, spreads or any other indirect or undisclosed forms of compensation. We are not controlled by any client or family and all of our investment decisions are made in the best interests of our clients. All of our fees are fully disclosed and transparent to our clients who have an unrestricted right to accept or reject them.

•

Demonstrated Track Record of Growing Assets Under Management. We have expanded our business through a combination of organic growth and acquired growth. Our value proposition to clients has enabled us to win market share from competitors. Since 2004, we have successfully completed four strategic, accretive acquisitions of separate registered investment advisers and we have integrated and rebranded their operations into our company. These factors, combined with strong investment returns, have produced a compound annual growth rate in total client assets of 50% since our inception.

•

Long-Term Track Record of Superior Investment Performance. We have a proven ability to generate excellent investment performance through both our asset allocation work on behalf of clients as well as through security selection. We have a team-based approach that utilizes the same body of research to manage all of our proprietary equity strategies, which we believe generates superior, more consistent returns over time. Through March 31, 2012, each of our proprietary equity strategies has outperformed its respective benchmark since inception.

•

Loyal, Diverse Base of Clients. As a result of our focus on delivering outstanding investment performance combined with highly personalized client service, we have developed significant long-term relationships with a large majority of our clients. Since 2006, our annual client retention rate has averaged 98%. Today, our clients are represented in 42 states and the District of Columbia and no single client represents more than 5% of our total revenue.

•

Our Growth Strategy

•

Continuing To Support Our Organic Growth. We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm that can deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown in excess of $1 billion per year without a commensurate increase in headcount. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients through client referrals, as well as through our recently created business development team charged with identifying and then creating customized solicitations for newly formed wealth.

•

Continuing Our Successful Track Record of Acquired Growth. From our inception, our organic growth has been complemented by selective hiring and strategic, accretive acquisitions. We expect to continue to acquire compatible wealth management companies, and recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest to be closer to both our clients and to prospective clients.

•

Our Structure and Reorganization

On July 11, 2011, Silvercrest was incorporated as a Delaware corporation. Silvercrest GP LLC is currently the general partner of Silvercrest L.P., which is the managing member of the operating subsidiary, Silvercrest Asset Management Group LLC. Concurrently with the consummation of this offering, Silvercrest Asset Management Group Inc. will acquire all of the Class A units of Silvercrest L.P. from Silvercrest GP LLC and approximately % of the Class B units from existing limited partners of Silvercrest L.P. in exchange for shares of our Class A common stock. As a result, we will become the general partner of Silvercrest L.P. and Silvercrest Asset Management Group LLC will become our operating subsidiary. We refer to this series of transactions as the reorganization. All of the Class B units acquired by us as part of the reorganization will be immediately converted into Class A units.

Immediately after our acquisition of the interests in Silvercrest L.P., our only material asset will be our ownership of all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran) will be held by 37 of our principals. If the underwriters exercise their option to purchase additional shares of Class A common stock from Mr. Cochran, we will acquire additional Class B units from him in exchange for shares of our Class A common stock sufficient to satisfy the exercise of such option, and such Class B units acquired by us will be immediately converted into Class A units. See “The Reorganization and Our Holding Company Structure” for a description of the reorganization and the structure of our company.

LOGO

(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

(3)	Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units which will represent the right to receive % of the distributions made by Silvercrest L.P.

(4)	We will hold Class A units (or Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full) which will represent the right to receive % of the distributions made by Silvercrest L.P.

The Offering


Class A common stock offered by us		shares of Class A common stock.

Class A common stock offered by the selling
stockholders		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares from G. Moffett Cochran.

Class A common stock to be outstanding
immediately after this offering		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares. If all Class B units of Silvercrest L.P. were to be exchanged for shares of our Class A common stock, shares of Class A common stock would be outstanding immediately after this offering.

Class B common stock to be outstanding
immediately after this offering		shares of Class B common stock, or shares of Class B common stock if the underwriters exercise in full their option to purchase additional shares. Shares of our Class B common stock have voting rights but no economic rights (including no rights to dividends or distribution upon liquidation) and will be issued to our principals in an amount equal to the number of Class B units of Silvercrest L.P. that our principals hold following the reorganization. When a Class B unit is exchanged for a share of Class A common stock, the corresponding share of Class B common stock will be cancelled. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.”

Use of proceeds		We will receive net proceeds from our sale of Class A common stock in this offering of approximately $ million based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus). We intend to use the net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions.

Voting rights and stockholders’ agreement		One vote per share of Class A common stock and Class B common stock. Our principals who hold shares of Class B common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote, while employed by us, the shares of Class A common stock and Class B common stock that they hold in accordance with the decision of the Executive Committee of Silvercrest L.P., consisting initially of G. Moffett Cochran, David J. Campbell, Scott A. Gerard and Richard R. Hough III. The vote of each member of the Executive Committee will be weighted based on the number of Class B units owned by the member relative to the number of Class B units held by all members of the Executive Committee at the time of a vote. See “The Reorganization and Our Holding Company Structure—Voting Rights of Class A and Class B Stockholders” and “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders.”


Class B unit exchange		Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., each Class B unit will be exchangeable for a share of our Class A common stock, subject to the exchange timing and volume limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” All Class B units held by a principal will be exchanged automatically for shares of our Class A common stock upon the termination of employment of such principal, other than in the case of retirement, subject to certain limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

Resale and registration rights		Pursuant to a resale and registration rights agreement that we will enter into with the holders of Class B units, we will agree to use our best efforts to file a registration statement for the sale of the shares of our Class A common stock that are issuable upon exchange of Class B units as soon as practicable after we become eligible to file a registration statement on Form S-3, which we expect to be one year after the consummation of this offering. We expect to cause that registration statement to be declared effective by the Securities and Exchange Commission, or the SEC, as soon as practicable thereafter. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement” for a description of the timing and manner limitations on resales of these shares of our Class A common stock.

Dividend policy		Upon completion of this offering, we will have no material assets other than our ownership of Class A units of Silvercrest L.P. Accordingly, our ability to pay dividends will depend on distributions from Silvercrest L.P. We intend to cause Silvercrest L.P. to make distributions to us with available cash generated from its subsidiaries’ operations in an amount sufficient to cover dividends. If Silvercrest L.P. makes such distributions, the holders of its Class B units will be entitled to receive equivalent distributions on a pro rata basis. The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors and may be discontinued at any time. In determining the amount of any future dividends, our board of directors will take into account any legal or contractual limitations, our actual and anticipated future earnings, cash flow, debt service and capital requirements and the amount of distributions to us from Silvercrest L.P. Following this offering, we intend to pay quarterly cash dividends. See “Dividend Policy.”

Listing symbol		“SAMG.”

Unless otherwise noted, the number of shares of Class A common stock outstanding after this offering and other information based thereon in this prospectus excludes:

•

shares of Class A common stock which may be issued upon the exercise of the underwriters’ option to purchase additional shares;

•

shares of Class A common stock reserved for issuance upon exchange of the Class B units that will be outstanding immediately after this offering;

•

Risk Factors

You should consider carefully the information set forth in the section entitled “Risk Factors” beginning on page 13 and all other information contained in this prospectus before investing in our Class A common stock.

Summary Selected Historical and Pro Forma Consolidated Financial Data


	Historical Silvercrest L.P.									Unaudited Pro Forma Silvercrest
	Year Ended December 31,									Year Ended December 31,
	2011			2010			2009			2011

Statements of operations data:

Revenue:
Management and advisory fees	$	37,869		$	32,442		$	29,341
Performance fees and allocations		85			548			96
Family office services income		4,833			3,841			3,097

Total revenue		42,787			36,831			32,534


Expenses:
Compensation and benefits		17,492			16,528			15,630
General, administrative and other		10,849			9,459			13,006
Impairment charges		—			—			1,691

Total expenses		28,341			25,987			30,327

Income before net loss from investment activities of Silvercrest Funds and other income (expenses)		14,446			10,844			2,207

Other income (expense):
Gain on extinguishment of debt		—			—			3,934
Gain on settlement with former LongChamp shareholders		—			—			1,470
Loss on forgiveness of notes receivable		(34	)		(508	)		—
Change in value of options granted to equity holders		—			2			134
Interest income		187			231			213
Interest expense		(164	)		(241	)		(467	)
Other (expense) income		(210	)		30			—
Equity income (loss) from investments		950			1,241			274

Total other income (expense)		729			755			5,558


Income (loss) before non-controlling interests in income of consolidated entities and (provision) benefit for income taxes:		15,175			11,599			7,765

Non-controlling interests in income of consolidated entities		—			—			—

Income before provision for income taxes		15,175			11,599			7,765
(Provision) benefit for income taxes		(566	)		(657	)		321

Net income	$	14,609		$	10,942		$	8,086


	Historical Silvercrest L.P.									Unaudited Pro Forma Silvercrest
	Year Ended December 31,									Year Ended December 31,
	2011			2010			2009			2011

Selected statements of financial position data:

Total assets	$	45,262		$	33,079		$	29,964
Notes payable		4,809			2,957			7,120
Total liabilities		15,751			12,490			14,893
Redeemable partners’ capital		85,177			45,619			34,220
Partners’ deficit		(55,666	)		(25,030	)		(19,148	)

Selected unaudited operating data:

Assets under management (billions of dollars) (1)	$	10.1		$	9.2		$	8.8
Adjusted EBITDA (2)	$	10,839		$	9,068		$	6,449
Adjusted EBITDA margin (3)		25.3	%		24.6	%		19.8	%

(1)	Reflected as of the last day of the period.

(2)

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a basis consistent with U.S. generally accepted accounting principles, or GAAP, with Adjusted EBITDA, a non-GAAP financial measure of earnings. EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishments of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Year Ended December 31
	2011			2010			2009

Reconciliation of non-GAAP financial measures:

Net income	$	14,609		$	10,942		$	8,086
Provision for income taxes		566			657			(321	)
Interest expense		164			241			467
Interest income		(187	)		(231	)		(213	)
Partner incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)
Depreciation and amortization		1,469			1,379			1,531
Equity-based compensation		1,060			583			—
Other adjustments (B)		1,933			670			(460	)


Adjusted EBITDA	$	10,839		$	9,068		$	6,499

(A)	Partner incentive allocations are treated as distributions of net income and are recorded when paid.

(B)	Other adjustments consist of the following:


	Year Ended December 31,
	2011		2010			2009
Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)
Write-off of LongChamp revenue (b)		—		64			557
Loss on sub-lease (c)		150		—			—
Lease abandonment charge (d)		—		—			1,154
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691
Client reimbursement		—		—			1,132
Fund redemption costs (f)		827		—			—
IPO professional fees		578		—			—
Milbank acquisition costs (g)		222		—			—
Severance		69		100			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)
Other (i)		53		—			—


Total other adjustments	$	1,933	$	670		$	(460	)

(a)	Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

(c)	Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)	Reflects a charge for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and subleased through September 29, 2017.

(e)	Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)	Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)	Reflects the legal and accounting fees associated with the closing of the Milbank Winthrop & Co., Inc. acquisition that were expensed in 2011.

(h)	Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)	Represents non-recurring professional fees related to the Milbank acquisition and a Silvercrest fund.

(3)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

RISK FACTORS

Risks Related to our Investment Performance and the Financial Markets

If market conditions improve greatly, driving the prices of the securities in our clients’ accounts higher, it may lead to withdrawals or redemptions. In many cases, we hold only a portion of our clients’ complete financial portfolio. This is because many clients prefer to diversify their portfolio among more than one asset manager or investment type. As to those clients, if the portion of their portfolio held by us increases significantly, it may become too large a percentage of their overall portfolio, and they may withdraw assets from our management and invest it elsewhere, thereby rebalancing their overall portfolio and returning their allocation to us to its prior level.

•

Our investment strategies can perform poorly for a number of reasons, including general market conditions, investment decisions that we make and the performance of the companies in which we invest on behalf of our clients. In addition, while we seek to deliver long-term value to our clients, volatility may lead to under-performance in the near term, which could adversely affect our results of operations.

The historical returns of our existing investment strategies may not be indicative of their future results or of the future results of investment strategies we may develop in the future.

We have presented the historical returns of our existing investment strategies under “Business—Our Business Model.” The historical returns of our strategies should not be considered indicative of the future results of these strategies or of the results of any other strategies that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The historical performance presented herein is as of December 31, 2011 and for periods then ended. The performance we achieve as of a subsequent date and for a subsequent period may be higher or lower and the difference may be material. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, such as in 2008, the first quarter of 2009 and the second quarter of 2010, general economic and market conditions have negatively affected investment opportunities and our strategies’ returns. These negative conditions may occur again, and in the future, we may not be able to identify and invest in profitable investment opportunities within our current or future strategies.

We derive a substantial portion of our revenues from a limited number of our strategies.

As of December 31, 2011, $6.1 billion of our assets under management were concentrated in discretionary managed accounts, representing approximately 85.7% of our investment management fees for the year ended December 31, 2011. Proprietary funds and sub-advised funds represented an additional $832.0 million and $170.8 million of our assets under management, respectively, as of December 31, 2011, representing approximately 10.0% and 4.3% of our investment management fees, respectively, for the year ended December 31, 2011. As a result, a substantial portion of our operating results depends upon the performance of those strategies, and our ability to retain client assets. If a significant portion of the investors in our larger strategies decided to withdraw their investments or terminate their investment management agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those strategies would decline, which would have a material adverse effect on our results of operations and financial condition.

Certain of our strategies are or may derive a significant portion of their total assets under management from assets of a single client or a small number of clients. If any such clients withdraw all or a portion of their assets under management, the assets under management levels of our business would be significantly affected, which would negatively impact our management fees and could have a material adverse effect on our results of operations and financial condition.

We may not be able to maintain our current fee structure for any number of reasons, including as a result of poor investment performance, competitive pressures or changes in our business mix. In recent years, there has been a general trend toward lower fees in the investment management industry, and some of our investment strategies, because they tend to invest in larger-capitalization companies and were designed to have larger capacity and to appeal to larger clients, have lower fee schedules. In order to maintain our fee structure in a competitive environment, we must be able to continue to provide clients with investment returns and service that our clients believe justify our fees. We may not succeed in providing the investment returns and service that will allow us to maintain our current fee structure. If our investment strategies perform poorly, we may be forced to lower our fees in order to retain current, and attract additional, assets to manage. Furthermore, if a larger part of our assets under management are invested in our larger capacity, lower fee strategies, our revenue could be adversely affected.

We derive most of our revenues from assets under management which may be reduced at any time by our clients.

termination of his investment advisory agreement with us. Our investment advisory agreements are terminable by our clients upon short notice or no notice. These investment management agreements and client relationships may be terminated or not renewed for any number of reasons. The decrease in revenues that could result from a reduction in assets under management or the termination of a material client relationship or group of client relationships could have a material adverse effect on our business.

The ability of our investment teams to deliver strong investment performance depends in large part on their ability to identify appropriate investment opportunities in which to invest client assets. If the investment team for any of our strategies is unable to identify sufficiently appropriate investment opportunities for existing and new client assets on a timely basis, the investment performance of the strategy could be adversely affected. In addition, if we determine that there are insufficient investment opportunities available for a strategy, we may choose to limit the growth of the strategy by limiting the rate at which we accept additional client assets for management under the strategy, closing the strategy to all or substantially all new investors or otherwise taking action to limit the flow of assets into the strategy. If we misjudge the point at which it would be optimal to limit access to or close a strategy, the investment performance of the strategy could be negatively impacted. The risk that sufficiently appropriate investment opportunities may be unavailable is influenced by a number of factors, including general market conditions, but is particularly acute with respect to our Small Cap and SMID Cap strategies that focus on small-cap investments, and is likely to increase as our assets under management increase, particularly if these increases occur very rapidly. If we are unable to identify appropriate investment opportunities in which to invest client assets, our growth and results of operations may be negatively affected.

Our investment strategies may not obtain attractive returns in the short-term or during certain market periods.

In particular, a prolonged period in which the growth style of investing outperforms the value style may cause our investment strategy to go out of favor with some clients, consultants or third-party intermediaries. Poor performance relative to peers, coupled with changes in personnel, extensive periods in particular market environments or other difficulties may result in significant withdrawals of client assets, client departures or a reduction in our assets under management.

As of December 31, 2011, our Core International Equity Strategy, which invests in companies domiciled outside of the United States, accounted for approximately 0.5% of our assets under management. In addition, some of our other strategies also invest on a more limited basis in securities of non-U.S. companies. Fluctuations in foreign currency exchange rates could negatively affect the returns of our clients who are invested in these strategies. In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our assets under management, which, in turn, could result in lower revenue since we report our financial results in U.S. dollars.

Investments in non-U.S. issuers may also be affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty, particularly as a result of the recent decline in economic conditions. Declining tax revenues may cause governments to assert their ability to tax the local gains and/or income of foreign investors (including our clients), which could adversely affect clients’ interests in investing outside the United States. Many financial markets are not as developed, or as efficient, as the U.S. financial markets, and, as a result, those markets may have limited liquidity and higher price volatility. Liquidity also may be adversely affected by political or economic events within a particular country, and our ability to dispose of an investment also may be adversely affected if we increase the size of our investments in smaller non-U.S. issuers. Non-U.S. legal and regulatory environments, including financial accounting standards and practices, also may be different, and there may be less publicly available information about such companies. These risks could adversely affect the performance of our Core International Equity Strategy and may be particularly acute in the emerging or less developed markets in which we invest.

Risks Related to our Key Professionals

The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business.

We depend on the skills and expertise of our investment professionals and our success depends on our ability to retain the key members of our senior management and investment teams, who possess substantial experience in investing and have been primarily responsible for the historically strong investment performance we have achieved. In particular, we depend on the portfolio managers. As of December 31, 2011, $2.9 billion, representing 28.9% of our assets under management, were managed using one of our proprietary equity strategies. Our five largest strategies were Large Cap, Multi Cap, Small Cap, Equity Income and Focused Value which represented 11.6%, 6.5%, 4.4%, 4.3% and 1.2% of assets under management, respectively. Each of these five strategies has been managed by its current portfolio manager since its inception at Silvercrest.

Because of the long tenure and stable track record of our portfolio managers, our clients generally attribute the investment performance we have achieved to these individuals. While we have generally experienced very few departures among our portfolio managers, there can be no assurance that this stability will continue in the future. The departure of one of a strategy’s portfolio managers could cause clients to withdraw funds from the strategy,

which would reduce our assets under management, our investment management and other fees and, if we were not able to reduce our expenses sufficiently, our net income, and these reductions could be material to our business. The departure of one of a strategy’s portfolio managers also could cause clients to refrain from allocating additional funds to the strategy or delay such allocation of additional funds until a sufficient track record under a new portfolio manager or managers has been established. This would have a negative effect on the future growth of our assets under management and, therefore, our results of operations.

We also depend on the contributions of our senior management team led by G. Moffett Cochran, our Chairman and Chief Executive Officer, who co-founded our company and has been the primary architect of our business strategy, as well as other members of our senior management team. Mr. Cochran is 61 years old and has no current plans to retire. In 2002, he had an islet cell tumor removed from his pancreas and in 2005, he was found to have neuroendocrine tumors on his liver. Since 2005, Mr. Cochran has been under the treatment of a physician and has continuously performed his duties as Chief Executive Officer of our company on a full-time basis. There can be no assurance, however, that Mr. Cochran will not reduce his responsibilities or retire earlier than expected if his health condition were to worsen in the future. In addition, our senior marketing and client service personnel have direct contact with our institutional clients and consultants and other key individuals within each of our distribution channels. The loss of any of these key professionals could limit our ability to successfully execute our business strategy, prevent us from sustaining the historically strong investment performance and adversely affect our ability to retain or attract client assets.

Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future.

Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future. Our ability to attract and retain these personnel will depend heavily on the amount and structure of compensation and opportunities for equity ownership we offer. Historically we have offered key employees equity ownership through interests in Silvercrest L.P. and Silvercrest GP LLC. Those key employees who are currently limited partners of Silvercrest L.P. and Silvercrest GP LLC will hold these interests in the form of Class B units immediately following this offering. In connection with our transition to a public company, we expect to implement a new compensation structure that uses a combination of cash and equity-based incentives as appropriate. Although we intend for overall compensation levels to remain commensurate with amounts paid to our key employees in the past, we may not be successful in designing and implementing an attractive compensation model. Any cost-reduction initiative or adjustments or reductions to compensation could negatively impact our ability to retain key personnel. In addition, changes to our management structure, corporate culture and corporate governance arrangements, including the changes associated with, and resulting from, our reorganization and on becoming a public company, could negatively impact our ability to retain key personnel. If we are unable to retain key personnel, our results of operations may be negatively affected.

Risks Related to the Regulatory Environment in which We Operate

We are subject to extensive regulation that imposes numerous obligations on our business.

We are subject to extensive regulation in the United States primarily at the federal level, including regulation by the SEC under the Investment Advisers Act of 1940, as amended, or the Advisers Act, by the U.S. Department of Labor under the Employee Retirement Income Security Act of 1974, or ERISA, Nasdaq, and by the Financial Industry Regulatory Authority, Inc., or FINRA. The Advisers Act imposes numerous obligations on investment advisers including advertising, recordkeeping and operating requirements, disclosure obligations and prohibitions on fraudulent activities. In addition, we regularly rely on exemptions from various requirements of the Securities Act of 1933, as amended, or the Securities Act, the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Investment Company Act of 1940, as amended, or the Investment Company Act, and ERISA. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to be revoked or challenged or otherwise become unavailable to us, we could be subject to regulatory action or third-party claims, and our business could be materially and adversely affected.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was signed into law on July 21, 2010. While we do not at this time believe that the Dodd-Frank Act will cause us to reconsider our business model, it does appear that certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act will be determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the Commodity Futures Trading Commission, or CFTC, jointly issued final rules that require investment advisers registered with the SEC that advise one or more private funds to provide certain information to the Financial Stability Oversight Council on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information for purposes of assessing the systemic risk posed by private funds. In light of this rulemaking, we will have to file a Form PF, providing all necessary information. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

Accordingly, we face the risk of significant intervention by regulatory authorities, including extended investigation and surveillance activity, adoption of costly or restrictive new regulations and judicial or administrative proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in some of our business activities. The requirements imposed by our regulators, other than the Exchange Act and the Nasdaq rules, are generally designed to ensure the integrity of the financial markets and to protect clients and other third parties who deal with us, and are generally not designed to protect our stockholders. Moreover, recent extreme volatility events in the U.S. equities markets have led to heightened scrutiny of sophisticated trading technology and execution methods. Consequently, these regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements.

The regulatory environment in which we operate is subject to continual change, and regulatory developments designed to increase oversight may adversely affect our business.

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. We believe that significant regulatory changes in our industry are likely to continue, which is likely to subject industry participants to additional, more costly and generally more punitive regulation. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries already have resulted in increased scrutiny of the industry and new rules and regulations for investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of the recent economic downturn, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct business.

We could be subject to regulatory investigations, which could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

The failure by us to comply with applicable laws or regulations could result in fines, suspensions of individual employees or other sanctions. Even if an investigation or proceeding did not result in a fine or sanction or the fine or sanction imposed against us or our employees by a regulator was small in monetary amount, the adverse publicity relating to an investigation, proceeding or imposition of these fines or sanctions could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business.

contributions by certain of the adviser’s employees and engagements of third parties that solicit government entities (and political action committees controlled by such persons) and to keep certain records in order to enable the SEC to determine compliance with the rule. Additionally, California enacted legislation that requires placement agents (including in certain cases employees of investment managers) who solicit funds from California state retirement systems, such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, to register as lobbyists, thereby becoming subject to increased reporting requirements and prohibited from receiving contingent compensation for soliciting investments from California state retirement systems. There also has been similar rulemaking in New York and other states. Such additional regulations may require the attention of senior management and may result in fines if any of our funds are deemed to have violated any regulations, thereby imposing additional expenses on us. Any failure on our part to comply with these rules could cause us to lose compensation for our advisory services or expose us to significant penalties and reputational damage.

Risks Related to Our Growth

Our efforts to establish new investment teams and strategies may be unsuccessful and could negatively impact our results of operations and our reputation.

Moreover, our future acquisition strategies may focus on privately-held asset managers that pursue single strategy specialized investments. This approach presents challenges, including the lack of publicly available information, and greater risks than are generally associated with transactions with more traditional asset managers The asset managers that we may acquire and their financial information may not be subject to the reporting requirements and other rules that govern public companies, including the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley. Moreover, such asset managers may not be subject to regulation under the Advisers Act at the time we acquire them. As a result, such asset managers could be more susceptible to irregular accounting or fraudulent practices. The targets we seek to acquire in the future may have shorter operating histories than us on which to estimate future performance and may not have significant or any operating revenues. They also may have a lower capitalization and fewer resources (including cash) and be more vulnerable to failure than traditional asset managers. We will be required to rely on the ability of the professionals employed by us to obtain adequate information to evaluate the manager affiliates we seek to acquire.

In addition, our ability to acquire asset managers on favorable teams and successfully integrate and operate them is subject to the following significant risks:

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we may acquire asset managers that are not accretive to our financial results upon acquisition, and we may not successfully manage acquired funds to meet our expectations;

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we may be unable to generate sufficient management fees from operations or obtain the necessary debt or equity financing to consummate an acquisition on favorable terms or at all;

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the process of acquiring or pursuing the acquisition of such asset managers may divert the attention of our management team from the operations of our business and our initial funds;

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we will need to attract, hire, train, supervise and manage new employees as a result of the acquisitions of asset managers;

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we may be unable to quickly and efficiently integrate new acquisitions into our existing operations.

venture may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating the strategic investment, acquisition or joint venture, which could subject us to unknown liabilities that could adversely affect our profitability, financial condition and results of operations. Moreover, such investigations will not necessarily result in the strategic investment, acquisition or joint venture being successful.

Risk Related Generally to our Business

Operational risks may disrupt our business, result in losses or limit our growth.

We are heavily dependent on the capacity and reliability of the communications, information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties. Operational risks such as trading or operational errors or interruption of our financial, accounting, trading, compliance and other data processing systems, whether caused by fire or other natural disaster, power or telecommunications failure, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus have a material adverse effect on our business. Some types of operational risks, including, for example, trading errors, may be increased in periods of increased volatility, which can magnify the cost of an error. Insurance and other safeguards we use may not be available or may only partially reimburse us for our losses. In addition, we may choose to reimburse a client in the event of a trading error or under other circumstances, even if we are not legally required to do so, and any such reimbursements could adversely affect our results of operations. Although we have back-up systems in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate, and the fact that we operate our business out of multiple physical locations may make such failures and interruptions difficult to address on a timely and adequate basis.

After we become a public company and as our client base, number of investment strategies and/or physical locations increase, developing and maintaining our operational systems and infrastructure may become increasingly challenging and costly, which could constrain our ability to expand our businesses. Any upgrades or expansions to our operations and/or technology to accommodate increased volumes of transactions or otherwise may require significant expenditures and may increase the probability that we will suffer system interruptions and failures. We also depend substantially on our New York office where a majority of our employees, administration and technology resources are located, for the continued operation of our business. Any significant disruption to that office could have a material adverse effect on us.

Employee misconduct could expose us to significant legal liability and reputational harm.

possible to deter employee misconduct, and the precautions we take to detect and prevent this activity may not always be effective. In addition, the SEC has increased its scrutiny of the use of non-public information obtained from corporate insiders by professional investors. Misconduct by our employees, or even unsubstantiated allegations of misconduct, could result in an adverse effect on our reputation and our business.

Improper disclosure of personal data could result in liability and harm our reputation.

Failure to properly address conflicts of interest could harm our reputation, business and results of operations.

We provide a broad range of services to Silvercrest Funds and family office services which may expose us to liability.

We also provide a range of family office services, in addition to investment management services, to some of our clients, including philanthropic, estate and wealth planning services, tax planning and preparation, financial statement, bill paying and record keeping services, bank loan arrangement and payment services and property and casualty insurance review. If we fail to perform these services properly, we could incur costs and reputational harm for which we might be liable. In addition, if it were determined that the Silvercrest Funds failed to comply with applicable regulatory requirements as a result of action or failure to act by our employees, we could be responsible for losses suffered or penalties imposed. Further, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income, or negatively affect our current business or our future growth prospects.

The investment management industry is intensely competitive.

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a number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do;

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potential competitors have a relatively low cost of entering the investment management industry;

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the recent trend toward consolidation in the investment management industry and the securities business in general, has served to increase the size and strength of a number of our competitors;

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some competitors may invest according to different investment styles or in alternative asset classes that the markets may perceive as more attractive than the investment strategies we offer;

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other industry participants, hedge funds and alternative asset managers may seek to recruit our investment professionals; and

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some competitors charge lower fees for their investment services than we do.

If we are unable to compete effectively, our results of operations may be materially adversely affected.

Reductions in business sourced through third-party distribution channels, or their poor reviews of us or our products, could materially reduce our revenue and ability to attract new clients.

New accounts sourced through consultant-led searches may be a major component of our future growth. We also have accessed the high-net-worth segment of the investing community through relationships with well respected wealth advisers who use our investment strategies in investment programs they construct for their clients. If we fail to successfully maintain these third-party distribution and sub-investment advisory relationships, our business could be materially adversely affected. In addition, many of these parties review and evaluate our products and our organization. Poor reviews or evaluations of either the particular product or of us may result in client withdrawals or may impact our ability to attract new assets through such intermediaries.

The significant growth we have experienced may be difficult to sustain.

Our assets under management have increased from $7.8 billion as of December 31, 2006 to $10.1 billion as of December 31, 2011. The absolute measure of our assets under management represents a significant rate of growth that may be difficult to sustain. The growth of our business will depend on, among other things, our ability to retain key investment professionals, to devote sufficient resources to maintaining existing investment strategies and to selectively develop new investment strategies. Our business growth also will depend on our success in achieving superior investment performance from our investment strategies, as well as our ability to maintain and extend our distribution capabilities, to deal with changing market conditions, to maintain adequate financial and business controls and to comply with new legal and regulatory requirements arising in response to both the increased sophistication of the investment management industry and the significant market and economic events of the last few years. If we believe that in order to continue to produce attractive returns from some or all of our investment strategies we should limit the growth of those strategies, we have in the past chosen, and in the future may choose, to limit or close access to those strategies to some or most categories of new investors or otherwise take action to slow the flow of assets into those strategies.

A change of control of us could result in termination of our sub-investment advisory and investment advisory agreements.

terminates in the event of its assignment. A sale of a controlling block of our voting securities and certain other transactions would be deemed an “assignment” pursuant to the Advisers Act and the Investment Company Act. Such an assignment may be deemed to occur in the event that the holders of the Class B units of Silvercrest L.P. exchange enough of their Class B units for shares of our Class A common stock and dispose of such shares of Class A common stock such that they no longer own a controlling interest in us, even if no other person or group acquires a controlling interest. If such a deemed assignment occurs, there can be no assurance that we will be able to obtain the necessary consents from our clients and, unless the necessary approvals and consents are obtained, the deemed assignment could adversely affect our ability to continue managing client accounts, resulting in the loss of assets under management and a corresponding loss of revenue.

If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.

The cost of insuring our business is substantial and may increase.

The historical consolidated financial information included in this prospectus may not be indicative of our future financial results after the reorganization and as a public company. Our assets under management have increased 29.0% in the past five years. We do not expect our assets under management or revenue to grow at the same rate as they have grown in the past five years. In addition, the historical consolidated financial information included in this prospectus does not reflect the added costs that we expect to incur as a public company or the changes that will occur in our capital structure and operations in connection with our reorganization. For example, because we operated through a limited liability company prior to this offering and paid little or no taxes on our profits, our historical consolidated financial information does not reflect the tax impact of our adoption of a corporate holding company structure.

In preparing our unaudited pro forma financial information for the periods prior to this offering, we adjusted our historical financial information for the transactions described in “The Reorganization and Our Holding Company Structure.” The estimates we used in this unaudited pro forma financial information are not intended to approximate our actual experience as a public company or be indicative in any way of our future performance. The results of future periods may be materially different than those of the past as a result of:

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the impact of the reorganization, in relation to our size, during the pro forma periods;

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future performance of our investment strategies, which differs from the historical performance reflected in the unaudited pro forma financial information;

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the additional costs of being a public company including compliance with Sarbanes-Oxley.

If we incur indebtedness or issue senior equity securities, we will be exposed to additional risks, including the typical risks associated with leverage.

The amount of leverage that we employ will depend on our general partner’s board of directors’ assessment of market and other factors at the time of any proposed borrowing. We may also use leverage to make certain investments. There is no assurance that a leveraging strategy will be successful. Leverage involves risks and special considerations that include the following:

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there is a likelihood of greater volatility of net asset value of our business and market price of our common stock than a comparable business without leverage;

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if we are required to pledge a substantial portion of our assets in order to obtain debt financing, it may limit our ability to enter into subsequent financings at attractive terms;

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we, and indirectly our investors, will bear the cost of leverage, including issuance and servicing costs; and

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any preferred, convertible or exchangeable securities that we issue may have lights, preferences and privileges more favorable than those of our common stock. Any requirement that we sell assets at a loss to redeem or pay interest on any leverage or for other reasons would reduce our net asset value and also make it difficult for our net asset value to recover. Our general partner’s board of directors, in its best judgment, nevertheless may determine to use leverage if it expects that the benefits to our common stockholders of maintaining the leveraged position will outweigh the risks. General interest rate fluctuations may have a substantial negative impact on our investments and investment opportunities. In addition, an increase in interest rates would make it more expensive for us to use debt to finance these investments.

Although we believe that the proceeds from this offering and future cash flow from operations will be sufficient to meet our working capital needs for normal operations pursuant to our business plan, these sources of capital may not fully fund our growth strategy in the immediate future. If we decide to pursue future acquisitions, we may use proceeds remaining from this offering and then raise additional capital through the incurrence of long-term or short-term indebtedness or the issuance of additional equity securities in private or public transactions. This could result in dilution of existing common stockholders’ equity positions, increased interest expense and decreased net income. In addition, significant capital requirements associated with such investments may impair our ability to make distributions to our common stockholders.

Risks Related to Our Structure

Control by our principals of % of the combined voting power of our capital stock and the rights of holders of Class B units of Silvercrest L.P. may give rise to conflicts of interest.

Immediately after the completion of this offering, our employee stockholders will collectively hold approximately % of the combined voting power of our capital stock (or approximately %, if the

underwriters exercise in full their option to purchase additional shares of our Class A common stock). Concurrently with the completion of this offering, each of our principals (including directors who are principals) who hold shares of our common stock will enter into a stockholders’ agreement with respect to all shares of our Class A common stock and Class B common stock then held by them and any shares of our Class A common stock and Class B common stock they may acquire in the future. Pursuant to the stockholders’ agreement, the shares of Class A common stock and Class B common stock held by our employees will be voted in accordance with the determination of the Executive Committee of Silvercrest L.P. until the termination of employment of such employee. The votes of the members of the Executive Committee will be weighted based upon their relative holdings of Silvercrest L.P. units. As a result of his equity ownership and position on the Executive Committee, Mr. Cochran, our Chief Executive Officer, will initially control the vote of the Executive Committee and, as a result, all of the shares of Class A common stock and Class B common stock held by our principals.

In addition, because our principals will hold all or a portion of their ownership interests in our business through Silvercrest L.P., rather than through Silvercrest, these existing owners may have other conflicting interests with holders of our Class A common stock. For example, our existing owners may have different tax positions from holders of our Class A common stock which could influence their decisions regarding whether and when we should dispose of assets, whether and when we should incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreement that we have entered into in connection with this offering, and whether and when our company should terminate the tax receivable agreement and accelerate its obligations thereunder. Also, the structuring of future transactions may take into consideration these existing owners’ tax or other considerations even where no similar benefit would accrue to us. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement” for more information.

Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law.

stockholders with the distributions received by us as general partner of Silvercrest L.P. also will be subject to the applicable provisions of Delaware law. Also, each of the companies in the corporate chain must manage its assets, liabilities and working capital in order to meet all of its cash obligations, including the payment of dividends or distributions. As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate, the payment of dividends on our Class A common stock. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our Class A common stock.

Our ability to pay taxes and expenses, including payments under the tax receivable agreement, may be limited by our structure.

We will be required to pay holders of Class B units of Silvercrest L.P. for certain tax benefits we may claim, and the amounts we may pay could be significant.

The reorganization described under “The Reorganization and Our Holding Company Structure” will result in favorable tax attributes for us. In addition, future exchanges of Class B units of Silvercrest L.P. for shares of our Class A common stock are expected to produce additional favorable tax attributes for us. When we acquire Class B units from existing partners, both the existing basis and the anticipated basis adjustments are likely to increase (for tax purposes) depreciation and amortization deductions allocable to us from Silvercrest L.P. and therefore reduce the amount of income tax we would otherwise be required to pay in the future. This increase in tax basis also may decrease gain (or increase loss) on future dispositions of certain capital assets to the extent the increased tax basis is allocated to those capital assets.

such amount, or $ , over the 15-year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and tax receivable agreement payments by us will be calculated using the market value of our Class A common stock and the prevailing tax rates at the time of the exchange and will be dependent on us generating sufficient future taxable income to realize the benefit. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement.”

The tax receivable agreement provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control, or if, at any time, we elect an early termination of the tax receivable agreement, our (or our successor’s) obligations under the tax receivable agreement (with respect to all Class B units, whether or not Class B units have been exchanged or acquired before or after such transaction) would be based on certain assumptions, including that we would have sufficient taxable income to fully avail ourselves of the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreement. As a result, (i) we could be required to make payments under the tax receivable agreement that are greater than or less than the specified percentage of the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreement, and (ii) if we elect to terminate the tax receivable agreement early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits, which payment may be made significantly in advance of the actual realization of such future benefits. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to finance our obligations under the tax receivable agreement. If we were to elect to terminate the tax receivable agreement immediately after this offering, based on an assumed price of $ per share of our Class A common stock (the midpoint of the price range set forth on the cover of this prospectus), we estimate that we would be required to pay $ in the aggregate under the tax receivable agreement.

that causes us to fall within the definition of “investment company.” We and Silvercrest L.P. intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks Related to this Offering

The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

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variations in our quarterly or annual operating results;

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failure to meet the market’s earnings expectations;

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publication of research reports about us or the investment management industry, or the failure of securities analysts to cover our Class A common stock after this offering;

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the public’s reactions to our press releases, other public announcements and filings with the SEC;

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departures of any of our portfolio managers or members of our senior management team or additions or departures of other key personnel;

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adverse market reaction to any indebtedness we may incur or securities we may issue in the future;

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market and industry perception of our success, or lack thereof, in pursuing our growth strategies;

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actions by stockholders;

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strategic actions by us or our competitors such as acquisitions or restructurings;

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changes in market valuations of similar companies;

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changes in our capital structure;

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actual or anticipated poor performance in one or more of the investment strategies we offer;

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changes in accounting standards, policies, guidance, interpretations or principles;

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adverse publicity about the investment management industry generally or as a result of specific events;

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sales of shares of our Class A common stock by us or members of our management team;

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litigation and governmental investigations;

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the expiration of contractual lockup agreements; and

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We will agree with the underwriters not to issue, sell, or otherwise dispose of or hedge any shares of our Class A common stock, subject to certain exceptions, for the 180-day period following the date of this prospectus, without the prior consent of Sandler O’Neill & Partners, L.P. Our officers and directors and our other stockholders will enter into similar lock-up agreements with the underwriters. Sandler O’Neill & Partners, L.P. may, at any time, release us and/or any of our officers and directors and/or our other stockholders from this lock-up agreement and allow us to sell shares of our Class A common stock within this 180-day period. For more information, see “Underwriting.” In addition, pursuant to the terms of an exchange agreement that we will enter into with the holders of Class B units of Silvercrest L.P., such Class B units will not be exchangeable for shares of our Class A common stock until the one-year anniversary of the consummation of this offering.

Upon completion of this offering, there will be shares of our Class A common stock outstanding (or shares if the underwriters’ option to purchase additional shares of our Class A common stock from Mr. Cochran is exercised in full), of which shares will be freely transferable without restriction or further registration under the Securities Act. The remaining shares of our Class A common stock outstanding, and shares of our Class A common stock that will be issuable upon exchange of Class B units, may not be sold until the fifth anniversary of the consummation of this offering, except in one or more annual underwritten public offerings, subject to certain exceptions described under “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.” Every year beginning on the one-year anniversary of this offering and ending on the date of a principal’s termination of employment, each principal and his permitted transferees (e.g., family trusts) may collectively exchange vested Class B units that equal 20% of the Class B units such persons collectively held at the beginning of such year, subject to certain exceptions described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Upon a termination of employment other than due to retirement, all Class B units held by a principal, other than those Class B units forfeited under certain circumstances, will be exchanged automatically for shares of Class A common stock. The shares of Class A common stock received upon exchange for Class B units may be sold (i) at any time and in any manner by retired employees and employees or estates of employees terminated due to death or disability, (ii) for any principal whose employment is terminated by us without cause, in an amount equal to 50% of the total shares of Class A common stock held by the principal in each 12-month period following the 18-month anniversary of the date of termination of employment, and (iii) for any principal who voluntarily resigns his employment, in an amount equal to one-third of the total shares of Class A common stock held by the principal in each 12-month period following the 18-month anniversary of the date of resignation of employment subject to manner of sale restrictions described in “The Reorganization and Our Holding Company Structure—Resale and Registration Rights.”

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or JOBS Act, enacted in April 2012, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b–2 under the Exchange Act, which would occur if the market value of our Class A common stock that is held by non–affiliates exceeds $700 million as of any January 31 before the end of that five-year period, or (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the preceding three-year period. We cannot predict whether investors will find our Class A common stock less attractive if we choose to rely on these exemptions. If some investors find our Class A common stock less attractive as a result of any decisions to reduce future disclosure, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are, however, choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non–emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us and could have a negative effect on our business, results of operations and financial condition. As a public company, we will be subject to the reporting requirements of the Exchange Act and requirements of Sarbanes Oxley. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. Sarbanes Oxley requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our company and to maintain appropriate operational and financial systems to adequately support expansion. In addition, as a public company, we must also enhance our investor relations, legal and corporate communications functions. All of these activities and additional efforts may increase our costs, strain our resources and divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

SEC thereunder, which we refer to as Section 404) and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

You will suffer immediate and substantial dilution and may experience additional dilution in the future.

We have broad discretion in the use of the net proceeds to us from this offering and may not use them in a manner in which our stockholders would consider appropriate.

We cannot specify with certainty the particular uses of the net proceeds that we will receive from this offering. Our management will have broad discretion in the application of the net proceeds, including for any of the purposes described under the heading “Use of Proceeds” included elsewhere in this prospectus. Our stockholders may not agree with the manner in which our management chooses to allocate and spend the net proceeds. The failure by our management to apply these funds effectively could have an adverse effect on our business. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

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the requirement that a majority of the board consists of independent directors;

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the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors;

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the requirement that we have a compensation committee that is composed entirely of independent directors; and

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the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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our business strategies and investment policies;

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our intention to pay quarterly dividends;

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our financing plans;

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our competitive position and the effects of competition on our business;

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potential growth opportunities available to us;

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status as an emerging growth company;

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the recruitment and retention of our employees;

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our expected levels of compensation of our employees and the impact of compensation on our ability to attract and retain employees;

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our potential operating performance and efficiency;

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our expected tax rate;

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our expectation with respect to the economy, capital markets, the market for asset management services and other industry trends;

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the benefits to our business resulting from the effects of the reorganization;

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our belief as to the adequacy of our facilities; and

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the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE

Overview

On July 11, 2011, Silvercrest was incorporated as a Delaware corporation. Silvercrest GP LLC is currently the general partner of Silvercrest L.P., which is the managing member of the operating subsidiary, Silvercrest Asset Management Group LLC. Concurrently with the consummation of this offering, Silvercrest Asset Management Group Inc. will acquire all of the Class A units of Silvercrest L.P. from Silvercrest GP LLC and approximately % of the Class B units from existing limited partners of Silvercrest L.P., in exchange for shares of our Class A common stock. As a result, we will become the general partner of Silvercrest L.P. and Silvercrest Asset Management Group LLC will become our operating subsidiary. Throughout this prospectus, we refer to this series of transactions as the reorganization. All of the Class B units acquired by us as part of the reorganization shall be immediately converted into Class A units.

Immediately after our acquisition of the interests in Silvercrest L.P., our only material asset will be our ownership of all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran) will be held by 37 of our principals. If the underwriters exercise their option to purchase additional shares of Class A common stock from Mr. Cochran, we will acquire additional Class B units from Mr. Cochran in exchange for shares of our Class A common stock sufficient to satisfy the exercise of such option, and such Class B units acquired by us will be immediately converted into Class A units.

The Class A units and Class B units will have the same economic rights. Accordingly, immediately after the consummation of the reorganization and this offering, the holders of our Class A common stock (through us) and the holders of the Class B units in Silvercrest L.P. will hold approximately % and %, respectively, of the economic interests in our business (or approximately % and %, respectively, if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran).

As part of the reorganization, we will issue to the holders of Class B units, for each Class B unit, one share of Class B common stock in exchange for the payment of its par value. Each share of our Class B common stock will entitle its holder to one vote. Initially, the holder of the Class B common stock will have % of the combined voting power of our common stock (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran). When a Class B unit is exchanged for a share of our Class A common stock, forfeited as a result of applicable vesting provisions, or forfeited or repurchased as a result of a breach of any restrictive covenants contained in the second amended and restated limited partnership agreement of Silvercrest L.P., a corresponding number of shares of our Class B common stock automatically will be redeemed at par value and cancelled by us. Conversely, to the extent we cause Silvercrest L.P. to issue additional Class B units (including awards of Class B units subject to vesting) to our employees pursuant to our 2012 Equity Incentive Plan, these employees will be entitled to receive an equal number of shares of our Class B common stock.

automatically exchanged for shares of our Class A common stock, subject to certain exceptions, including in the case of retirement, a voluntary resignation of employment and termination with cause, as described under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

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(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

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(3)	Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units which will represent the right to receive % of the distributions made by Silvercrest L.P.

(4)	We will hold Class A units (or Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full) which will represent the right to receive % of the distributions made by Silvercrest L.P.

Holding Company Structure

Net profits, net losses and distributions of Silvercrest L.P. will be allocated and made to each of its partners pro rata in accordance with the number of partnership units of Silvercrest L.P. held by each of them. Accordingly, net profits and net losses of Silvercrest L.P. will initially be allocated, and distributions will be made, approximately % to us and approximately % to the initial holders of Class B units (or % and %, respectively, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

Governance

We will serve as the general partner of Silvercrest L.P. As such, we will control its business and affairs and will be responsible for the management of its business. We also will have the power to delegate some of our management responsibilities as the general partner of Silvercrest L.P. to an Executive Committee consisting of our Chief Executive Officer, Mr. Cochran, and the officers appointed by him to serve as members of the Executive Committee. Initially, Mr. Cochran and each of David J. Campbell, Scott A. Gerard and Richard R. Hough III, will serve as members of the Executive Committee. No partners of Silvercrest L.P., in their capacity as such, will have any authority or right to control the management of Silvercrest L.P. or to bind it in connection with any matter.

Voting and Economic Rights

Net profits, net losses and distributions of Silvercrest L.P. will be allocated and made to each of its partners pro rata in accordance with the number of partnership units of Silvercrest L.P. held by each of them (whether or not vested). Silvercrest L.P. will agree to make distributions to the holders of its partnership units, which includes us, for the purpose of funding their tax obligations in respect of Silvercrest L.P. See “—Tax Consequences.” Additional distributions from Silvercrest L.P. to us will be made at the discretion of our board of directors, acting on our behalf as the general partner of Silvercrest L.P. Neither Silvercrest Asset Management Group LLC nor Silvercrest L.P. may make any distributions to its members or partners if doing so would violate any agreement to which it is then a party or any law then applicable to it, have the effect of rendering it insolvent or result in it having net capital lower than that required by applicable law.

Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.

At any time we issue a share of our Class A common stock for cash, the net proceeds received by us will be promptly transferred to Silvercrest L.P., and Silvercrest L.P. will issue to us one of its Class A units, or alternatively, we may agree to transfer the net proceeds to a limited partner of Silvercrest L.P. in exchange for one Class B unit of Silvercrest L.P. held by such partner, which Class B unit will be converted automatically into a Class A unit. If at any time we issue a share of our Class A common stock pursuant to our 2012 Equity Incentive Plan, we will contribute to Silvercrest L.P. all of the proceeds we receive (if any), and Silvercrest L.P. will issue to us one of its Class A units, having the same restrictions, if any, attached to the shares of Class A common stock issued under this

plan. If we issue other classes or series of our equity securities, Silvercrest L.P. will issue, and Class B units (if any) transferred to us by its limited partners in exchange for our newly issued equity securities will be converted automatically into, an equal number of equity securities of Silvercrest L.P. with designations, preferences and other rights and terms that are substantially the same as our newly issued equity securities. Conversely, if we redeem any shares of our Class A common stock (or our equity securities of other classes or series) for cash, Silvercrest L.P. will, immediately prior to our redemption, redeem an equal number of Class A units (or its equity securities of the corresponding classes or series) held by us, upon the same terms and for the same price, as the shares of our Class A common stock (or our equity securities of such other classes or series) are redeemed.

Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., we will agree, as general partner, that we will not conduct any business other than the management and ownership of Silvercrest L.P. and its subsidiaries, or own any other assets (other than on a temporary basis), although we may incur indebtedness and may take other actions if we determine in good faith that such indebtedness or other actions are in the best interest of Silvercrest L.P. In addition, partnership units of Silvercrest L.P., as well as our common stock, will be subject to equivalent stock splits, dividends and reclassifications.

Issuances and Transfer of Units

Class A units may only be issued to us, the general partner of Silvercrest L.P., and are non-transferable. Class B units may be issued only to persons or entities to which we agree to permit the issuance of units in exchange for cash or other consideration, including the services of Silvercrest L.P.’s and its subsidiaries’ employees. Class B units may not be transferred except, with our consent, to a permitted transferee, subject to conditions we may specify, or as described below under “—Exchange Rights.” If a Class B unitholder is permitted to transfer its Class B units, the holder of Class B units may not transfer any Class B units to any person unless he or she transfers an equal number of shares of our Class B common stock to the same transferee.

Material Corporate Transactions

If Silvercrest L.P. proposes to engage in a material corporate transaction, including a merger, consolidation, dissolution or sale of substantially all of its assets, we, in our capacity as the general partner, along with a majority in interest of the holders of the Class B units, will have the power and authority to approve such a transaction. In addition, if we, in our capacity as the general partner, along with a majority in interest of the holders of the Class B units, determine that all (or any portion) of the Class A units and Class B units, should be sold to a third party purchaser, we will have the right to compel the holders of Class B units to sell all or the same portion of their Class B units to this third party purchaser.

Exchange Rights

We have reserved for issuance shares of our Class A common stock, which is the aggregate number of shares of our Class A common stock expected to be issued over time upon exchanges by:

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all holders of Class B units outstanding immediately after this offering;

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recipients of grants that may be made, or have been made at the consummation of this offering, under the 2012 Equity Incentive Plan, pursuant to which Silvercrest L.P. will have reserved a number of Class B units equal to 15% of the total number of units of Silvercrest L.P. outstanding immediately after the consummation of this offering and the reorganization transactions, assuming no anti-dilution adjustments based on share splits, dividends or reclassifications; and

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all holders of the deferred equity units and performance units to acquire up to Class B units that have been granted prior to the consummation of this offering.

Holders of Class B units may exchange their vested Class B units for shares of our Class A common stock at the times and in the amounts described below.

Each year, in the period beginning on the first effective date of the Form S-3 registration statement described under “—Resale and Registration Rights Agreement,” which we refer to as the shelf registration statement, and ending on the date of the termination of employment of a principal with us, a principal and his permitted transferees may collectively exchange up to the number of vested Class B units that equals 20% of all Class B units such principal and his or her permitted transferees collectively hold as of the first day of that year, in accordance with the timing restrictions described under “—Resale and Registration Rights Agreement.” Notwithstanding the foregoing, each principal shall commit to retain at least 25% of the number of Class B units held by the principal on the date of the consummation of this offering (as adjusted for any stock splits, dividends and reclassifications occurring after this offering). Any principal who is hired by our company after the consummation of this offering may not exchange any Class B units during his or her first year of employment with our company. In addition, unless otherwise determined by the Executive Committee of Silvercrest L.P., in its sole discretion, upon a termination of employment for any reason other than retirement, all of the Class B units held by a principal shall be exchanged automatically for shares of our Class A common stock, subject to the forfeiture of any Class B units as described under “—Restrictive Covenants—Forfeiture or Repurchase of Class B units and Class A Common Stock” below.

Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., if the amount of income taxes that principals are required to pay due to the grant or vesting of their Class B units, the exercise of their options to acquire Class B units and/or the exchange of their Class B units for shares of our Class A common stock upon termination of employment (whether or not they are employees at the time that the tax payment obligation arises) exceeds the net proceeds they would receive upon the sale of all of the shares of our Class A common stock issued to them in exchange for 20% of Class B units that they hold as of the first day of the year with respect to which the tax is payable, then they will instead be entitled to exchange an amount of vested Class B units and resell an equal number of shares of our Class A common stock issued in exchange for such that the net proceeds from the sale of this amount of shares would enable them to pay all such taxes due. In addition, we may allow holders of Class B units to make exchanges in amounts exceeding those described above at any time following the effective date of the shelf registration statement (as described in “—Resale and Registration Rights Agreement”), which determination may be withheld, delayed, or granted on such terms and conditions as our Executive Committee may determine, in its sole discretion.

Restrictive Covenants

Non-Solicitation

Confidential Information

Forfeiture or Repurchase of Class B Units and Class A Common Stock

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal and his or her permitted transferees and us, if a principal of Silvercrest L.P. breaches any of the non-solicitation or confidentiality covenants described above or, if a principal voluntarily resigns or retires and competes with our company during the 12 months following his or her termination of employment, then, in addition to any legal rights and remedies available to us, the principal (and, to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B

units and/or shares of Class A common stock, if any, and, at the option of Silvercrest L.P., would be required to sell to Silvercrest L.P. all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the capital account balance of the principal and his or her permitted transferees in Silvercrest L.P. and (ii) the purchase price paid by the terminated principal to first acquire the Class B units, and, at our option, would be required to sell to us all of the Class A common stock collectively held by the principal and his or her permitted transferees for a purchase price equal to the purchase price paid by the principal to first acquire the Class B units for which such shares of Class A common stock had been exchanged. To the extent a retired principal violates these restrictive covenants or competes with our company during 12 months following his or his termination of employment and the retired principal or his or her permitted transferees sold more than 20% of the Class B units and/or shares of Class A common stock held by the retired principal and his or her permitted transferees on the date of the principal’s retirement, then, in addition to the repurchase of Class B units and shares of Class A common stock described above, we will have the right to claw back from the retired principal the purchase price received for the shares of Class A common stock and/or Class B units sold above an amount equal to 20% of the securities held on the date of retirement. In addition to the forfeiture, repurchase and claw back provisions described above, if a principal violates the non-solicitation or confidentiality covenants or competes with our company within the 12-month period following a voluntary resignation of employment or retirement, then the principal will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Repurchase of Class B Units Upon Termination for Cause

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal, his or her permitted transferees and us, if a principal of Silvercrest L.P. is terminated for cause, the principal (and, to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B units, if any, and, at our option, would be required to sell to Silvercrest L.P. all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the aggregate capital account balance in Silvercrest L.P. of the principal and his or her permitted transferees and (ii) the purchase price paid by the terminated principal to first acquire the Class B units. In addition to the forfeiture described above, any principal terminated for cause will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Indemnification and Exculpation

Amendments

Resale and Registration Rights Agreement

Pursuant to the resale and registration rights agreement, we will commit to use our best efforts to:

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cause the SEC to declare the shelf registration statement effective as soon as practicable thereafter.

From the first effective date of the shelf registration statement until the fifth anniversary of the consummation of this offering, holders of Class B units, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights,” will only be able to sell the shares of Class A common stock issued upon exchange pursuant to the shelf registration statement. Holders of Class B units will be permitted to sell shares of Class A common stock issued upon exchange of Class B units during the first 10-day period of the open trading window of each quarter by submitting a request to the Executive Committee of Silvercrest L.P. to sell a specified number of shares. The Executive Committee may, in its discretion, deny the request of any holder of Class B units to sell his or her underlying shares of Class A common stock. If a sale request by a holder of Class B units is denied, the denied holder will be given the first opportunity to sell shares of Class A common stock in the next available open window. Thereafter, holders of Class B units will be able to exchange their Class B units for shares of our Class A common stock, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights” and will be permitted to sell their shares in any manner, but only at times determined by us, in our sole discretion.

Following the termination of a principal’s employment other than in the case of retirement, the Class B units held by the terminated principal will be automatically exchanged, and the corresponding number of shares of Class B common stock redeemed, for shares of our Class A common stock, subject to any required forfeiture or repurchase of Class B units as described under “—Restrictive Covenants—Forfeiture or Repurchase of Class B units and Class A Common Stock” above. If the principal’s employment was terminated for any reason other than retirement, death, disability or voluntarily resignation, the principal may (i) at the time of termination of employment, sell a number of shares of Class A common stock sufficient to cover any taxes due on the exchange of Class B units, and (ii) in each 12-month period following the 18-month anniversary of the termination, sell a number of shares of our Class A common stock equal to one-half of the difference between the aggregate number of vested shares of Class A common stock received upon exchange of the Class B units held as of the date of termination of his or her employment and the number of shares, if any, of Class A common stock the principal sold to cover taxes to the exchange subsequent to the principal’s termination. If a principal voluntarily terminates his or her employment, then the principal may (i) at the time of termination of employment, sell a number of shares of Class A common stock sufficient to cover taxes due on the exchange of Class B units and (ii) in each 12-month period following the 18-month anniversary of the termination, sell a number of shares of our Class A common stock equal to one-third of the difference between the aggregate number of vested shares of Class A common stock received upon exchange of the Class B units held as of the date of termination of his or her employment and the number of shares, if any, of Class A common stock the principal sold to cover taxes to the exchange subsequent to the principal’s termination. If the principal has retired, died or become disabled, he or she may sell any and all shares of Class A common stock or Class B units held by such retired principal, subject to any applicable securities law limitations. If the amount of income taxes that principals are required to pay due to the exchange of their Class B units for shares of our Class A common stock (whether or not they are employees at the time that the tax payment obligations arises) exceed the net proceeds they would receive upon the sale of all shares they are permitted to sell pursuant to the immediately preceding paragraph during the year with respect to which the tax is payable, then they will instead be entitled to sell a number of shares of our Class A common stock sufficient to provide net proceeds that would enable them to pay the taxes due.

We have agreed to indemnify the holders of the Class B units against any losses or damages resulting from any untrue statement or omission of material fact in any registration statement or prospectus pursuant to which they may sell the shares of our Class A common stock they receive upon exchange of their Class B units, unless such liability arose from the selling stockholder’s misstatement or omission, and the holders have agreed to indemnify us against all losses caused by their misstatements or omissions. We will pay all expenses incident to our performance under the resale and registration rights agreement, and the selling stockholders will pay their respective portions of all underwriting discounts, commissions and transfer taxes relating to the sale of their shares of Class A common stock pursuant to the registration rights agreement.

Voting Rights of Class A and Class B Stockholders

Each share of our Class A common stock and Class B common stock will entitle its holder to one vote. Immediately after this offering, our Class B common stockholders will hold approximately % of the combined voting power of our common stock (or % if the underwriters exercise their option in full to purchase additional shares of our Class A common stock from Mr. Cochran). We intend to cause Silvercrest L.P. to issue additional Class B units to our employees in various forms of equity compensation, such as restricted Class B units and options to acquire Class B units. Silvercrest L.P. will initially be authorized to issue additional Class B units in an amount not exceeding % of all partnership units outstanding as of the consummation of this offering pursuant to the 2012 Equity Incentive Plan. The holders of any vested or unvested Class B units issued after this offering will be entitled to receive a corresponding number of shares of our Class B common stock in exchange for the payment of their par value and, therefore, the voting power of our Class B common stockholders will increase to the extent that we grant Class B unit awards pursuant to the 2012 Equity Incentive Plan, to our employees, partners or other consultants. Conversely, when any holder of vested Class B units exchanges them for the corresponding number of shares of our Class A common stock, any holder of unvested Class B units forfeits a Class B unit or has it repurchased due to applicable vesting provisions, or any holder of vested or unvested Class B units forfeits a Class B unit due to a breach of restrictive covenants contained in the amended and restated limited partnership agreement of Silvercrest L.P. or the holder voluntarily resigns or retires and competes with our company in the 12-month period following termination of employment, it will result in the automatic redemption of the corresponding number of shares of our Class B common stock and, therefore, will decrease the aggregate voting power of our Class B stockholders.

Stockholders’ Agreement Among Class B Stockholders

In addition, pursuant to this stockholders’ agreement, each holder of shares of Class B common stock will agree that:

•

the holder will not transfer any shares of Class B common stock to any person unless the holder transfers an equal number of Class B units to the same person; and

•

in the event the holder transfers any Class B units to any person, the holder will transfer an equal number of shares of Class B common stock to the same person.

This stockholders’ agreement may only be amended with the consent of the holders of a majority of the shares of Class B common stock that are party to this agreement.

Tax Consequences

Silvercrest L.P. has made a Section 754 of the Internal Revenue Code election. As a result of this election any future exchanges of Class B units for shares of our Class A common stock, are expected to result in increases in our share of the tax basis in the tangible and intangible assets of Silvercrest L.P. at the time of our acquisition of partnership units, which will increase the tax depreciation and amortization deductions available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of tax that we would otherwise be required to pay in the future.

Tax Receivable Agreement

We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis described above and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement. The tax receivable agreement with a principal will automatically terminate if a principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement, and no further payments will be made under the tax receivable agreement.

•

the timing of exchanges of Class B units for shares of our Class A common stock — for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of Silvercrest L.P. at the time of the exchanges;

•

the price of our Class A common stock at the time of exchanges of Class B units — the increase in our share of the basis in the assets of Silvercrest L.P., as well as the increase in any tax deductions, will be related to the price of our Class A common stock at the time of these exchanges;

•

the extent to which these exchanges are taxable — if an exchange is not taxable for any reason (for instance, if a holder of Class B units exchanges units in order to make a charitable contribution), increased deductions will not be available;

•

the tax rates in effect at the time we utilize the increased amortization and depreciation deductions; and

•

the amount and timing of our income — we will be required to pay 85% of the tax savings, as and when realized, if any. If we do not have taxable income, we generally will not be required to make payments under the tax receivable agreement for that taxable year because no tax savings will have been actually realized.

We expect that, as a result of the size of the increases in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. attributable to our interest therein, the payments that we make under the tax receivable agreement will likely be substantial. Assuming that there are no material changes in the relevant tax law, and that we earn sufficient taxable income to realize the full tax benefit of the increased depreciation and amortization of our assets, we expect that future payments under the tax receivable agreement in respect of our initial purchase of partnership units of Silvercrest L.P. will aggregate $ million and range from approximately $ million to $ million per year over the next 15 years (or $ million and range from approximately $ million to $ million per year over the next 15 years if the underwriters exercise their option in full to purchase additional shares of our Class A common stock). A $1.00 increase (decrease) in the assumed initial public offering price of $ per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) the aggregate amount of future payments to holders of Class B units in respect of the purchase by $ million (or $ million if the underwriters exercise their option in full to purchase additional shares of our Class A common stock). Future payments under the tax receivable agreement in respect of subsequent exchanges will be in addition to these amounts and are expected to be substantial.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of shares of our Class A common stock by us in this offering will be approximately $ million, based on an assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus), in each case after deducting assumed underwriting discounts and estimated offering expenses payable by us. We intend to use the net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business and new investment strategies and strategic acquisitions for which no targets have been identified.

DIVIDEND POLICY

Our Dividend Policy

Following this offering, we intend to pay quarterly cash dividends. We expect that our first dividend will be paid in the quarter of 2012 and will be $ per share of our Class A common stock. We will be a holding company and will have no material assets other than our ownership of the general partnership interest of Silvercrest L.P. As a result, we intend to fund our initial dividend, as well as any future dividend, from our portion of distributions from Silvercrest L.P. to pay any dividends declared by us. If Silvercrest L.P. makes distributions to its partners, holders of Class B units will be entitled to receive equivalent distributions on a pro rata basis.

In addition, the declaration and payment of any dividends to our stockholders will be at the sole discretion of our board of directors. Only holders of our Class A common stock will be entitled to any dividend declared by us on our capital stock. Our board of directors will take into account:

•

our financial results as well as the financial results of Silvercrest L.P.;

•

our available cash and anticipated cash needs;

•

the capital requirements of our company and our direct and indirect subsidiaries (including Silvercrest L.P.);

•

general economic and business conditions; and

•

such other factors as our board of directors may deem relevant.

Neither we nor any of our direct or indirect subsidiaries has any debt obligations which limit our or its ability to pay dividends or distributions. However, pursuant to its second amended and restated limited partnership agreement, Silvercrest L.P. may not make any distributions to its partners, including us, if doing so would violate any agreement to which it is then a party or any law then applicable to it, have the effect of rendering it insolvent or result in it having net capital lower than that required by applicable law.

Silvercrest L.P.’s Historical Distributions

In connection with the reorganization, Silvercrest L.P. may make a distribution to its existing partners representing some of its undistributed earnings generated between and the date of the offering.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2011 (1) on an actual basis for Silvercrest L.P. and (2) on a pro forma basis for Silvercrest after giving effect to the transactions described under “Unaudited Pro Forma Consolidated Financial Information,” including the reorganization transactions and the application of the net proceeds from this offering. The table below should be read in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical consolidated financial statements of Silvercrest L.P. and related notes included elsewhere in this prospectus.


	As of December 31, 2011
	Silvercrest L.P. Actual			Silvercrest Pro Forma
	(unaudited) (dollars in thousands)
Cash and cash equivalents	$	7,354		$


Long-term debt, including current portion:

Total long-term debt, including current portion		4,809

Total redeemable equity		85,177

Total (deficit) equity		(55,666	)

Total capitalization	$	34,320		$

DILUTION

Our pro forma, as adjusted net tangible book value as of December 31, 2011 was approximately $ million, or approximately $ per share of our Class A common stock. Pro forma, as adjusted net tangible book value per share represents the amount of total tangible assets less total liabilities, after giving effect to the reorganization transactions and the distribution by Silvercrest L.P. to its pre-offering partners of some of its retained profits as of the date of the closing of this offering.

After giving effect to the sale by us of shares of Class A common stock in this offering at the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) after deducting estimated underwriting discounts and estimated offering expenses payable by us and the assumed exchange of all Class B units that will be outstanding immediately after the reorganization for the corresponding number of shares of our Class A common stock, our pro forma as adjusted net tangible book value at December 31, 2011 was $ million, or $ per share of our Class A common stock. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price per share of Class A common stock		$
Pro forma, as adjusted net tangible book value per share of Class A common stock at December 31, 2011	$
Increase in pro forma, as adjusted net tangible book value per share of Class A common stock attributable to new investors	$

Pro forma, as adjusted net tangible book value per share after this offering		$


Dilution in pro forma, as adjusted net tangible book value per share of Class A common stock to new investors	$

The following table sets forth, on the same pro forma, as adjusted basis at December 31, 2011, the number of shares of Class A common stock purchased from us and the total consideration and the average price per share paid by existing equity holders which consist of , and by new investors purchasing Class A common stock in this offering assuming that all holders of Class B units of Silvercrest L.P. immediately after the consummation of the reorganization have exchanged all their Class B units for the corresponding number of shares of our Class A common stock:

Shares Purchased

Total Consideration

Average Price Per Share

Number

Percent

Amount

Percent

Existing equity holders

New investors

Total

If the underwriters exercise in full their over-allotment option, our pro forma as adjusted net tangible book value will increase to $ per share, representing an increase to existing holders of $ per share, and there will be an immediate dilution of $ per share to new investors.

Sales by the selling stockholders in this offering will cause the number of shares of Class A common stock held by existing equity holders, on the same pro forma, as adjusted basis at December 31, 2011, to be reduced to shares or % of the total number of shares of our Class A common stock outstanding after this offering. If the underwriters exercise in full their overallotment option, our existing equity holders would own % and our new investors would own % of the total number of shares of Class A common stock outstanding after this offering.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following tables set forth selected historical combined consolidated financial and other data of Silvercrest L.P., which is deemed to be our predecessor for accounting purposes, as of the dates and for the periods indicated. As discussed elsewhere in this prospectus, Silvercrest L.P. was formed on December 10, 2008 and commenced operations on January 1, 2009. For reporting purposes, all balances of Silvercrest Asset Management Group LLC were carried over to Silvercrest L.P. at their carrying values on December 31, 2008. The selected consolidated statements of operations data for the years ended December 31, 2011, 2010 and 2009, and the consolidated statements of financial position data as of December 31, 2011 and 2010 have been derived from the Silvercrest L.P. and subsidiaries audited consolidated financial statements included elsewhere in this prospectus. The consolidated statement of financial position data as of December 31, 2009 has been derived from consolidated financial statements of Silvercrest L.P. and subsidiaries not included in this prospectus. The selected consolidated statements of operations data for the years ended December 31, 2008 and 2007 and the consolidated statements of financial position data as of December 31, 2008 and 2007 have been derived from the consolidated financial statements of Silvercrest Asset Management Group LLC and subsidiaries not included in this prospectus.


	Years Ended December 31,
	2011			2010			2009			2008			2007⁽¹⁾

Statements of operations data:

Revenue:
Management and advisory fees	$	37,869		$	32,442		$	29,341		$	40,987		$	42,633
Performance fees and allocations		85			548			96			75			1,554
Family office services income		4,833			3,841			3,097			2,019			931
Investment income		—			—			—			—			10,396

Total revenue		42,787			36,831			32,534			43,081			55,514


Expenses:
Compensation and benefits		17,492			16,528			15,630			18,399			19,263
General, administrative and other		10,849			9,459			13,006			11,943			9,097
Impairment charges		—			—			1,691			9,599			9,402

Total expenses		28,341			25,987			30,327			39,941			37,762

Income before net loss from investment activities of Silvercrest Funds and other income (expense)		14,446			10,844			2,207			3,140			17,752

Net loss from investment activities of Silvercrest Funds:
Realized gains		—			—			—			—			6,510
Net change in unrealized gains		—			—			—			—			(28,693	)
Equity income (loss) from investments		—			—			—			—			41

Net loss from investment activities of Silvercrest Funds		—			—			—			—			(22,142	)


Other income (expense):
Gain on extinguishment of debt		—			—			3,934			—			461
Gain on settlement with former LongChamp shareholders		—			—			1,470			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—
Interest income		187			231			213			358			—
Interest expense		(164	)		(241	)		(467	)		(613	)		(705	)
Change in value of options granted to equity holders		—			2			134			796			(931	)
Other (expense) income		(210	)		30			—			—			—
Equity income (loss) from investments		950			1,241			274			(247	)		—

Total other income (expense)		729			755			5,558			294			(1,175	)


	Years Ended December 31,
	2011			2010			2009			2008			2007⁽¹⁾

Income (loss) before non-controlling interests in income (loss) of consolidated entities and (provision) benefit for income taxes		15,175			11,599			7,765			3,434			(5,565	)

Non-controlling interests in income (loss) of consolidated entities		—			—			—			—			15,536

Income before provision for income taxes		15,175			11,599			7,765			3,434			9,971
(Provision) benefit for income taxes		(566	)		(657	)		321			(1,062	)		(2,653	)

Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318


Selected statements of financial position data:

Total assets	$	45,262		$	33,079		$	29,964		$	37,719		$	49,212
Notes payable	$	4,809		$	2,957		$	7,120		$	8,855		$	5,938
Total liabilities	$	15,751		$	12,490		$	14,893		$	23,282		$	27,766
Redeemable partners’/members’ capital	$	85,177		$	45,619		$	34,219		$	83,377		$	95,595
Partners’/members’ deficit	$	(55,666	)	$	(25,030	)	$	(19,148	)	$	(68,940	)	$	(74,149	)

Selected unaudited operating data:

Assets under management (in billions)⁽²⁾	$	10.1		$	9.2		$	8.8		$	7.8		$	10.1
Adjusted EBITDA⁽³⁾	$	10,839		$	9,068		$	6,449		$	7,107		$	14,153
Adjusted EBITDA margin⁽⁴⁾		25.3	%		24.6	%		19.8	%		16.5	%		25.5	%

(1)

Revenue $ 7,229

Expenses $ 570

The consolidation of the various Silvercrest Funds had no net effect on net income or members’ capital.

(2)	Reflected as of the last day of the period.

(3)

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings. EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishments of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Years Ended December 31,
	2011			2010			2009			2008			2007
	(in thousands)
Reconciliation of non-GAAP financial measures:

Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318
Provision for income taxes		566			657			(321	)		1,062			2,653
Interest expense		164			241			467			613			705
Interest income		(187	)		(231	)		(213	)		(358	)		(516	)
Partner/member incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(7,171	)		(7,215	)
Non-performance fee related equity method (gains) losses		—			—			—			247			—
Depreciation and amortization		1,469			1,379			1,531			1,539			1,206
Equity-based compensation		1,060			583			—			—			130
Other adjustments (B)		1,933			670			(460	)		8,803			9,872


Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	7,107		$	14,153

(A)	Partner/member incentive allocations are treated as distributions of net income and are recorded when paid.

(B)	Other adjustments consist of the following:


	Year Ended December 31,
	2011		2010			2009			2008			2007
Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)		—			(461	)
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)		—			—
Write-off of LongChamp revenue (b)		—		64			557			—			—
Loss on sub-lease (c)		150		—			—			—			—
Lease abandonment charge (d)		—		—			1,154			—			—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691			9,599			9,402
Client reimbursement		—		—			1,132			—			—
Fund redemption costs (f)		827		—			—			—			—
IPO professional fees		578		—			—			—			—
Milbank acquisition costs (g)		222		—			—			—			—
Severance		69		100			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		(796	)		931
Other (i)		53		—			—			—			—


Total other adjustments	$	1,933	$	670		$	(460	)	$	8,803		$	9,872

(a)	Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

(c)	Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)	Reflects a charge for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and subleased through September 29, 2017.

(e)	Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)	Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)	Reflects the legal and accounting fees associated with the closing of the Milbank acquisition that were expensed in 2011.

(h)	Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)	Represents non-recurring professional fees related to the Milbank acquisition and a Silvercrest fund.

(4)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited consolidated pro forma financial statements present the consolidated results of operations and financial condition of Silvercrest and its predecessor, assuming that all of the transactions described in the four bullet points below had been completed as of January 1, 2011 with respect to the unaudited pro forma consolidated statement of operations data for the year ended December 31, 2011, and as of December 31, 2011 with respect to the unaudited pro forma consolidated statement of financial condition data as of December 31, 2011. The pro forma adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions and this offering on the historical financial information of Silvercrest L.P.

The pro forma adjustments principally give effect to the following transactions:

•

the acquisitions of Milbank Winthrop & Co., Inc., which closed on November 1, 2011, and MW Commodity Advisors, LLC, which closed on April 1, 2012;

•

the reorganization transactions described in “The Reorganization and Our Holding Company Structure”, which will occur immediately prior to the consummation of this offering, including our agreement to return 85% of the tax benefits that we receive as a result of our ability to step up our tax basis in the partnership units of Silvercrest L.P. that we acquire from our partners;

•

the sale of shares of our Class A common stock in this offering at an assumed offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and the application of the proceeds therefrom, after payment of assumed underwriting discounts and commissions and estimated offering expenses payable by us.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2011


	Silvercrest L.P. Historical			Business Acquisition(1)			Silvercrest L.P. Including Business Acquisition			Offering Adjustments(2)	Offering Adjustments Pro Forma Note	Silvercrest L.P. Consolidated Pro Forma
Assets:
Cash and cash equivalents	$	7,354		$	3		$	7,357			(A),(C)
Restricted certificates of deposit and escrow		1,130			—			1,130
Investments		1,128			—			1,128
Receivables, net		2,238			4			2,242
Due from Silvercrest Funds		2,043			—			2,043
Furniture, equipment and leasehold improvements, net		2,275			—			2,275
Goodwill		14,683			112			14,795
Intangible assets, net		13,810			—			13,810
Prepaid expenses and other assets		601			—			601			(A)

Total assets	$	45,262		$	119		$	45,381		$		$


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit:
Accounts payable and accrued expenses	$	4,365		$	5		$	4,370
Accrued compensation		2,915			—			2,915
Notes payable		4,809			—			4,809
Deferred rent		3,287			—			3,287
Deferred tax and other liabilities		375			14			389			(A)

Total liabilities		15,751			19			15,770


Redeemable partners’ capital		96,613			154			96,767			(B)
Notes receivable from partners		(6,024	)		—			(6,024	)		(C)

Total redeemable partners’ capital		90,589			154			90,743


Commitments and Contingencies:

Partners’ Capital:
Common stock											(A)
Additional paid-in capital											(A)
Partners’ capital		44,359						44,359			(A)
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(105,437	)		(54	)		(105,491	)		(A)

Total partners’ deficit		(61,078	)		(54	)		(61,132	)
Non-controlling interests											(A)
Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	119		$	45,381		$		$

(1)

On April 1, 2012, Silvercrest L.P. acquired 100% of the LLC interests of MW Commodity Advisors, LLC, which is the general partner of MW Commodity Strategies L.P., a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. We refer to this acquisition as the MW Acquisition. The consolidated statement of financial condition for MW Commodity Advisors, LLC as of December 31, 2011 is derived from its audited financial statements included elsewhere in this prospectus.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR DECEMBER 31, 2011


(in thousands)	Silvercrest L.P. Historical			Milbank Winthrop Business Acquisition¹			MW Commodity Business Acquisition¹			Silvercrest L.P. Including Business Acquisitions			Offering Adjustments	Offering Adjustments Pro Forma Note	Silvercrest L.P. Consolidated Pro Forma

Revenue:
Management and advisory fees	$	37,869		$	4,348		$	158		$	42,375
Performance fees and allocations		85			—			—			85
Family office services income		4,833			387			—			5,220

Total revenue		42,787			4,735			158			47,680


Expenses:
Compensation and benefits		17,492			1,989			—			19,481
General and administrative		10,849			1,278			37			12,164

Total expenses		28,341			3,267			37			31,645


Income before other income (expenses)		14,446			1,468			121			16,035

Other income (expenses)
Loss on forgiveness of notes receivable		(34	)		—			—			(34	)
Interest income		187			1			—			188
Interest expense		(164	)		(132	)		—			(296	)
Other expense		(210	)		—			—			(210	)
Equity income from investments		950			—			—			950

Total other income (expenses)		729			(131	)		—			598


Income before provision for income taxes		15,175			1,337			121			16,633
Provision for income taxes		(566	)		(49	)		(5	)		(620	)		(D)

Net income		14,609			1,288			116			16,013
Less: net income attributable to non-controlling interests		—			—			—			—			(E)

Net income attributable to Silvercrest	$	14,609		$	1,288		$	116		$	16,013		$		$


Net income per share:
Basic															$

Diluted															$


Weighted average shares outstanding:
Basic															$

Diluted															$

(1)	Silvercrest L.P. consolidates the statements of operations of Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC effective on the date of the closing of these acquisitions, and has accounted for them as business combinations using the acquisition method of accounting.

Offering Adjustments:

(A) From this offering, we expect to receive net proceeds from our sale of Class A common stock of approximately $ million, based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus). We intend to use the net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions. We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. This liability of $ million is included in pro forma other liabilities. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until (i) all such tax benefits have been utilized or expired, (ii) the tax receivable agreement with a principal automatically terminates due to a breach by such principal of his or her non-solicitation covenants with our company, or (iii) the termination by our company of a principal with cause, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement.


Silvercrest L.P. excess of liabilities, redeemable partners’ capital and partners’ capital over assets		$
Deferred tax asset		$
Tax receivable liability to selling partners		$

Total		$

Common stock		$
Additional paid-in capital		$

Total		$

(B) Represents the elimination of redeemable partners’ equity as the Silvercrest L.P. limited partnership agreement will be amended as of the completion of this offering by removing the call and put rights of Silvercrest L.P. and its partners, respectively.

(C) Represents the satisfaction of partner notes receivable related to three of our named executive officers. These notes were satisfied on [date to be included], 2012.

(D) Reflects the impact of federal, state and local income taxes on the income of Silvercrest. As a limited partnership, Silvercrest L.P. has not been subject to these taxes, although it has been liable for the New York City Unincorporated Business Tax. The effective rate of pro forma income tax is estimated to be approximately %, and was determined by combining the projected federal, state and local income taxes.

(E) Represents the non-controlling interest allocation of % (assuming that the underwriters do not exercise the overallotment option) of the income of Silvercrest to Silvercrest L.P.

Business acquisitions:


(in thousands)	MW Commodity Advisors, LLC Historical		Pro Forma Adjustments			Pro Forma Note		MW Commodity Advisors, LLC Pro Forma

Assets:
Cash and cash equivalents	$	3	$	—				$	3
Receivables, net		4		—					4
Goodwill		—		112			(1)		112
MW Commodity Strategies, L.P.:									—
Cash and cash equivalents		141		(141	)		(2)		—
Investments in Funds		29,920		(29,920	)		(2)		—
Prepaid expenses and other assets		—		—					—

Total assets	$	30,068	$	(29,949	)			$	119


Liabilities, Redeemable Members’ Capital and Members’ Deficit:
Accounts payable and accrued expenses	$	5	$	—				$	5
Deferred tax and other liabilities		—		14			(3)		14
MW Commodity Strategies, L.P.:
Accrued expenses		27		(27	)		(2)		—
Other liabilities		21		(21	)		(2)		—
Redemptions payable		195		(195	)		(2)		—

Total liabilities		248		(229	)				19


Redeemable members’ capital		—		100			(4)		100
		—		54			(5)		54

Total Redeemable members’ capital		—		154					154


Commitments and Contingencies:

Member’s Equity:
Member’s equity		71		(71	)		(6)		—

Excess of liabilities, redeemable members’ capital and members’ capital over assets		—		(54	)		(5)		(54	)

Total MW Commodity Advisors, LLC Member’s Equity		71		(125	)		(2)		(54	)

Minority interests in MW Commodity Strategies, L.P		29,749		(29,749	)				—

Total member’s equity (deficit)		29,820		(29,874	)				(54	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	30,068	$	(29,949	)			$	119


(in thousands)	MW Commodity Advisors, LLC Historical Twelve Months Ended December 31, 2011			Pro Forma Adjustments			Pro Forma Note			MW Commodity Advisors, LLC Pro Forma Twelve Months Ended December 31, 2011
Revenue:
Investment advisory fees	$	—		$	158			(7	)	$	158
MW Commodity Strategies, L.P.:											—
Interest		—			—						—

Total revenue		—			158						158


Expenses:
General, administrative and other		37			—						37
MW Commodity Strategies, L.P.:											—
General and administrative		58			(58	)		(2	)		—

Total expenses		95			(58	)					37


(Loss) income before net loss from MW Commodity Strategies, L.P.		(95	)		216						121

Net loss from MW Commodity Strategies, L.P.:
Unrealized loss on investments in funds, net		(2,287	)		2,287			(2	)		—
Realized loss on investments in Funds, net		(289	)		289			(2	)		—

Total net (loss) from investment activities of Consolidated Milbank Partnerships		(2,576	)		2,576						—


(Loss) income before provision for income taxes		(2,671	)		2,792						121
Provision for income taxes		—			(5	)		(8	)		(5	)

Net (loss) income		(2,671	)		2,787						116

Minority interest in MW Commodity Strategies, L.P.		2,793			(2,793	)		(2	)		—

Net income attributable to MW Commodity Advisors, LLC	$	122		$	(6	)				$	116

(1)	Represents the pro forma goodwill recorded upon the completion of the MW Commodity acquisition.

(2)

Upon closing of Silvercrest L.P.’s acquisition of the LLC interests of MW Commodity Advisors, LLC, the unaffiliated investors in MW Commodity Strategies, L.P. were granted rights to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent and investment adviser or equivalent of the partnership or to accelerate the liquidation date of that partnership in accordance with certain procedures. The granting of these rights resulted in the deconsolidation of MW Commodity Strategies, L.P. and in the accounting of Silvercrest L.P.’s interest in MW Commodity Strategies, L.P. under the equity method. These adjustments represent the adjustments to deconsolidate the assets of MW Commodity Strategies, L.P.

(3)	Pursuant to the purchase agreement to acquire LLC interests of MW Commodity Advisors, LLC, certain call rights were granted by Silvercrest L.P. to the former sole member of MW Commodity Advisors, LLC to repurchase the LLC interests subject to the following terms:

(i)

if Silvercrest L.P. terminates the employment of the former sole member of MW Commodity Advisors, LLC without cause, as defined in the purchase agreement, then the former sole member shall have the right to purchase the LLC interests from Silvercrest L.P. in an amount equal to the revenue, as defined in the purchase agreement, assigned or attributable to investments of limited partners in MW Commodity Strategies, L.P. for the most recent calendar year, multiplied by two, proceeding the date on which the call right is exercised, or;

(ii)

to the revenue, as defined in the purchase agreement, assigned or attributable to investments of limited partners in MW Commodity Strategies, L.P. for the most recent calendar year, multiplied by two, proceeding the date on which the call right is exercised.

(4)	Represents the estimated fair value of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(5)	Represents the adjustment to the redemption value at December 31, 2011 of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(6)	Represents the elimination of historical MW Commodity Advisors, LLC member’s equity of $71,000.

(7)	Represents management fees of $158,000 earned by MW Commodity Advisors, LLC from MW Commodity Strategies, L.P. which were eliminated in the historical consolidated statement of operations.

(8)	Represents the provision of income taxes for NYC Unincorporated Business Tax of $5,000. Silvercrest L.P. is a partnership for income tax purposes.


(in thousands)	Milbank Winthrop & Co., Inc. Historical Nine Months Ended September 30, 2011			Pro Forma Adjustments			Pro Forma Note			Milbank Winthrop & Co., Inc. Pro Forma Ten Months Ended October 31, 2011

Revenue:
Investment advisory fees	$	1,502		$	2,846			(1	)	$	4,348
Family office services income		—			387			(2	)		387
Other income		1			—						1
Consolidated Milbank Partnerships:											—
Dividends		1,629			(1,629	)		(3	)		—
Interest		394			(394	)		(3	)		—

Total revenue		3,526			1,210						4,736


Expenses:
Compensation and benefits		3,780			(1,791	)		(4	)		1,989
General, administrative and other		589			689			(5	)		1,278
Interest		—			132			(6	)		132
Consolidated Milbank Partnerships:											—
Management and advisory fees		1,410			(1,410	)		(3	)		—
Interest and dividends		233			(233	)		(3	)		—
General, administrative and other		393			(393	)		(3	)		—

Total expenses		6,405			(3,006	)					3,399


Loss before net gains from Consolidated Milbank Partnerships		(2,879	)		4,216			—			1,337

Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,988			(4,988	)		(3	)		—
Realized gain on investments in funds, net		767			(767	)		(3	)		—
Unrealized loss on investments in securities, net		(19,574	)		19,574			(3	)		—
Unrealized loss on investments in funds, net		(21,156	)		21,156			(3	)		—

Total net gain (loss) from investment activities of Consolidated Milbank Partnerships		(34,975	)		34,975						—


Loss before provision for income taxes		(37,854	)		39,191						1,337
Provision for income taxes		(330	)		281			(7	)		(49	)

Net loss		(38,184	)		39,472						1,288

Minority interest in Consolidated Milbank Partnerships		(38,507	)		38,507			(3	)		—

Net income attributable to Milbank Winthrop & Co., Inc.	$	323		$	965					$	1,288

(1)

(2)	Represents adjustment for $379,000 of fund administration services fees from the Milbank partnerships for the nine months ended September 30, 2011 that were eliminated in consolidation. Also, includes the adjustment for $8,000 of fund administration services fees earned in October 2011.

(3)

(4)	Upon the acquisition by Silvercrest L.P., the Milbank group is subject to a compensation cap equal to 42% of Milbank’s revenue. This adjustment represents the reduction to historical Milbank compensation and benefits expense to the compensation cap level.

(5)

Includes $520,000 of amortization expense for acquired intangible assets related to the Milbank acquisition, and additional estimated general, administrative and other expenses of $169,000 such as increased audit fees and referral fees to the former principal of Milbank that did not join Silvercrest L.P.

(6)	Pursuant to the terms of the asset purchase agreement between Milbank and Silvercrest L.P., Silvercrest L.P. issued a promissory note for $3.2 million to Milbank. Pro forma interest expense on the note is $132,000 for the ten months ended December 31, 2011.

(7)	Represents the elimination of Milbank’s historical corporate provision for income taxes of $330,000 and the provision of income taxes for NYC Unincorporated Business Tax of $49,000. Silvercrest L.P. is a partnership for income tax purposes.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and endowments, foundations and other institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking a comprehensive oversight of their financial affairs. During the twelve months ended December 31, 2011, our assets under management grew 9.8%, from $9.2 billion to $10.1 billion.

As part of the reorganization of our company occurring in connection with this offering, Silvercrest will become the general partner of Silvercrest, L.P, our operating company. In addition, the partnership units of all continuing partners of Silvercrest L.P. will be reclassified as Class B units that have equal economic rights to our shares of Class A common stock of Silvercrest. After giving effect to the reorganization transactions described above, we will hold approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters exercise in full their over-allotment option). The partners in Silvercrest L.P. following this offering, consisting of 37 of our current employees, will collectively hold the remaining approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters in full exercise their over-allotment option). Net profits and net losses of Silvercrest L.P. will be allocated, and distributions from Silvercrest L.P. will be made, to its current partners pro rata in accordance with their respective partnership units. For more information on our reorganization, see “The Reorganization and Our Holding Company Structure.”

The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of Silvercrest L.P. and its subsidiaries. After the completion of the reorganization, as the general partner of Silvercrest L.P., we will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ collective % partnership interest in Silvercrest L.P. immediately after the reorganization and this offering (or approximately % if the underwriters exercise in full their over-allotment option), we will reflect the interests of these employees as a non-controlling interest in our consolidated financial statements. As a result, our net income, after amounts attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or approximately % if the underwriters exercise in full their over-allotment option), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or approximately % if the underwriters exercise in full their over-allotment option). For more information on the pro forma impact of our reorganization, see “Unaudited Pro Forma Financial Information.”

Key Performance Indicators

When we review our performance, we focus on the indicators described below:


	For the year ended December 31,
(in thousands except as indicated)	2011			2010			2009

Assets under management at period end (in billions)	$	10.1		$	9.2		$	8.8
Average assets under management (in billions)⁽¹⁾	$	9.7		$	9.0		$	8.3
Total revenue	$	42,787		$	36,831		$	32,534
Adjusted EBITDA⁽²⁾	$	10,839		$	9,068		$	6,449
Adjusted EBITDA margin⁽³⁾		25.3	%		24.6	%		19.8	%

(1)	We have computed average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period.

(2)

EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving affect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishments of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. See “Selected Historical Financial Data” for a further explanation of Adjusted EBITDA and its reconciliation to net income on a basis consistent with GAAP.

(3)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

Revenue

Our advisory fees are primarily driven by the level of our assets under management. Our assets under management increase or decrease based on the net inflows or outflows of funds into our various investment strategies and the investment performance on our clients’ accounts. In order to increase our assets under management and expand our business, we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term. Our ability to continue to attract clients will depend on a variety of factors including, among others:

•

our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service;

•

the relative investment performance of our investment strategies, as compared to competing products and market indices;

•

competitive conditions in the investment management and broader financial services sectors;

•

investor sentiment and confidence; and

•

our decision to close strategies when we deem it to be in the best interests of our clients.

the value of net assets on the first business day of the month. Depending on the investment fund, fees are paid either quarterly in advance or quarterly in arrears. Advisory fees are also adjusted for any cash flows into or out of a portfolio, where the cash flow represents greater than 10% of the value of the portfolio. Silvercrest L.P. has authority to take fees directly from external custodian accounts of its separately-managed accounts.

Our advisory fees may fluctuate based on a number of factors, including the following:

•

changes in assets under management due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;

•

allocation of assets under management among our investment strategies, which have different fee schedules;

•

allocation of assets under management between separately-managed accounts and advised funds, for which we generally earn lower overall advisory fees; and

•

the level of our performance with respect to accounts and funds on which we are paid incentive fees.

Our family office services capabilities enable us to provide comprehensive and integrated services to our clients. Our dedicated group of tax and financial planning professionals provide financial planning, tax planning and preparation and consolidated wealth reporting among other services. Family office services income fluctuates based on both the number of clients for whom we perform these services and the level of agreed-upon fees, most of which are flat fees. We have experienced a steady increase in family office service fees over the past few years as more of our separately managed accounts relationships have taken advantage of these services. Furthermore, we have been successful in attracting new clients who have engaged us primarily for our family office services.

Expenses

•

the level of management fees from funds that utilize sub-advisors will affect the amount of sub-advisory fees.

We expect our professional services fees to increase after this offering as a result of being a public company.

Compensation and Benefits Expense

Our largest expense is compensation and benefits, which includes the salaries, bonuses, equity-based compensation and related benefits and payroll costs attributable to our principals and employees. Our compensation methodology is intended to meet the following objectives: (i) support our overall business strategy; (ii) attract, retain and motivate top-tier professionals within the investment management industry; and (iii) align our partner’ interests with those of our equity owners. We have experienced, and expect to continue to experience, a general rise in compensation and benefits expense commensurate with growth in headcount and with the need to maintain competitive compensation levels.

The components of our compensation expenses for the three years ended December 31, 2011 are as follows:


	For the Year Ended December 31,
	2011		2010		2009
	(in thousands)
Cash compensation and benefits	$	16,495	$	15,936	$	15,630
Distributions on liability awards (1)		20		9		—
Non-cash equity-based compensation expense		977		583		—

Total compensation expense	$	17,492	$	16,528	$	15,630

(1)	Cash distributions on the portion of unvested deferred equity units that are subject to forfeiture are expensed when paid. Unvested deferred equity units are classified as liability awards

On February 28, 2011 and February 24, 2010, Silvercrest L.P. and Silvercrest GP LLC, our predecessor, granted equity-based compensation awards to certain of their principals based on the fair value of the equity interests of Silvercrest L.P. and Silvercrest GP LLC. Each grant includes a deferred equity unit and performance unit, subject to forfeiture and acceleration of vesting. Each 100 deferred equity units represent the unsecured right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P., subject to vesting over a four year period beginning on the first-year anniversary of the date of grant. Each deferred equity unit, whether vested or unvested, entitles the holder to receive distributions from Silvercrest L.P. and Silvercrest GP LLC as if such holder held such unit. Upon each vesting date, a holder may receive the number of units vested or the equivalent cash value and units, but in no event may the holder receive more than 50% of the aggregate value in cash. To the extent that holders elect to receive up to 50% of the aggregate value in cash, we could have less cash to utilize. We have accounted for the distributions on the portion of the deferred equity units that is subject to forfeiture as compensation expense. Equity-based compensation expense will be recognized on the February 28, 2011 and February 24, 2010 deferred equity unit and performance unit awards through February 28, 2015 and February 24, 2014, respectively.

General and Administrative Expenses

General and administrative expenses include occupancy-related costs, professional and outside services fees, office expenses, depreciation and amortization, sub-advisory fees and the costs associated with operating and maintaining our research, trading and portfolio accounting systems. Our costs associated with operating and maintaining our research, trading and portfolio accounting systems and professional services expenses generally increase or decrease in relative proportion to the number of employees retained by us and the overall size and scale of our business operations. Sub-advisory fees will fluctuate based on the level of management fees from funds that utilize sub-advisors.

Other Income

Minority and Non-Controlling Interests

After our reorganization, we will be the general partner of Silvercrest L.P. and will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ expected % interest in Silvercrest L.P. (or % if the overallotment option is exercised in full) immediately after the consummation of the reorganization and this offering, we will reflect their partnership interests as a non-controlling interest in our consolidated financial statements. As a result, immediately after the consummation of this offering, our net income, after income attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or % if the overallotment option is exercised in full), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or % if the overallotment option is exercised in full).

Provision for Income Tax

Significant Transactions

Milbank

On November 1, 2011, we acquired substantially all of the assets of Milbank Winthrop & Co., Inc., or Milbank, a registered investment adviser that manages approximately $500 million of assets primarily on behalf of ultra high net worth families. The strategic acquisition of Milbank, a long-standing and highly regarded investment boutique, strengthens Silvercrest L.P.’s presence in the New York market and adds investment managers that have significant experience and knowledge of the industry. Under the terms of the asset purchase agreement, the purchase price for the assets of Milbank consisted of a cash consideration of $3.4 million (net of cash acquired of $0.8 million), interests in Silvercrest L.P. and Silvercrest GP LLC with a fair value of $3.1 million, and a promissory note issued by Silvercrest Asset Management Group LLC to Milbank for $3.2 million. As part of the asset purchase agreement, we are obligated to make future earnout payments to Milbank should specific financial and performance targets be achieved by the Milbank business. We determined that the acquisition-date fair value of the contingent consideration was $1.7 million based on the likelihood that the financial and performance targets included in the asset purchase agreement will be achieved. Under the terms of the asset purchase agreement, Milbank is entitled to receive six earnout payments for the following periods: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA generated by the Milbank business (as defined in the asset purchase agreement) during the relevant earnout period. The amount of the earnout payment will vary depending on the level of EBITDA that is generated in each respective earnout period. Milbank revenue and operating expenses for the two months ended December 31, 2011 were $0.9 million and $0.5 million, respectively.

LongChamp

Operating Results

Revenue

Our revenues for the years ended December 31, 2011, 2010 and 2009 are set forth below:


(dollars in thousands)	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)			2011 vs. 2010 (%)

Management and advisory fees	$	37,869	$	32,442	$	5,427			16.7	%
Performance fees and allocations		85		548		(463	)		-84.5	%
Family office services income		4,833		3,841		992			25.8	%

Total revenue	$	42,787	$	36,831	$	5,956			16.2	%


(dollars in thousands)	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)		2010 vs. 2009 (%)

Management and advisory fees	$	32,442	$	29,341	$	3,101		10.6	%
Performance fees and allocations		548		96		452		470.8	%
Family office services income		3,841		3,097		744		24.0	%

Total revenue	$	36,831	$	32,534	$	4,297		13.2	%

The growth in our assets under management from December 31, 2009 to December 31, 2011 is described below (in billions):


(in billions)	Total Assets Under Management

As of December 31, 2009	$	8.8
Net new account flows		0.4
Net client withdrawals ⁽¹⁾		(0.4	)
Market appreciation		0.4

As of December 31, 2010		9.2
Net new account flows		0.8
Net client cash flows⁽¹⁾		0.1
Market appreciation		—

As of December 31, 2011	$	10.1	⁽²⁾

(1)	Represents periodic flows related to existing accounts.

(2)	Consists of $7.1 of discretionary assets under management and $3.1 of non-discretionary assets under management.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Assets under management increased by $0.9 billion, or 9.8%, to $10.1 billion at December 31, 2011 from $9.2 billion at December 31, 2010. Contributing to the growth in assets under management was $0.8 billion of net asset inflows. Our growth in assets under management in 2011 was primarily attributable to an increase of $0.5 billion in separately managed accounts and $0.3 billion in proprietary and sub-advised funds. As of December 31, 2011, the composition of our assets under management was 70% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 30% in non-discretionary assets which represent assets on which we primarily report.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Assets under management increased by $0.4 billion, or 4.5%, to $9.2 billion at December 31, 2010 from $8.8 billion at December 31, 2009. Contributing to the growth in assets under management was $0.4 billion in market appreciation. Our growth in assets under management in 2010 was attributable to an increase of $0.1 billion in discretionary separately managed accounts and $0.4 billion in non-discretionary assets. As of December 31, 2010, the composition of our assets under management was 67% in discretionary assets.

Expenses

Our expenses for the years ended December 31, 2011, 2010 and 2009 are set forth below:


(in thousands)	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)			2011 vs. 2010 (%)

Compensation and benefits	$	17,492	$	16,528	$	964			5.8	%
General, administrative and other		10,849		9,459		1,390			14.7	%

Total expenses	$	28,341	$	25,987	$	2,354			9.1	%


(in thousands)	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)			2010 vs. 2009 (%)

Compensation and benefits	$	16,528	$	15,630	$	898			5.7	%
General, administrative and other		9,459		13,006		(3,547	)		-27.3	%
Impairment charges		—		1,691		(1,691	)		-100.0	%

Total expenses	$	25,987	$	30,327	$	(4,340	)		-14.3	%

Our expenses are driven primarily by our compensation costs. The table included in “—Compensation and Benefits Expense” describes the components of our compensation expense for the three years ended December 31, 2011. Other expenses, such as rent, professional service fees, data-related costs, and sub-advisory fees incurred are included in our general and administrative expenses.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Total expenses increased by $2.4 million, or 9.1%, to $28.3 million for the year ended December 31, 2011 from $26.0 million for the year ended December 31, 2010. This increase was primarily attributable to increases in compensation and benefits expense and general, administrative and other expenses of $1.0 million and $1.4 million, respectively.

General and administrative expenses increased by $1.4 million, or 14.7%, to $10.8 million for the year ended December 31, 2011 from $9.4 million for the year ended December 31, 2010. This increase was primarily due to an increase in professional fees of $0.8 million for services rendered in connection with this offering and acquisition transactions, $0.7 million in reimbursements to clients and a $0.2 million increase in costs related to the development of our portfolio management system and investment research and pricing subscriptions, offset by decreased occupancy costs of $0.3 million due to increased sub-tenant rent.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Total expenses decreased by $4.3 million, or 14.3%, to $26.0 million for the year ended December 31, 2010 from $30.3 million for the year ended December 31, 2009. This was primarily attributable to decreases in general, administrative and other expenses and impairment charges of $3.5 million and $1.7 million, respectively, partially offset by a $0.9 million increase in compensation and benefits expense.

Compensation and benefits expense increased by $0.9 million, or 5.7%, to $16.5 million for the year ended December 31, 2010 from $15.6 million for the year ended December 31, 2009. The increase was primarily attributable to a $0.6 million increase in equity-based compensation expense, increased employee bonus expense of $0.1 million, a $0.1 increase in salaries, and $0.1 million of severance charges related to the termination of two employees.

Other Income (Expense)


(in thousands)	For the Year Ended December 31,
	2011			2010			2011 vs. 2010 ($)			2011 vs. 2010 (%)

Loss on forgiveness of notes receivable	$	(34	)	$	(508	)	$	474			-93.3	%
Interest income		187			231			(44	)		-19.0	%
Interest expense		(164	)		(241	)		77			-32.0	%
Equity income from investments		950			1,241			(291	)		-23.4	%
Other		(210	)		32			(242	)		-756.3	%

Total other income (expense)	$	729		$	755		$	(26	)		-3.4	%


(in thousands)	For the Year Ended December 31,
	2010			2009			2010 vs. 2009 ($)			2010 vs. 2009 (%)

Gain on extinguishment of debt	$	—		$	3,934		$	(3,934	)		-100.0	%
Gain on settlement with former LGI shareholders		—			1,470			(1,470	)		-100.0	%
Loss on forgiveness of notes receivable		(508	)		—			(508	)		—
Interest income		231			213			18			8.5	%
Interest expense		(241	)		(467	)		226			-48.4	%
Equity income from investments		1,241			274			967			352.9	%
Other		32			134			(102	)		-76.1	%

Total other income (expense)	$	755		$	5,558		$	(4,803	)		-86.4	%

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Provision for Income Taxes

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Liquidity and Capital Resources

Our ongoing sources of cash primarily consist of management fees and family office services fees, which are principally collected quarterly. We primarily use cash flow from operations to pay compensation and related expenses, general, administrative and other expenses, income taxes, debt service, capital expenditures and distributions.

The following table set forth certain key financial data relating to our liquidity and capital resources as of December 31, 2011, 2010 and 2009.


	As of December 31,
	2011		2010		2009
	(in thousands)
Cash and cash equivalents	$	7,354	$	7,025	$	5,327
Accounts receivable	$	2,238	$	2,247	$	1,213
Due from Silvercrest Funds	$	2,043	$	1,255	$	953

Our purchase of Class A units in Silvercrest L.P. concurrently with this offering, and the future exchanges of Class B units of Silvercrest L.P., are expected to result in increases in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. at the time of our acquisition and these future exchanges, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of tax that we would otherwise be required to pay in the future. We will enter into a tax receivable agreement with current members of Silvercrest L.P. and any future holders of Class B units pursuant to which we will agree to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize as a result of these increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments thereunder. While the actual increase in tax basis, as well as the amount and timing of any payments under this agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of our income and the tax rates then applicable, we expect that as a result of the size of the increases in the tax basis of our tangible and intangible assets, the payments that we may make under the tax receivable agreement likely will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the increased depreciation and amortization of our assets, we expect that future payments to the selling principals of Silvercrest L.P. in respect of our purchase of Class B units from them will aggregate $ million and range from approximately $ million to $ million per year over the next 15 years. Future payments to current principals of Silvercrest L.P. and future holders of Class B units in respect of subsequent exchanges would be in addition to these amounts and are expected to be substantial.

Cash Flows

The following table sets forth our cash flows for the years ended December 31, 2011, 2010 and 2009. Operating activities consist of net income subject to adjustments for changes in operating assets and liabilities, depreciation, and equity-based compensation expense. Investing activities consist primarily of acquiring and selling property and equipment, distributions received from investments in investment funds, and cash paid as part of business acquisitions. Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes and earnout payments related to business acquisitions.


	As of December 31,
	2011			2010			2009
	(in thousands)
Net cash provided by operating activities	$	15,401		$	11,419		$	8,311
Net cash (used in) provided by investing activities		(3,813	)		610			(24	)
Net cash used in financing activities		(11,259	)		(10,331	)		(9,335	)

Net change in cash	$	329		$	1,698		$	(1,048	)

Operating Activities

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Investing Activities

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Investing activities consist primarily of investments in investment funds as well as capital expenditures. For the year ended December 31, 2011, investing activities used $3.8 million whereas for the year ended December 31, 2010, investing activities provided $0.6 million. The increase in cash used in investing activities from 2010 to 2011 was primarily the result of the cash payment of $3.3 million related to the Milbank acquisition.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

For the year ended December 31, 2010, investing activities provided $0.6 million primarily as a result of the funding of a sub-tenant escrow account.

Financing Activities

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes, and earnout payments related to business acquisitions. For the years ended December 31, 2011 and 2010, financing activities used $11.3 million, and $10.3 million, respectively. The increase in net cash used in financing activities from 2010 to 2011 was the result of an increase in earnout payments of $0.4 million related to the Marathon acquisition and increased distributions of $4.1 million made to principals as a result of higher partner incentive allocations paid in 2011 in addition to higher tax distributions paid in the first quarter of 2011 as compared to the same period in 2010. These increases were partially offset by lower payments of $2.9 million on notes payable due to the payment in full in 2011 of the note issued in connection with the Marathon acquisition, and the payment in full during 2010 of notes issued to former partners by us for the redemption of units under which we exercised our call right upon their termination of employment. In addition, cash received from principals on notes receivable was $1.1 million for the year ended December 31, 2011 compared to $0.2 million for the year ended December 31, 2010.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

For the years ended December 31, 2010 and 2009, financing activities used $10.3 million, and $9.3 million, respectively. This increase was due to $1.2 million of reduced cash proceeds received from the issuance of interests in Silvercrest L.P. in 2010. Cash payments received from principals on notes receivable was $0.8 million lower in 2010 than in 2009 because payments on certain partner notes that were due in 2010 were extended until 2011. Repayments on notes issued to former principals for the redemption of units held by them under which we exercised our call right upon their termination increased $0.5 million for the year ended December 31, 2010 compared to the year ended December 31, 2009. These increases were partially offset by lower distributions to principals of $1.4 million as a result of lower partner incentive allocations paid in 2010.

$0.9 million, $1.0 million, and $0.6 million, respectively, together with all accrued and unpaid interest. If specified conditions are not met by Milbank prior to November 1, 2014, then the principal payment due on November 1, 2015 will be reduced to $0.1 million. The principal amount outstanding under this note bears interest at the rate of five percent per annum.

Contractual Obligations

The following table sets forth information regarding our consolidated contractual obligations as of December 31, 2011.


	Payments Due by Period
	Less Than								More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(in thousands)
Operating leases	$	19,096	$	3,448	$	6,687	$	6,532	$	2,429
Capital leases		55		21		34		—		—
Notes payable		4,739		1,469		2,706		564		—

Total	$	23,890	$	4,938	$	9,427	$	7,096	$	2,429

Off-Balance Sheet Arrangements

We entered into a guaranty arrangement in 2011. See Note 11 to the consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus for further disclosure regarding this off-balance sheet arrangement.

We did not have any off-balance sheet arrangements as of December 31, 2010 or 2009.

Critical Accounting Policies and Estimates

Business Combinations

Goodwill and Intangible Assets

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Goodwill is not amortized and is evaluated for impairment using a two-step process that is performed at least annually, or whenever events or circumstances indicate that impairment may have occurred. During 2011, we changed our annual impairment test date from December 31 to October 1, effective October 1, 2011. The change was made in anticipation of our company having a requirement to issue its annual financial statements on an accelerated basis as compared to prior years. The change had no impact on our results of operations or any other financial statement line item. The first step is a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied fair value of the goodwill. If the carrying amount of the goodwill is greater than the implied value, an impairment loss is recognized for the difference. The implied value of the goodwill is determined as of the test date by performing a purchase price allocation, as if the reporting unit had just been acquired, using currently estimated fair values of the individual assets and liabilities of the reporting unit, together with an estimate of the fair value of the reporting unit taken as a whole. The estimate of the fair value of the reporting unit is based upon information available regarding prices of similar groups of assets, or other valuation techniques including present value techniques based upon estimates of future cash flows. Our reporting unit is not at risk of failing step one as its estimated fair value determined during the company’s annual goodwill impairment test for 2011 exceeded its carrying amount by over 400%.

Revenue Recognition

Equity-Based Compensation

awards that have the potential to be settled in cash at the election of the employee are classified as liabilities, or Liability Awards, and are adjusted to fair value at the end of each reporting period. Distributions associated with Liability Awards not expected to vest are accounted for as part of compensation expense in our Consolidated Statements of Operations.

Income Taxes

Our operating company is not subject to federal and state income taxes, since all income, gains and losses are passed through to its partners. Our operating company is subject to New York City Unincorporated Business Tax. We, including our affiliated incorporated entities, are subject to federal and state corporate tax, which requires an asset and liability approach to the financial accounting and reporting of income taxes. With respect to our incorporated entity, the annual tax rate is based on the income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which we operate. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Judgment is required in determining the tax expense and in evaluating tax positions. The tax effects of an uncertain tax position, or UTP, taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. We recognize estimated interest and penalties related to UTPs in income tax expense.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update, or ASU, 2010-06, “Improving Disclosures About Fair Value Measurements”, or ASU 2010-06. ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures were effective as of January 1, 2010, except for the Level III gross reporting which was effective for our company January 1, 2011. The adoption of ASU 2010-06 did not have a material impact on our financial statements.

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”, or ASU 2010-20. ASU 2010-20 requires additional disclosures about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. The new disclosures were effective for our interim and annual reporting periods beginning January 1, 2011. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles – Goodwill and Other (Topic 350) When to Perform Step Two of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”, which enhanced guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires step two to be performed if it is more likely than not that a goodwill impairment exists. This guidance was effective for our interim and annual reporting periods beginning January 1, 2011. As our reporting unit does not currently have a zero or negative carrying value, the adoption of this guidance did not have any impact on our financial statements.

interests used as consideration in a business combination. An entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds the instrument as an asset. With respect to financial instruments that are managed as part of a portfolio, an exception to fair value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and financial liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) are not permitted in a fair value measurement.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for our interim and annual periods commencing January 1, 2012. Early adoption is permitted. The company will consider this guidance when performing its annual impairment assessment in 2012.

Subsequent Event

Commodity Advisors Acquisition

On January 5, 2012, we signed a Limited Liability Purchase Agreement, or the Purchase Agreement, with MW Commodity Advisors, LLC, or Commodity Advisors, to acquire the LLC interests, or the LLC Interests, of Commodity Advisors. Commodity Advisors is the general partner of MW Commodity Strategies, L.P., the Commodity Fund, a $30 million fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. The strategic acquisition of Commodity Advisors adds another strategy to our complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. On April 1, 2012, under the terms of the Purchase Agreement, we, in exchange for the LLC Interests, issued 631 and 6 units of Silvercrest L.P. and Silvercrest GP LLC, respectively, at closing, with an estimated fair value of $100,000, which is equal to the difference between the Closing Revenue, as defined in the Purchase Agreement, attributable to all limited partners minus Closing Revenue attributable to those limited partners who give notice that they want to withdraw from the Commodity Fund. As part of the Purchase Agreement, we could be obligated to make a future one-time earnout payment in units of Silvercrest L.P. and Silvercrest GP LLC equal to the difference between $800,000 and the annualized revenue at closing only if incremental revenue, as defined, reaches an amount equal to $400,000 prior to March 31, 2014, as defined in the Purchase Agreement.

Qualitative and Quantitative Disclosures Regarding Market Risk

Our exposure to market risk is directly related to our role as investment adviser for the separate accounts we manage and the funds for which we act as sub-investment adviser. Most of our revenue for the year ended December 31, 2011 was derived from advisory fees, which are typically based on the market value of assets under management. Accordingly, a decline in the prices of securities would cause our revenue and income to decline due to a decrease in the value of the assets we manage. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenue and income to decline further.

BUSINESS

Our Guiding Principles

•

We will create, build and maintain an environment that encourages innovation and original thought and apply this fresh thinking to the needs of our clients and firm.

•

We will attract, motivate and retain unusually talented and ambitious professionals who share a passion for the investment business and an antipathy for corporate bureaucracy and office politics.

•

We will conduct ourselves in all our dealings as highly ethical, responsible and competent professionals who always place our clients’ financial interests ahead of our own.

•

We will encourage and nurture an entrepreneurial, collegial and action-oriented business culture in which “fun” is inevitable and decisions are generally consensual.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. As of March 31, 2012, we managed assets totaling $11.1 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance together with high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of March 31, 2012, we had 375 client relationships with an average size of $28 million which represented approximately 98% of our assets under management and our top 50 relationships averaged $157 million. As a boutique, we are large enough to provide an array of comprehensive capabilities, yet agile enough to coordinate and deliver highly personalized client service.

We consider these to be our competitive strengths:

•

We are a company offering independent, unconflicted advice, which is principally employee-owned.

•

We have a superb record of organic and acquired growth and we have a scalable platform.

•

We have a long-term track record of superior investment performance.

•

We have a diverse and highly loyal clientele.

•

We have proven senior management which has successfully executed our growth strategy.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Client assets have grown on average more than $1 billion per year since our founding and our annual client retention rate has averaged 98% since 2006. We believe our record of growth is a direct result of our demonstrated record of delivering excellent performance together with highly personalized service to our clients. As shown below, this results in a compound annual growth rate, or CAGR, in excess of 50% in assets under management since inception.

LOGO

Our organic growth has been complemented by selective hiring and by four strategic, accretive acquisitions which have expanded not only assets under management, but also our professional ranks, geographic footprint and service capabilities. We believe additional acquisitions will allow us to extend our geographic presence nationally. As we grow, we will maintain our value proposition to continue to deliver to our clients excellent investment performance together with excellent client service, the essence of what differentiates us from our competitors.

As of year-end 2011, approximately 95% of our assets under management were held for individual clients and 5% for institutional clients. Based on the strong results we have achieved in a number of our equity strategies, we have begun to attract a significant amount of institutional investor interest. After almost four years of dedicated effort, our equity capabilities are now on the approved lists of several prominent institutional consultants and, as a result, we believe significant institutional growth is likely in future years.

History, Organization and Philosophy

When forming our company, our founders had the objective of creating a large full-service boutique operation focused on managing portfolios and delivering financial advice to wealthy individuals and select institutions. We commenced operations in April of 2002. Our first partners and employees came almost entirely from Donaldson, Lufkin & Jenrette (DLJ) Asset Management Group which had been acquired by Credit Suisse Asset Management in late 2000. In 2002, we carefully recruited and hired the same equity, fixed income and client service teams with whom our clients had worked at DLJ Asset Management Group. Today, more than a quarter of our 88 employees are veterans of DLJ. Many of our principals, therefore, have worked together for 20 years and, in some cases, even longer.

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. Since 2004, we have successfully acquired four separate registered investment advisers and we have integrated and rebranded their operations into our company. The following is a summary of these acquisitions:

•

James C. Edwards Asset Management Inc., acquired in March 2004 with $889 million in assets under management, helped build out our New York presence;

•

Marathon Capital Group LLC, acquired in October 2008 with $552 million in assets under management, established a Boston office for our company; and

•

In meeting our primary objective to deliver strong investment results, we seek to add value through our asset allocation advice, as well as through our proprietary equity and fixed income strategies and robust outsourced investment capabilities. We recruited and hired a team of seasoned securities analysts who have an institutional caliber approach to security selection and a long record of success in implementing their strategies. We encourage them to focus 100% of their professional time on the task of securities selection. Our in-house equity analysts are focused on U.S. large cap, small cap, smid cap, multi cap, equity income and focused value equity strategies. On the fixed income side, our analysts are focused on high-grade municipals, high-yield municipals and high-grade taxables.

Prior to the financial crisis of 2008, we enjoyed a triple digit annualized growth rate of assets under management. Subsequent to the onset of the financial crisis in 2008, we have recovered more rapidly than many of our large, independent competitors, according to RIA Data Center, and our assets under management now exceed our pre-financial crisis high. Importantly, we remained profitable throughout the downturn. We expect to continue our pattern of complementing our organic growth in assets through selective hiring and acquisitions. We expect our growth to further accelerate as a direct result of growing client referrals and increasing our presence in the institutional marketplace.

Our Market Opportunity

Overview

Our client relationships with ultra-high net worth individuals currently represent less than 1% of U.S. families with investable assets over $25 million. Our assets represent less than 5% of the $356 billion multi-family office (MFO)/registered investment adviser (RIA) channel, which itself represents 8% of the estimated $4.6 trillion high net worth market. Even modest improvements in our penetration of this market will lead to significant further growth.

Domestic High Net Worth Market

LOGO

Source: The Spectrem Group

The Wealth Management Industry

•

Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

•

Trust Companies combine fiduciary and investment services as well as ancillary financial services with little emphasis on performance.

•

MFO/RIAs focus exclusively on the high net worth segment and, in the case of MFOs, are frequently dominated by one or two families.

Institutional Market

The asset management industry has experienced significant growth in worldwide assets under management during the past 15 years, fueled in significant respects by aging populations in both developed and emerging markets around the world, which have increased the pools of savings and particularly pension assets. For example, total pension assets in the United States grew from $6.8 trillion at the end of 1996 to $16.1 trillion at the end of 2011, according to Towers Watson. Furthermore, Towers Watson estimates that U.S. pension funds allocate 44% of year-end total assets to equities or $7.1 trillion. As of March 31, 2012, institutional assets only represented approximately 5% of our total assets under management or $556 million but, after a major multi-year investment effort to make our capabilities known to institutional investment consultants, we believe we are now well positioned to attract meaningful institutional assets. As a result, we expect this percentage to increase significantly.

Competitive Strengths

Our key competitive strengths are as follows:

Independent, Unconflicted Advice

We are an independent registered investment adviser and are not affiliated with a broker/dealer or a commercial bank. As a result, our financial incentives are directly aligned with those of our clients. Our revenues increase if our clients’ assets grow in value; our revenues decrease if our clients’ assets decline in value. We do not receive commissions, rebates, spreads or any other indirect or undisclosed forms of compensation. We are not controlled by any client or family and all of our investment decisions are made in the best interests of our clients. All of our fees are fully disclosed and transparent to our clients who have an unrestricted right to accept or reject them.

We employ a partnership culture and mindset fostered through widespread employee equity ownership. As of March 31, 2012, 37 of our employees own equity in our company. Each of our principals purchased this equity by making a substantial personal investment in our company. We believe that employee equity aligns our employees’ interests both with our company’s and our clients’ interests. It further motivates and dedicates employees to the task of satisfying our clients’ objectives. We believe that this partnership approach maximizes teamwork and collegiality and when issues and opportunities arise, all of our principals take an active interest in them.

Demonstrated Track Record of Growing Assets Under Management

Our organic growth in our individual client business has been fueled by client referrals and through the hiring of portfolio managers with substantial client relationships. Our institutional client business has resulted from a multi-year effort to make our equity capabilities known to institutional investment consultants. Our acquired growth is the result of four strategic, accretive acquisitions we have consummated in New York, Boston and Charlottesville. Following this offering we expect the number and frequency of these acquisitions to increase.

Long-Term Track Record of Superior Investment Performance

PROPRIETARY EQUITY PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

2.3

21.5

2.5

5.7

6.1

Russell 1000 Value Index

4.8

22.8

-0.8

3.5

4.6

Small Cap Value Composite

4/1/02

3.4

28.5

9.1

10.8

10.1

Russell 2000 Value Index

-1.1

25.4

0.0

4.6

6.6

Smid Cap Value Composite

10/1/05

4.2

26.2

5.8

N/A

7.5

Russell 2500 Value Index

0.1

27.1

1.0

N/A

4.3

Multi Cap Value Composite

7/1/02

4.3

24.5

4.9

7.0

7.5

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.8

Equity Income Composite

12/1/03

6.6

22.0

6.0

8.4

10.2

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.6

Focused Value Composite

9/1/04

-0.3

25.9

4.4

8.0

9.1

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

4.9

Loyal, Diverse Base of Clients

Our suite of family office services has been an important component to building a strong relationship with our clients, leading to greater client retention. Nine out of our ten largest relationships and approximately 17% of our current relationships use one or more components of our family office services. In addition to assisting in client retention, these capabilities have been instrumental in attracting new clients from families which seek a comprehensive and efficient approach to overseeing their wealth beyond investment management.

Our assets under management are highly diversified among clients. As of March 31, 2012, approximately 98% of our business was comprised of clients whose average relationship size is $28 million and our top 50 relationships averaged $157 million. Today, our clients are represented in 42 states and the District of Columbia and no single client represents more than 5% of our revenue.

Dedicated, Proven Senior Management

Our Growth Strategy

We built our company to take market share from financial services firms whose wealth management models we believe are flawed. To date, we attracted substantially all of our new client relationships from our competitors due to client dissatisfaction with service and/or investment performance. Our growth strategy has been and will continue to be to grow our business organically, to complement our organic growth with strategic hires and accretive acquisitions and to expand our presence in the institutional market. In support of each of these initiatives we plan to continue to invest in establishing our brand through continued selective advertising and public relations.

Organic Growth

We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm designed to deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown in excess of $1 billion per year without a commensurate increase in headcount. Importantly, we have achieved our growth while maintaining our profitability during one of the most challenging periods in the history of the U.S. financial markets. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients.

Where appropriate, our portfolio managers are also encouraged to introduce our clients to our family office services capabilities and we expect to see growth in the client utilization of these services in the future. Roughly 18% of our current clients use our family office services (including nine of our ten largest clients) and some of these have closed their own family offices to consolidate those activities with us. This is a profitable business for us and it serves to tighten our ties to those clients who avail themselves of the services we offer. It is also extremely useful to us in new business competitions where we use these services as a differentiator from our competitors. We expect much greater penetration with our current clients in future years and we expect that many of our new clients will use these services extensively.

Complementing the efforts of our senior portfolio managers to cultivate client referrals, our recently created business development team is charged with identifying newly formed wealth (resulting from merger, acquisition or corporate finance) and then creating customized solicitations. Our objective is two-fold: we will expand awareness of our company and its capabilities by distributing our marketing materials to this new audience and we will attract a certain amount of new business. The basis of this effort is careful research designed to ascertain if the prospect has any relationship with us - or any of our clients or friends – and then our solicitation is tailored to those circumstances. This effort is relatively new but we are very encouraged by its early results.

customized new business presentations distinguish us from both our much larger competitors who have major resources but cannot easily tailor solutions to suit clients’ needs as well as from our smaller competitors who do not have our depth of resources or capabilities.

Acquired Growth

From our inception, our organic growth has been complemented by selective hiring and accretive acquisitions which have served to enlarge our client base, expand our professional ranks, increase our geographic presence and broaden our service capabilities. We therefore expect to continue to recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We have used acquisitions to extend our presence into new geographies (Boston, Charlottesville) and to gain new investment expertise. The four successful strategic acquisitions we have done to date have been accretive to our partners and have allowed us to benefit from economies of scale and scope.

Continuing our growth strategy, we intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest in order to be closer to both our clients and to prospective clients. The following chart identifies those U.S. cities which contain the greatest number of families with net worth of $30 million or more:


RANK	CITY	RESIDENTS WITH A NET WORTH > $30 MILLION
1	New York, NY		7,270
2	Los Angeles, CA		4,350
3	San Francisco, CA		4,230
4	Chicago, IL		2,550
5	Washington, DC		2,300
6	Houston, TX		2,250
7	Dallas, TX		1,855
8	Atlanta, GA		960
9	Boston, MA		890
10	Seattle, WA		885
	Source: Cerulli Associates/Wealth-X

We have a strong brand and excellent reputation. Unlike pure “roll up” firms, we believe we appeal to like-minded professionals who wish to remain independent, autonomous and focused on their clients. In-line with our previous acquisitions, we envision future targets will be rebranded as Silvercrest.

Institutional Growth

We are now on the “approved” lists of certain prominent institutional investment consultants and we have begun to win mandates in our equity strategies. This trend was recently highlighted by our selection by a very large state retirement fund to manage an equity mandate of up to $400 million. In addition, we have been hired to manage a new equity mutual fund which is presently in the early stages of its national marketing campaign. We expect this trend to continue once it is publicly known that these and other institutions have engaged us to manage significant portfolios for them. The importance of institutional growth to our company is noteworthy: institutional assets will likely expand not only our assets under management but also our profit margins; and the painstaking due diligence conducted by these institutions before selecting us will ratify and confirm the decisions to hire us made by our individual clients.

Brand Management

With limited resources, we have created a focused national advertising campaign which has drawn praise from clients, prospects and competitors alike. We have carefully chosen media outlets that reach our target audience efficiently and we estimate that the new business which we get directly as a result of our advertising now finances its cost.

Our Business Model

To provide a high level of service, we rely on portfolio management teams and our family office services team to provide objective, conflict-free investment management selection and a fully integrated, customized family-centric approach to wealth management. We believe the combination of comprehensive family office service, excellent investment capabilities and a high level of personal service allows us to institutionalize our ultra-high net worth client relationships.

Delivering Investment Performance

MODEL PORTFOLIO PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Income Portfolio

5/1/03

5.4

14.2

5.7

6.4

7.0

U.S. Stock/Bond Mix (50/50)¹

8.1

15.1

4.1

5.2

6.1

Balanced Portfolio

5/1/03

4.8

18.4

5.9

6.9

8.1

U.S Stock/Bond Mix (60/40)¹

8.2

16.8

3.7

5.1

6.3

Growth Portfolio

5/1/03

4.2

23.1

5.5

7.2

9.1

U.S. Stock/Bond Mix (90/10)¹

2.7

13.4

0.7

4.8

6.0

¹	The equity benchmark is the S&P 500 Index and the fixed income benchmark is the Barclays Aggregate Bond Index.

We believe that it is impossible for a single manager to perform all forms of investing equally well. Thus, our core proprietary investment capabilities are focused on a narrow range of highly disciplined U.S. equity and fixed income management strategies. Our investment teams exhibited strong performance records. With respect to these strategies, roughly 56% of our separately managed account assets are managed in our proprietary investment strategies. Each of these strategies is measured against its appropriate benchmark and the results are formally reported to our clients quarterly. This performance measurement is conducted under the rigors of the CFA Institute’s Global Investment Performance Standards, or GIPS, which requires annual independent audits and represents the highest institutional standard for investment performance measurement.

Proprietary Equity Strategies

Our equity strategies rely on a team-based investment approach and a robust investment process. This approach has resulted in returns that exceed relevant market benchmarks. We believe this team approach has

LOGO

•

When a stock is excessively valued in our models or the best case scenario is reflected in the stock price;

•

Due to a stock’s outperformance which can adversely affect a portfolio’s diversification;

•

Due to underperformance, when a stock trails relevant benchmarks by more than 10%;

•

When the investment thesis changes, due to a loss of confidence in management, a change in business prospects, or the deterioration in earnings quality.

Below is a breakdown of assets among the various proprietary equity strategies as of March 31, 2012:

LOGO

Each of our equity strategies has outperformed its benchmark as illustrated by the following chart:

PROPRIETARY EQUITY PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

2.3

21.5

2.5

5.7

6.1

Russell 1000 Value Index

4.8

22.8

-0.8

3.5

4.6

Small Cap Value Composite

4/1/02

3.4

28.5

9.1

10.8

10.1

Russell 2000 Value Index

-1.1

25.4

0.0

4.6

6.6

Smid Cap Value Composite

10/1/05

4.2

26.2

5.8

N/A

7.5

Russell 2500 Value Index

0.1

27.1

1.0

N/A

4.3

Multi Cap Value Composite

7/1/02

4.3

24.5

4.9

7.0

7.5

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.8

Equity Income Composite

12/1/03

6.6

22.0

6.0

8.4

10.2

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.6

Focused Value Composite

9/1/04

-0.3

25.9

4.4

8.0

9.1

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

4.9

Proprietary Fixed Income Strategies

In the management of fixed income investments clients typically give us the mandate to produce stable returns to dampen the volatility of their portfolios as a counter-weight to equities as part of their complete asset allocation. For those investors who can take advantage of the tax exemption of municipal bonds, we have developed two high-yield municipal bond products designed to add value to the returns possible from high-grade bonds in a low interest rate environment. Below is the breakdown of assets under management by strategy as of March 31, 2012:

LOGO

Outsourced Manager Selection

•

Highly Consistent Returns. We emphasize consistency of performance over strong performance marked by high volatility.

•

Tax Sensitivity. We seek managers with a low turnover style of management designed to achieve attractive after-tax rates of return.

•

Solid Operations, Technology. We require each manager to produce evidence that it has robust technology and operations capabilities as well as vigorous compliance adherence.

•

Alignment of Interest. We require evidence that the strategy’s key people have significant equity in their company and are motivated to stay in place.

•

In the case of hedge fund selection, for several years we have engaged the services of an outside hedge fund consultant whose team of analysts assists us in making formal hedge fund decisions. For large clients with significant hedge fund exposure we offer a hedge fund advisory service to create customized hedge fund portfolios. Each of our funds of funds capabilities appears below:

•

Silvercrest Hedged Equity Fund is designed to complement and diversify long-only equity portfolios through investments with managers who employ long and short strategies;

•

Silvercrest Emerging Markets Fund provides international and non-dollar exposure and diversification focused on long, short, credit and other managers who invest in emerging markets;

•

Silvercrest Commodity Strategies Fund seeks to give investors comprehensive commodity exposure; and

•

Silvercrest Special Situations Fund is designed to provide absolute returns that outperform traditional benchmarks with substantially less volatility.

Delivering Client Service

Approximately 18% of our current clients use one or more components of our family office services and nine out of our ten largest clients use one or more component of our family office services. We believe that this is an attractive growth area for our company and have initiated plans to increase the provision of these services to both broaden relationships with existing clients and to attract potential clients. Our family office services are profitable and are not used as a loss-leader for attracting clients. Our family office capabilities include the following:

•

Financial Planning;

•

Tax Planning and Preparation;

•

Partnership Accounting and Fund Administration;

•

Consolidated Wealth Reporting;

•

Estate or Trust Agency; and

•

Art Consultancy, Management.

Competition

•

Diversified Financial Institutions have divisions aimed at providing wealth management solutions to the high net worth segment that are usually staffed by brokers.

•

Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

•

Trust Companies combine fiduciary and investment services as well as ancillary financial services.

•

MFO/RIAs focus exclusively on the high net worth segment and are frequently dominated by one or two families.

Employees

As of March 31, 2012, we had 86 full-time employees and two part-time employees.

Facilities

Legal Proceedings

In the normal course of business, we may be subject to various legal and administrative proceedings. Currently, there are no legal proceedings pending or threatened against us.

REGULATORY ENVIRONMENT

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries have resulted in increased scrutiny of the industry and new rules and regulations for investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of recent market events, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct our business.

SEC Regulation

The Advisers Act imposes substantive regulation on virtually all aspects of our business and relationships with our clients. As a registered adviser, we are subject to many requirements that cover, among other things, disclosure of information about our business to clients; maintenance of written policies and procedures; maintenance of extensive books and records; restrictions on the types of fees we may charge, including performance fees; solicitation arrangements; engaging in transactions with clients; maintaining an effective compliance program; custody of client assets; client privacy; advertising; and proxy voting. The SEC has authority to inspect any registered investment adviser and typically inspects a registered adviser periodically to determine whether the adviser is conducting its activities (i) in accordance with applicable laws, (ii) consistent with disclosures made to clients and (iii) with adequate systems and procedures to ensure compliance.

As an investment adviser, we have a fiduciary duty to our clients. The SEC has interpreted this duty to impose standards, requirements and limitations on, among other things: trading for proprietary, personal and client accounts; allocations of investment opportunities among clients; use of soft dollars; execution of transactions; and recommendations to clients. We manage 70% of our accounts on a discretionary basis, with authority to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates. In connection with these transactions, we receive soft dollar credits from broker-dealers that have the effect of reducing certain of our expenses. Section 28(e) of the Exchange Act provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services. To rely on the safe harbor offered by Section 28(e), (i) we must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to us in carrying out our investment decision-making responsibilities. In permissible

circumstances, we may receive technology-based research, market quotation and/or market survey services which are paid for in whole or in part by soft dollar brokerage arrangements. If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations, our operating expenses would increase.

CFTC Regulation

Due to recent rule amendments by the CFTC, Silvercrest Asset Management Group LLC and certain of its affiliates may be required to register with the CFTC and the National Futures Association, or the NFA, as a commodity pool operator and/or commodity trading adviser. Registration will subject us and our affiliates to substantive and material restrictions and requirements, including, among other things, reporting, recordkeeping, disclosure, self-examination and training requirements. Registration may also subject us to periodic on-site audits, and the CFTC is authorized to institute proceedings and impose sanctions for violations of the Commodity Exchange Act and/or CFTC rules.

Dodd-Frank

While the Dodd-Frank Act has not yet caused us to reconsider our business model, certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act are being determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the CFTC adopted rules that require investment advisers registered with the SEC that advise one or more private funds to provide certain information to the Financial Stability Oversight Council on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information for purposes of assessing the systemic risk posed by private funds. We are subject to these rules and will have to provide a Form PF to the SEC. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding further implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

ERISA-Related Regulation

To the extent that Silvercrest Asset Management Group LLC or any other of our affiliates is a “fiduciary” under ERISA with respect to benefit plan clients, it is subject to ERISA and to regulations promulgated thereunder. Among other things, ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients and provide monetary penalties for violations of these prohibitions. Our failure to comply with these requirements could have a material adverse effect on our business.

Compliance

MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our directors, nominees to our board of directors and executive officers.


Name	Age	Position
G. Moffett Cochran	61	Chairman, Chief Executive Officer and Director
Richard R. Hough III	42	President, Chief Operating Officer and Director
David J. Campbell	43	General Counsel and Secretary
Scott A. Gerard	44	Chief Financial Officer
Winthrop B. Conrad, Jr.	66	Director
Wilmot H. Kidd III	70	Director
Richard S. Pechter	67	Director

Richard R. Hough III is our President and Chief Operating Officer and a member of our board of directors. Mr. Hough has served as President of Silvercrest Asset Management Group LLC since January 2012 and as its Chief Operating Officer since July 2011. He has been a member of the Executive Committee of Silvercrest L.P. since 2007. Mr. Hough, who joined us in 2003, has responsibility for all aspects of our operations, including corporate strategy and development. Previously, Mr. Hough served as the founding national program director of Children’s Scholarship Fund, or CSF, where he oversaw program design, information processing, statistical analysis and relationship management in CSF’s 40 locations. Mr. Hough also worked in Washington, DC, as a managing editor and policy analyst and founded an online education network in 1994. Mr. Hough is a member of the Board of Governors of the Investment Adviser Association, a not-for-profit organization that represents the interests of SEC-registered investment adviser firms. He serves on the advisory board of the New Criterion, a monthly review of the arts and intellectual life. Mr. Hough is a member of the President’s Council of CSF and the board of advisers of Christendom College. Mr. Hough was recognized in 2006 as an American Young Leader by the American Council on Germany and he remains active in the Council’s affairs. Mr. Hough is the Scoutmaster of his town’s Boy Scout troop and serves on the executive board of Monmouth Council, Boy Scouts of America. Mr. Hough graduated with a degree in politics from Princeton University.

Scott A. Gerard is our Chief Financial Officer. Mr. Gerard has served as Chief Financial Officer of Silvercrest Asset Management Group LLC since 2010. Prior to joining Silvercrest, Mr. Gerard was Chief Financial Officer of Brand Connections, LLC, a private equity-backed marketing and media company. Previously, he was Chief Financial Officer of Guideline, Inc., a publicly-held business research firm. Prior to Guideline, Mr. Gerard was a Division Controller with Citigroup Inc. and began his career with KPMG LLP. Mr. Gerard is a Certified Public Accountant and received a B.S. in accounting from the University of Buffalo.

Wilmot H. Kidd III is a member of our board of directors. Mr. Wilmot H. Kidd III is Chairman of the Board and President of Central Securities Corporation, a non-diversified, publicly traded, investment company. Mr. Kidd has served as its President since 1973 and became Chairman of its Board of Directors in 2010. Mr. Kidd graduated from Washington & Lee University with a B.S. and from Northwestern University with an M.B.A.

Richard S. Pechter is a member of our board of directors. Mr. Pechter joined Donaldson, Lufkin & Jenrette, or DLJ, in 1969 and spent his career there, retiring in 2000 as a Director of the parent and Chairman of DLJ’s Financial Services Group and DLJdirect. He is currently a Director of FINRA and the New York Stock Exchange Regulatory Authority. Mr. Pechter graduated from Yale and received his M.B.A. from the Harvard Business School, where he was a Baker Scholar.

Board Composition

Staggered Board

•

Our Class I directors will be and ;

•

Our Class II directors will be and ; and

•

Our Class III director will be .

Incorporation—Classified Board of Directors” and “Risk Factors—Risks Related to this Offering—Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws could discourage a change of control that our stockholders may favor, which also could adversely affect the market price of our Class A common stock.”

Our board of directors currently consists of five directors. Messrs. Conrad, Kidd and Pechter qualify as independent directors under the corporate governance standards of Nasdaq. Silvercrest was incorporated on July 11, 2011. As such, we have had only one annual meeting during the most recent fiscal year in which all directors attended. Upon being registered as a public company, we intend to have required annual meetings.

Board Leadership Structure

Board Oversight of Risk Management

Board Committees

Audit Committee

Our Audit Committee’s responsibilities will include, among others:

•

reviewing our financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent registered public accounting firm;

•

reviewing our financial risk and control procedures, compliance programs regarding risk assessment and management and significant tax, legal and regulatory matters; and

•

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee’s responsibilities will include, among others:

•

making recommendations to the board regarding the selection of candidates, qualification and competency requirements for service on the board and the suitability of proposed nominees as directors;

•

advising the board with respect to the corporate governance principles applicable to us;

•

overseeing the evaluation of the board and management;

•

reviewing and approving in advance any related party transaction, other than those that are pre-approved pursuant to pre-approval guidelines or rules established by the committee;

•

reviewing periodically the form and amounts of director compensation and making recommendations to the board with respect thereto; and

•

establishing guidelines or rules to cover specific categories of transactions.

Compensation Committee

Our Compensation Committee will assist our board of directors in the discharge of its responsibilities relating to the compensation of our executive officers.

Our Compensation Committee’s responsibilities will include, among others:

•

reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our executive officers;

•

overseeing and administering, and making recommendations to our board of directors with respect to, our cash and equity incentive plans; and

•

reviewing and making recommendations to the board of directors with respect to director compensation.

Compensation Committee Interlocks and Insider Participation

100

including the named executive officers. None of our executive officers serves as a member of the board of directors or Compensation Committee, or other committee serving an equivalent function, of any entity that has one or more of its executive officers serving as a member of our board of directors or our Compensation Committee.

101

COMPENSATION DISCUSSION AND ANALYSIS

Philosophy and Objectives of Compensation Program

102

Determination of Compensation and Role of Directors and Principals in Compensation Decisions

In the future, we also expect that our Chief Executive Officer will continue to have discretion to determine the compensation of the named executive officers (other than himself), which he will do in consultation with our Compensation Committee. Our Compensation Committee is also expected to assume overall oversight responsibility for our compensation policies, plans and programs, by reviewing our company’s achievements and the achievements of our employees, and providing input and guidance to our Chairman and Chief Executive Officer in the determination of the specific type and level of compensation of our other named executive officers. Our Compensation Committee will also set the compensation of our Chairman and Chief Executive Officer.

Principal Components of Compensation

We have established compensation practices that directly link compensation with individual and company performance, as described below. These practices apply to all of our principals, including our named executive officers. Ultimately, ownership in our company has been the primary tool we have used to attract and retain senior professionals. As of , 2012, on a pro forma basis to take into account the reorganization and the consummation of this offering, our principals indirectly held approximately % of the interests in Silvercrest L.P. The substantial majority of employee-owned interests are held by Mr. Cochran. In connection with the reorganization transactions, all units in Silvercrest GP LLC, our predecessor, held by our principals will be converted into interests in Silvercrest L.P. The interests in Silvercrest L.P. currently held by our principals will continue to be held by them and will entitle them to continue to receive distributions from Silvercrest L.P. after the consummation of this offering.

103

•

Other Benefits and Perquisites. Each of our employees participates in the employee health benefit programs we maintain, including medical, group life and long-term disability insurance, on the same basis as all other employees, subject to satisfying any eligibility requirements and applicable law. We also provide other perquisites such as an automobile program, by which our present and former Management Committee members are provided $500 per month toward auto lease or financing payments. In addition, we offer each of our employees our investment management services, if they place their funds in a separately-managed account with us, at a discounted advisory fee typically associated with these services. Currently we do not have plans to change the levels of perquisites received, but continue to monitor them and may make adjustments from time to time. The perquisites provided to our named executive officers in the fiscal year ending December 31, 2011 are described below in our “Summary Compensation Table.”

Stock Ownership Guidelines

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Our principals have not historically been subject to mandated equity ownership or retention guidelines. It is our belief that the equity component of our compensation program ensures that our principals are also owners whose incentives are directly aligned with those of our company and our clients. As a public company, we intend to continue to promote broad and substantial equity ownership by our principals by using both equity-based compensation awards which may be granted on an annual basis, and performance awards that will be granted in appropriate circumstances. We may expand our equity ownership by creating opportunities for all employees, and not only our principals, to acquire equity interests in our company. In addition, following this offering, while an employee of Silvercrest L.P., our principals will be required to retain at least 50% of the Class B units in Silvercrest L.P. owned by the principal on the date of consummation of this offering.

An equity interest in Silvercrest L.P. and Silvercrest GP LLC also allows the holder to participate in the appreciation or depreciation in the value of Silvercrest L.P. and Silvercrest GP LLC, respectively, from and after the date of the grant of the equity interest, by participating in defined capital or liquidity events (as defined in the limited partnership agreement and limited liability company agreement) or by redemption following termination of employment. The redemption of these equity interests is described in detail below under “Potential Payments Upon Termination or Change in Control.”

Following this offering, as an element of compensation we intend to grant equity-based awards to those individuals considered to be critical to our company’s future success.

Tax Considerations

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corporation that pays compensation in excess of $1 million to any of its named executive officers (other than the chief financial officer) in any taxable year, unless the compensation plan and awards meet certain requirements. As a private company, Section 162(m) does not currently apply to our compensation program. To the extent Section 162(m) becomes applicable to us, we will endeavor to structure compensation to qualify as performance-based under Section 162(m), where it is reasonable to do so while meeting our compensation objectives. Notwithstanding the foregoing, we reserve the right to pay amounts that are not deductible under Section 162(m) during any period when Section 162(m) is applicable to us.

Risk Considerations in our Compensation Program

In evaluating our compensation program, we have identified two primary risks relating to compensation: (i) the risk that compensation will not be sufficient to retain talent and (ii) the risk that compensation may provide unintended incentives. To combat the risk that our compensation might not be sufficient, we strive to use a compensation structure and set compensation levels for all employees in a way that we believe contributes to low rates of employee attrition. We do not use compensation consultants, but we receive regular and ongoing input from industry representatives and other market sources through our (1) participation on the Pershing Advisor Council with MFO/RIA peers; (2) participation in other custodian advisor forums and industry events; (3) review of compensation surveys by companies such as The Bower Group; (4) review of industry publications featuring stories on compensation practices and metrics; and (5) reviewing the Moss Adams Adviser Compensation and Staffing Study. We also make equity awards subject to multi-year vesting schedules to provide a long-term component to our compensation program and impose ongoing restrictions on the ability of our principals to dispose of their equity holdings acquired through equity awards. We believe that both the structure and levels of compensation have aided us in retaining key personnel as evidenced by the long-term tenure of our principals.

Summary Compensation Table


Name and Principal Position	Year		Salary ($)⁽²⁾		Bonus ($)⁽³⁾		Stock Awards ($)⁽⁴⁾		All Other Compensation Earnings ($) ⁽⁵⁾		Total ($)

G. Moffett Cochran,		2011	$	500,000		—	$	409,031	$	230,523	$	1,139,554
Chief Executive Officer

Scott A. Gerard,		2011	$	325,000	$	200,000	$	67,982		—	$	592,982
Chief Financial Officer

Richard R. Hough,		2011	$	400,000	$	225,000	$	76,645		—	$	701,645
President and Chief Operating Officer ⁽¹⁾

David J. Campbell,		2011	$	325,000	$	175,000	$	59,530		—	$	559,530
General Counsel and Secretary

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(1)	Mr. Hough was named our Chief Operating Officer in July 2011 and was named President in February 2012.

(2)	Amounts represent guaranteed payments made to our named executive officers.

(3)	Amounts represent cash bonuses earned at December 31, 2011 and paid in February 2012.

(4)

(5)

Employment Agreements

Silvercrest Asset Management Group LLC is currently party to employment agreements with each of Messrs. Campbell and Gerard which provide for at-will employment. These agreements do not provide compensation terms or duration of employment. They do include restrictive covenants concerning the protection of our confidential information and solicitation of our employees and clients. We do not have employment agreements with Mr. Hough or Mr. Cochran. However, as limited partners of Silvercrest L.P., each of our named executive officers (other than Mr. Cochran) may not, while employed and during the one-year period following termination of employment by the employee, without good reason, (i) contact any of our clients or vendors or otherwise solicit any of our clients or vendors to terminate their relationship with us; (ii) accept any business from any of our clients with whom the employee dealt while at our company; or (iii) hire any of our employees. As a founding partner of our company, Mr. Cochran is bound by more restrictive covenants which prevent him during his employment and for two years following termination of employment from (i) contacting any of our clients or vendors or otherwise soliciting any of our clients or vendors to terminate their relationship with us; (ii) accepting any business from any of our clients with whom he dealt while at our company; (iii) competing with us; or (iv) hiring any of our employees.

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Outstanding Equity Awards at Fiscal Year End 2011

The following table sets forth information relating to equity interests in Silvercrest L.P. and Silvercrest GP LLC issued to our named executive officers subject to vesting provisions.


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested (as of 12/31/2011) ($)⁽¹⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
G. Moffett Cochran(2)		2,525	$	611,156		—	$	—
Scott A. Gerard(3)		420	$	101,678		—	$	—
Richard R. Hough(4)		1,391	$	336,747		—	$	—
David J. Campbell(5)		826	$	199,966		—	$	—

(1)	Represents (i) $242.09 per unit, which is the effective per unit value as of December 31, 2011, multiplied by (ii) the number of unvested units.

(2)	420.75 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 842 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(3)	70 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 140 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(4)

(5)

Option Exercises and Stock Vested Table

The following table sets forth information concerning interests in Silvercrest L.P. acquired upon the vesting of deferred equity units by the named executive officers.


	Equity Awards
Name	Number of L.P. Interests Acquired on Vesting (#)		Value Realized on Vesting ($)⁽¹⁾
G. Moffett Cochran		—	$	—
Scott A. Gerard		—	$	—
Richard R. Hough		184	$	27,296
David J. Campbell		92	$	13,648

(1)	Reflects the vesting date fair value computed in accordance with ASC 718 associated with deferred equity units in Silvercrest L.P.

Pension Benefits

We do not sponsor or maintain any benefit pension or retirement benefits for the benefit of our employees.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

We do not sponsor or maintain any nonqualified defined contribution or other nonqualified deferred compensation plans for the benefit of our employees.

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Potential Payments Upon Termination or Change in Control

Severance Benefits

Deferred Equity Units and Performance Units

As part of bonus compensation for performance during 2009, Silvercrest Asset Management LLC awarded to its principals 50% of the annual bonus earned by them in deferred equity units and performance units. For performance during 2010, the percentage was 25%, except in the case of Mr. Cochran, for whom the percentage in 2010 was 100%. As of December 31, 2011, there were 22,353 deferred equity units and 12,795 performance units outstanding. The deferred equity units and performance units were not issued pursuant to a plan.

Deferred Equity Units

Each deferred equity unit represents the right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P. As part of the reorganization, all deferred equity units outstanding immediately prior to the consummation of this offering will represent the right to receive an equal number of Class B units of Silvercrest L.P. Each deferred equity unit vests in four annual increments of 25% beginning on the first anniversary of the date of grant. On each vesting date, each deferred equity unit will entitle the holder thereof to receive 100 Class B units of Silvercrest L.P. On each vesting date, the holder of a deferred equity unit will have the right to require Silvercrest Asset Management Group LLC to pay the holder cash for a specified percentage of the deferred equity units in lieu of issuing Class B units to the holder for that percentage. The Executive Committee of Silvercrest L.P. sets the specified percentage that may be paid in cash at the option of the holder of the deferred equity units each year.

Performance Units

Dividend Equivalents

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Treatment upon Termination of Employment

Voluntary Resignation and Termination with Cause

Involuntary Termination without Cause, Death, Disability and Retirement

Upon an employee’s involuntary termination by us, the disability of the employee, the retirement by the employee or an employee’s death, all deferred equity units become fully and immediately vested. The Executive Committee of Silvercrest L.P. may determine as of the date of termination of employment the percentage of the deferred equity units held by the terminated employee that may be settled in cash. If an employee is terminated for any of the reasons set forth above, the terminated employee will receive a pro rated number of Class B units based on the period of time employed between the date of grant and the settlement of the performance units when the performance target is achieved. The performance units will not be settled until the achievement of the performance target, if at all. In addition, the right to receive dividend equivalents on the deferred equity units will continue until the deferred equity units are settled.

Change in Control

Vesting and Redemption of Silvercrest L.P. Interests

Director Compensation

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employees any compensation for their services as directors. We anticipate that our independent, non-employee directors will initially be compensated with an annual retainer of $50,000 and an additional $5,000 annually per committee on which the director serves. In addition, all directors will be reimbursed for reasonable out-of-pocket expenses incurred by them in connection with attending board of directors, committee and stockholder meetings, including those for travel, meals and lodging. We reserve the right to change the manner and amount of compensation to our directors at any time.

2012 Equity Incentive Plan

Awards under the 2012 Equity Incentive Plan will be structured to comply with Section 409A of the Internal Revenue Code.

Shares Subject to the 2012 Equity Incentive Plan

If an equity award granted under the 2012 Equity Incentive Plan expires or otherwise terminates without being exercised in full, or is settled in cash, the equity interests not acquired pursuant to the award will again become available for subsequent issuance under the 2012 Equity Incentive Plan. In addition, equity awards that are forfeited, cancelled, exchanged or surrendered prior to becoming fully vested, may become available for the grant of new equity awards under the 2012 Equity Incentive Plan.

Administration of the 2012 Equity Incentive Plan

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of the stock awards, including the period of their exercisability and vesting and, in certain instances, the fair market value applicable to a stock award. In addition, the Compensation Committee will interpret the 2012 Equity Incentive Plan and may adopt any administrative rules, regulations, procedures and guidelines governing the 2012 Equity Incentive Plan or any awards granted under the 2012 Equity Incentive Plan as it deems appropriate.

Types of Equity-Based Awards

Non-qualified Stock Options

Incentive Stock Options

An incentive stock option is a stock option that meets the requirements of Section 422 of the Internal Revenue Code. Incentive stock options may be granted only to our employees and must have an exercise price of no less than 100% of fair market value on the grant date, a term of no more than ten years, and be granted from a plan that has been approved by our stockholders. No incentive stock option may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates, or more than 10% of the value of all classes of our stock, unless (i) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (ii) the term of the incentive stock option does not exceed five years from the date of grant.

SARs

Restricted Stock

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of the rights of a stockholder as to those shares, including the right to receive dividend payments on the shares subject to their award during the vesting period (unless the awards are subject to performance-vesting criteria) and the right to vote those shares. Dividends will be subject to the same restrictions as the underlying restricted stock unless otherwise provided by the Compensation Committee. All unvested restricted stock awards are forfeited if the participant’s employment or service is terminated for any reason, unless the Compensation Committee determines otherwise.

Restricted Stock Units

Performance Awards

The performance goals, to the extent designed to meet the requirements of Section 162(m) of the Internal Revenue Code, will be based on one or more of the following criteria: (i) earnings including operating income, economic income, economic net income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) return on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology and goals relating to acquisitions, divestitures, joint ventures and similar transactions and budget comparisons; (xviii) personal professional objectives, including any of the foregoing performance goals, implementation of policies and plans, negotiation of transactions, development of long-term business goals, formation of joint ventures, research or development collaborations, and completion of other corporate transactions; and (xix) any combination of any of the foregoing.

Dividend Equivalents

Class B Units

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Compensation Committee may grant the same types of awards available under the 2012 Equity Incentive Plan related to our Class A common stock as awards related to the Class B units of Silvercrest L.P., including options to purchase Class B units. Any award granted covering units will reduce the overall limit with respect to the number of shares of Class A common stock that may be granted under the 2012 Equity Incentive Plan on a one-for-one basis.

LTIP Awards

Other Equity-Based Awards

Adjustments

Change of Control

In general terms, a change of control under the 2012 Equity Incentive Plan occurs:

•

if a person, entity or affiliated group (with certain exceptions) acquires more than 50% of our then outstanding voting securities;

•

if we sell or dispose of all or substantially all of our assets;

•

if we are liquidated or dissolved;

•

We cease to be the general partner of Silvercrest L.P.

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Section 162(m) Stockholder Approval Requirements

Amendment; Termination

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CERTAIN RELATIONSHIPS AND

RELATED PARTY TRANSACTIONS

Reorganization Transactions

Prior to the effectiveness of the registration statement of which this prospectus forms a part, we entered into a series of transactions to reorganize our capital structure. We also entered into agreements with certain related persons in connection with the reorganization transactions. See “The Reorganization and Our Holding Company Structure.”

Promissory Notes

In [date to be included], Mr. Campbell repaid in full the principal amount and all accrued interest on two promissory notes issued by Mr. Campbell in favor of Silvercrest L.P. The notes were issued in the amounts of $77,520.00 and $270,187.51 with interest accruing at 2.64% and 2.84%, per annum, respectively.

In [date to be included], Mr. Gerard repaid in full the principal amount and all accrued interest on two promissory notes issued by Mr. Gerard in favor of Silvercrest L.P. The notes were issued in the amounts of $261,513.54 and $133,640.17 with interest accruing at 1.62% and 2.66%, per annum, respectively.

In [date to be included], Mr. Hough repaid in full the principal amount and all accrued interest on five promissory notes issued by Mr. Hough in favor of Silvercrest L.P. The notes were issued in the amounts of $542,220.00, $122,812.50, $44,544.00, $77,520.00, and $222,837.51 with interest accruing at 3.53%, 2.77%, 4.40%, 2.64% and 2.42%, per annum, respectively.

Shares Subject to Redemption

Management Fees

Policies and Procedures Regarding Transactions with Related Persons

Upon the consummation of this offering, our board of directors will adopt written policies and procedures for transactions with related persons. As a general matter, the policy will require our Audit Committee to review and approve or disapprove the entry by us into certain transactions with related persons. The policy will contain transactions which are pre-approved transactions. The policy will only apply to transactions, arrangements and relationships where the aggregate amount involved could reasonably be expected to exceed $120,000 in any calendar year and in which a related person has a direct or indirect interest. A related person is (i) any of our directors, nominees for director or executive officers, (ii) any immediate family member of any of our directors, nominees for director or executive officers and (iii) any person, and his or her immediate family members, or entity, including affiliates, that was a beneficial owner of 5% or more of any of our outstanding equity securities at the time the transaction occurred or existed.

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person’s interest in the transaction. Any related person transaction must be conducted at arm’s length. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the Audit Committee that considers a transactions.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

•

each person who beneficially owns more than 5% of the shares;

•

each of our named executive officers listed in the summary compensation table;

•

each member of our board of directors;

•

all executive officers and directors as a group; and

•

each selling stockholder selling Class A common stock in this offering.

We have agreed to bear the expenses (other than underwriting discounts and commissions) of the selling stockholders in connection with this offering and to indemnify them against certain liabilities, including liabilities under the Securities Act.

This beneficial ownership information is presented on the following basis:

•

after giving effect to the issuance of an aggregate of shares of Class B common stock to the continuing members of Silvercrest L.P.;

•

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to equity awards held by that person that are currently exercisable or will become exercisable within 60 days after April , 2012 are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person.


	Class A								Class B
Beneficial Owner	No. of Shares Before Offering		Percentage		No. of Shares after Offering		Percentage		No. of Shares Before Offering		Percentage			No. of Shares after Offering		Percentage
Officers and Directors
G. Moffett Cochran (1)		—		—		—		—		113,155		21.06	%
Richard R. Hough III		—		—		—		—		8,773		1.63	%
Scott A. Gerard		—		—		—		—		3,252		*
Winthrop B. Conrad, Jr.		—		—		—		—		—		—			—		—
Wilmot H. Kidd III		—		—		—		—		—		—			—		—
Richard S. Pechter		—		—		—		—		—		—			—		—
David J. Campbell		—		—		—		—		4,773		*
All named executive officers and directors as a group (7 people).		—		—		—		—		129,953		24.19	%		129,953

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	Class A								Class B
Beneficial Owner	No. of Shares Before Offering		Percentage		No. of Shares after Offering		Percentage		No. of Shares Before Offering		Percentage			No. of Shares after Offering		Percentage
5% Security Holders
Martin Jaffe		—		—		—		—		70,781		13.17	%

Vulcan Wealth Management LLC (2)		—		—		—		—		136,364		25.38	%		—		—

(1)

Includes amount of Class B units owned by The Moffett Cochran GRAT 2010 of which Mr. Cochran is the trustee. If the underwriters elect to exercise in full their overallotment option, Mr. Cochran will beneficially own shares of Class B common stock after this offering, or % of the outstanding shares of Class B common stock.

(2)

Vulcan Wealth Management LLC is wholly-owned by Vulcan Capital Private Equity I LLC. Vulcan Capital Private Equity Inc. is the managing member of Vulcan Capital Private Equity Management I LLC, which is the manager of Vulcan Capital Private Equity I LLC. Paul Allen is the sole stockholder of Vulcan Capital Private Equity Inc, and, as such, possesses sole voting and investment power over the shares held by Vulcan Wealth Management LLC. Mr. Allen disclaims beneficial ownership of the shares held by Vulcan Wealth Management LLC except to the extent of his pecuniary interest therein. The address for Vulcan Wealth Management LLC is 505 5th Avenue S, Suite 900, Seattle, Washington 98104.

*	Less than 1%.

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DESCRIPTION OF CAPITAL STOCK

Common Stock

Class A Common Stock

Voting Rights

Dividend Rights

Class A stockholders are entitled to receive dividends, when and if declared by our board of directors, out of funds legally available therefore, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Dividends consisting of shares of Class A common stock may be paid only as follows: (i) shares of Class A common stock may be paid only to holders of shares of Class A common stock and (ii) shares will be paid proportionally with respect to each outstanding share of our Class A common stock. See “Dividend Policy.”

Liquidation Rights

Other Matters

No shares of Class A common stock will be subject to redemption or have preemptive rights to purchase additional shares of Class A common stock.

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Upon consummation of this offering, all the outstanding shares of Class A common stock will be legally issued, fully paid and non-assessable.

Exchanges of Class B units for Class A Common Stock and Registration Rights

Class B Common Stock

Issuance of Class B Common Stock with Class B units

Voting Rights

Dividend Rights

Our Class B stockholders will not participate in any dividends declared by our board of directors.

Liquidation Rights

Other Matters

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(including cash), all common stockholders will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash); provided that, if shares of Class B common stock are exchanged for shares of capital stock, such shares exchanged for, or changed into, may differ to the extent that the shares of our Class A common stock and Class B common stock differ.

No shares of Class B common stock will have preemptive rights to purchase additional shares of Class B common stock.

Upon consummation of this offering, all outstanding shares of Class B common stock will be legally issued, fully paid and non-assessable.

Preferred Stock

Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation

Issuance of Preferred Stock

Our board of directors is authorized to issue million shares of preferred stock and determine the powers, preferences and special rights of any unissued series of preferred stock, including voting rights, dividend rights, and terms of redemption, conversion rights and the designation of any such series, without the approval of our stockholders. As a result, our board of directors could issue preferred stock quickly and easily, which could adversely affect the rights of holders of our common stock. Our board of directors could issue the preferred stock with terms calculated to delay or prevent a change in control or make removal of management more difficult.

Elimination of Stockholder Action by Written Consent

Elimination of the Ability to Call Special Meetings

Advance Notice Procedures for Stockholder Proposals

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Classified Board of Directors

Removal of Directors; Board of Directors Vacancies

Amendment of Certificate of Incorporation and Bylaws

The General Corporation Law of the State of Delaware, or DGCL, provides generally that the affirmative vote of a majority of the outstanding shares of common stock entitled to vote is required to amend or repeal a corporation’s certificate of incorporation or bylaws, unless the certificate of incorporation requires a greater percentage. Our amended and restated certificate of incorporation generally requires the approval of the holders of at least two-thirds of the voting power of the issued and outstanding shares of our capital stock entitled to vote in connection with the election of directors to amend any provisions of our amended and restated certificate of incorporation described in “—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation.” Our amended and restated certificate of incorporation and amended and restated bylaws provide that the holders of at least two-thirds of the voting power of the issued and outstanding shares of our capital stock entitled to vote in connection with the election of directors have the power to amend or repeal our bylaws. In addition, our amended and restated certificate of incorporation grants our board of directors the authority to amend and repeal our bylaws without a stockholder vote in any manner not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation.

Section 203 of the DGCL

Limitations on Liability and Indemnification of Officers and Directors

123

cases, be broader than the specific indemnification provisions contained under Delaware law. In addition, as permitted by the DGCL, our amended and restated certificate of incorporation includes provisions that eliminate the personal liability of our directors for monetary damages resulting from breaches of certain fiduciary duties as a director. The effect of this provision is to restrict our rights and the rights of our stockholders in derivative suits to recover monetary damages against a director for breach of fiduciary duties as a director, except that a director will be personally liable for:

•

any breach of his duty of loyalty to us or our stockholders;

•

acts or omissions not in good faith, or which involve intentional misconduct or a knowing violation of law;

•

any transaction from which the director derived an improper personal benefit; or

•

improper distributions to stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our Class A common stock will be American Stock Transfer.

Listing

We intend to apply to list our Class A common stock on Nasdaq under the symbol “SAMG.”

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SHARES ELIGIBLE FOR FUTURE SALE

Class A Common Stock Outstanding Upon Closing

shares of Class A common stock will be outstanding immediately after this offering (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran). Subject to certain restrictions, following the first anniversary of the consummation of this offering, each holder (other than us) and certain permitted transferees will have the right to exchange their Class B units of Silvercrest L.P. for shares of our Class A common stock on a one-for-one basis pursuant to the terms of our second amended and restated limited partnership agreement. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” These shares of our Class A common stock issuable upon exchange of Class B units would be “restricted securities,” as defined in Rule 144. However, we will enter into a resale and registration rights agreement with the holders of the Class B units of Silvercrest L.P. that will require us to register under the Securities Act these shares of Class A common stock. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.”

Of the shares of Class A common stock outstanding following this offering, shares of Class A common stock (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock from Mr. Cochran) sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares of Class A common stock held by our “affiliates”, as defined in Rule 144 under the Securities Act, which would be subject to the limitations and restrictions described below under “—Rule 144.”

•

holders at any time may sell a number of shares sufficient to cover taxes due upon exchange of Class B units in any manner of sale permitted under the securities laws; and

•

the estate of any deceased holder or the beneficiaries thereof at any time may sell a number of shares sufficient to cover applicable estate and inheritance taxes.

In addition, our board of directors may at any time waive any restrictions on sale of our Class A common stock.

Lock-Up Agreements

Rule 144

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Class A common stock, which will equal approximately shares immediately after this offering (based on the number of shares of our Class A common stock outstanding upon completion of this offering), or the average weekly trading volume of our Class A common stock on Nasdaq during the four calendar weeks preceding the filing of a notice of the sale on Form 144. Sales under Rule 144 by affiliates also will be subject to manner of sale provisions, notice requirements and the availability of current public information about us.

Rule 701

Registration of Shares Under 2012 Equity Incentive Plan

Resale and Registration Rights Agreement

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MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

OF CLASS A COMMON STOCK

•

banks, insurance companies or other financial institutions;

•

partnerships or other pass-through entities;

•

tax-exempt organizations;

•

tax-qualified retirement plans;

•

dealers in securities or currencies;

•

U.S. expatriates and certain former citizens or long-term residents of the U.S.;

•

controlled foreign corporations;

•

passive foreign investment companies;

•

persons that own, or have owned, actually or constructively, more than 5% of our Class A common stock; and

•

persons that will hold common stock as a position treated as a hedging transaction, “straddle” or “conversion transaction” for tax purposes.

PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY INCOME OR OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP OR DISPOSITION OF OUR CLASS A COMMON STOCK ARISING UNDER THE LAWS OF THE U.S., ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

127

Definition of Non-U.S. Holder

•

an individual citizen or resident of the U.S. as determined for U.S. federal income tax purposes;

•

a corporation (or any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

•

an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•

Distributions on Class A Common Stock

128

Gain on Sale or Other Taxable Disposition of Class A Common Stock

•

We believe we currently are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. However, no assurance can be offered in this regard.

Gain described in the second bullet point above will be subject to U.S. federal income tax at a flat 30% rate (or such lower rate specified by an applicable income tax treaty) but may be offset by U.S. source capital losses (even though the individual is not considered a resident of the U.S.), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.

Federal Estate Taxes

Backup Withholding and Information Reporting

129

a non-U.S. holder sells or otherwise disposes of its shares of our Class A common stock through a U.S. broker or the U.S. offices of a foreign broker, the broker will generally be required to report the amount of proceeds paid to the non-U.S. holder to the IRS and also backup withhold on that amount unless such non-U.S. holder provides appropriate certification to the broker of its status as a non-U.S. person (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Internal Revenue Code) or otherwise establishes an exemption. Information reporting will also apply if a non-U.S. holder sells its shares of our Class A common stock through a foreign broker deriving more than a specified percentage of its income from U.S. sources or having certain other connections to the U.S., unless such broker has documentary evidence in its records that such non-U.S. holder is a non-U.S. person (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Internal Revenue Code) and certain other conditions are met, or such non-U.S. holder otherwise establishes an exemption.

Foreign Accounts

130

UNDERWRITING


Name		Number of Shares of Class A common stock

Sandler O’Neill & Partners, L.P.

Raymond James & Associates, Inc.

Total

•

the representations and warranties made by us are true and agreements have been performed;

•

there is no material adverse change in their determination in the financial markets or in our business; and

•

we deliver customary closing documents.

Subject to these conditions, the underwriters are committed to purchase and pay for all of the shares of our Class A common stock offered by this prospectus, if any such shares are purchased. However, the underwriters are not obligated to take or pay for the shares of our common stock covered by the underwriters’ over-allotment option described below, unless and until that option is exercised.

Over-Allotment Option

Mr. Cochran has granted the underwriters an option, exercisable no later than 30 days after the date of the underwriting agreement, to purchase up to an aggregate of additional shares of Class A common stock at the public offering price, less the underwriting discounts and commissions set forth on the cover page of this prospectus. We will be obligated to sell these shares of Class A common stock to the underwriters to the extent the over-allotment option is exercised. The underwriters may exercise this option only to cover over-allotments, if any, made in connection with the sale of our Class A common stock offered by this prospectus.

Commissions and Expenses

Per Share

Total without over-
allotment exercise

Total with over-
allotment exercise

Public offering price

Underwriting discount

Proceeds to us (before expenses)

131

Further, we will reimburse the underwriters for their legal fees of up to $ incurred in connection with their engagement as underwriters, regardless of whether this offering is consummated. We will also pay for filing fees incident to, and the fees and disbursements (up to an aggregate of $ ) of counsel for the underwriters in connection with, securing any required review of the terms of this offering. We estimate that the total expenses of this offering, exclusive of the underwriting discounts and commissions, will be approximately $ , and are payable by us.

Offering Price Determination

•

the history and prospects for the industry in which we compete;

•

our financial information;

•

our earning prospects;

•

the prevailing securities markets at the time of this offering; and

•

the recent market prices of and the demand for publicly traded stock of comparable companies.

Indemnification

Lock-Up Agreement

•

The 180-day restricted period described in the preceding paragraph will be extended if:

•

prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 17-day period beginning on the last day of the 180-day restricted period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the date that is 15 calendar days plus 3 business days after the date on which the earnings release is issued or the material news or material event relating to us occurs.

132

Listing on the Nasdaq Global Market

We have applied to list our Class A common stock on The Nasdaq Global Market under the symbol “SAMG.”

Stabilization

In connection with this offering, the underwriters may, but are not obligated to, engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids.

•

Our Relationship with the Underwriters

133

LEGAL MATTERS

Certain legal matters with respect to the common stock offered hereby will be passed upon for us and the selling stockholders by Bingham McCutchen LLP. Certain legal matters with respect to this offering will be passed upon for the underwriters by Paul, Weiss, Rifkind, Wharton & Garrison LLP.

EXPERTS

The balance sheet of Silvercrest Asset Management Group Inc. as of May 11, 2012, included in this prospectus, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such balance sheet has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Silvercrest L.P. and its subsidiaries as of December 31, 2011 and December 2010, and for each of the years in the three-year period ended December 31, 2011, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

You may read and copy any document we have filed or may in the future file at the SEC’s public reference facility in Room 1580, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at http://www.sec.gov.

134

INDEX TO FINANCIAL STATEMENTS

SILVERCREST ASSET MANAGEMENT GROUP INC.


	Page

Silvercrest Asset Management Group Inc.

Report of Independent Registered Public Accounting Firm		F-3

Balance Sheet as of May 11, 2012		F-4

Notes to Balance Sheet		F-5

Silvercrest L.P. and Subsidiaries

Report of Independent Registered Public Accounting Firm		F-6

Audited Consolidated Financial Statements of Silvercrest L.P. and its Subsidiaries for the three years ended December 31, 2011, December 31, 2010, and December 31, 2009:

Consolidated Statements of Financial Condition		F-7
Consolidated Statements of Operations		F-8
Consolidated Statements of Partners’ Deficit		F-9
Consolidated Statements of Cash Flows		F-10
Notes to Consolidated Financial Statements		F-12

Milbank Winthrop & Co., Inc.

Unaudited Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the nine month period ended September 30, 2011:

Consolidated Statements of Financial Condition		F-32
Consolidated Statements of Operations		F-34
Consolidated Statements of Changes in Stockholders’ Equity		F-35
Consolidated Statements of Cash Flows		F-36
Notes to Consolidated Financial Statements		F-38
Audited Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2010:

Independent Auditors’ Report		F-50
Consolidated Statements of Financial Condition		F-51
Consolidated Statements of Income		F-52
Consolidated Statements of Changes in Stockholders’ Equity		F-53
Consolidated Statements of Cash Flows		F-54
Notes to Consolidated Financial Statements		F-56
Audited Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2009:

Independent Auditors’ Report		F-66
Consolidated Statement of Financial Condition		F-67
Consolidated Statement of Income		F-68
Consolidated Statement of Changes in Stockholders’ Equity		F-69
Consolidated Statement of Cash Flows		F-70
Notes to Consolidated Financial Statements		F-72

F-1


MW Commodity Advisors, LLC

Audited Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2011:

Independent Auditors’ Report			F-84
Consolidated Statement of Financial Condition			F-85
Consolidated Statement of Operations			F-86
Consolidated Statement of Changes in Members’ Equity			F-87
Consolidated Statement of Cash Flows			F-88
Notes to Consolidated Financial Statements			F-89
Audited Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2010:

Independent Auditors’ Report			F-98
Consolidated Statement of Financial Condition			F-99
Consolidated Statement of Income			F-100
Consolidated Statement of Changes in Member’s Equity			F-101
Consolidated Statement of Cash Flows			F-102
Notes to Consolidated Financial Statements			F-103

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder of Silvercrest Asset Management Group Inc.:

New York, New York

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012

F-3

Silvercrest Asset Management Group Inc.

Balance Sheet

May 11, 2012


Assets

Cash	$	100


Stockholder’s Equity

Class A common stock, $0.01 par value - 1,000 shares authorized, 10 shares issued and outstanding	$	—

Class B common stock, $0.01 par value - 1,000 shares authorized, 0 shares issued and outstanding		—

Additional paid-in capital		100


Total stockholder’s equity	$	100

See accompanying notes to balance sheet.

F-4

Silvercrest Asset Management Group Inc.

Notes to Balance Sheet

As of May 11, 2012

1.	ORGANIZATION

Silvercrest Asset Management Group Inc. (the “Company”) was formed as a Delaware corporation on July 11, 2011. The Company was formed for the purpose of completing a public offering and related transactions in order to carry on the business of Silvercrest L.P. The Company will be the sole general partner in Silvercrest L.P. and will operate and control all of the businesses and affairs of Silvercrest L.P. and, through Silvercrest L.P. and its subsidiaries, continue to conduct the business now conducted by these subsidiaries.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.	STOCKHOLDER’S EQUITY

F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Silvercrest L.P.:

New York, New York

As discussed in Note 2 to the consolidated financial statements, the Company changed its annual goodwill impairment testing date from December 31 to October 1, effective October 1, 2011.

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012

F-6

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Financial Condition

(In thousands)


	As of December 31,
	2011			2010
Assets
Cash and cash equivalents	$	7,354		$	7,025
Restricted certificates of deposit and escrow		1,130			1,465
Investments		1,128			1,316
Receivables, net		2,238			2,247
Due from Silvercrest Funds		2,043			1,255
Furniture, equipment and leasehold improvements, net		2,275			2,107
Goodwill		14,683			10,993
Intangible assets, net		13,810			5,771
Prepaid expenses and other assets		601			900

Total assets	$	45,262		$	33,079


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit
Accounts payable and accrued expenses		4,365			2,236
Accrued compensation		2,915			2,790
Notes payable		4,809			2,957
Deferred rent		3,287			3,552
Deferred tax and other liabilities		375			955

Total liabilities		15,751			12,490


Redeemable partners’ capital		91,201			51,744
Notes receivable from partners		(6,024	)		(6,125	)

Total redeemable partners’ capital		85,177			45,619


Commitments and Contingencies (Note 11)

Partners’ Deficit
Partners’ capital		44,359			41,909
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(100,025	)		(66,939	)

Total partners’ deficit		(55,666	)		(25,030	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	33,079

See accompanying notes to consolidated financial statements.

F-7

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Operations

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Revenue
Management and advisory fees	$	37,869		$	32,442		$	29,341
Performance fees and allocations		85			548			96
Family office services		4,833			3,841			3,097

Total revenue		42,787			36,831			32,534


Expenses
Compensation and benefits		17,492			16,528			15,630
General and administrative		10,849			9,459			13,006
Impairment charges		—			—			1,691

Total expenses		28,341			25,987			30,327

Income before other income (expense)		14,446			10,844			2,207

Other income (expense)
Gain on extinguishment of debt		—			—			3,934
Gain on settlement with former LongChamp shareholders		—			—			1,470
Loss on forgiveness of notes receivable		(34	)		(508	)		—
Change in value of options granted to equity holders		—			2			134
Other (expense) income		(210	)		30			—
Interest income		187			231			213
Interest expense		(164	)		(241	)		(467	)
Equity income from investments		950			1,241			274

Total other income		729			755			5,558


Income before (provision) benefit for income taxes		15,175			11,599			7,765
(Provision) benefit for income taxes		(566	)		(657	)		321

Net income	$	14,609		$	10,942		$	8,086

See accompanying notes to consolidated financial statements.

F-8

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Partners’ Deficit

(In thousands)


	Partners’ Capital			Excess of Liabilities, Redeemable Partners’ Capital and Partners’ Capital over Assets			Total Partners’ Deficit
January 1, 2009	$	37,521		$	(106,461	)	$	(68,940	)
Contributions from partners		—			4,842			4,842
Distributions to partners		—			(7,377	)		(7,377	)
Accretion to redemption value of redeemable partnership units		—			44,241			44,241
Net income		2,239			5,847			8,086

December 31, 2009		39,760			(58,908	)		(19,148	)
Contributions from partners		—			1,090			1,090
Distributions to partners		(823	)		(5,050	)		(5,873	)
Equity-based compensation		—			9			9
Accretion to redemption value of redeemable partnership units		—			(12,050	)		(12,050	)
Net income		2,972			7,970			10,942

December 31, 2010		41,909			(66,939	)		(25,030	)
Contributions from partners		—			849			849
Distributions to partners		(1,271	)		(8,723	)		(9,994	)
Equity-based compensation		—			489			489
Accretion to redemption value of redeemable partnership units		—			(36,589	)		(36,589	)
Net income		3,721			10,888			14,609

December 31, 2011	$	44,359		$	(100,025	)	$	(55,666	)

See accompanying notes to consolidated financial statements.

F-9

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Operating Activities
Net income	$	14,609		$	10,942		$	8,086
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation		977			583			—
Depreciation and amortization		1,469			1,379			1,531
Amortization of acquired deferred revenue		(870	)		—			—
Deferred rent		(265	)		(418	)		647
Deferred income taxes		(275	)		(174	)		293
Goodwill, intangible and fixed asset impairment charge		—			—			1,691
Change in fair value of options granted		—			(2	)		(134	)
Gain on extinguishment of debt		—			—			(3,934	)
Gain on settlement with former LongChamp shareholders		—			—			(219	)
Loss on forgiveness of notes receivable		34			508			—
Non-cash interest income		(180	)		(207	)		(165	)
Non-cash interest expense		—			—			35
Distributions received from investment funds		1,231			274			1,014
Equity income from investments		(950	)		(1,241	)		(274	)
Provision for doubtful receivables		—			104			—
Other		92			—			—
Cash flows due to changes in operating assets and liabilities:
Receivables and due from Silvercrest funds		(780	)		(1,438	)		3,211
Prepaid expenses and other assets		192			422			(49	)
Payables and accrued expenses		644			(261	)		(980	)
Accrued compensation		(360	)		113			(2,702	)
Deferred and other liabilities		(282	)		646			(2	)
Interest payable on notes payable		115			189			262

Net cash provided by operating activities		15,401			11,419			8,311


Cash Flows From Investing Activities
Restricted certificates of deposit and escrow	$	335		$	689		$	(14	)
Acquisition of furniture, equipment and leasehold improvements		(606	)		(79	)		(10	)
Acquisition of Milbank, net of cash acquired		(3,357	)		—			—
Purchase of investments		(419	)		—			—
Proceeds from sale of investments		234			—			—

Net cash (used in) provided by investing activities		(3,813	)		610			(24	)

F-10


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Financing Activities
Earnouts paid related to acquisitions	$	(663	)	$	(245	)	$	(488	)
Proceeds from issuance of partner interests		13			180			1,343
Redemptions of partner interests		(237	)		(225	)		—
Repayments of notes payable		(1,445	)		(4,373	)		(3,895	)
Payments on capital leases		(16	)		(2	)		—
Distributions to partners		(9,994	)		(5,873	)		(7,307	)
Payments from partners on notes receivable		1,083			207			1,012

Net cash used in financing activities		(11,259	)		(10,331	)		(9,335	)


Net increase (decrease) in cash and cash equivalents		329			1,698			(1,048	)
Cash and cash equivalents, beginning of year		7,025			5,327			6,375

Cash and cash equivalents, end of year	$	7,354		$	7,025		$	5,327


Supplemental Disclosures of Cash Flow Information
Net cash paid (refunded) during the year for:
Income taxes	$	855		$	(539	)	$	934
Interest		114			252			285

Supplemental Disclosures of Non-cash Financing Activities
Notes receivable:
From partners for capital contributions	$	836		$	187		$	3,500
Satisfied as part of share redemptions		—			734			901
Loss on forgiveness of notes receivable		34			508			—
Earnout accrual for acquisition of Marathon Capital Group, LLC		419			685			321
Earnout accrual for acquisition of Heritage Financial Management, LLC		—			—			291
Earnout accrual for acquisition of Milbank		1,726			—			—
Issuance of notes payable for redemption of partner interests		—			745			1,897
Issuance of notes payable for acquisition of Milbank		3,181			—			—
Issuance of partner interests as satisfaction of notes payable to partners		—			724			—
Issuance of shares for acquisition of Milbank		3,105			—			—

See accompanying notes to consolidated financial statements.

F-11

Silvercrest L.P.

and Subsidiaries

Notes to Consolidated Financial Statements

As of and For the Years Ended December 2011, 2010 and 2009

(Dollars in thousands)

1.	ORGANIZATION AND BUSINESS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Silvercrest, SAMG LLC, SFS, LGI, MCG, Silvercrest Investors LLC and Silvercrest Investors II LLC as of and for the year ended December 31, 2011. All intercompany transactions and balances have been eliminated.

The Company consolidates those entities in which it has control over significant operating, financial or investing decisions of the entity.

In addition, Silvercrest consolidates those entities it controls through a majority voting interest or otherwise, including those Silvercrest Funds in which the general partner or equivalent is presumed to have control over the fund pursuant to ASC 810-20, Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (“ASC 810-20”). As of and for the year ended December 31, 2011, 2010 and 2009, Silvercrest did not consolidate any of the Silvercrest Funds.

Segment Reporting

F-12

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents.

Restricted Certificates of Deposit

Certain certificates of deposit held at a major financial institution are restricted and serve as collateral for letters of credit for the Company’s lease obligations as described in Note 11.

Equity Method Investments

Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, Investments-Equity Method and Joint Ventures, (“ASC 323”), whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist.

Receivables and Due from Silvercrest Funds

Furniture, Equipment and Leasehold Improvements

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date.

F-13

Goodwill and Intangible Assets

The Company has one reporting unit at December 31, 2011, 2010 and 2009. No goodwill impairment charges were recorded during the years ended December 31, 2011 and 2010. As discussed in Notes 6 and 7, goodwill and intangible assets related to the acquisition of LGI were determined to be impaired as of December 31, 2009.

Long-lived Assets

Derivative Instruments

F-14

The Company records the changes in fair value of derivative instruments in “Other income (expenses)” in the consolidated statement of operations.

The Company does not purchase, hold or sell derivative financial instruments for trading and speculative purposes.

Partner Distributions

Partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership.

Redeemable Partnership Units

The Company also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions.

Revenue Recognition

Investment advisory fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter, based on a contractually specified percentage of the assets managed. Revenue is recognized on a ratable basis over the period in which services are performed.

The Company accounts for performance based revenue in accordance with ASC 605-20-S99, Accounting for Management Fees Based on a Formula, by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company records performance fees and allocations as a component of revenue.

Equity-Based Compensation

Equity-based compensation cost relating to the issuance of share-based awards to partners is based on the fair value of the award at the date of grant, which is expensed ratably over the requisite service period, net of estimated forfeitures. The forfeiture assumption is ultimately adjusted to the actual forfeiture rate. Therefore, changes in the forfeiture assumptions may affect the timing of the total amount of expense recognized over the vesting period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that have the potential to be settled in cash at the election of the employee are classified as liabilities (“Liability Awards”) and are adjusted to fair value at the end of each reporting period. Distributions associated with Liability Awards not expected to vest are accounted for as part of compensation expense in the Consolidated Statement of Operations.

Leases

F-15

Income Taxes

Recent Accounting Developments

F-16

An entity should measure the fair value of its own equity instrument from the perspective of a market participant that holds the instrument as an asset. With respect to financial instruments that are managed as part of a portfolio, an exception to fair value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and financial liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) is not permitted in a fair value measurement.

The guidance also requires enhanced disclosures about fair value measurements, including, among other things, (a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity, and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing January 1, 2012. Early adoption is permitted. The Company will consider this guidance when performing its annual impairment assessment in 2012.

3.	ACQUISITION

F-17

contingent consideration was $1,726 based on the likelihood that the financial and performance targets will be achieved. Under the terms of the Asset Purchase Agreement, Milbank is entitled to receive six earnout payments. The earnout periods are as follows: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA, as defined in the Asset Purchase Agreement. There is no required EBITDA milestone that needs to be achieved in order for an earnout payment to be made. The amount of the earnout payments will vary depending on the level of EBITDA that is generated in each respective earnout period. During 2011, the Company incurred $222 in costs related to the acquisition of Milbank, and has included these in general, administrative and other in the Consolidated Statement of Operations.


Shares issued	$	3,105

Note payable due to Milbank		3,181

Cash paid on date of acquisition		4,170

Contingent consideration		1,726


Total purchase consideration	$	12,182

The following table summarizes the amounts allocated to the acquired assets and assumed liabilities. The excess of the purchase price over the fair values of assets acquired and liabilities assumed was allocated to goodwill and intangible assets.


Cash	$	813

Prepaid expenses		57

Furniture and equipment		20

Deferred revenue		(871	)

Net deferred tax liability		(107	)

Capital lease		(17	)


Total fair value of net tangible assets acquired		(105	)

Goodwill		3,271

Customer relationships (20 years)		8,200

Non-compete agreements (3-5 years)		816


Total purchase consideration	$	12,182

F-18


	Pro Forma Twelve Months Ended December 31, 2011		Pro Forma Twelve Months Ended December 31, 2010

Total Revenue	$	47,522	$	41,617

Net Income	$	15,896	$	12,122

Milbank revenue and income before provision for income taxes for the two months ended December 31, 2011 that are included in the Consolidated Statement of Operations are $871 and $367, respectively.

4.	INVESTMENTS AND FAIR VALUE MEASUREMENTS

Investments include $1,034, $1,316 and $349 as of December 31, 2011, 2010 and 2009, respectively, representing the Company’s equity method investments in affiliated investment funds which have been established and managed by the Company and its affiliates. The Company’s financial interest in these funds can range up to 2%. Despite the Company’s insignificant financial interest, the Company exerts significant influence over these funds as the Company typically serves as the general partner, managing member or equivalent for these funds. During 2007, the Silvercrest Funds granted rights to the unaffiliated investors in each respective fund to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent of that fund or to accelerate the liquidation date of that fund in accordance with certain procedures. At December 31, 2011, 2010 and 2009, the Company determined none of the Silvercrest Funds were required to be consolidated. The Company’s involvement with these entities began on the dates that they were formed, which ranges from July 2003 to July 2008.

Summarized financial information for investments accounted for under the equity method as of and for the years ended December 31, 2011, 2010 and 2009 are as follows:


	As of and for the Years Ended December 31,
	2011		2010		2009

Total assets	$	257,349	$	266,979	$	268,770


Total liabilities	$	20,412	$	1,712	$	7,385


Income	$	17,398	$	18,771	$	19,433
Operating expenses		2,161		2,236		2,045

Realized and unrealized gain (loss) on investments		5,675		6,533		49,415

Net increase in members capital resulting from operations	$	20,913	$	23,068	$	66,802

F-19

Fair Value Measurements

Investments measured and reported at fair value are classified and disclosed in one of the following categories.

•

Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives.

•

F-20

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2011:


	Level I		Level II		Level III		Total

Assets

Cash equivalents – Money Market Funds	$	1,037	$	—	$	—	$	1,037

Free Standing Derivatives – Put Options		94		—		—		94


	$	1,131	$	—	$	—	$	1,131

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2010:

Level I

Level II

Level III

Total

Assets

Cash equivalents – Money Market Funds

1,034

—

1,034

5.	RECEIVABLES, NET

The following is a summary of receivables as of December 31, 2011 and 2010:


	2011			2010
Management and advisory fees receivable	$	1,433		$	1,442
Unbilled receivables		1,134			1,196
Other receivables		57			2

Receivables		2,624			2,640
Allowance for doubtful receivables		(386	)		(393	)

Receivables, net	$	2,238		$	2,247

F-21

6.	FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of December 31, 2011 and 2010:


	2011			2010
Leasehold improvements	$	3,466		$	2,982
Furniture and equipment		3,360			3,190
Artwork		338			332

Total cost		7,164			6,504
Accumulated depreciation and amortization		(4,889	)		(4,397	)

Furniture, equipment and leasehold improvements, net	$	2,275		$	2,107

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $492, $463 and $522, respectively.

In 2009, the Company dissolved LGI and wrote off all related fixed assets, totaling $43.

7.	GOODWILL

The following is a summary of the changes to the carrying amount of goodwill as of December 31, 2011 and 2010:


	2011			2010
January 1,
Gross balance	$	28,408		$	26,731
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance		10,993			9,316
Purchase price adjustments from earnouts		419			929
Acquisition of Milbank		3,271			—
Deferred tax liability adjustment		—			748

December 31,
Gross balance		32,098			28,408
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance	$	14,683		$	10,993

F-22

8.	INTANGIBLE ASSETS

The following is a summary of intangible assets as of December 31, 2011 and 2010:


	Customer Relationships			Other Intangible Assets			Total

Cost
Balance, January 1, 2011	$	7,710		$	750		$	8,460
Acquisition of certain assets of Milbank		8,200			816			9,016

Balance, December 31, 2011		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years
Accumulated amortization
Balance, January 1, 2011		(2,351	)		(338	)		(2,689	)
Amortization expense		(793	)		(184	)		(977	)

Balance, December 31, 2011		(3,144	)		(522	)		(3,666	)

Net book value	$	12,766		$	1,044		$	13,810


Cost
Balance, January 1, 2010	$	7,710		$	750		$	8,460

Balance, December 31, 2010		7,710			750			8,460
Useful lives		15-20 years			5 years

Accumulated amortization
Balance, January 1, 2010		(1,585	)		(188	)		(1,773	)
Amortization expense		(766	)		(150	)		(916	)

Balance, December 31, 2010		(2,351	)		(338	)		(2,689	)

Net book value	$	5,359		$	412		$	5,771

Amortization expense related to the intangible assets was $1,009 for the year ended December 31, 2009.

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:


2011	$	1,447
2012		1,370
2013		1,229
2014		1,100
2015		1,044
Thereafter		7,620

Total	$	13,810

9.	NOTES PAYABLE

The following is a summary of notes payable:


	December 31, 2011
	Interest Rate			Amount
Principal on fixed rate notes		5.0	%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		1,558
Interest payable					70

Total, December 31, 2011				$	4,809

F-23


	December 31, 2010
	Interest Rate			Amount

Principal on fixed rate notes		2.38	%	$	450
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		2,438
Interest payable					69

Total, December 31, 2010				$	2,957

Future amounts payable under the notes payable are as follows:


2012	$	1,469
2013		1,556
2014		1,150
2015		564

Total	$	4,739

10.

SETTLEMENT WITH FORMER SHAREHOLDERS OF THE LONGCHAMP GROUP, INC.

11.

COMMITMENTS AND CONTINGENCIES

Lease Commitments

F-24

provided the Company spends at least an additional $513 on improvements. The Company spent $3,284 on leasehold improvements and received $1,499 of the allowance during 2007; the remaining $39 of the allowance was received in 2008. As security for performance under the leases, the Company is required to maintain letters of credit in favor of the landlord totaling $2,023 that were reduced to $1,013 on August 31, 2010 and can be further reduced to $506 on August 31, 2014. The letter of credit is collateralized by a certificate of deposit in an equal amount.

Future minimum lease payments and rentals under lease agreements which expire through 2017 are as follows:


	Minimum Lease Commitments		Non-cancellable Subleases			Minimum Net Rentals

2012	$	3,448	$	(757	)	$	2,691
2013		3,342		(724	)		2,618
2014		3,345		(453	)		2,892
2015		3,293		(473	)		2,820
2016		3,239		(473	)		2,766
Thereafter		2,429		(354	)		2,075

Total	$	19,096	$	(3,234	)	$	15,862

The Company has capital leases for certain office equipment. The principal balance of these leases was $55 and $9 as of December 31, 2011 and 2010, respectively.

Partners’ Interests and Options Granted

In April 2007, certain former investor members of SAMG LLC sold their membership interests in SAMG LLC to Vulcan Wealth Management Group LLC (“Vulcan”). In addition, Vulcan invested an additional $10,000 in SAMG LLC in 2007 and SAMG LLC incurred $592 of capital issuance costs associated with the transaction that were charged against the proceeds.

In connection with the transaction described above, SAMG LLC granted the former investor members options to purchase 18,170 shares or 4% of members interests in SAMG LLC at a price of $0.275 per share increasing at 20% per annum to a maximum of $0.475 per share. The options vest on and are exercisable for a 30 day period beginning on the earlier of April 30, 2010, fifteen consecutive trading days after an initial public offering, or the date on which a sale of control is consummated. The options can only be settled by the physical delivery of shares to the investor members.

F-25

Indemnification Agreement

12.

PARTNERS’ CASH INCENTIVE ALLOCATIONS AND ALLOCATION OF INCOME AND LOSSES

Pursuant to Silvercrest’s Operating Agreement as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Certain partner incentive allocations are formula based while others are discretionary and are determined by the Executive Committee. Distributions of partner incentive allocations of net income for the years ended December 31, 2011, 2010 and 2009 amounted to $5,073, 2,691 and $7,171, respectively, and are included in excess of liabilities, redeemable partners’ capital and partners’ capital over assets in the Consolidated Statements of Financial Condition.

13.

NOTES RECEIVABLE FROM PARTNERS

Notes receivable from partners are as follows:


	2011			2010
Balance, January 1,	$	6,125		$	7,179
Repayment of notes		(1,083	)		(940	)
Forgiveness of notes receivable		(34	)		(508	)
Interest accrued and capitalized on notes receivable		180			207
New notes receivable issued to partners		836			187

Balance, December 31,	$	6,024		$	6,125

F-26

14.

RELATED PARTY TRANSACTIONS

For the years ended December 31, 2011, 2010 and 2009, the Company earned from the above activities management fee income, which is included in Management and advisory fees in the Consolidated Statement of Operations, of $5,403, $4,890 and $5,377, respectively, and performance fees and allocations of $1,046, $1,379 and $96, respectively, of which $950, $1,241 and $0, respectively, is included in equity income from investments and $85, $138 and $96, respectively, is included in performance fees in the Statement of Operations. As of December 31, 2011 and 2010, the Company was owed $2,043 and $1,255, respectively, from its various funds.

F-27

15.

INCOME TAXES


	Year Ended December 31,
	2011			2010			2009
Current Provision:
Federal	$	6		$	(9	)	$	8
State and local		835			983			88

Total Current Provision	$	841		$	974		$	96


Deferred (Benefit) Provision:
Federal	$	(281	)	$	(224	)	$	(152	)
State and local		6			(93	)		(265	)

Total Deferred Benefit	$	(275	)	$	(317	)	$	(417	)

Total Provision (Benefit) for Income Taxes	$	566			657			(321	)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their bases for income tax purposes.

A summary of the tax effects of the temporary differences is as follows:


	As of December 31,
	2011			2010

Deferred tax assets
Deferred rent	$	120		$	129
Equity-based compensation of partners		33			23
Depreciation		—			13
Other		6			3


Total deferred tax assets	$	159		$	168


Deferred tax liabilities
Intangible assets	$	256		$	436
Other		12			11


Total deferred tax liabilities	$	268		$	447


Net deferred tax asset (liability)	$	(109	)	$	(279	)

F-28

The following table reconciles the provision for income taxes to the U.S. Federal statutory tax rate:


	Year Ended December 31,
	2011			2010			2009

Statutory U.S. federal income tax rate		35.00	%		35.00	%		35.00	%
Income passed through to Partners		(35.00	)%		(35.00	)%		(35.00	)%
State and local income taxes		5.72	%		5.68	%		-1.41	%

Other		-1.99	%		-0.02	%		-2.72	%


Effective income tax rate		3.73	%		5.66	%		-4.14	%

The Company files U.S. Federal, state and local tax returns. The 2009, 2010, and 2011 tax years of the Company remain subject to examination by U.S. Federal and most state and local tax authorities.

16.

REDEEMABLE PARTNERSHIP UNITS

17.

EQUITY-BASED COMPENSATION

F-29

use different assumptions, or if the quantity and nature of the Company’s equity-based compensation awards changes, then the amount of expense may need to be adjusted and future equity compensation expense could be materially different from what has been recorded in the current period.

The Company utilized both discounted cash flow and guideline company valuation methods to determine the grant date fair value of the Deferred Equity Units. The grant date fair values of Performance Units were determined by applying a performance probability factor to the Deferred Equity Unit Value. These methodologies included the use of third party data and discounts for lack of control and marketability. All Deferred Equity Units are considered to be liability awards and are adjusted to fair value at the end of each reporting period. For the years ended December 31, 2011 and 2010, the Company recorded compensation expense of $1,060 and $669, respectively, of which $128 and $123, respectively, relates to the Performance Units given that there is an explicit service period associated with the deferred Equity Units, and the likelihood that the performance target will be met is considered probable. Distributions include cash distributions paid on Liability Awards. Cash distributions paid on awards expected to be forfeited were $20 and $9 for the years ended December 31, 2011 and 2010, respectively, and are part of total compensation expense for the years then ended. As of December 31, 2011 and 2010, there was $2,260 and $2,114, respectively, of estimated unrecognized compensation expense related to unvested awards. As of December 31, 2011 and 2010, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 2.65 and 3.17 years, respectively.

On February 24, 2010 and February 28, 2011, the Company granted 15,808 and 10,802 units, respectively, under the Equity Programs. As of December 31, 2011, 22,353 Deferred Equity Units and 12,795 Performance Units remain outstanding and unvested and the fair value of the Deferred Equity Units, the 2010 Performance Units and the 2011 Performance Units was $157.16, $63.99 and $55.00, respectively. The Company expects 10% of all awards to be forfeited and the related service period is 4 years.

F-30

18.

DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

19.

SOFT DOLLAR ARRANGEMENTS

The Company obtains research and other services through “soft dollar” arrangements. Consistent with the “soft dollar” safe harbor established by Section 28(e) of the Securities Exchange Act of 1934, as amended, the Company does not have any contractual obligation or arrangement requiring it to pay for research and other services obtained through soft dollar arrangements with brokers. Instead, the provider is obligated to pay for the services. Consequently, the Company does not incur any liability and does not accrue any expenses in connection with any research or other services obtained pursuant to such soft dollar arrangements. If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services.

20.

SUBSEQUENT EVENT

ACQUISITION

The Company has evaluated subsequent events through May 11, 2012, which is the date the consolidated financial statements were available to be issued.

* * * * * *

F-31

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010


	SEPTEMBER 30, 2011				DECEMBER 31, 2010
	(unaudited)
ASSETS
Cash and cash equivalents			$	339,099			$	163,256
Investments in securities and partnerships				8,247				7,818
Accounts receivable				710,965				97,148
Prepaid taxes				—				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $285,068 and $284,168)				28,426				27,073

Security deposit				15,220				15,220
Prepaid expenses and other				79,552				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	11,708,030			$	18,066,684
Investments in securities		102,190,687				123,483,737
Investments in Funds		167,976,499				198,373,114
Redemptions receivable from investments in Funds		395,139				9,624,700
Accrued income		101,398				173,463
Due from partner		81,402				—
Prepaid expenses and other		119,190		282,572,345		153,628		349,875,326

TOTAL ASSETS			$	283,753,854			$	350,326,654


LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Accrued expenses			$	39,210			$	21,400
Taxes payable				293,543				—
Deferred taxes				53,668				91,122
Consolidated Milbank Partnerships:
Contributions received in advance		—				500,000
Accrued expenses		287,743				639,584
Redemptions payable		2,211,744				34,305,163
Securities sold short		2,541,031		5,040,518		4,434,420		39,879,167

Total Liabilities			$	5,426,939			$	39,991,689

Commitments and Contingencies (see Note 5)

The accompanying notes are an integral part of these consolidated financial statements.

F-32

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

(continued)


	September 30, 2011		December 31, 2010
	(unaudited)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding	$	196	$	196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding		125		125
Additional paid in capital		454,839		454,839
Retained earnings		1,190,660		867,957

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity		1,645,820		1,323,117
Minority interests in Consolidated Milbank Partnerships		276,681,095		309,011,848

Total Stockholders’ Equity		278,326,915		310,334,965

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	283,753,854	$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-33

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011						2010
	(unaudited)						(unaudited)
REVENUES:
Investment advisory fees				$	1,501,604				$	1,355,072
Other income					535					1,016
Consolidated Milbank Partnerships
Dividends	$	1,629,197					$	1,477,273
Interest		394,230			2,023,427			521,669		1,998,942

Total revenues					3,525,566					3,355,030

EXPENSES:
Compensation and benefits					3,780,024					3,551,485
Rent					130,348					130,157
Insurance					105,167					99,247
Office and administrative					138,384					152,014
Computer services					80,251					69,574
Professional fees					134,371					27,806
Depreciation					900					900
Consolidated Milbank Partnerships:
Management and advisory fees		1,409,795						1,240,705
Interest and dividends		232,863						223,503
Professional fees		266,334						285,558
Office and administrative		42,694						127,245
Other expenses		83,436			2,035,122			90,158		1,967,169

Total expenses					6,404,567					5,998,352

LOSS BEFORE NET GAIN (LOSS) FROM CONSOLIDATED MILBANK PARTNERSHIPS					(2,879,001	)				(2,643,322	)
Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,987,983						6,703,204
Realized gain on investments in Funds, net		766,884						—
Unrealized gain (loss) on investments in securities, net change		(19,574,394	)					2,940,362
Unrealized gain (loss) on investments in Funds, net change		(21,155,552	)		(34,975,079	)		14,582,651		24,226,217

INCOME (LOSS) BEFORE INCOME TAX EXPENSE					(37,854,080	)				21,582,895
Income tax expense					330,019					232,567

NET INCOME (LOSS)					(38,184,099	)				21,350,328

Minority interest in Consolidated Milbank Partnerships					(38,506,802	)				21,093,366

NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.				$	322,703				$	256,962

The accompanying notes are an integral part of these consolidated financial statements.

F-34

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (unaudited)

AND THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at December 31, 2010		3,922		196		2,496		125		454,839		867,957		309,011,848			310,334,965
Contributions		—		—		—		—		—		—		12,539,311			12,539,311
Withdrawals		—		—		—		—		—		—		(6,363,262	)		(6,363,262	)
Net Income (Loss)		—		—		—		—		—		322,703		(38,506,802	)		(38,184,099	)

Balance at September 30, 2011 (unaudited)		3,922	$	196		2,496	$	125	$	454,839	$	1,190,660	$	276,681,095		$	278,326,915

The accompanying notes are an integral part of these consolidated financial statements.

F-35

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	322,703		$	256,962
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income (loss)		(38,506,802	)		21,093,366
Depreciation		900			900
Deferred taxes		(37,454	)		26,942
Sales of securities and partnerships		—			17,130
Unrealized (gain) on investments in securities and partnerships, net change		(429	)		(8,076	)
Realized loss on investments in securities and partnerships, net		—			8,119
Consolidated Milbank Partnerships:
Realized (gain) on investments in securities, net		(4,987,983	)		(6,703,204	)
Realized (gain) on investments in Funds, net		(766,884	)		—
Unrealized (gain) loss on investments in securities, net change		19,574,394			(2,940,362	)
Unrealized (gain) loss on investments in Funds, net change		21,155,552			(14,582,651	)
Purchases of investments in securities		(62,909,399	)		(146,801,804	)
Purchases of investments in Funds		(7,000,000	)		—
Sales of investments in securities		67,722,649			152,615,257
Sales of investments in Funds		17,007,947			4,060,065
(Increase) decrease in operating assets:
Accounts receivable		(613,817	)		(507,379	)
Prepaid taxes		34,915			43,955
Prepaid expenses and other		26,346			(22,391	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		6,358,654			6,075,279
Redemptions receivable from investments in Funds		9,229,561			82,760,368
Accrued income		72,065			137,334
Prepaid expenses and other		34,438			(22,572	)
Increase (decrease) in operating liabilities:
Accrued expenses		17,810			1,731
Taxes payable		293,543			130,337
Consolidated Milbank Partnerships:
Accrued expenses		(351,841	)		(1,299,427	)

Net cash provided by operating activities	$	26,676,868		$	94,339,879

The accompanying notes are an integral part of these consolidated financial statements.

F-36

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:

(continued)


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	$	(2,253	)	$	(665	)


Net cash used in investing activities		(2,253	)		(665	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships		11,957,909			775,000
Withdrawals from Milbank Partnerships		(38,456,681	)		(95,064,326	)


Net cash used in financing activities		(26,498,772	)		(94,289,326	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		175,843			49,888

Cash and cash equivalents at beginning of period:		163,256			126,858


Cash and cash equivalents at end of period:	$	339,099		$	176,746


Supplemental cash flow information:
Cash paid during the period for taxes	$	1,561		$	31,333

Cash paid during the period for interest	$	215,690		$	200,505

The accompanying notes are an integral part of these consolidated financial statements.

F-37

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Use of Estimates

F-38

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-39

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

F-40

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes (continued)

Foreign Securities

The value of securities and cash equivalents which are denominated in foreign currencies are stated using the exchange rate in effect on the last business day of the period. Purchases and sales of securities, interest and dividend income and expenses, which are denominated in foreign currencies, are recorded at the exchange rate as of the date of the transactions. For financial statement purposes, the Company does not isolate that portion of the gain or loss on securities resulting from exchange rate fluctuation. Such changes are combined with changes in market prices and shown as realized or unrealized gain or loss.

Accounting Developments

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS” No. 167, Amendments to FASB Interpretation No. 46(R), which changes the approach to determining the primary beneficiary of a Variable Interest Entity (“VIE”) and requires companies to more frequently assess whether they must consolidate VIEs. This pronouncement is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. In November 2009, the FASB agreed to defer the effective date of this pronouncement for certain types of asset manager funds until the completion of its consolidation project. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

F-41

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-42

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes investments under the fair value hierarchy the valuation of the Company’s as of September 30, 2011:


	Level 1			Level 2			Level 3			Total
Assets
Investments in Securities and Partnerships	$	3,247		$	—		$	5,000		$	8,247

From Consolidated Milbank Partnerships:

Investments in Securities		96,449,023			5,059,848			681,816			102,190,687
Investments in Funds		—			154,867,659			13,108,840			167,976,499

Total	$	96,452,270		$	159,927,507		$	13,795,656		$	270,175,433

Liabilities
Securities Sold Short	$	(927,955	)	$	(1,281,162	)	$	(331,914	)	$	(2,541,031	)


Assets	Investments
Beginning balance, December 31, 2010	$	8,568,283
Total gains or (losses), realized and unrealized		(188,890	)
Purchases and sales, net		5,416,263

Ending balance, September 30, 2011	$	13,795,656

The amount of gain (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at September 30, 2011	$	(267,353	)

F-43

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)


Liabilities	Securities Sold Short

Beginning balance, December 31, 2010	$	(312,096	)
Total gains or (losses), realized and unrealized		17,419
Purchases and sales, net		(37,237	)

Ending balance, September 30, 2011	$	(331,914	)
The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at September 30, 2011	$	17,419

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818

From consolidated affiliated Partnerships:

Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669

Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

F-44

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments

Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)


Ending balance, December 31, 2010	$	8,568,283


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210


Liabilities	Securities Sold Short

Beginning balance, December 31, 2009	$	(71,500	)
Total gains or (losses), realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250


Ending balance, December 31, 2010	$	(312,096	)


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

F-45

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 4.

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest charge management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-46

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

NOTE 5.

LEASE COMMITMENT


	September 30, 2011		December 31, 2010
2011	$	37,350	$	149,400
2012		49,800		49,800

Total	$	87,150	$	199,200

Total rent expense for the nine months ended September 30, 2011 and 2010 was $130,348 and $130,157, respectively.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employees’ compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the nine months ended September 30, 2011 and 2010 were $8,460 and $10,013, respectively.

F-47

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at September 30, 2011 and December 31, 2010, respectively, are as follows:


	September 30, 2011		December 31, 2010
Insurance	$	59,091	$	86,685
Rent		12,450		12,450
Other		8,011		6,763


	$	79,552	$	105,898

NOTE 8.

RELATED PARTY TRANSACTIONS

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expenses for the nine months ended September 30, 2011 and 2010 has been determined as follows:


	2011			2010

Current taxes
Federal	$	257,231		$	143,938
State and local		110,242			61,687


		367,473			205,625

Deferred taxes
Federal		(37,454	)		26,942


	$	330,019		$	232,567

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-48

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Assets at cost:	September 30, 2011			December 31, 2010

Furniture and equipment	$	222,796		$	220,543
Leasehold improvements		90,698			90,698

Total cost		313,494			311,241

Less: accumulated depreciation		(285,068	)		(284,168	)


Net fixed assets	$	28,426		$	27,073

Depreciation expense for both the nine months ended September 30, 2011 and 2010 was $900.

NOTE 11.

SHARES OF STOCK

NOTE 12.

SUBSEQUENT EVENTS

F-49

INDEPENDENT AUDITORS’ REPORT

To the Stockholders of

Milbank Winthrop & Co., Inc.:

/s/ Fulvio & Associates, LLP

New York, New York

September 2, 2011

F-50

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

YEAR ENDED DECEMBER 31, 2010


ASSETS
Cash and cash equivalents			$	163,256
Investments in securities and partnerships				7,818
Accounts receivable				97,148
Prepaid taxes				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $284,168)				27,073
Security deposit				15,220
Prepaid expenses and other				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	18,066,684
Investments in securities		123,483,737
Investments in Funds		198,373,114
Redemptions receivable from investments in Funds		9,624,700
Accrued income		173,463
Prepaid expenses and other		153,628		349,875,326


TOTAL ASSETS			$	350,326,654


LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Accrued expenses			$	21,400
Deferred taxes				91,122
Consolidated Milbank Partnerships:
Contributions received in advance	$	500,000
Accrued expenses		639,584
Redemptions payable		34,305,163
Securities sold short		4,434,420		39,879,167

Total Liabilities				39,991,689


Commitments and Contingencies (see Note 5)

Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				867,957

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,323,117

Minority interests in Consolidated Milbank Partnerships				309,011,848

Total Stockholders’ Equity				310,334,965


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-51

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:
Investment advisory fees			$	1,822,748
Other income				755
Consolidated Milbank Partnerships:
Dividends	$	1,996,373
Interest		663,103		2,659,476

Total revenues				4,482,979


EXPENSES:
Compensation and benefits				5,505,058
Rent				167,506
Insurance				133,034
Office and administrative				132,650
Computer services				93,653
Professional fees				39,606
Depreciation				6,751
Other				83,703
Consolidated Milbank Partnerships:
Management and advisory fees		1,591,767
Office and administrative		538,045
Professional fees		377,634
Interest and dividends		318,727		2,826,173


Total expenses				8,988,134


LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,505,155	)

Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		11,004,979
Unrealized gain on investments in securities, net change		9,205,034
Unrealized gain on investments in Funds, net change		28,901,005		49,111,018


INCOME BEFORE INCOME TAX EXPENSE				44,605,863

Income tax expense				76,383


NET INCOME				44,529,480


Minority Interests in Consolidated Milbank Partnerships				(44,462,064	)


NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	67,416

The accompanying notes are an integral part of these consolidated financial statements.

F-52

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at September 30, 2011	$	3,922	$	196	$	2,496	$	125	$	454,839	$	867,957	$	309,011,848		$	310,334,965

The accompanying notes are an integral part of these consolidated financial statements.

F-53

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:

Net income				$	67,416
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	44,462,064
Depreciation		6,751
Deferred taxes		34,905
Sales of securities and partnerships		17,173
Unrealized gain on investments in securities and partnerships, net change		(331	)

Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(11,004,979	)
Unrealized gain on investments in securities, net change		(9,205,034	)
Unrealized gain on investments in funds, net change		(28,901,005	)
Purchases of investments in securities		(164,514,871	)
Purchases of investments in funds		(13,524	)
Sales of investments in securities		174,448,934
Sales of investments in funds		14,502,312

(Increase) decrease in operating assets:
Accounts receivable		57,783
Prepaid taxes		9,040
Security deposit		(203	)
Prepaid expenses and other		1,668
Consolidated Milbank Partnerships
Cash and cash equivalents		(473,962	)
Redemption receivable from investments in funds		74,517,538
Prepaid investments		61,430
Accrued income		18,754
Prepaid expenses and other		(36,671	)
Increase (decrease) in operating liabilities:
Accrued expenses		(18,081	)
Consolidated Milbank Partnerships
Accrued expenses		(1,009,006	)


Total Adjustments				$	92,960,685


Net Cash Provided by Operating Activities				$	93,028,101

The accompanying notes are an integral part of these consolidated financial statements.

F-54

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010

(continued)


CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets	$	(5,627	)

Net cash used in investing activities		(5,627	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships		3,375,000
Redemptions from Milbank Partnerships		(96,361,076	)

Net cash used in financing activities		(92,986,076	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		36,398

Cash and Cash Equivalents at December 31, 2009		126,858


Cash and Cash Equivalents at December 31, 2010	$	163,256


Supplemental cash flow information:
Cash paid during the period for taxes	$	32,438

The accompanying notes are an integral part of these consolidated financial statements.

F-55

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-56

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-57

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

F-58

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

Accounting Developments

F-59

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Account Developments (continued)

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818

From consolidated affiliated Partnerships:

Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669


Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

F-60

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments
Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)

Ending balance, December 31, 2010	$	8,568,283

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210


Liabilities	Securities Sold Short

Beginning balance, December 31, 2009	$	(71,500	)
Total gains or (losses), realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250

Ending balance, December 31, 2010	$	(312,096	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

F-61

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 4

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-62

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

NOTE 5.

LEASE COMMITMENT


2011	$	149,400
2012		49,800

	$	199,200

Total rent expense for the year ended December 31, 2010 was $167,506.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2010 were $13,350.

F-63

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2010 are as follows:


Insurance	$	86,685
Rent		12,450
Other		6,763

	$	105,898

NOTE 8.

RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2010, Milbank earned $3,829,228 in advisory fees and $505,200 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2010 has been determined as follows:


Current taxes
Federal	$	(11,820	)
State and local		53,298

		41,478

Deferred taxes
Federal		34,905

	$	76,383

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-64

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Asset at cost:
Furniture and equipment	$	220,543
Leasehold improvement		90,698

Total cost		311,241

Less accumulated depreciation		(284,168	)


Net fixed assets	$	27,073

Depreciation expense for the year ended December 31, 2010 was $6,751.

NOTE 11.

SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2010, 3,922 shares were issued and outstanding.

NOTE 12.

SUBSEQUENT EVENTS

F-65

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

Milbank Winthrop & Co., Inc.:

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Milbank Winthrop & Co., Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

August 30, 2011

F-66

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2009


ASSETS
Cash and cash equivalents			$	126,858
Investments in securities and partnerships				24,660
Accounts receivable				18,173
Prepaid taxes				43,955
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $277,417)				28,197
Security deposit				15,017
Prepaid expenses and other				107,566
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	17,592,722
Investments in securities		112,117,035
Investments in Funds		183,960,896
Redemptions receivable from investments in Funds		84,142,238
Accrued income		253,647
Prepaid expenses and other		116,957		398,183,495

TOTAL ASSETS			$	398,547,921


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued expenses			$	39,481
Deferred taxes				56,217
Consolidated Milbank Partnerships:
Contributions received in advance	$	25,000
Accrued expenses		1,511,832
Redemptions payable		92,803,029
Securities sold short		3,343,667		97,683,538

Total Liabilities				97,779,226

Commitments and Contingencies (see Note 5)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				800,541

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,255,701

Minority interests in Consolidated Milbank Partnerships				299,512,994

Total Stockholders’ Equity				300,768,695

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	398,547,921

The accompanying notes are an integral part of these financial statements.

F-67

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2009


REVENUES:
Investment advisory fees			$	1,732,854
Other income				5,074
Consolidated Milbank Partnerships:
Dividends	$	1,837,732
Interest		1,134,922		2,972,654

Total revenues				4,710,582


EXPENSES:
Compensation and benefits				5,293,535
Rent				164,251
Insurance				140,120
Office and administrative				134,206
Professional fees				109,482
Depreciation				2,097
Other				156,041
Consolidated Milbank Partnerships:
Management and advisory fees		1,582,597
Office and administrative		1,226,115
Professional fees		396,815
Interest and dividends		295,978		3,501,505


Total expenses				9,501,237


LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,790,655	)
Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		2,239,337
Unrealized gain on investments in securities, net change		36,511,370
Realized gain on investments in Funds, net		1,861,609
Unrealized gain on investments in Funds, net change		56,060,996		96,673,312


INCOME BEFORE INCOME TAX EXPENSE				91,882,657

Income tax expense				138,669


NET INCOME				91,743,988


Minority Interests in Consolidated Milbank Partnerships				(91,653,265	)


NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	90,723

The accompanying notes are an integral part of these financial statements.

F-68

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2009


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total

Balance at December 31, 2008		3,922	$	196		2,496	$	125	$	454,839	$	709,818	$	299,398,031		$	300,563,009

Contributions		—		—		—		—		—		—		2,150,000			2,150,000

Redemptions		—		—		—		—		—		—		(93,688,302	)		(93,688,302	)

Net Income		—		—		—		—		—		90,723		91,653,265			91,743,988


Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695

The accompanying notes are an integral part of these financial statements.

F-69

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	90,723
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	91,653,265
Depreciation		2,097
Deferred taxes		56,217
Purchases of securities and partnerships		(28,808	)
Sales of securities and partnerships		103
Unrealized gain on investments in securities and partnerships, net change		(4,514	)
Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(2,239,337	)
Unrealized gain on investments in securities, net change		(36,511,370	)
Realized gain on investments in funds, net		(1,861,609	)
Unrealized gain on investments in funds, net change		(56,060,996	)
Purchases of investments in securities		(122,598,527	)
Purchases of investments in funds		(10,000,000	)
Sales of investments in securities		150,623,210
Sales of investments in funds		84,466,655
(Increase) decrease in operating assets:
Accounts receivable		16,348
Prepaid taxes		(43,955	)
Security deposit		(203	)
Prepaid expenses and other		(2,488	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		(7,342,804	)
Redemption receivable from investments in funds		(52,342,738	)
Prepaid investments		7,000,000
Accounts receivable		159,750
Accrued income		215,963
Prepaid expenses and other		10,596
Increase (decrease) in operating liabilities:
Accrued expenses		16,792
Consolidated Milbank Partnerships:
Accrued expenses		805,938

Total Adjustments					45,989,585

Net cash provided by Operating Activities				$	46,080,308

F-70

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009

(continued)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships	$	2,175,000
Redemption from Milbank Partnerships		(48,233,273	)

Net cash used in financing activities		(46,058,273	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		22,035

Cash and Cash Equivalents at December 31, 2008		104,823


Cash and Cash Equivalents at December 31, 2009	$	126,858


Supplemental cash flow information:
Cash paid during the period for taxes	$	88,729

The accompanying notes are an integral part of these consolidated financial statements.

F-71

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-72

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-73

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

F-74

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

Accounting Developments

F-75

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-76

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-77

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2009:


	Level 1		Level 2		Level 3		Total
Assets

Investments in securities and partnerships	$	2,487	$	—	$	22,173	$	24,660

From Consolidated affiliated Partnerships:

Investments in securities		99,416,010		10,239,480		2,461,545		112,117,035

Investments in Funds		—		18,051,193		165,909,703		183,960,896


Total	$	99,418,497	$	28,290,673	$	168,393,421	$	296,102,591


Liabilities

Securities sold short	$	1,844,370	$	1,427,797	$	71,500	$	3,343,667

F-78

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2009:


Assets	Investments

Beginning balance, December 31, 2008	$	203,148,415

Total gains or (losses), realized and unrealized		51,669,953

Purchases and sales, net		(70,575,571	)

Transferred in/out of Level 3		(15,849,376	)


Ending balance, December 31, 2009	$	168,393,421


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2009	$	52,044,937


Liabilities	Securities Sold Short

Beginning balance, December 31, 2008	$	(179,100	)
Total gains or (losses), realized and unrealized		52,368

Purchases and sales, net		55,232


Ending balance, December 31, 2009	$	(71,500	)


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2009	$	7,300

F-79

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 4.

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-80

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

NOTE 5.

LEASE COMMITMENT


2010	$	149,400
2011		149,400
2012		49,800

	$	348,600

Total rent expense for the year ended December 31, 2009 was $164,251.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2009 were $15,150.

F-81

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2009 are as follows:


Insurance	$	84,116
Rent		12,450
Other		11,000

	$	107,566

NOTE 8.

RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2009, Milbank earned $3,807,621 in advisory fees and $474,750 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2009 has been determined as follows:


Current taxes
Federal	$	14,347
State and local		68,100


		82,447

Deferred taxes

Federal		56,222


	$	138,669

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-82

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Assets at cost:

Furniture and equipment	$	214,916

Leasehold improvement		90,698


Total cost		305,614

Less accumulated depreciation		(277,417	)

Net fixed assets	$	28,197

Depreciation expense for the year ended December 31, 2009 was $2,097.

NOTE 11.

SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2009, 3,922 shares were issued and outstanding.

NOTE 12.

SUBSEQUENT EVENTS

F-83

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

/s/ Fulvio & Associates, LLP

New York, New York

March 15, 2011

F-84

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2011


ASSETS

Cash and cash equivalents			$	2,919
Accounts receivable				4,000
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	141,356
Investments in Funds		29,919,624
Other assets		488		30,061,468


TOTAL ASSETS			$	30,068,387

LIABILITIES AND MEMBER’S EQUITY

Liabilities:

Professional fees payable			$	4,915
MW Commodity Strategies, L.P.:
Redemptions payable		194,946
Professional fees payable		27,325
Other liabilities		20,614		242,885


Total Liabilities				247,800


Member’s Equity:

Member’s Equity				71,811

Minority interests in MW Commodity Strategies, L.P.				29,748,776


Total Member’s Equity				29,820,587


TOTAL LIABILITIES AND MEMBER’S EQUITY			$	30,068,387

The accompanying notes are an integral part of these consolidated financial statements.

F-85

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011


REVENUES:
MW Commodity Strategies, L.P.:
Interest				$	203


Total revenues					203



EXPENSES:
Account fees					27,164
Other					9,703
MW Commodity Strategies, L.P.:
Professional fees	$	41,138
Other		17,031			58,169


Total expenses					95,036


LOSS BEFORE NET GAINS (LOSS) FROM MW COMMODITY STRATEGIES, L.P.					(94,833	)

Net loss from MW Commodity Strategies, L.P.:
Realized loss on investments in Funds, net		(288,915	)
Unrealized loss on investments in Funds, net change		(2,287,676	)		(2,576,591	)


NET LOSS					(2,671,424	)


Minority Interests in MW Commodity Strategies, L.P.					2,793,270


NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC				$	121,846

The accompanying notes are an integral part of these consolidated financial statements.

F-86

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2011


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total
Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726

Contributions-		—			5,650,000			5,650,000

Withdrawals		(220,000	)		(758,715	)		(978,715	)

Net Income (Loss)		121,846			(2,793,270	)		(2,671,424	)


Member’s Equity - December 31, 2011	$	71,811		$	29,748,776		$	29,820,587

The accompanying notes are an integral part of these consolidated financial statements.

F-87

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	121,846
Adjustments to reconcile net income to net cash used in operating activities:
MW Commodity Strategies, L.P.:
Net loss	$	(2,793,270	)
Realized loss on investments in Funds, net		288,915
Unrealized loss on investments in Funds, net change		2,287,676
Purchase of investments in Funds		(8,500,000	)
Proceeds from investments in Funds		4,273,076
(Increase) decrease in operating assets:
Accounts receivable		(4,000	)
MW Commodity Strategies, L.P.:
Cash and cash equivalents		909,153
Redemptions receivable from investments in Funds		100,000
Other assets		6,893
Increase (decrease) in operating liabilities:
Professional fees payable		4,915
MW Commodity Strategies, L.P.:
Professional fees payable		(46,575	)
Other liabilities		7,857

Total adjustments					(3,465,360	)

Net Cash Used in Operating Activities					(3,343,514	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(220,000	)
MW Commodity Strategies, L.P.:
Contributions		5,650,000
Withdrawals		(2,155,810	)

Net Cash Provided by Financing Activities					3,274,190


NET CHANGE IN CASH AND CASH EQUIVALENTS					(69,324	)

Cash and Cash Equivalents at December 31, 2010					72,243

Cash and Cash Equivalents at December 31, 2011				$	2,919

The accompanying notes are an integral part of these consolidated financial statements.

F-88

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

NOTE 1.

ORGANIZATION

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

The Company follows the accrual method of accounting. Income is recorded when earned, and expenses are recorded when incurred in the period to which they pertain. Purchases and sales of securities are recorded on the trade date basis. Purchases and sales of Funds are recorded on the effective date as specified in the Funds’ investment agreements.

Use of Estimates

Cash and Cash Equivalents

F-89

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of Consolidation

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

F-90

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

F-91

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

•

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

F-92

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

Accounting Developments

F-93

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-94

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

NOTE 3.

INVESTMENTS IN FUNDS


Fund and (Strategy)	Fair Value at December 31, 2011		Capital Liquidity

Covepoint Emerging Markets Macro Fund, L.P. CI. A. (d)	$	2,258,119	Quarterly
Covepoint Emerging Markets Macro Fund, L.P. CI. B. (d)		448,619	Quarterly
Dynamic Domestic Fund L.P. (d)		2,898,050	Monthly
Goldfinch Capital Management, L.P. (b)		1,939,801	Monthly
Hard Assets Partners 2X L.P. (d)		2,112,717	Quarterly
Peak Partners, L.P. (d)		1,922,912	Monthly
Tiverton Investments, LLC (d)		4,432,502	Monthly
Vardana Partners, LP (d)		2,728,342	Quarterly
Wexford Catalyst Fund, L.P. (d)		3,180,816	Quarterly
Bocage Global Resource Fund, L.P. (b)		4,257,486	Monthly
Taylor Woods (b)		3,250,111	Quarterly
Other Funds (a), (c)		490,149


Total Investments in Funds	$	29,919,624

F-95

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 3.

INVESTMENTS IN FUNDS (continued)

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

b) Futures and Derivatives Funds:

c) Macro Funds:

d) Multi-Strategy Funds:

F-96

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 4.

OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

NOTE 5.

COMMITMENTS AND CONTINGENCIES

NOTE 6.

RELATED PARTY TRANSACTIONS

Advisors earned $158,015 in management fees from the Partnership during 2011. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 7.

SUBSEQUENT EVENTS

F-97

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MW Commodity Advisors, LLC as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

October 28, 2011

F-98

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2010


ASSETS

Cash and cash equivalents			$	72,243
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	1,050,509
Investments in Funds		28,269,291
Redemptions receivable		100,000
Other assets		7,381		29,427,181


TOTAL ASSETS			$	29,499,424


LIABILITIES AND MEMBER’S EQUITY

Liabilities:

MW Commodity Strategies, L.P.:
Redemptions payable	$	1,592,041
Professional fees payable		73,900
Other liabilities		12,757


Total Liabilities			$	1,678,698


Member’s Equity:

Member’s Equity				169,965


Minority interests in MW Commodity Strategies, L.P.				27,650,761


Total Member’s Equity				27,820,726


TOTAL LIABILITIES AND MEMBER’S EQUITY			$	29,499,424

The accompanying notes are an integral part of these consolidated financial statements.

F-99

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:

MW Commodity Strategies, L.P.:

Interest			$	679


Total revenues				679


EXPENSES:
Account fees				26,384
Liability fees				18,648
Filing fees				783
Other				2,211
MW Commodity Strategies, L.P.:

Professional fees	$	86,482

Other		14,510		100,992


Total expenses				149,018


LOSS BEFORE NET GAINS FROM MW COMMODITY STRATEGIES, L.P.				(148,339	)

Net gains from investment activities of MW Commodity Strategies, L.P.:
Realized gain on investments in Funds, net		84,434
Unrealized gain on investments in Funds, net change		1,125,925		1,210,359


NET INCOME			$	1,062,020


Minority Interests in MW Commodity Strategies, L.P.				(939,734	)


NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC			$	122,286

The accompanying notes are an integral part of these consolidated financial statements.

F-100

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total

Member’s Equity - December 31, 2009	$	167,590		$	26,957,046		$	27,124,636

Contributions		—			4,708,688			4,708,688

Withdrawals		(119,911	)		(4,954,707	)		(5,074,618	)

Net Income		122,286			939,734			1,062,020


Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726

The accompanying notes are an integral part of these consolidated financial statements.

F-101

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:

Net income				$	122,286
Adjustments to reconcile net income to net cash provided by operating activities:
MW Commodity Strategies, L.P.:
Net income	$	939,734
Proceeds from investments		69,911
Realized gain on investments in Funds, net		(84,434	)
Unrealized gain on investments in Funds, net change		(1,125,925	)
Purchase of investments in Funds		(4,000,000	)
Proceeds from investments in Funds		2,018,051
(Increase) decrease in operating assets:
Accounts receivable		8,669
MW Commodity Strategies, L.P.:
Cash and cash equivalents		9,101,694
Redemptions receivable from investments in Funds		1,235,938
Other assets		6,887
Increase (decrease) in operating liabilities:
MW Commodity Strategies, L.P.:
Professional fees payable		(92,106	)
Other liabilities		5,435

Total adjustments					8,083,854

Net Cash Flows Provided by Operating Activities					8,206,140

CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(119,911	)
MW Commodity Strategies, L.P.:
Contributions		2,408,688
Withdrawals		(10,464,144	)

Net Cash Used in Financing Activities					(8,175,367	)

NET CHANGE IN CASH AND CASH EQUIVALENTS					30,773
Cash and Cash Equivalents at December 31, 2009					41,470

Cash and Cash Equivalents at December 31, 2010				$	72,243

The accompanying notes are an integral part of these consolidated financial statements.

F-102

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1.

ORGANIZATION

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Use of Estimates

Cash and Cash Equivalents

Basis of Consolidation

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

F-103

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-104

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

•

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

Income Taxes

F-105

Accounting Developments

NOTE 3.

INVESTMENTS IN FUNDS

F-106

NOTE 3.

INVESTMENTS IN FUNDS (continued)


Fund and (Strategy)	Fair Value at December 31, 2010		Liquidity Capital

Covepoint Emerging Markets Macro Fund, L.P. (d)	$	4,005,911	Quarterly
Dynamic Domestic Fund L.P. (d)		2,711,778	Monthly
Goldfinch Capital Management, L.P. (b)		1,611,218	Monthly
Hard Assets Partners 2X L.P. (d)		2,440,332	Quarterly
Peak Partners, L.P. (d)		2,941,146	Monthly
Quantitative Global 1X Fund LLC (b)		2,795,278	Monthly
Tiverton Investments, LLC (d)		4,606,234	Monthly
Vardana Partners, LP (d)		1,731,625	Quarterly
Wexford Catalyst Fund, L.P. (d)		3,442,623	Quarterly
Other Investments (a),(c)		1,983,146

	$	28,269,291

As of December 31, 2010, the investments in the Funds had no remaining significant lockups.

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

b) Futures and Derivatives Funds:

c) Macro Funds:

d) Multi-Strategy Funds:

F-107

NOTE 4.

FAIR VALUE MEASUREMENTS

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


	Investments in Funds
Beginning balance, December 31, 2009	$	25,076,983
Total gains or losses (realized and unrealized)		1,210,359
Purchases and sales, net		1,981,949
Transfer in (out) of Level 3		(28,269,291	)

Ending balance, December 31, 2010	$	—

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	—

Gains and losses (realized and unrealized), if any, are included in the net realized gain on investments in Funds and net change in unrealized gain on investments in Funds in the statement of income.

NOTE 5.

OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

NOTE 6.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The general indemnifications apply not only to the extent such representations and warranties are untrue but also may cover third parties such as the Partnership’s Administrator for claims related to the services performed for the Partnership. The Company’s maximum exposure under any such arrangements is unknown, as exposure only arises to the extent further claims that have not yet occurred are made against the Company.

NOTE 7.

RELATED PARTY TRANSACTIONS

Advisors earned $132,685 in management fees from the Partnership during 2010. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 8.

SUBSEQUENT EVENTS

Subsequent events have been evaluated through October 28, 2011, which is the date the financial statements were available to be issued. The Company is in negotiations to merge with an outside entity.

F-108

LOGO

Silvercrest Asset Management Group Inc.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.

Other Expenses of Issuance and Distribution.


SEC Registration Fee	$	*
FINRA Filing Fee	$	*
Nasdaq Listing Fee	$	*
Accounting Fees and Expenses	$	*
Legal Fees and Expenses	$	*
Printing Fees and Expenses	$	*
Miscellaneous	$	*

Total:	$	*

*	To be filed by amendment.

Item 14.

Indemnification of Directors and Officers.

Item 15.

Recent Sales of Unregistered Securities.

Item 16.

Exhibits and Financial Statements Schedules.


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement.

3.1*		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

II-1


Exhibit Number		Description of Document

3.2*		Bylaws of Silvercrest Asset Management Group Inc.

4.1*		Specimen stock certificate for shares of Class A common stock.

4.2*		2012 Exchange Agreement.

4.3*		Resale and Registration Rights Agreement.

4.4*		2012 Equity Incentive Plan.

4.5*		Stockholders Agreement.

4.6*		Form of Deferred Equity Unit Award Agreement.

4.7*		Form of Award Agreement under 2012 Equity Incentive Plan

5.1*		Opinion of Bingham McCutchen LLP.

10.1*		Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

10.2*		Tax Receivable Agreement.

10.3*		Form of Indemnification Agreement with directors.

21.1*		List of Subsidiaries.

23.1		Consent of Deloitte & Touche LLP

23.2*		Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

24.1		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

Item 17.

Undertakings.

(1)

(2)

(3)

The undersigned registrant hereby undertakes that:

(a)

II-2

(b)

II-3

SIGNATURES


SILVERCREST ASSET MANAGEMENT GROUP INC.

By:
		G. Moffett Cochran
		Chief Executive Officer

By:
		Scott A. Gerard
		Chief Financial Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following:


Signature	Title	Date

G. Moffett Cochran	(Principal Executive Officer) and Director	May , 2012

Scott A. Gerard	(Principal Financial Officer)	May , 2012

Richard R. Hough III	Director	May , 2012

Winthrop B. Conrad, Jr.	Director	May , 2012

Wilmot H. Kidd III	Director	May , 2012

Richard S. Pechter	Director	May , 2012

II-4


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement.

3.1*		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

3.2*		Bylaws of Silvercrest Asset Management Group Inc.

4.1*		Specimen stock certificate for shares of Class A common stock.

4.2*		2012 Exchange Agreement.

4.3*		Resale and Registration Rights Agreement.

4.4*		2012 Equity Incentive Plan.

4.5*		Stockholders Agreement.

4.6*		Form of Deferred Equity Unit Award Agreement.

4.7*		Form of Award Agreement under 2012 Equity Incentive Plan

5.1*		Opinion of Bingham McCutchen LLP.

10.1*		Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

10.2*		Tax Receivable Agreement.

10.3*		Form of Indemnification Agreement with directors.

21.1*		List of Subsidiaries.

23.1		Consent of Deloitte & Touche LLP

23.2*		Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

24.1		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

II-5

EX-99.2 11 d411733dex992.htm FORM S-1 FORM S-1

EXHIBIT 99.2

The Registrant is submitting this draft registration statement confidentially as an emerging growth company pursuant to Section 6(e) of the Securities Act of 1933.

As filed with the Securities and Exchange Commission on , 2012 Amendment No. 1 to Confidential Draft

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Silvercrest Asset Management Group Inc.

(Exact name of each registrant as specified in its charter)

Delaware

6282

45-5146560

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

David J. Campbell

General Counsel

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Floyd I. Wittlin

Christina E. Melendi

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

(212) 705-7000

Robert D. Goldbaum

David S. Huntington

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be Registered(1)	Proposed Maximum offering price per share	Proposed maximum aggregate offering price(2)	Amount of registration fee
Class A common stock, par value, $0.01 per share

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)	Including shares of Class A common stock which may be purchased by the underwriters to cover over-allotments, if any.

The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2012

PRELIMINARY PROSPECTUS

Shares

LOGO

Silvercrest Asset Management Group Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of Silvercrest Asset Management Group Inc. We are offering shares of Class A common stock.

The underwriters have the option to purchase up to an additional shares of our Class A common stock from us within 30 days of the date of this prospectus on the same terms and conditions set forth below at the initial public offering price, less the underwriting discounts and commissions.


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions (1)	$	$
Proceeds, before expenses, to Silvercrest Asset Management Group Inc.	$	$

(1)	See “Underwriting” beginning on page 139.

Sandler O’Neill + Partners, L.P., on behalf of the underwriters, expects to deliver the shares of Class A common stock on or about , 2012, subject to customary closing conditions.



Sandler O’Neill + Partners, L.P.		Raymond James

The date of this prospectus is , 2012.

TABLE OF CONTENTS


	Page

PROSPECTUS SUMMARY		1

RISK FACTORS		14

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE		37

USE OF PROCEEDS		48

DIVIDEND POLICY		49

CAPITALIZATION		50

DILUTION		51

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		52

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION		57

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		68

BUSINESS		89

REGULATORY ENVIRONMENT		104


	Page

MANAGEMENT		106

COMPENSATION DISCUSSION AND ANALYSIS		111

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		124

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		126

DESCRIPTION OF CAPITAL STOCK		128

SHARES ELIGIBLE FOR FUTURE SALE		133

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK		135

UNDERWRITING		139

LEGAL MATTERS		142

EXPERTS		142

WHERE YOU CAN FIND MORE INFORMATION		142

INDEX TO FINANCIAL STATEMENTS		F-1

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your decision to invest in our Class A common stock. This summary is qualified in its entirety by the more detailed information, and consolidated financial statements and notes thereto included in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding to invest in our Class A common stock. Unless otherwise indicated, “Silvercrest” refers solely to Silvercrest Asset Management Group Inc. The terms “we,” “us” and “our” refer to Silvercrest L.P. and its consolidated subsidiaries when referring to events occurring prior to this offering, and these terms refer to Silvercrest Asset Management Group Inc. and its consolidated subsidiaries when referring to events occurring after this offering.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. As of March 31, 2012, we managed assets totaling $11.1 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance and high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of March 31, 2012, we had 375 client relationships with an average size of $28 million which represented approximately 98% of our assets under management and our top 50 relationships averaged $157 million.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Our organic growth has been complemented by selective hiring and by four completed acquisitions which have expanded not only our assets under management, but also our professional ranks, geographic footprint and service capabilities. Client assets have grown on average more than $1 billion per year since our founding and our annual client retention rate has averaged 98% since 2006. This growth includes a combination of market appreciation of assets under management as well as an increase in the amount of assets we manage for both new and existing clients. As shown below, this results in a compound annual growth rate in assets under management since inception in excess of 50%.

LOGO

Our fees for our investment advisory services, non-proprietary services, and family office and related administrative services are structured to align our financial incentives with those of our clients to ensure they receive unconflicted advice. The vast majority of our fees are for discretionary asset management, and are based on the value of the assets we manage for our clients. These fee revenues increase if our clients’ assets grow in value; these fee revenues decrease if our clients’ assets decline in value. Unlike our discretionary asset management fees, our fees for family office services and related administrative services are generally not based on or correlated to market values of our clients’ assets. For these services, we generally charge our clients a negotiated fee based on the scope of work requested. These services create strong client relationships and contribute meaningfully to our record of client retention.

As of March 31, 2012, approximately 95% of our assets under management were held for individual clients and 5% for institutional clients. Based on the strong investment results of our proprietary equity strategies, we have begun to attract a significant amount of institutional investor interest. The following chart summarizes the performance of each of our principal equity strategies relative to their appropriate benchmarks since inception.

LOGO

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. We believe our track record of superior performance and our trusted reputation within the wealth management industry and among our clients is solely attributable to the talent and pedigree of our employees. As of March 31, 2012, we had 88 employees, including 37 employee-owners.

Our Market Opportunity

Key Competitive Strengths

•

Demonstrated Track Record of Growing Assets Under Management. We have expanded our business through a combination of organic growth and acquired growth. Our value proposition to clients has

enabled us to win market share from competitors. Since 2004, we have completed four strategic acquisitions of separate registered investment advisers and we have integrated and rebranded their operations into our company. These factors, combined with strong investment returns, have produced a compound annual growth rate in total client assets of 50% since our inception.

•

Long-Term Track Record of Superior Investment Performance. We have a proven ability to generate excellent investment performance through both our asset allocation work on behalf of clients as well as through security selection. We have a team-based approach that utilizes the same body of research to manage all of our proprietary equity strategies, which we believe generates superior, more consistent returns over time. Through March 31, 2012, each of our proprietary equity strategies has outperformed its respective benchmark since inception.

•

Loyal, Diverse Base of Clients. As a result of our focus on delivering outstanding investment performance combined with highly personalized client service, we have developed significant long-term relationships with a large majority of our clients. Since 2006, our annual client retention rate has averaged 98%. Today, our clients are represented in 42 states and the District of Columbia and no single client represents more than 5% of our total revenue.

•

Our Growth Strategy

•

Continuing To Support Our Organic Growth. We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm that can deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown in excess of $1 billion per year, consisting of the market appreciation of our assets under management as well as an increase in the amount of assets we manage for both new and existing clients, without a commensurate increase in headcount. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients through client referrals, as well as through our recently created business development team charged with identifying and then creating customized solicitations for newly formed wealth.

•

Continuing Our Successful Track Record of Acquired Growth. From our inception, our organic growth has been complemented by selective hiring and strategic acquisitions. We expect to continue to acquire compatible wealth management companies, and recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest to be closer to both our clients and to prospective clients.

•

Risks Facing our Company

Our business is subject to numerous risks that are described more fully in the section entitled “Risk Factors” on page 14.

Our Structure and Reorganization

On July 11, 2011, Silvercrest was incorporated as a Delaware corporation. Silvercrest GP LLC is currently the general partner of Silvercrest L.P., which is the managing member of the operating subsidiary, Silvercrest Asset Management Group LLC. See “The Reorganization and Our Holding Company Structure—Overview” for a description of the reorganization and the structure of our company. Immediately prior to the consummation of this offering, the members of Silvercrest GP LLC will receive a distribution of the general partner interests of Silvercrest L.P. owned by Silvercrest GP LLC as part of the reorganization. Once acquired, these interests that were distributed to the members of Silvercrest GP LLC will be automatically converted into limited partnership interests. Subsequent to the distribution of the general partner interests of Silvercrest L.P. to its members and the conversion of those interests into limited partnership interests, Silvercrest GP LLC will transfer its rights as general partner to Silvercrest and will be dissolved. Silvercrest will become the general partner of Silvercrest L.P. As part of the reorganization, the partnership agreement of Silvercrest L.P. will be amended to provide that the limited partnership interests will be converted to Class B units and the general partnership interests will be converted to Class A units.

Immediately after our acquisition of the interests in Silvercrest L.P., our only material asset will be our ownership of all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) will be held by 37 of our principals. We will use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners and such Class B units acquired by us will be immediately converted into Class A units. See “The Reorganization and Our Holding Company Structure” for a description of the reorganization and the structure of our company.

LOGO

(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

(3)	Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold [—] Class B units, which will represent the right to receive [—]% of the distributions made by Silvercrest L.P.

(4)	We will hold [—] Class A units (or [—] Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full) which will represent the right to receive [—]% of the distributions made by Silvercrest L.P.

The Offering


Class A common stock offered by us		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares.

Class A common stock to be outstanding immediately after this offering		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares. If all Class B units of Silvercrest L.P. were to be exchanged for shares of our Class A common stock, shares of Class A common stock would be outstanding immediately after this offering.

Class B common stock to be outstanding immediately after this offering		shares of Class B common stock. Shares of our Class B common stock have voting rights but no economic rights (including no rights to dividends or distribution upon liquidation) and will be issued to our principals in an amount equal to the number of Class B units of Silvercrest L.P. that our principals hold following the reorganization. When a Class B unit is exchanged for a share of Class A common stock, the corresponding share of Class B common stock will be cancelled. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.”

Use of proceeds		We will receive net proceeds from our sale of Class A common stock in this offering of approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares) based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus). We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B Units will be determined by the public offering price of our Class A common stock in this offering, less the amount of offering expenses incurred by us on a per share basis. We intend to use the remaining net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions.

Voting rights and stockholders’ agreement		One vote per share of Class A common stock and Class B common stock. Our principals who hold shares of Class B common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote, while employed by us, the shares of Class A common stock and Class B common stock that they hold in accordance with the decision of the Executive Committee of Silvercrest L.P., consisting initially of G. Moffett Cochran, David J. Campbell, Scott A. Gerard and Richard R. Hough III. The vote of each member of the Executive Committee will be weighted based on the number of Class B units owned by the member relative to the number of Class B units held by all members of the Executive Committee at the time of a vote. See “The Reorganization and Our Holding Company Structure—Voting Rights of Class A and Class B Stockholders” and “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders.”



Class B unit exchange		Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., each Class B unit will be exchangeable for a share of our Class A common stock, subject to the exchange timing and volume limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” All Class B units held by a principal will be exchanged automatically for shares of our Class A common stock upon the termination of employment of such principal, other than in the case of retirement, subject to certain limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

Resale and registration rights		Pursuant to a resale and registration rights agreement that we will enter into with the holders of Class B units, we will agree to use our best efforts to file a registration statement for the sale of the shares of our Class A common stock that are issuable upon exchange of Class B units as soon as practicable after we become eligible to file a registration statement on Form S-3, which we expect to be one year after the consummation of this offering. We expect to cause that registration statement to be declared effective by the Securities and Exchange Commission, or the SEC, as soon as practicable thereafter. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement” for a description of the timing and manner limitations on resales of these shares of our Class A common stock.

Dividend policy		Upon completion of this offering, we will have no material assets other than our ownership of Class A units of Silvercrest L.P. Accordingly, our ability to pay dividends will depend on distributions from Silvercrest L.P. We intend to cause Silvercrest L.P. to make distributions to us with available cash generated from its subsidiaries’ operations in an amount sufficient to cover dividends. If Silvercrest L.P. makes such distributions, the holders of its Class B units will be entitled to receive equivalent distributions on a pro rata basis. The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors and may be discontinued at any time. In determining the amount of any future dividends, our board of directors will take into account any legal or contractual limitations, our actual and anticipated future earnings, cash flow, debt service and capital requirements and the amount of distributions to us from Silvercrest L.P. Following this offering, we intend to pay quarterly cash dividends. See “Dividend Policy.”

Tax Receivable Agreement		We will enter into a tax receivable agreement with the current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized.



		The tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed upon value of payments remaining to be made under the agreement. The tax receivable agreement will automatically terminate if a principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement, and no further payments will be made under the tax receivable agreement.

Listing symbol		“SAMG.”

Unless otherwise noted, the number of shares of Class A common stock outstanding after this offering and other information based thereon in this prospectus excludes:

•

shares of Class A common stock, which may be issued upon the exercise of the underwriters’ option to purchase additional shares;

•

shares of Class A common stock reserved for issuance upon exchange of the Class B units that will be outstanding immediately after this offering;

•

Risk Factors

You should consider carefully the information set forth in the section entitled “Risk Factors” beginning on page 14 and all other information contained in this prospectus before investing in our Class A common stock.

Summary Selected Historical and Pro Forma Consolidated Financial Data

The following table sets forth the summary selected historical consolidated financial data of Silvercrest L.P., which is deemed to be our predecessor for accounting purposes, as of the dates and for the periods indicated. The historical selected consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009, and the consolidated statements of financial position data as of December 31, 2011 and 2010 of Silvercrest L.P. have been derived from, and are qualified in their entirety by, the historical audited consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus. The consolidated statements of financial position data as of December 31, 2009 have been derived from financial statements not included in this prospectus. The summary selected consolidated statements of operations data for the three months ended March 31, 2012 and 2011 and the summary selected consolidated statement of financial condition data as of March 31, 2012 have been derived from the Silvercrest L.P. unaudited consolidated financial statements included elsewhere in this prospectus. These unaudited consolidated financial statements have been prepared on substantially the same basis as our audited consolidated financial statements and include all adjustments that we consider necessary for a fair presentation of our results of operations and financial condition for the periods and as of the dates presented. Our results for the three months ended March 31, 2012 are not necessarily indicative of our results for a full fiscal year.


	Historical Silvercrest L.P.										Pro Forma Silvercrest
	Year Ended December 31,						Three Months Ended March 31,				Year Ended December 31,	Three Months Ended March 31,
	2011		2010		2009		2012		2011		2011	2012

Statements of operations data:

Revenue:
Management and advisory fees	$	37,869	$	32,442	$	29,341	$	10,682	$	8,970
Performance fees and allocations		85		548		96		—		18
Family office services		4,833		3,841		3,097		1,198		1,077

Total revenue		42,787		36,831		32,534		11,880		10,065


Expenses:
Compensation and benefits		17,492		16,528		15,630		4,768		4,169
General and administrative		10,849		9,459		13,006		2,566		2,157
Impairment charges		—		—		1,691		—		—

Total expenses		28,341		25,987		30,327		7,334		6,326

Income before net loss from investment activities of Silvercrest Funds and other income (expenses)		14,446		10,844		2,207		4,546		3,739


	Historical Silvercrest L.P.															Pro Forma Silvercrest
	Year Ended December 31,									Three Months Ended March 31,						Year Ended December 31,	Three Months Ended March 31,
	2011			2010			2009			2012			2011			2011	2012

Other income (expense):
Gain on extinguishment of debt		—			—			3,934			—			—
Gain on settlement with former LongChamp shareholder		—			—			1,470			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—
Change in value of options granted to equity holders		—			2			134			—			—
Interest income		187			231			213			45			46
Interest expense		(164	)		(241	)		(467	)		(64	)		(39	)
Other (expense) income		(210	)		30			—			32			(203	)
Equity income (loss) from investments		950			1,241			274			—			—

Total other income (expense)		729			755			5,558			13			(196	)


Income (loss) before non-controlling interests in income of consolidated entities and (provision) benefit for income taxes:		15,175			11,599			7,765			4,559			3,543

Non-controlling interests in income of consolidated entities		—			—			—			—			—

Income before provision for income taxes		15,175			11,599			7,765			4,559			3,543
(Provision) benefit for income taxes		(566	)		(657	)		321			(270	)		66

Net income	$	14,609		$	10,942		$	8,086		$	4,289		$	3,609


Selected statements of financial position data:

Total assets	$	45,262		$	33,079		$	29,964		$	40,454		$	28,5924
Notes payable		4,809			2,957			7,120			4,362			2,463
Total liabilities		15,751			12,490			14,893			12,645			9,067
Redeemable partners’ capital		85,177			45,619			34,220			80,919			57,758
Partners’ deficit		(55,666	)		(25,030	)		(19,148	)		(53,110	)		(38,232	)

Selected unaudited operating data:

Assets under management (billions of dollars) (1)	$	10.1		$	9.2		$	8.8		$	11.1		$	9.9
Adjusted EBITDA (2)	$	10,839		$	9,068		$	6,449		$	3,447		$	2,686
Adjusted EBITDA margin (3)		25.3	%		24.6	%		19.8	%		29.0	%		26.7	%

(1)	Reflected as of the last day of the period.

(2)

and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Year Ended December 31,									Three Months Ended March 31,
	2011			2010			2009			2012			2011

Reconciliation of non-GAAP financial measures:

Net income	$	14,609		$	10,942		$	8,086		$	4,289		$	3,609
Provision (benefit) for income taxes		566			657			(321	)		270			(66	)
Interest expense		164			241			467			64			39
Interest income		(187	)		(231	)		(213	)		(45	)		(46	)
Partner incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(2,027	)		(1,575	)
Depreciation and amortization		1,469			1,379			1,531			475			315
Equity-based compensation		1,060			583			—			431			206
Other adjustments (B)		1,933			670			(460	)		(10	)		204


Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	3,447		$	2,686

(A)	Partner incentive allocations are treated as distributions of net income and are recorded when paid.

(B)	Other adjustments consist of the following:


	Year Ended December 31,								Three Months Ended March 31,
	2011		2010			2009			2012			2011

Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)		—			—
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)		—			—
Write-off of LongChamp revenue (b)		—		64			557			—			—
Loss on sub-lease (c)		150		—			—			(21	)		213
Lease abandonment charge (d)		—		—			1,154						—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691			—			—
Client reimbursement		—		—			1,132			—			—
Fund redemption costs (f)		827		—			—			9			—
IPO professional fees		578		—			—			2			—
Milbank acquisition costs (g)		222		—			—			—			—
Severance		69		100			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		—			—
Other (i)		53		—			—			—			(9	)


Total other adjustments	$	1,933	$	670		$	(460	)	$	(10	)	$	204

(a)	Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

(c)	Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)	Reflects a charge for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and subleased through September 29, 2017.

(e)	Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)	Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)	Reflects the legal and accounting fees associated with the closing of the Milbank Winthrop & Co., Inc. acquisition that were expensed in 2011.

(h)	Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)	Represents professional fees related to the Milbank acquisition and a Silvercrest fund.

(3)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

RISK FACTORS

Risks Related to our Investment Performance and the Financial Markets

•

The historical returns of our existing investment strategies may not be indicative of their future results or of the future results of investment strategies we may develop in the future.

We have presented the historical returns of our existing investment strategies under “Business—Our Business Model.” The historical returns of our strategies should not be considered indicative of the future results of these strategies or of the results of any other strategies that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The historical performance presented herein is as of March 31, 2012 and for periods then ended. The performance we achieve as of a subsequent date and for a subsequent period may be higher or lower and the difference may be material. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, such as in 2008, the first quarter of 2009 and the second quarter of 2010, general economic and market conditions have negatively affected investment opportunities and our strategies’ returns. These negative conditions may occur again, and in the future, we may not be able to identify and invest in profitable investment opportunities within our current or future strategies.

We derive a substantial portion of our revenues from a limited number of our strategies.

As of March 31, 2012, $6.7 billion of our assets under management were concentrated in discretionary managed accounts, representing approximately 81% of our investment management fees for the quarter ended March 31, 2012. Private partnerships represented an additional $1.0 billion of our assets under management, as of March 31, 2012, representing approximately 19% of our investment management fees for the quarter ended March 31, 2012. As a result, a substantial portion of our operating results depends upon the performance of those strategies and our ability to retain client assets. If a significant portion of the investors in our larger strategies decided to withdraw their investments or terminate their investment management agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those strategies would decline, which would have a material adverse effect on our results of operations and financial condition.

We derive most of our revenues from assets under management that may be reduced at any time by our clients.

be terminated or not renewed for any number of reasons. The decrease in revenues that could result from a reduction in assets under management or the termination of a material client relationship or group of client relationships could have a material adverse effect on our business.

Our investment strategies may not obtain attractive returns in the short-term or during certain market periods.

performance relative to peers, coupled with changes in personnel, extensive periods in particular market environments or other difficulties may result in significant withdrawals of client assets, client departures or a reduction in our assets under management.

As of March 31, 2012, our Core International Equity Strategy, which invests in companies domiciled outside of the United States, accounted for approximately 0.7% of our assets under management. In addition, some of our other strategies also invest on a more limited basis in securities of non-U.S. companies. Fluctuations in foreign currency exchange rates could negatively affect the returns of our clients who are invested in these strategies. In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our assets under management, which, in turn, could result in lower revenue since we report our financial results in U.S. dollars.

Risks Related to our Key Professionals

The loss of key investment professionals or members of our senior management team could have a material adverse effect on our business.

We depend on the skills and expertise of our investment professionals and our success depends on our ability to retain the key members of our senior management and investment teams, who possess substantial experience in investing and have been primarily responsible for the historically strong investment performance we have achieved. In particular, we depend on the portfolio managers. As of March 31, 2012, $3.4 billion, representing 31% of our assets under management, were managed using one of our proprietary equity strategies. Our five largest strategies as of March 31, 2012 were Large Cap, Multi Cap, Small Cap, Equity Income and Focused Value which represented 12%, 7%, 5%, 5% and 1% of assets under management, respectively. Each of these five strategies has been managed by its current portfolio manager since its inception at Silvercrest.

departure of one of a strategy’s portfolio managers also could cause clients to refrain from allocating additional funds to the strategy or delay such allocation of additional funds until a sufficient track record under a new portfolio manager or managers has been established. This would have a negative effect on the future growth of our assets under management and, therefore, our results of operations.

Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future.

retain these personnel will depend heavily on the amount and structure of compensation and opportunities for equity ownership we offer. Historically we have offered key employees equity ownership through interests in Silvercrest L.P. and Silvercrest GP LLC. Those key employees who are currently limited partners of Silvercrest L.P. and Silvercrest GP LLC will hold these interests in the form of Class B units immediately following this offering. In connection with our transition to a public company, we expect to implement a new compensation structure that uses a combination of cash and equity-based incentives as appropriate. Although we intend for overall compensation levels to remain commensurate with amounts paid to our key employees in the past, we may not be successful in designing and implementing an attractive compensation model. Any cost-reduction initiative or adjustments or reductions to compensation could negatively impact our ability to retain key personnel. In addition, changes to our management structure, corporate culture and corporate governance arrangements, including the changes associated with, and resulting from, our reorganization and on becoming a public company, could negatively impact our ability to retain key personnel. If we are unable to retain key personnel, our results of operations may be negatively affected.

Risks Related to the Regulatory Environment in which We Operate

We are subject to extensive regulation that imposes numerous obligations on our business.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was signed into law on July 21, 2010. While we do not at this time believe that the Dodd-Frank Act will cause us to reconsider our business model, it does appear that certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act will be determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the Commodity Futures Trading Commission, or CFTC, jointly issued final rules that require investment advisers registered with the SEC that advise one or more private funds to provide certain information to the Financial Stability Oversight Council on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information for purposes of assessing the systemic risk posed by private funds. In light of this rulemaking, we will have to file a Form PF, providing all necessary information. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

the Exchange Act and the Nasdaq rules, are generally designed to ensure the integrity of the financial markets and to protect clients and other third parties who deal with us, and are generally not designed to protect our stockholders. Moreover, recent extreme volatility events in the U.S. equities markets have led to heightened scrutiny of sophisticated trading technology and execution methods. Consequently, these regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements.

The regulatory environment in which we operate is subject to continual change, and regulatory developments designed to increase oversight may adversely affect our business.

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. We believe that significant regulatory changes in our industry are likely to continue, which is likely to subject industry participants to additional, more costly and generally more punitive regulation. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries already have resulted in increased scrutiny of the industry and new rules and regulations for investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of the recent economic downturn, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct business.

We could be subject to regulatory investigations, which could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

The failure by us to comply with applicable laws or regulations could result in fines, suspensions of individual employees or other sanctions. Even if an investigation or proceeding did not result in a fine or sanction or the fine or sanction imposed against us or our employees by a regulator was small in monetary amount, the adverse publicity relating to an investigation, proceeding or imposition of these fines or sanctions could harm our reputation and cause our funds to lose existing investors or fail to attract new investors.

Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business.

The SEC and several states have initiated investigations alleging that certain private equity firms and hedge funds or agents acting on their behalf have paid money to current or former government officials or their associates in exchange for improperly soliciting contracts with state pension funds. The SEC has also recently initiated a similar investigation into contracts awarded by sovereign wealth funds. The SEC approved Rule 206(4)-5 under the Advisers Act regarding “pay to play” practices by investment advisers involving campaign contributions and other payments to government officials able to exert influence on potential government entity clients. Among other restrictions, the rule prohibits investment advisers from providing advisory services for compensation to a government entity for two years, subject to very limited exceptions, after the investment adviser, its senior executives or its personnel involved in soliciting investments from government entities have made contributions to certain candidates and officials in a position to influence the hiring of an investment adviser by such government entity. Advisers are required to implement compliance policies designed, among other matters, to track contributions by certain of the adviser’s employees and engagements of third parties that solicit government entities (and political action committees controlled by such persons) and to keep certain records in order to enable the SEC to determine compliance with the rule. Additionally, California enacted legislation that requires placement agents (including in certain cases employees of investment managers) who solicit funds from California state retirement systems, such as the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, to register as lobbyists, thereby becoming subject to increased reporting requirements and prohibited from

receiving contingent compensation for soliciting investments from California state retirement systems. There also has been similar rulemaking in New York and other states. Such additional regulations may require the attention of senior management and may result in fines if any of our funds are deemed to have violated any regulations, thereby imposing additional expenses on us. Any failure on our part to comply with these rules could cause us to lose compensation for our advisory services or expose us to significant penalties and reputational damage.

Risks Related to Our Growth

Our efforts to establish new investment teams and strategies may be unsuccessful and could negatively impact our results of operations and our reputation.

acquire them. As a result, such asset managers could be more susceptible to irregular accounting or fraudulent practices. The targets we seek to acquire in the future may have shorter operating histories than us on which to estimate future performance and may not have significant or any operating revenues. They also may have a lower capitalization and fewer resources (including cash) and be more vulnerable to failure than traditional asset managers. We will be required to rely on the ability of the professionals employed by us to obtain adequate information to evaluate the manager affiliates we seek to acquire.

In addition, our ability to acquire asset managers on favorable teams and successfully integrate and operate them is subject to the following significant risks:

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we may acquire asset managers that are not accretive to our financial results upon acquisition, and we may not successfully manage acquired funds to meet our expectations;

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we may be unable to generate sufficient management fees from operations or obtain the necessary debt or equity financing to consummate an acquisition on favorable terms or at all;

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the process of acquiring or pursuing the acquisition of such asset managers may divert the attention of our management team from the operations of our business and our initial funds;

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we will need to attract, hire, train, supervise and manage new employees as a result of the acquisitions of asset managers;

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we may be unable to quickly and efficiently integrate new acquisitions into our existing operations.

Risk Related Generally to our Business

Operational risks, including the threat of cyber attacks, may disrupt our business, breach our clients’ security, result in losses or limit our growth.

We are heavily dependent on the capacity and reliability of the communications, information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties. Operational risks, such as trading or operational errors or interruption of our financial, accounting, trading, compliance and other data processing systems, whether caused by the failure to prevent or mitigate data loss or other security breaches, or other cybersecurity threats or attacks, including breaches of our vendors’ technology and systems, fire or other natural disaster, power or telecommunications failure, act of terrorism or war or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus have a material adverse effect on our business. Some types of operational risks, including, for example, trading errors, may be increased in periods of increased volatility, which can magnify the cost of an error. Cybersecurity risks relating to our business primarily involve the potential security breaches of our clients’ personal and financial information and illegal use thereof through system-wide “hacking” or other means. While we have never had any cybersecurity threat or attack on our technology systems, this may occur in the future. Although we have back-up systems and cyber security and consumer protection measures in place, our back-up procedures, cyber defenses and capabilities in the event of a failure, interruption, or breach of security may not be adequate. Insurance and other safeguards we use may not be available or may only partially reimburse us for our losses related to operational failures or cyber attacks. In addition, we may choose to reimburse a client in the event of a trading error or under other circumstances, even if we are not legally required to do so, and any such reimbursements could adversely affect our results of operations.

Employee misconduct could expose us to significant legal liability and reputational harm.

Improper disclosure of personal data could result in liability and harm our reputation.

Failure to properly address conflicts of interest could harm our reputation, business and results of operations.

We provide a broad range of services to Silvercrest Funds and family office services, which may expose us to liability.

We also provide a range of family office services, in addition to investment management services, to some of our clients, including philanthropic, estate and wealth planning services, tax planning and preparation, financial statement, bill paying and record keeping services, bank loan arrangement and payment services and property and casualty insurance review. If we fail to perform these services properly, we could incur costs and reputational harm for which we might be liable. In addition, if it were determined that the Silvercrest Funds failed to comply with applicable regulatory requirements as a result of action or failure to act by our employees, we could be responsible for losses suffered or penalties imposed. Further, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income, or negatively affect our current business or our future growth prospects.

The investment management industry is intensely competitive.

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a number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do;

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potential competitors have a relatively low cost of entering the investment management industry;

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the recent trend toward consolidation in the investment management industry and the securities business in general, has served to increase the size and strength of a number of our competitors;

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some competitors may invest according to different investment styles or in alternative asset classes that the markets may perceive as more attractive than the investment strategies we offer;

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other industry participants, hedge funds and alternative asset managers may seek to recruit our investment professionals; and

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some competitors charge lower fees for their investment services than we do.

If we are unable to compete effectively, our results of operations may be materially adversely affected.

Reductions in business sourced through third-party distribution channels, or their poor reviews of us or our products, could materially reduce our revenue and ability to attract new clients.

New accounts sourced through consultant-led searches may be a major component of our future growth. We also have accessed the high-net-worth segment of the investing community through relationships with well respected wealth advisers who use our investment strategies in investment programs they construct for their clients. If we fail to successfully maintain these third-party distribution and sub-investment advisory relationships, our business could be materially adversely affected. In addition, many of these parties review and evaluate our products and our organization. Poor reviews or evaluations of either the particular product or of us may result in client withdrawals or may impact our ability to attract new assets through such intermediaries.

The significant growth we have experienced may be difficult to sustain.

Our assets under management have increased from $7.8 billion as of December 31, 2006 to $11.1 billion as of March 31, 2012. The absolute measure of our assets under management represents a significant rate of growth that may be difficult to sustain. The growth of our business will depend on, among other things, our ability to retain key investment professionals, to devote sufficient resources to maintaining existing investment strategies and to selectively develop new investment strategies. Our business growth also will depend on our success in achieving superior investment performance from our investment strategies, as well as our ability to maintain and extend our distribution capabilities, to deal with changing market conditions, to maintain adequate financial and business controls and to comply with new legal and regulatory requirements arising in response to both the increased sophistication of the investment management industry and the significant market and economic events of the last few years. If we believe that in order to continue to produce attractive returns from some or all of our investment strategies we should limit the growth of those strategies, we have in the past chosen, and in the future may choose, to limit or close access to those strategies to some or most categories of new investors or otherwise take action to slow the flow of assets into those strategies.

A change of control of us could result in termination of our sub-investment advisory and investment advisory agreements.

If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.

The cost of insuring our business is substantial and may increase.

The historical consolidated financial information included in this prospectus may not be indicative of our future financial results after the reorganization and as a public company. Our assets under management have increased 29.0% in the past five years. We do not expect our assets under management or revenue to grow at the same rate as they have grown in the past five years. In addition, the historical consolidated financial information included in this prospectus does not reflect the added costs that we expect to incur as a public company or the changes that will occur in our capital structure and operations in connection with our reorganization. For example, because we operated through a limited liability company prior to this offering and paid little or no taxes on our profits, our historical consolidated financial information does not reflect the tax impact of our adoption of a corporate holding company structure.

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the impact of the reorganization, in relation to our size, during the pro forma periods;

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future performance of our investment strategies, which differs from the historical performance reflected in the unaudited pro forma financial information;

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the additional costs of being a public company including compliance with Sarbanes-Oxley.

If we incur indebtedness or issue senior equity securities, we will be exposed to additional risks, including the typical risks associated with leverage.

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there is a likelihood of greater volatility of net asset value of our business and market price of our common stock than a comparable business without leverage;

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if we are required to pledge a substantial portion of our assets in order to obtain debt financing, it may limit our ability to enter into subsequent financings at attractive terms;

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we, and indirectly our investors, will bear the cost of leverage, including issuance and servicing costs; and

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Risks Related to Our Structure

Control by our principals of % of the combined voting power of our capital stock and the rights of holders of Class B units of Silvercrest L.P. may give rise to conflicts of interest.

Immediately after the completion of this offering, our employee stockholders will collectively hold approximately % of the combined voting power of our capital stock (or approximately %, if the

In addition, because our principals will hold all or a portion of their ownership interests in our business through Silvercrest L.P., rather than through Silvercrest, these existing owners may have other conflicting interests with holders of our Class A common stock. For example, our existing owners may have different tax positions from holders of our Class A common stock which could influence their decisions regarding whether and when we should dispose of assets, whether and when we should incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreement that we have entered into in connection with this offering, and whether and when our company should terminate the tax receivable agreement and accelerate its obligations thereunder. Also, the structuring of future transactions may take into consideration these existing owners’ tax or other considerations even where no similar benefit would accrue to us. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement” for more information.

Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law.

Our ability to pay taxes and expenses, including payments under the tax receivable agreement, may be limited by our structure.

We will be required to pay holders of Class B units of Silvercrest L.P. for certain tax benefits we may claim, and the amounts we may pay could be significant.

partnership units 85% of such amount, or $ , over the 15-year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and tax receivable agreement payments by us will be calculated using the market value of our Class A common stock and the prevailing tax rates at the time of the exchange and will be dependent on us generating sufficient future taxable income to realize the benefit. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement.”

Risks Related to this Offering

The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our stockholders.

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variations in our quarterly or annual operating results;

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failure to meet the market’s earnings expectations;

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publication of research reports about us or the investment management industry, or the failure of securities analysts to cover our Class A common stock after this offering;

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the public’s reactions to our press releases, other public announcements and filings with the SEC;

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departures of any of our portfolio managers or members of our senior management team or additions or departures of other key personnel;

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adverse market reaction to any indebtedness we may incur or securities we may issue in the future;

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market and industry perception of our success, or lack thereof, in pursuing our growth strategies;

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actions by stockholders;

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strategic actions by us or our competitors such as acquisitions or restructurings;

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changes in market valuations of similar companies;

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changes in our capital structure;

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actual or anticipated poor performance in one or more of the investment strategies we offer;

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changes in accounting standards, policies, guidance, interpretations or principles;

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adverse publicity about the investment management industry generally or as a result of specific events;

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sales of shares of our Class A common stock by us or members of our management team;

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litigation and governmental investigations;

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the expiration of contractual lockup agreements; and

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We will agree with the underwriters not to issue, sell, or otherwise dispose of or hedge any shares of our Class A common stock, subject to certain exceptions, for the 180-day period following the date of this prospectus, without the prior consent of Sandler O’Neill & Partners, L.P. Our officers and directors and our other stockholders will enter into similar lock-up agreements with the underwriters. Sandler O’Neill & Partners, L.P. may, at any time, release us and/or any of our officers and directors and/or our other stockholders from this lock-up agreement and allow us to sell shares of our Class A common stock within this 180-day period. For more information, see “Underwriting.” In addition, pursuant to the terms of an exchange agreement that we will enter into with the holders of Class B units of Silvercrest L.P., such Class B units will not be exchangeable for shares of our Class A common stock until the six-month anniversary of the consummation of this offering.

Upon completion of this offering, there will be shares of our Class A common stock outstanding (or shares if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) of which shares will be freely transferable without restriction or further registration under the Securities Act. The shares of Class A common stock that will be issuable upon exchange of Class B units may only be sold in the manner at the times described under “The Reorganization and Our Holding Company Structure — Resale and Registration Rights Agreement.” Every 12-month period beginning on the six-month anniversary of this offering and ending on the date of a principal’s termination of employment, each principal and his permitted transferees (e.g., family trusts) may collectively exchange vested Class B units that equal 20% of the Class B units such persons collectively held at the beginning of such 12-month period, subject to certain exceptions described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Upon a termination of employment other than due to retirement, all Class B units held by a principal, other than those Class B units forfeited under certain circumstances, will be exchanged automatically for shares of Class A common stock. The shares of Class A common stock received upon exchange for Class B units may be sold (i) at any time and in any manner by retired employees and employees or estates of employees terminated due to death or disability, (ii) for any principal whose employment is terminated by us without cause, in an amount equal to 50% of the total shares of Class A common stock held by the principal in each 12-month period following the 18-month anniversary of the date of termination of employment, and (iii) for any principal who voluntarily resigns his employment, in an amount equal to one-third of the total shares of Class A common stock held by the principal in each 12-month period following the 18-month anniversary of the date of resignation of employment subject to manner of sale restrictions described in “The Reorganization and Our Holding Company Structure—Resale and Registration Rights.”

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are, however, choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non–emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Following the completion of this offering, we will be required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs to us and could have a negative effect on our business, results of operations and financial condition. As a public company, we will be subject to the reporting requirements of the Exchange Act and requirements of Sarbanes Oxley. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. Sarbanes Oxley requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our company and to maintain appropriate operational and financial systems to adequately support expansion. In addition, as a public company, we must also enhance our investor relations, legal and corporate communications functions. All of these activities and additional efforts may increase our costs, strain our resources and divert management’s attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

You will suffer immediate and substantial dilution and may experience additional dilution in the future.

We have broad discretion in the use of the net proceeds to us from this offering and may not use them in a manner in which our stockholders would consider appropriate.

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the requirement that a majority of the board consists of independent directors;

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the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors;

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the requirement that we have a compensation committee that is composed entirely of independent directors; and

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the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

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our business strategies and investment policies;

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our intention to pay quarterly dividends;

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our financing plans;

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our competitive position and the effects of competition on our business;

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potential growth opportunities available to us;

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status as an emerging growth company;

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the recruitment and retention of our employees;

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our expected levels of compensation of our employees and the impact of compensation on our ability to attract and retain employees;

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our potential operating performance and efficiency;

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our expected tax rate;

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our expectation with respect to the economy, capital markets, the market for asset management services and other industry trends;

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the benefits to our business resulting from the effects of the reorganization;

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our belief as to the adequacy of our facilities; and

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the impact of future legislation and regulation, and changes in existing legislation and regulation, on our business.

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE

Overview

Set forth below is our holding company structure and ownership immediately prior to the consummation of the reorganization and this offering.

LOGO

(1)	Silvercrest GP LLC is the General Partner of Silvercrest L.P.

(2)	Silvercrest L.P. is the Managing Member of the operating subsidiaries.

Immediately after our acquisition of the interests in Silvercrest L.P., our only material asset will be our ownership of all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) will be held by 37 of our principals. We will use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners and such Class B units acquired by us will be immediately converted into Class A units.

As part of the reorganization, we will issue to the holders of Class B units, for each Class B unit, one share of Class B common stock in exchange for the payment by the holder of the Class B units of its par value. Each share of our Class B common stock will entitle its holder to one vote. Initially, the holder of the Class B common stock will have % of the combined voting power of our common stock (or % if the underwriters exercise in full their option to purchase additional shares of Class A common stock). When a Class B unit is exchanged for a share of our Class A common stock, forfeited as a result of applicable vesting provisions, or forfeited or repurchased as a result of a breach of any restrictive covenants contained in the second amended and restated limited partnership agreement of Silvercrest L.P., a corresponding number of shares of our Class B common stock automatically will be redeemed at par value and cancelled by us. Conversely, to the extent we cause Silvercrest L.P. to issue additional Class B units (including awards of Class B units subject to vesting) to our employees pursuant to our 2012 Equity Incentive Plan, these employees will be entitled to receive an equal number of shares of our Class B common stock.

Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., each vested Class B unit will be exchangeable for a share of our Class A common stock, subject to the exchange timing and volume limitations described under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Unvested Class B units will not be exchangeable until they have vested other than upon a termination of employment of a principal, at which time all vested and unvested Class B units will be automatically exchanged for shares of our Class A common stock, subject to certain exceptions, including in the case of retirement, a voluntary resignation of employment and termination with cause, as described under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

LOGO

(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

(3)	Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units, which will represent the right to receive % of the distributions made by Silvercrest L.P.

(4)	We will hold Class A units (or Class A units if the under writers exercise their option to purchase additional shares of Class A common stock in full), which will represent the right to receive % of the distributions made by Silvercrest L.P.

Holding Company Structure

Net profits, net losses and distributions of Silvercrest L.P. will be allocated and made to each of its partners pro rata in accordance with the number of partnership units of Silvercrest L.P. held by each of them. Accordingly, net profits and net losses of Silvercrest L.P. will initially be allocated, and distributions will be made, approximately % to us and approximately % to the initial holders of Class B units (or % and %, respectively, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

Governance

We will serve as the general partner of Silvercrest L.P. As such, we will control its business and affairs and will be responsible for the management of its business. We also will have the power to delegate some of our management responsibilities as the general partner of Silvercrest L.P. to an Executive Committee consisting of our Chief Executive Officer, Mr. Cochran, and the officers appointed by him to serve as members of the Executive Committee. Initially, Mr. Cochran and each of David J. Campbell, Scott A. Gerard and Richard R. Hough III, will serve as members of the Executive Committee. No partners of Silvercrest L.P., in their capacity as such, will have any authority or right to control the management of Silvercrest L.P. or to bind it in connection with any matter.

Voting and Economic Rights

Net profits, net losses and distributions of Silvercrest L.P. will be allocated and made to each of its partners pro rata in accordance with the number of partnership units of Silvercrest L.P. held by each of them (whether or not vested). Silvercrest L.P. will agree to make distributions to the holders of its partnership units, which includes us, for the purpose of funding their tax obligations in respect of Silvercrest L.P. See “—Tax Consequences.” Additional distributions from Silvercrest L.P. to us will be made at the discretion of our board of directors, acting on our behalf as the general partner of Silvercrest L.P. Neither Silvercrest Asset Management Group LLC nor Silvercrest L.P. may make any distributions to its members or partners if doing so would violate any agreement to which it is then a party or any law then applicable to it, have the effect of rendering it insolvent or result in it having net capital lower than that required by applicable law.

Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.

our Class A common stock pursuant to our 2012 Equity Incentive Plan, we will contribute to Silvercrest L.P. all of the proceeds we receive (if any), and Silvercrest L.P. will issue to us one of its Class A units, having the same restrictions, if any, attached to the shares of Class A common stock issued under this plan. If we issue other classes or series of our equity securities, (i) Silvercrest L.P. will issue, and (ii) Class B units (if any) transferred to us by its limited partners in exchange for our newly issued equity securities will be converted automatically into, an equal number of equity securities of Silvercrest L.P. with designations, preferences and other rights and terms that are substantially the same as our newly issued equity securities. Conversely, if we redeem any shares of our Class A common stock (or our equity securities of other classes or series) for cash, Silvercrest L.P. will, immediately prior to our redemption, redeem an equal number of Class A units (or its equity securities of the corresponding classes or series) held by us, upon the same terms and for the same price, as the shares of our Class A common stock (or our equity securities of such other classes or series) are redeemed.

Issuances and Transfer of Units

Class A units may only be issued to us, the general partner of Silvercrest L.P., and are non-transferable. Class B units may be issued only to persons or entities to which we agree to permit the issuance of units in exchange for cash or other consideration, including the services of Silvercrest L.P.’s and its subsidiaries’ employees. Class B units may not be transferred except, with our consent, to a permitted transferee, subject to conditions we may specify, or as described below under “—Exchange Rights.” If a Class B unitholder is permitted to transfer its Class B units, the holder of Class B units may not transfer any Class B units to any person unless he or she transfers an equal number of shares of our Class B common stock to the same transferee.

Material Corporate Transactions

Exchange Rights

We have reserved for issuance shares of our Class A common stock, which is the aggregate number of shares of our Class A common stock expected to be issued over time upon exchanges by:

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all holders of Class B units outstanding immediately after this offering;

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all holders of the deferred equity units and performance units to acquire up to Class B units that have been granted prior to the consummation of this offering.

Holders of Class B units may exchange their vested Class B units for shares of our Class A common stock at the times and in the amounts described below.

Each year, in the period beginning on the six-month anniversary of the consummation of this offering and ending on the date of the termination of employment of a principal with us, a principal and his permitted transferees may collectively exchange up to the number of vested Class B units that equals 20% of all Class B units such principal and his or her permitted transferees collectively hold as of the first day of that year, in accordance with the timing restrictions described under “—Resale and Registration Rights Agreement.” Notwithstanding the foregoing, each principal shall commit to retain at least 25% of the number of Class B units held by the principal on the date of the consummation of this offering (as adjusted for any stock splits, dividends and reclassifications occurring after this offering). Any principal who is hired by our company after the consummation of this offering may not exchange any Class B units during his or her first year of employment with our company. In addition, unless otherwise determined by the Executive Committee of Silvercrest L.P., in its sole discretion, upon a termination of employment for any reason other than retirement, all of the Class B units held by a principal shall be exchanged automatically for shares of our Class A common stock, subject to the forfeiture of any Class B units as described under “—Restrictive Covenants—Forfeiture or Repurchase of Class B units and Class A Common Stock” below.

Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., if the amount of income taxes that principals are required to pay due to the grant or vesting of their Class B units, the exercise of their options to acquire Class B units and/or the exchange of their Class B units for shares of our Class A common stock upon termination of employment (whether or not they are employees at the time that the tax payment obligation arises) exceeds the net proceeds they would receive upon the sale of all of the shares of our Class A common stock issued to them in exchange for 20% of Class B units that they hold as of the first day of the year with respect to which the tax is payable, then they will instead be entitled to exchange an amount of vested Class B units and resell an equal number of shares of our Class A common stock issued in exchange for such that the net proceeds from the sale of this amount of shares would enable them to pay all such taxes due. In addition, we may allow holders of Class B units to make exchanges in amounts exceeding those described above at any time following the effective date of the shelf registration statement (as described in “—Resale and Registration Rights Agreement”), which determination may be withheld, delayed, or granted on such terms and conditions as our Executive Committee may determine, in its sole discretion.

Restrictive Covenants

Non-Solicitation

Confidential Information

Forfeiture or Repurchase of Class B Units and Class A Common Stock

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal and his or her permitted transferees and us, if a principal of Silvercrest L.P. breaches any of the non-solicitation or confidentiality covenants described above or, if a principal voluntarily resigns or retires and competes with our company during the 12 months following his or her termination of employment, then, in addition to any legal rights and remedies available to us, the principal (and to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B units and/or shares of Class A common stock, if any, and, at the option of Silvercrest L.P., would be required to sell to Silvercrest L.P. all of the vested Class B units collectively held by the principal and his or her

permitted transferees for a purchase price equal to the lesser of (i) the capital account balance of the principal and his or her permitted transferees in Silvercrest L.P. and (ii) the purchase price paid by the terminated principal to first acquire the Class B units, and, at our option, would be required to sell to us all of the Class A common stock collectively held by the principal and his or her permitted transferees for a purchase price equal to the purchase price paid by the principal to first acquire the Class B units for which such shares of Class A common stock had been exchanged. To the extent a retired principal violates these restrictive covenants or competes with our company during 12 months following his or her termination of employment and the retired principal or his or her permitted transferees sold more than 20% of the Class B units and/or shares of Class A common stock held by the retired principal and his or her permitted transferees on the date of the principal’s retirement, then, in addition to the repurchase of Class B units and shares of Class A common stock described above, we will have the right to claw back from the retired principal the purchase price received for the shares of Class A common stock and/or Class B units sold above an amount equal to 20% of the securities held on the date of retirement. In addition to the forfeiture, repurchase and claw back provisions described above, if a principal violates the non-solicitation or confidentiality covenants or competes with our company within the 12-month period following a voluntary resignation of employment or retirement, then the principal will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Repurchase of Class B Units Upon Termination for Cause

Unless otherwise determined by our board of directors, in its sole discretion, or previously agreed to by the principal, his or her permitted transferees and us, if a principal of Silvercrest L.P. is terminated for cause, the principal (and, to the extent of any Class B units transferred after the date of the consummation of this offering, his or her permitted transferees) would forfeit all of his, her or their unvested Class B units, if any, and, at our option, would be required to sell to Silvercrest L.P. all of the vested Class B units collectively held by the principal and his or her permitted transferees for a purchase price equal to the lesser of (i) the aggregate capital account balance in Silvercrest L.P. of the principal and his or her permitted transferees and (ii) the purchase price paid by the terminated principal to first acquire the Class B units. In addition to the forfeiture described above, any principal terminated for cause will cease to receive any payments required to be made to the principal under the tax receivable agreement. See “—Tax Receivable Agreement.”

Indemnification and Exculpation

Amendments

Resale and Registration Rights Agreement

Pursuant to the resale and registration rights agreement, we will commit to use our best efforts to:

•

cause the SEC to declare the shelf registration statement effective as soon as practicable thereafter.

From the first effective date of the shelf registration statement until the fifth anniversary of the consummation of this offering, holders of Class B units, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights,” will only be able to sell the shares of Class A common stock issued upon exchange pursuant to the shelf registration statement. Prior to the first effective date of the shelf registration statement, holders of Class B units may, subject to securities law limitations, sell their shares in any manner, but only at times determined by us in our sole discretion and subject to the timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” Holders of Class B units will be permitted to sell shares of Class A common stock issued upon exchange of Class B units during the first 10-day period of the open trading window of each quarter by submitting a request to the Executive Committee of Silvercrest L.P. to sell a specified number of shares. The Executive Committee may, in its discretion, deny the request of any holder of Class B units to sell his or her underlying shares of Class A common stock. If a sale request by a holder of Class B units is denied, the denied holder will be given the first opportunity to sell shares of Class A common stock in the next available open window. Thereafter, holders of Class B units will be able to exchange their Class B units for shares of our Class A common stock, subject to the exchange timing and volume limitations described above under “—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights” and will be permitted to sell their shares in any manner, but only at times determined by us, in our sole discretion.

Voting Rights of Class A and Class B Stockholders

Stockholders’ Agreement Among Class B Stockholders

In addition, pursuant to this stockholders’ agreement, each holder of shares of Class B common stock will agree that:

•

the holder will not transfer any shares of Class B common stock to any person unless the holder transfers an equal number of Class B units to the same person; and

•

in the event the holder transfers any Class B units to any person, the holder will transfer an equal number of shares of Class B common stock to the same person.

This stockholders’ agreement may only be amended with the consent of the holders of a majority of the shares of Class B common stock that are party to this agreement.

Tax Consequences

Tax Receivable Agreement

We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis described above and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement. The tax receivable agreement with a principal will automatically terminate if a principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement, and no further payments will be made under the tax receivable agreement.

•

the timing of exchanges of Class B units for shares of our Class A common stock — for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of Silvercrest L.P. at the time of the exchanges;

•

the price of our Class A common stock at the time of exchanges of Class B units — the increase in our share of the basis in the assets of Silvercrest L.P., as well as the increase in any tax deductions, will be related to the price of our Class A common stock at the time of these exchanges;

•

the extent to which these exchanges are taxable — if an exchange is not taxable for any reason (for instance, if a holder of Class B units exchanges units in order to make a charitable contribution), increased deductions will not be available;

•

the tax rates in effect at the time we utilize the increased amortization and depreciation deductions; and

•

the amount and timing of our income — we will be required to pay 85% of the tax savings, as and when realized, if any. If we do not have taxable income, we generally will not be required to make payments under the tax receivable agreement for that taxable year because no tax savings will have been actually realized.

We expect that, as a result of the size of the increases in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. attributable to our interest therein, the payments that we make under the tax receivable agreement will likely be substantial. Assuming that there are no material changes in the relevant tax law, and that we earn sufficient taxable income to realize the full tax benefit of the increased depreciation and amortization of our assets, we expect that future payments under the tax receivable agreement in respect of our initial purchase of partnership units of Silvercrest L.P. will aggregate $ million and range from approximately $ million to $ million per year over the next 15 years. A $1.00 increase (decrease) in the assumed initial public offering price of $ per share of Class A common stock (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) the aggregate amount of future payments to holders of Class B units in respect of the purchase by $ million. Future payments under the tax receivable agreement in respect of subsequent exchanges will be in addition to these amounts and are expected to be substantial.

USE OF PROCEEDS

We intend to use approximately $ million of the net proceeds from this offering to purchase an aggregate of Class B units of Silvercrest L.P. from existing limited partners and will not retain any of these proceeds. The purchase price for the Class B units will be determined by the public offering price of our Class A common stock in this offering less the per share amount of offering expenses incurred by us. We intend to use the remaining net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business and new investment strategies and strategic acquisitions for which no targets have been identified.

DIVIDEND POLICY

Our Dividend Policy

Following this offering, we intend to pay quarterly cash dividends. We expect that our first dividend will be paid in the quarter of 2012 and will be $ per share of our Class A common stock. Only holders of our Class A common stock will be entitled to any dividend declared by us on our capital stock. We will be a holding company and will have no material assets other than our ownership of the general partnership interest of Silvercrest L.P. As a result, we intend to fund our initial dividend, as well as any future dividend, from our portion of distributions from Silvercrest L.P. to pay any dividends declared by us. If Silvercrest L.P. makes distributions to its partners, holders of Class B units will be entitled to receive equivalent distributions on a pro rata basis.

•

our financial results as well as the financial results of Silvercrest L.P.;

•

our available cash and anticipated cash needs;

•

the capital requirements of our company and our direct and indirect subsidiaries (including Silvercrest L.P.);

•

general economic and business conditions; and

•

such other factors as our board of directors may deem relevant.

Silvercrest L.P.’s Historical Distributions

Silvercrest L.P. made distributions to its partners of $9.6 million, $12.9 million, $7.4 million, $5.9 million and $10 million for the years ended December 31, 2007, 2008, 2009, 2010 and 2011, respectively. In connection with the reorganization, Silvercrest L.P. may make a distribution to its existing partners representing some of its undistributed earnings generated between and the date of the offering.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2012 (1) on an actual basis for Silvercrest L.P. and (2) on a pro forma basis for Silvercrest after giving effect to the transactions described under “Unaudited Pro Forma Consolidated Financial Information,” including the reorganization and the application of the net proceeds from this offering. The table below should be read in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the historical consolidated financial statements of Silvercrest L.P. and related notes included elsewhere in this prospectus.


	As of March 31, 2012
	Silvercrest L.P. Actual			Silvercrest Pro Forma
	(unaudited) (dollars in thousands)

Cash and cash equivalents	$	4,095		$


Long-term debt, including current portion:

Total long-term debt, including current portion		4,362

Total redeemable equity		80,919

Total (deficit) equity		(53,110	)

Total capitalization	$	36,266		$

DILUTION

Our pro forma, as adjusted net tangible book value as of March 31, 2012 was approximately $ million, or approximately $ per share of our Class A common stock. Pro forma, as adjusted net tangible book value per share represents the amount of total tangible assets less total liabilities, after giving effect to the reorganization and the distribution by Silvercrest L.P. to its pre-offering partners of some of its retained profits as of the date of the closing of this offering.

After giving effect to the sale by us of shares of Class A common stock in this offering at the assumed initial public offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) after deducting estimated underwriting discounts and estimated offering expenses payable by us and the assumed exchange of all Class B units that will be outstanding immediately after the reorganization for the corresponding number of shares of our Class A common stock, our pro forma as adjusted net tangible book value at March 31, 2012 was $ million, or $ per share of our Class A common stock. This represents an immediate increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to the new investors purchasing shares in this offering. The following table illustrates this per share dilution:


Assumed initial public offering price per share of Class A common stock		$
Pro forma, as adjusted net tangible book value per share of Class A common stock at March 31, 2012	$
Increase in pro forma, as adjusted net tangible book value per share of Class A common stock attributable to new investors	$

Pro forma, as adjusted net tangible book value per share after this offering		$


Dilution in pro forma, as adjusted net tangible book value per share of Class A common stock to new investors	$

The following table sets forth, on the same pro forma, as adjusted basis at March 31, 2012, the number of shares of Class A common stock purchased from us and the total consideration and the average price per share paid by existing equity holders which consist of , and by new investors purchasing Class A common stock in this offering assuming that all holders of Class B units of Silvercrest L.P. immediately after the consummation of the reorganization have exchanged all their Class B units for the corresponding number of shares of our Class A common stock:

Shares Purchased

Total Consideration

Number

Percent

Amount

Percent

Average Price Per Share

Existing equity holders

New investors

Total

Sales by the selling stockholders in this offering will cause the number of shares of Class A common stock held by existing equity holders, on the same pro forma, as adjusted basis at March 31, 2012, to be reduced to shares or % of the total number of shares of our Class A common stock outstanding after this offering. If the underwriters exercise in full their overallotment option, our existing equity holders would own % and our new investors would own % of the total number of shares of Class A common stock outstanding after this offering.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The selected consolidated statements of operations data for the three months ended March 31, 2012 and 2011 and the selected consolidated statements of financial condition as of March 31, 2012 and 2011 have been derived from the Silvercrest L.P. unaudited consolidated financial statements included elsewhere in this prospectus. These unaudited consolidated financial statements have been prepared on substantially the same basis as our audited consolidated financial statements and include all adjustments that we consider necessary for a fair presentation of our consolidated results of operations and financial condition for the periods and as of the date presented. Our results for the three months ended March 31, 2012 and 2011 are not necessarily indicative of our results for a full fiscal year.


	Historical Silvercrest L.P.														Pro Forma Silvercrest
	Years Ended December 31,										Three Months Ended March 31,				Year Ended December 31,	Three Months Ended March 31,
	2011		2010		2009		2008⁽¹⁾		2007⁽²⁾		2012		2011		2011	2012

Statements of operations data:

Revenue:
Management and advisory fees	$	37,869	$	32,442	$	29,341	$	40,987	$	42,633	$	10,682	$	8,970
Performance fees and allocations		85		548		96		75		1,554		—		18
Family office services		4,833		3,841		3,097		2,019		931		1,198		1,077
Investment income		—		—		—		—		10,396		—		—

Total revenue		42,787		36,831		32,534		43,081		55,514		11,880		10,065


Expenses:
Compensation and benefits		17,492		16,528		15,630		18,399		19,263		4,768		4,169
General and administrative		10,849		9,459		13,006		11,943		9,097		2,566		2,157
Impairment charges		—		—		1,691		9,599		9,402		—		—

Total expenses		28,341		25,987		30,327		39,941		37,762		7,334		6,326


	Historical Silvercrest L.P.																					Pro Forma Silvercrest
	Years Ended December 31,															Three Months Ended March 31,						Year Ended December 31,	Three Months Ended March 31,
	2011			2010			2009			2008⁽¹⁾			2007⁽²⁾			2012			2011			2011	2012

Income before net loss from investment activities of Silvercrest Funds and other income (expense)		14,446			10,844			2,207			3,140			17,752			4,546			3,739

Net loss from investment activities of Silvercrest Funds:
Realized gains		—			—			—			—			6,510			—			—
Net change in unrealized gains		—			—			—			—			(28,693	)		—			—
Equity income (loss) from investment		—			—			—			—			41			—			—

Net loss from investment activities of Silvercrest Funds		—			—			—			—			(22,142	)		—			—


Other income (expense):
Gain on extinguishment of debt		—			—			3,934			—			461			—			—
Gain on settlement with former LongChamp shareholders		—			—			1,470			—			—			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—			—			—
Interest income		187			231			213			358			—			45			46
Interest expense		(164	)		(241	)		(467	)		(613	)		(705	)		(64	)		(39	)
Change in value of options granted to equity holders		—			2			134			796			(931	)		—			—
Other (expense) income		(210	)		30			—			—			—			32			(203	)
Equity income (loss) from investments		950			1,241			274			(247	)		—			—			—

Total other income (expense)		729			755			5,558			294			(1,175	)		13			(196	)

Income (loss) before non-controlling interests in income (loss) of consolidated entities and (provision) benefit for income taxes		15,175			11,599			7,765			3,434			(5,565	)		4,559			3,543

Non-controlling interests in income (loss) of consolidated entities		—			—			—			—			15,536			—			—

Income before provision for income taxes		15,175			11,599			7,765			3,434			9,971			4,559			3,543
(Provision) benefit for income taxes		(566	)		(657	)		321			(1,062	)		(2,653	)		(270	)		66

Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318		$	4,289		$	3,609


Selected statements of financial position data:

Total assets	$	45,262		$	33,079		$	29,964		$	37,719		$	49,212		$	40,454		$	28,592
Notes payable	$	4,809		$	2,957		$	7,120		$	8,855		$	5,938		$	4,362		$	2,463
Total liabilities	$	15,751		$	12,490		$	14,893		$	23,282		$	27,766		$	12,645		$	9,067
Redeemable partners’/members’ capital	$	85,177		$	45,619		$	34,219		$	83,377		$	95,595		$	80,919		$	57,758
Partners’/members’ deficit	$	(55,666	)	$	(25,030	)	$	(19,148	)	$	(68,940	)	$	(74,149	)	$	(53,110	)	$	(38,232	)


	Historical Silvercrest L.P.																					Pro Forma Silvercrest
	Years Ended December 31,															Three Months Ended March 31,						Year Ended December 31,	Three Months Ended March 31,
	2011			2010			2009			2008⁽¹⁾			2007⁽²⁾			2012			2011			2011	2012

Selected unaudited operating data:

Assets under management (in billions)⁽³⁾	$	10.1		$	9.2		$	8.8		$	7.8		$	10.1		$	11.1		$	9.9
Adjusted EBITDA⁽⁴⁾	$	10,839		$	9,068		$	6,449		$	7,107		$	14,153		$	3,447		$	2,686
Adjusted EBITDA margin⁽⁵⁾		25.3	%		24.6	%		19.8	%		16.5	%		25.5	%		29.0	%		26.7	%

(1)

(2)


Revenue	$	7,229
Expenses	$	570

The consolidation of the various Silvercrest Funds had no net effect on net income or members’ capital.

(3)	Reflected as of the last day of the period.

(4)

To provide investors with additional insight, promote transparency and allow for a more comprehensive understanding of the information used by management in its financial and operational decision-making, we supplement our consolidated financial statements presented on a GAAP basis with Adjusted EBITDA, a non-GAAP financial measure of earnings. EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishments of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. Our management uses Adjusted EBITDA as a financial measure to evaluate the profitability and efficiency of our business model. We use this non-GAAP financial measure to assess the strength of the underlying operations of our business. These adjustments, and the non-GAAP financial measure that is derived from them, provide supplemental information to analyze our operations between periods and over time. Investors should consider our non-GAAP financial measure in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP.

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Years Ended December 31,															Three Months Ended March 31,
	2011			2010			2009			2008			2007			2012			2011
	(in thousands)
Reconciliation of non-GAAP financial measures:

Net income	$	14,609		$	10,942		$	8,086		$	2,372		$	7,318		$	4,289		$	3,609
Provision (benefit) for income taxes		566			657			(321	)		1,062			2,653			270			(66	)
Interest expense		164			241			467			613			705			64			39
Interest income		(187	)		(231	)		(213	)		(358	)		(516	)		(45	)		(46	)
Partner/member incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(7,171	)		(7,215	)		(2,027	)		(1,575	)
Non-performance fee related equity method (gains) losses		—			—			—			247			—			—			—
Depreciation and amortization		1,469			1,379			1,531			1,539			1,206			475			315
Equity-based compensation		1,060			583			—			—			130			431			206
Other adjustments (B)		1,933			670			(460	)		8,803			9,872			(10	)		204


Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	7,107		$	14,153		$	3,447		$	2,686

(A)	Partner/member incentive allocations are treated as distributions of net income and are recorded when paid.

(B)	Other adjustments consist of the following:


	Year Ended December 31,														Three Months Ended March 31,
	2011		2010			2009			2008			2007			2012			2011

Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—		$	—		$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)		—			(461	)		—			—
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)		—			—			—			—
Write-off of LongChamp revenue (b)		—		64			557			—			—			—			—
Loss on sub-lease (c)		150		—			—			—			—			(21	)		213
Lease abandonment charge (d)		—		—			1,154			—			—			—			—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691			9,599			9,402			—			—
Client reimbursement		—		—			1,132			—			—			—			—
Fund redemption costs (f)		827		—			—			—			—			9			—
IPO professional fees		578		—			—			—			—			2			—
Milbank acquisition costs (g)		222		—			—			—			—			—			—
Severance		69		100			—			—			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		(796	)		931			—			—
Other (i)		53		—			—			—			—			—			(9	)


Total other adjustments	$	1,933	$	670		$	(460	)	$	8,803		$	9,872		$	(10	)	$	204

(a)	Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

(c)	Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)	Reflects a charge for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and subleased through September 29, 2017.

(e)	Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)	Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)	Reflects the legal and accounting fees associated with the closing of the Milbank acquisition that were expensed in 2011.

(h)	Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)	Represents professional fees related to the Milbank acquisition and a Silvercrest fund.

(5)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

The following unaudited consolidated pro forma financial statements present the consolidated results of operations and financial condition of Silvercrest and its predecessor, Silvercrest L.P., assuming that all of the transactions described in the four bullet points below had been completed as of January 1, 2011 with respect to the unaudited pro forma consolidated statement of operations data for the three months and year ended March 31, 2012 and December 31, 2011, and as of March 31, 2012 and December 31, 2011 with respect to the unaudited pro forma consolidated statement of financial condition data as of March 31, 2012 and December 31, 2011, respectively. The pro forma adjustments are based on available information and upon assumptions that our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions and this offering on the historical financial information of Silvercrest L.P.

The pro forma adjustments principally give effect to the following transactions:

•

the reorganization described in “The Reorganization and Our Holding Company Structure”, which will occur immediately prior to the consummation of this offering, including our agreement to return 85% of the tax benefits that we receive as a result of our ability to step up our tax basis in the partnership units of Silvercrest L.P. that we acquire from our partners;

•

the sale of shares of our Class A common stock in this offering at an assumed offering price of $ per share (the midpoint of the price range set forth on the cover of this prospectus) and the application of the proceeds therefrom, after payment of assumed underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma adjustments for the acquisitions of Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC described above are not included in the unaudited pro forma consolidated statement of operations data and statement of financial condition data for the three months ended March 31, 2012 because the acquisition of Milbank Winthrop & Co., Inc. was completed on November 1, 2011 and the acquisition is already reflected in the unaudited financial statements of Silvercrest L.P. for the three months ended March 31, 2012 and the adjustments for MW Commodity Advisors, LLC are de minimis.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF DECEMBER 31, 2011


	Silvercrest L.P. Historical			Business Acquisition(1)			Silvercrest L.P. Including Business Acquisition			Offering Adjustments(2)	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Assets:
Cash and cash equivalents	$	7,354		$	3		$	7,357				(A),(C	)
Restricted certificates of deposit and escrow		1,130			—			1,130
Investments		1,128			—			1,128
Receivables, net		2,238			4			2,242
Due from Silvercrest Funds		2,043			—			2,043
Furniture, equipment and leasehold improvements, net		2,275			—			2,275
Goodwill		14,683			112			14,795
Intangible assets, net		13,810			—			13,810
Prepaid expenses and other assets		601			—			601				(A	)

Total assets	$	45,262		$	119		$	45,381		$				$


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit:
Accounts payable and accrued expenses	$	4,365		$	5		$	4,370
Accrued compensation		2,915			—			2,915
Notes payable		4,809			—			4,809
Deferred rent		3,287			—			3,287
Deferred tax and other liabilities		375			14			389				(A	)

Total liabilities		15,751			19			15,770


Redeemable partners’ capital		96,613			154			96,767				(B	)
Notes receivable from partners		(6,024	)		—			(6,024	)			(C	)

Total redeemable partners’ capital		90,589			154			90,743


Commitments and Contingencies:

Partners’ Capital:
Common stock												(A	)
Additional paid-in capital												(A	)
Partners’ capital		44,359						44,359				(A	)
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(105,437	)		(54	)		(105,491	)			(A	)

Total partners’ deficit		(61,078	)		(54	)		(61,132	)
Non-controlling interests												(A	)
Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	119		$	45,381		$				$

(1)

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION AS OF MARCH 31, 2012(1)


	Silvercrest L.P. Historical			Offering Adjustments(2)	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma
Assets:
Cash and cash equivalents	$	4,095				(A),(C	)
Restricted certificates of deposit and escrow		1,046
Investments		74
Receivables, net		2,148
Due from Silvercrest Funds		1,918
Furniture, equipment and leasehold improvements, net		2,167
Goodwill		14,683
Intangible assets, net		13,448
Prepaid expenses and other assets		875				(A	)

Total assets	$	40,454		$				$


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit:
Accounts payable and accrued expenses	$	3,667
Accrued compensation		1,176
Notes payable		4,362
Deferred rent		3,159
Deferred tax and other liabilities		281				(A	)

Total liabilities		12,645


Redeemable partners’ capital		86,148				(B	)
Notes receivable from partners		(5,229	)			(C	)

Total redeemable partners’ capital		80,919


Commitments and Contingencies:

Partners’ Capital:
Common stock						(A	)
Additional paid-in capital						(A	)
Partners’ capital		45,127				(A	)
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(98,237	)			(A	)

Total partners’ deficit		(53,110	)
Non-controlling interests						(A	)
Total liabilities, redeemable partners’ capital and partners’ deficit	$	40,454		$				$

(1)

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR DECEMBER 31, 2011


(in thousands)	Silvercrest L.P. Historical			Milbank Winthrop Business Acquisition¹			MW Commodity Business Acquisition¹			Silvercrest L.P. Including Business Acquisitions			Offering Adjustments	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma

Revenue:
Management and advisory fees	$	37,869		$	4,348		$	158		$	42,375
Performance fees and allocations		85			—			—			85
Family office services		4,833			387			—			5,220

Total revenue		42,787			4,735			158			47,680


Expenses:
Compensation and benefits		17,492			1,989			—			19,481
General and administrative		10,849			1,278			37			12,164

Total expenses		28,341			3,267			37			31,645


Income before other income (expenses)		14,446			1,468			121			16,035

Other income (expenses)
Loss on forgiveness of notes receivable		(34	)		—			—			(34	)
Interest income		187			1			—			188
Interest expense		(164	)		(132	)		—			(296	)
Other expense		(210	)		—			—			(210	)
Equity income from investments		950			—			—			950

Total other income (expenses)		729			(131	)		—			598


Income before provision for income taxes		15,175			1,337			121			16,633
Provision for income taxes		(566	)		(49	)		(5	)		(620	)			(D	)

Net income		14,609			1,288			116			16,013
Less: net income attributable to non-controlling interests		—			—			—			—				(E	)

Net income attributable to Silvercrest	$	14,609		$	1,288		$	116		$	16,013		$				$


Net income per share:
Basic																	$

Diluted																	$


Weighted average shares outstanding:
Basic																	$

Diluted																	$

(1)	Silvercrest L.P. consolidates the statements of operations of Milbank Winthrop & Co., Inc. and MW Commodity Advisors, LLC effective on the date of the closing of these acquisitions, and has accounted for them as business combinations using the acquisition method of accounting.

(2) Offering Adjustments:

(A) From this offering, we expect to receive net proceeds from our sale of Class A common stock of approximately $ million, based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus). We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B Units will be determined by the public offering price of our Class A common stock in this offering, less the per share amount of offering expenses incurred by us. We intend to use the remaining net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions. We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. This liability of $ million is included in pro forma other liabilities. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until (i) all such tax benefits have been utilized or expired, (ii) the tax receivable agreement with a principal automatically terminates due to a breach by such principal of his or her non-solicitation covenants with our company, or (iii) the termination by our company of a principal with cause, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement.


Silvercrest L.P. excess of liabilities, redeemable partners’ capital and partners’ capital over assets		$
Deferred tax asset		$
Tax receivable liability to selling partners		$

Total		$

Common stock		$
Additional paid-in capital		$

Total		$

(C) Represents the satisfaction of partner notes receivable related to three of our named executive officers. These notes were satisfied on [date to be included], 2012.

(E) Represents the non-controlling interest allocation of % (assuming that the underwriters do not exercise the overallotment option) of the income of Silvercrest to Silvercrest L.P.

Business acquisitions:


(in thousands)	MW Commodity Advisors, LLC Historical		Pro Forma Adjustments			Pro Forma Note			MW Commodity Advisors, LLC Pro Forma

Assets:
Cash and cash equivalents	$	3	$	—					$	3
Receivables, net		4		—						4
Goodwill		—		112			(1	)		112
MW Commodity Strategies, L.P.:										—
Cash and cash equivalents		141		(141	)		(2	)		—
Investments in Funds		29,920		(29,920	)		(2	)		—
Prepaid expenses and other assets		—		—						—

Total assets	$	30,068	$	(29,949	)				$	119


Liabilities, Redeemable Members’ Capital and Members’ Deficit:
Accounts payable and accrued expenses	$	5	$	—					$	5
Deferred tax and other liabilities		—		14			(3	)		14
MW Commodity Strategies, L.P.:
Accrued expenses		27		(27	)		(2	)		—
Other liabilities		21		(21	)		(2	)		—
Redemptions payable		195		(195	)		(2	)		—

Total liabilities		248		(229	)					19


Redeemable members’ capital		—		100			(4	)		100
		—		54			(5	)		54

Total Redeemable members’ capital		—		154						154


Commitments and Contingencies:

Member’s Equity:
Member’s equity		71		(71	)		(6	)		—
Excess of liabilities, redeemable members’ capital and members’ capital over assets		—		(54	)		(5	)		(54	)

Total MW Commodity Advisors, LLC Member’s Equity		71		(125	)		(2	)		(54	)

Minority interests in MW Commodity Strategies, L.P		29,749		(29,749	)					—

Total member’s equity (deficit)		29,820		(29,874	)					(54	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	30,068	$	(29,949	)				$	119


(in thousands)	MW Commodity Advisors, LLC Historical Twelve Months Ended December 31, 2011		Pro Forma Adjustments		Pro Forma Note			MW Commodity Advisors, LLC Pro Forma Twelve Months Ended December 31, 2011
Revenue:
Investment advisory fees	$	—	$	158		(7	)	$	158
MW Commodity Strategies, L.P.:
Interest		—		—					—

Total revenue		—		158					158


Expenses:
General and administrative		37		—					37


(in thousands)	MW Commodity Advisors, LLC Historical Twelve Months Ended December 31, 2011			Pro Forma Adjustments			Pro Forma Note			MW Commodity Advisors, LLC Pro Forma Twelve Months Ended December 31, 2011
MW Commodity Strategies, L.P.:											—
General and administrative		58			(58	)		(2	)		—

Total expenses		95			(58	)					37


(Loss) income before net loss from MW Commodity Strategies, L.P.		(95	)		216						121

Net loss from MW Commodity Strategies, L.P.:
Unrealized loss on investments in funds, net		(2,287	)		2,287			(2	)		—
Realized loss on investments in Funds, net		(289	)		289			(2	)		—

Total net (loss) from investment activities of Consolidated Milbank Partnerships		(2,576	)		2,576						—


(Loss) income before provision for income taxes		(2,671	)		2,792						121
Provision for income taxes		—			(5	)		(8	)		(5	)

Net (loss) income		(2,671	)		2,787						116

Minority interest in MW Commodity Strategies, L.P.		2,793			(2,793	)		(2	)		—

Net income attributable to MW Commodity Advisors, LLC	$	122		$	(6	)				$	116

(1)	Represents the pro forma goodwill recorded upon the completion of the MW Commodity acquisition.

(2)

Upon closing of Silvercrest L.P.’s acquisition of the LLC interests of MW Commodity Advisors, LLC, the unaffiliated investors in MW Commodity Strategies, L.P. were granted rights to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent and investment adviser or equivalent of the partnership or to accelerate the liquidation date of that partnership in accordance with certain procedures. The granting of these rights resulted in the deconsolidation of MW Commodity Strategies, L.P. and in the accounting of Silvercrest L.P.’s interest in MW Commodity Strategies, L.P. under the equity method. These adjustments represent the adjustments to deconsolidate the assets of MW Commodity Strategies, L.P.

(3)	Pursuant to the purchase agreement to acquire LLC interests of MW Commodity Advisors, LLC, certain call rights were granted by Silvercrest L.P. to the former sole member of MW Commodity Advisors, LLC to repurchase the LLC interests subject to the following terms:

(i)

(ii)

(4)	Represents the estimated fair value of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(5)	Represents the adjustment to the redemption value at December 31, 2011 of the shares of Silvercrest L.P. and Silvercrest GP LLC issued in connection with the MW Commodity acquisition.

(6)	Represents the elimination of historical MW Commodity Advisors, LLC member’s equity of $71,000.

(7)	Represents management fees of $158,000 earned by MW Commodity Advisors, LLC from MW Commodity Strategies, L.P. which were eliminated in the historical consolidated statement of operations.

(8)	Represents the provision of income taxes for NYC Unincorporated Business Tax of $5,000. Silvercrest L.P. is a partnership for income tax purposes.


(in thousands)	Milbank Winthrop & Co., Inc. Historical Nine Months Ended September 30, 2011			Pro Forma Adjustments			Pro Forma Note			Milbank Winthrop & Co., Inc. Pro Forma Ten Months Ended October 31, 2011

Revenue:
Investment advisory fees	$	1,502		$	2,846			(1	)	$	4,348
Family office services		—			387			(2	)		387
Other income		1			—						1
Consolidated Milbank Partnerships:											—
Dividends		1,629			(1,629	)		(3	)		—
Interest		394			(394	)		(3	)		—

Total revenue		3,526			1,210						4,736


Expenses:
Compensation and benefits		3,780			(1,791	)		(4	)		1,989
General and administrative		589			689			(5	)		1,278
Interest		—			132			(6	)		132
Consolidated Milbank Partnerships:											—
Management and advisory fees		1,410			(1,410	)		(3	)		—
Interest and dividends		233			(233	)		(3	)		—
General and administrative		393			(393	)		(3	)		—

Total expenses		6,405			(3,006	)					3,399


Loss before net gains from Consolidated Milbank Partnerships.		(2,879	)		4,216			—			1,337

Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,988			(4,988	)		(3	)		—
Realized gain on investments in funds, net		767			(767	)		(3	)		—
Unrealized loss on investments in securities, net		(19,574	)		19,574			(3	)		—
Unrealized loss on investments in funds, net		(21,156	)		21,156			(3	)		—

Total net gain (loss) from investment activities of Consolidated Milbank Partnerships		(34,975	)		34,975						—


Loss before provision for income taxes		(37,854	)		39,191						1,337
Provision for income taxes		(330	)		281			(7	)		(49	)

Net loss		(38,184	)		39,472						1,288

Minority interest in Consolidated Milbank Partnerships		(38,507	)		38,507			(3	)		—

Net income attributable to Milbank Winthrop & Co., Inc.	$	323		$	965					$	1,288

(1)

(2)	Represents adjustment for $379,000 of fund administration services fees from the Milbank partnerships for the nine months ended September 30, 2011 that were eliminated in consolidation. Also, includes the adjustment for $8,000 of fund administration services fees earned in October 2011.

(3)

(4)	Upon the acquisition by Silvercrest L.P., the Milbank group is subject to a compensation cap equal to 42% of Milbank’s revenue. This adjustment represents the reduction to historical Milbank compensation and benefits expense to the compensation cap level.

(5)	Includes $520,000 of amortization expense for acquired intangible assets related to the Milbank acquisition, and additional estimated general and administrative expenses of $169,000 such as increased audit fees and referral fees to the former principal of Milbank that did not join Silvercrest L.P.

(6)	Pursuant to the terms of the asset purchase agreement between Milbank and Silvercrest L.P., Silvercrest L.P. issued a promissory note for $3.2 million to Milbank. Pro forma interest expense on the note is $132,000 for the ten months ended December 31, 2011.

(7)	Represents the elimination of Milbank’s historical corporate provision for income taxes of $330,000 and the provision of income taxes for NYC Unincorporated Business Tax of $49,000. Silvercrest L.P. is a partnership for income tax purposes.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2012(1)


(in thousands)	Silvercrest L.P. Historical			Offering Adjustments	Offering Adjustments Pro Forma Note			Silvercrest Asset Management Group Inc. Consolidated Pro Forma

Revenue:
Management and advisory fees	$	10,682
Performance fees and allocations		—
Family office services		1,198

Total revenue		11,880


Expenses:
Compensation and benefits		4,768
General and administrative		2,566

Total expenses		7,334


Income before other income		4,546

Other income
Other income		32
Interest income		45

Interest expense		(64	)

Total other income		13


Income before provision for income taxes		4,559
Provision for income taxes		(270	)			(D	)

Net income		4,289
Less: net income attributable to non-controlling interests		—				(E	)

Net income attributable to Silvercrest	$	4,289		$				$


Net income per share:
Basic								$

Diluted								$


Weighted average shares outstanding:
Basic

Diluted

(1)

On April 1, 2012, Silvercrest L.P. acquired 100% of the LLC interests of MW Commodity Advisors, LLC, which is the general partner of MW Commodity Strategies L.P., a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. We refer to this acquisition as the MW Acquisition. Due to the insignificance of the MW Acquisition, a consolidated statement of operations for MW Commodity Advisors, LLC for the three months ended March 31, 2012 is not included in this prospectus

(2) Offering Adjustments:

proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B units will be determined by the public offering price of our Class A common stock in this offering, less the amount of offering expenses incurred by us on a per share basis. We intend to use the remaining net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions. We will enter into a tax receivable agreement with current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize (or are deemed to realize in the case of an early termination payment by us, or a change in control, as discussed below) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. This liability of $ million is included in pro forma other liabilities. We expect to benefit from the remaining 15% of cash savings, if any, realized. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no increase in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. The term of the tax receivable agreement will commence upon consummation of this offering and will continue until (i) all such tax benefits have been utilized or expired, (ii) the tax receivable agreement with a principal automatically terminates due to a breach by such principal of his or her non-solicitation covenants with our company, or (iii) the termination by our company of a principal with cause, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed-upon value of payments remaining to be made under the agreement.

As illustrated below, the common stock and additional paid-in capital at March 31, 2012 reflected on the consolidated pro forma statement of financial condition were determined by combining the pro forma adjusted net excess of liabilities, redeemable partners’ capital and partners’ capital over assets of $ million, the $ million deferred tax asset that arises as a result of this offering and the $ million tax receivable liability to the selling partners of Silvercrest L.P., which also arises as a result of this offering.


Silvercrest L.P. excess of liabilities, redeemable partners’ capital and partners’ capital over assets		$
Deferred tax asset		$
Tax receivable liability to selling partners		$
Total		$

Common stock		$
Additional paid-in capital		$
Total		$

(C) Represents the satisfaction of partner notes receivable related to three of our named executive officers. These notes were satisfied on [date to be included], 2012.

(E) Represents the non-controlling interest allocation of % (assuming that the underwriters do not exercise the overallotment option) of the income of Silvercrest to Silvercrest L.P.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and endowments, foundations and other institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking a comprehensive oversight of their financial affairs. During the three months ended March 31, 2012, our assets under management grew 9.9%, from $10.1 billion to $11.1 billion. During the twelve months ended December 31, 2011, our assets under management grew 9.8%, from $9.2 billion to $10.1 billion.

As part of the reorganization of our company occurring in connection with this offering, Silvercrest will become the general partner of Silvercrest, L.P, our operating company. In addition, the partnership units of all continuing partners of Silvercrest L.P. will be reclassified as Class B units that have equal economic rights to our shares of Class A common stock of Silvercrest. After giving effect to the reorganization described above, we will hold approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters exercise in full their over-allotment option). The partners in Silvercrest L.P. following this offering, consisting of 37 of our current employees, will collectively hold the remaining approximately % of the partnership interests in Silvercrest L.P. (or approximately % if the underwriters in full exercise their over-allotment option). Net profits and net losses of Silvercrest L.P. will be allocated, and distributions from Silvercrest L.P. will be made, to its current partners pro rata in accordance with their respective partnership units. For more information on our reorganization, see “The Reorganization and Our Holding Company Structure.”

The historical results of operations discussed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are those of Silvercrest L.P. and its subsidiaries. After the completion of the reorganization, as the general partner of Silvercrest L.P., we will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ collective % partnership interest in Silvercrest L.P. immediately after the reorganization and this offering (or approximately % if the underwriters exercise in full their over-allotment option), we will reflect the interests of these employees as a non-controlling interest in our consolidated financial statements. As a result, our net income, after amounts attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or approximately % if the underwriters exercise in full their over-allotment option), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or approximately % if the underwriters exercise in full their over-allotment option). For more information on the pro forma impact of our reorganization, see “Unaudited Pro Forma Financial Information.”

Key Performance Indicators

When we review our performance, we focus on the indicators described below:


	For the year ended December 31,									For the Three Months Ended March 31,
(in thousands except as indicated)	2011			2010			2009			2012			2011

Revenue	$	42,787		$	36,831		$	32,534		$	11,880		$	10,065
Income before other income (expense)	$	14,446		$	10,844		$	2,207		$	4,546		$	3,739
Net Income	$	14,609		$	10,942		$	8,086		$	4,289		$	3,609
Adjusted EBITDA⁽¹⁾	$	10,839		$	9,068		$	6,449		$	3,447		$	2,686
Adjusted EBITDA margin⁽²⁾		25.3	%		24.6	%		19.8	%		29.0	%		26.7	%
Assets under management at period end (in billions)	$	10.1		$	9.2		$	8.8		$	11.1		$	9.9
Average assets under management (in billions)⁽³⁾⁽⁴⁾	$	9.7		$	9.0		$	8.3		$	10.6		$	9.6

(1)

EBITDA represents net income before income tax expense, interest income, interest expense, depreciation and amortization. We define Adjusted EBITDA as EBITDA without giving effect to professional fees associated with acquisitions or financing transactions, losses on forgiveness of notes receivable from our principals, gains on extinguishments of debt or other obligations related to acquisitions, impairment charges and losses on disposals or abandonment of assets and leaseholds, client reimbursements and fund redemption costs, severance and other similar expenses, but including partner incentive allocations as an expense. See “Selected Historical Financial Data” for a further explanation of Adjusted EBITDA and its reconciliation to net income on a basis consistent with GAAP.

(2)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

(3)	We have computed average assets under management by averaging assets under management at the beginning of the applicable period and assets under management at the end of the applicable period.

(4)	We have computed average assets under management by averaging quarter-end assets under management for the applicable period.

Revenue

strategies and the investment performance of our clients’ accounts. In order to increase our assets under management and expand our business, we must develop and market investment strategies that suit the investment needs of our target clients and provide attractive returns over the long term. Our ability to continue to attract clients will depend on a variety of factors including, among others:

•

our ability to educate our target clients about our classic value investment strategies and provide them with exceptional client service;

•

the relative investment performance of our investment strategies, as compared to competing products and market indices;

•

competitive conditions in the investment management and broader financial services sectors;

•

investor sentiment and confidence; and

•

our decision to close strategies when we deem it to be in the best interests of our clients.

Our total average management fee was 0.39% and 0.36% in 2011 and 2010, respectively. Advisory fees are also adjusted for any cash flows into or out of a portfolio, where the cash flow represents greater than 10% of the value of the portfolio. Silvercrest L.P. has authority to take fees directly from external custodian accounts of its separately-managed accounts.

Our advisory fees may fluctuate based on a number of factors, including the following:

•

changes in assets under management due to appreciation or depreciation of our investment portfolios, and the levels of the contribution and withdrawal of assets by new and existing clients;

•

allocation of assets under management among our investment strategies, which have different fee schedules;

•

allocation of assets under management between separately-managed accounts and advised funds, for which we generally earn lower overall advisory fees; and

•

the level of our performance with respect to accounts and funds on which we are paid incentive fees.

Our family office services capabilities enable us to provide comprehensive and integrated services to our clients. Our dedicated group of tax and financial planning professionals provide financial planning, tax planning and preparation, partnership accounting and fund administration and consolidated wealth reporting among other services. Family office services income fluctuates based on both the number of clients for whom we perform these services and the level of agreed-upon fees, most of which are flat fees. We have experienced a steady increase in family office service fees over the past few years as more of our separately managed accounts relationships have taken advantage of these services. Furthermore, we have been successful in attracting new clients who have engaged us primarily for our family office services.

Expenses

•

the level of management fees from funds that utilize sub-advisors will affect the amount of sub-advisory fees.

We expect our professional services fees to increase after this offering as a result of being a public company.

Compensation and Benefits Expense

The components of our compensation expenses for the three years ended December 31, 2011 and the three months ended March 31, 2012 and 2011 are as follows:


	For the Year Ended December 31,						For the Three Months Ended March 31,
(in thousands)	2011		2010		2009		2012		2011

Cash compensation and benefits	$	16,495	$	15,936	$	15,630	$	4,331	$	3,960
Distributions on liability awards (1)		20		9		—		6		3
Non-cash equity-based compensation expense		977		583		—		431		206

Total compensation expense	$	17,492	$	16,528	$	15,630	$	4,768	$	4,169

(1)	Cash distributions on the portion of unvested deferred equity units that are subject to forfeiture are expensed when paid. Unvested deferred equity units are classified as liability awards

On February 29, 2012, February 28, 2011 and February 24, 2010, Silvercrest L.P. and Silvercrest GP LLC, our predecessor, granted equity-based compensation awards to certain of their principals based on the fair value of the equity interests of Silvercrest L.P. and Silvercrest GP LLC. Each grant includes a deferred equity unit and performance unit, subject to forfeiture and acceleration of vesting. Each 100 deferred equity units represent the unsecured right to receive one unit of Silvercrest GP LLC and 99 units of Silvercrest L.P., subject to vesting over a four year period beginning on the first-year anniversary of the date of grant. Each deferred equity unit, whether vested or unvested, entitles the holder to receive distributions from Silvercrest L.P. and Silvercrest GP LLC as if such holder held such unit. Upon each vesting date, a holder may receive the number of units vested or the equivalent cash value and units, but in no event may the holder receive more than 50% of the aggregate value in cash. To the extent that holders elect to receive up to 50% of the aggregate value in cash, we could have less cash to utilize. We have accounted for the distributions on the portion of the deferred equity units that are subject to forfeiture as compensation expense. Equity-based compensation expense will be recognized on the February 29, 2012, February 28, 2011 and February 24, 2010 deferred equity unit and performance unit awards through February 29, 2016, February 28, 2015 and February 24, 2014, respectively.

General and Administrative Expenses

Other Income

Minority and Non-Controlling Interests

After our reorganization, we will be the general partner of Silvercrest L.P. and will control its business and affairs and, therefore, consolidate its financial results with ours. In light of our employees’ expected % interest in Silvercrest L.P. (or % if the overallotment option is exercised in full) immediately after the consummation of the reorganization and this offering, we will reflect their partnership interests as a non-controlling interest in our consolidated financial statements. As a result, immediately after the consummation of this offering, our net income, after income attributable to non-controlling interests, will represent % of Silvercrest L.P.’s net income (or % if the overallotment option is exercised in full), and similarly, outstanding shares of our Class A common stock will represent % of the outstanding partnership units of Silvercrest L.P. (or % if the overallotment option is exercised in full).

Provision for Income Tax

Significant Transactions

Milbank

consideration was $1.7 million based on the likelihood that the financial and performance targets included in the asset purchase agreement will be achieved. Under the terms of the asset purchase agreement, Milbank is entitled to receive six earnout payments for the following periods: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA generated by the Milbank business (as defined in the asset purchase agreement) during the relevant earnout period. The amount of the earnout payment will vary depending on the level of EBITDA that is generated in each respective earnout period. Milbank revenue and operating expenses for the two months ended December 31, 2011 were $0.9 million and $0.5 million, respectively.

LongChamp

Operating Results

Revenue

Our revenues for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009 are set forth below:


(in thousands)	For the Three Months Ended March 31,
	2012		2011		2012 vs. 2011 ($)			2012 vs. 2011 (%)

Management and advisory fees	$	10,682	$	8,970	$	1,712			19.1	%
Performance fees and allocations		—		18		(18	)		-100.0	%
Family office services		1,198		1,077		121			11.2	%

Total revenue	$	11,880	$	10,065	$	1,815			18.0	%


(in thousands)	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)			2011 vs. 2010 (%)

Management and advisory fees	$	37,869	$	32,442	$	5,427			16.7	%
Performance fees and allocations		85		548		(463	)		-84.5	%
Family office services		4,833		3,841		992			25.8	%

Total revenue	$	42,787	$	36,831	$	5,956			16.2	%


(in thousands)	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)		2010 vs. 2009 (%)

Management and advisory fees	$	32,442	$	29,341	$	3,101		10.6	%
Performance fees and allocations		548		96		452		470.8	%
Family office services		3,841		3,097		744		24.0	%

Total revenue	$	36,831	$	32,534	$	4,297		13.2	%

The growth in our assets under management during the quarters ended March 31, 2011 and 2012 and from December 31, 2009 to December 31, 2011 and is described below:


(in billions)	Total Assets Under Management

As of December 31, 2010	$	9.2
Net new account flows		0.2
Net client cash flows ⁽¹⁾		0.1
Market appreciation		0.4

As of March 31, 2011	$	9.9	⁽²⁾


As of December 31, 2011	$	10.1
Net new account flows		0.3
Net client cash flows⁽¹⁾		—
Market appreciation		0.7

As of March 31, 2012	$	11.1	⁽²⁾


As of January 1, 2009	$	7.8
Net new account flows		(0.4	)
Net client withdrawals ⁽¹⁾		(0.8	)
Market appreciation		2.2

As of December 31, 2009	$	8.8
Net new account flows		0.4
Net client withdrawals ⁽¹⁾		(0.4	)
Market appreciation		0.4

As of December 31, 2010		9.2
Net new account flows		0.8
Net client cash flows⁽¹⁾		0.1
Market appreciation		—

As of December 31, 2011	$	10.1	⁽²⁾⁽³⁾

(1)	Represents periodic flows related to existing accounts.

(2)	Consists of $6.6, $7.7 and $7.0 of discretionary assets under management and $3.3, $3.3 and $3.1 of non-discretionary assets under management as of March 31, 2011, March 31, 2012 and December 31, 2011, respectively.

(3)	Less than 5% of assets under management generate performance fees.

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

Our total revenue increased by $1.8 million, or 18.0%, to $11.9 million for the three months ended March 31, 2012, from $10.1 million for the three months ended March 31, 2011. This increase was driven primarily by growth in our management and advisory fees as a result of increased assets under management.

Assets under management increased by $1.0 billion, or 9.9%, to $11.1 billion at March 31, 2012 from $10.1 billion at December 31, 2011. Assets under management increased by $0.7 billion, or 7.6%, to $9.9 billion at March 31, 2011 from $9.2 billion at December 31, 2010.

Contributing to the growth in assets under management for the three months ended March 31, 2012 was $0.3 billion of net asset inflows. Our growth in assets under management for the three months ended March 31, 2012 was primarily attributable to an increase of $0.7 billion in separately managed accounts and $0.2 billion in non-discretionary assets. As of March 31, 2012, the composition of our assets under management was 70% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 30% in non-discretionary assets which represents assets on which we provide portfolio reporting but do not have investment discretion.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Assets under management increased by $0.9 billion, or 9.8%, to $10.1 billion at December 31, 2011 from $9.2 billion at December 31, 2010. Contributing to the growth in assets under management was $0.8 billion of net asset inflows. Our growth in assets under management in 2011 was primarily attributable to an increase of $0.5 billion in separately managed accounts and $0.2 billion in proprietary and sub-advised funds. As of December 31, 2011, the composition of our assets under management was 70% in discretionary assets, which includes both separately managed accounts and proprietary and sub-advised funds, and 30% in non-discretionary assets which represent assets on which we provide portfolio reporting but do not have investment discretion.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Assets under management increased by $0.4 billion, or 4.5%, to $9.2 billion at December 31, 2010 from $8.8 billion at December 31, 2009. Contributing to the growth in assets under management was $0.4 billion in market appreciation. Our growth in assets under management in 2010 was attributable to an increase of $0.3 billion in discretionary separately managed accounts and $0.2 billion in non-discretionary assets. As of December 31, 2010, the composition of our assets under management was 69% in discretionary assets.

Expenses

Our expenses for the three months ended March 31, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009 are set forth below:


(in thousands)	For the Three Months Ended March 31,
	2012		2011		2012 vs. 2011 ($)		2012 vs. 2011 (%)

Compensation and benefits	$	4,768	$	4,169	$	599		14.4	%
General and administrative		2,566		2,157		409		19.0	%

Total expenses	$	7,334	$	6,326	$	1,008		15.9	%


(in thousands)	For the Year Ended December 31,
	2011		2010		2011 vs. 2010 ($)		2011 vs. 2010 (%)

Compensation and benefits	$	17,492	$	16,528	$	964		5.8	%
General and administrative		10,849		9,459		1,390		14.7	%

Total expenses	$	28,341	$	25,987	$	2,354		9.1	%


(in thousands)	For the Year Ended December 31,
	2010		2009		2010 vs. 2009 ($)			2010 vs. 2009 (%)

Compensation and benefits	$	16,528	$	15,630	$	898			5.7	%
General and administrative		9,459		13,006		(3,547	)		-27.3	%
Impairment charges		—		1,691		(1,691	)		-100.0	%

Total expenses	$	25,987	$	30,327	$	(4,340	)		-14.3	%

Our expenses are driven primarily by our compensation costs. The table included in “—Compensation and Benefits Expense” describes the components of our compensation expense for the three months ended March 31, 2012 and 2011 and the three years ended December 31, 2011. Other expenses, such as rent, professional service fees, data-related costs, and sub-advisory fees incurred are included in our general and administrative expenses.

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

Total expenses increased by $1.0 million, or 15.9%, to $7.3 million for the three months ended March 31, 2012 from $6.3 million for the three months ended March 31, 2011. This increase was primarily attributable to increases in compensation and benefits expense and general and administrative expenses of $0.6 million and $0.4 million, respectively.

Compensation and benefits expense increased by $0.6 million, or 14.4%, to $4.8 million for the three months ended March 31, 2012 from $4.2 million for the three months ended March 31, 2011. The increase was primarily attributable to an increase in salaries of $0.3 million as a result of both merit increases and increased headcount primarily as a result of the Milbank acquisition, increased incentive compensation expense of $0.1 million, and increased equity-based compensation expense of $0.2 million due to the grant of additional deferred equity units to employees,

General and administrative expenses increased by $0.4 million, or 19.0%, to $2.6 million for the three months ended March 31, 2012 from $2.2 million for the three months ended March 31, 2011. This increase was primarily due to an increase in depreciation and amortization expense of $0.2 million due to amortization of intangible assets related to Milbank, a $0.1 million increase in costs related to the development of our portfolio management system and investment research and pricing subscriptions, and a $0.1 million increase in professional fees including acquisition transactions.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Other Income (Expense)


(in thousands)	For the Three Months Ended March 31,
	2012			2011			2012 vs. 2011 ($)			2012 vs. 2011 (%)

Other income (expense)	$	32		$	(203	)	$	235			-115.8	%
Interest income		45			46			(1	)		-2.2	%
Interest expense		(64	)		(39	)		(25	)		64.1	%

Total other income (expense)	$	13		$	(196	)	$	209			-106.6	%


(in thousands)	For the Year Ended December 31,
	2011			2010			2011 vs. 2010 ($)			2011 vs. 2010 (%)

Loss on forgiveness of notes receivable	$	(34	)	$	(508	)	$	474			-93.3	%
Interest income		187			231			(44	)		-19.0	%
Interest expense		(164	)		(241	)		77			-32.0	%
Equity income from investments		950			1,241			(291	)		-23.4	%
Other		(210	)		32			(242	)		-756.3	%

Total other income (expense)	$	729		$	755		$	(26	)		-3.4	%


(in thousands)	For the Year Ended December 31,
	2010			2009			2010 vs. 2009 ($)			2010 vs. 2009 (%)

Gain on extinguishment of debt	$	—		$	3,934		$	(3,934	)		-100.0	%
Gain on settlement with former LGI shareholders		—			1,470			(1,470	)		-100.0	%
Loss on forgiveness of notes receivable		(508	)		—			(508	)		—
Interest income		231			213			18			8.5	%
Interest expense		(241	)		(467	)		226			-48.4	%
Equity income from investments		1,241			274			967			352.9	%
Other		32			134			(102	)		-76.1	%

Total other income (expense)	$	755		$	5,558		$	(4,803	)		-86.4	%

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

Other income (expense) increased by $209 thousand to $13 thousand for the three months ended March 31, 2012 from ($196) thousand for the three months ended March 31, 2011. The increase in other income (expense) is attributable to $0.2 million loss on a sub-lease charge related to a new sub-tenant on our leased space in January 2011. Interest expense increased by $25 thousand to $64 thousand for the three months ended March 31, 2012 from $39 thousand for the three months ended March 31, 2011, primarily due to an increase in notes payable issued in connection with the acquisition of Milbank.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Provision for Income Taxes

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

The (provision) benefit for income taxes was ($0.3) million and $0.1 million for the three months ended March 31, 2012 and March 31, 2011, respectively. The change was a result of an increase in taxable income. Our (provision) benefit for income taxes as a percentage of income before (provision) benefit for income taxes for the three months ended March 31, 2012 was 5.9% compared to 1.9% for the three months ended March 31, 2011.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Liquidity and Capital Resources

The following table set forth certain key financial data relating to our liquidity and capital resources as of December 31, 2011, 2010 and 2009 and March 31, 2012 and 2011.


(in thousands)	Years Ended December 31,						Three Months Ended March 31,
	2011		2010		2009		2012		2011

Cash and cash equivalents	$	7,354	$	7,025	$	5,327	$	4,095	$	3,834
Accounts receivable	$	2,238	$	2,247	$	1,213	$	2,148	$	2,258
Due from Silvercrest Funds	$	2,043	$	1,255	$	953	$	1,918	$	1,060

Our purchase of Class B units in Silvercrest L.P. concurrently with this offering, and the future exchanges of Class B units of Silvercrest L.P., are expected to result in increases in our share of the tax basis of the tangible and intangible assets of Silvercrest L.P. at the time of our acquisition and these future exchanges, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to us. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of tax that we would otherwise be required to pay in the future. We will enter into a tax receivable agreement with current members of Silvercrest L.P. and any future holders of Class B units pursuant to which we will agree to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually realize as a result of these increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments thereunder. While the actual increase in tax basis, as well as the amount and timing of any payments under this agreement, will vary depending upon a number of factors, including the timing of exchanges, the price of shares of our Class A common stock at the time of the exchange, the extent to which such exchanges are taxable, the amount and timing of our income and the tax rates then applicable, we expect that as a result of the size of the increases in the tax basis of our tangible and intangible assets, the payments that we may make under the tax receivable agreement likely will be substantial. Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the

increased depreciation and amortization of our assets, we expect that future payments to the selling principals of Silvercrest L.P. in respect of our purchase of Class B units from them will aggregate $ million and range from approximately $ million to $ million per year over the next 15 years. Future payments to current principals of Silvercrest L.P. and future holders of Class B units in respect of subsequent exchanges would be in addition to these amounts and are expected to be substantial.

Cash Flows

The following table sets forth our cash flows for the years ended December 31, 2011, 2010 and 2009 and the three months ended March 31, 2012 and 2011. Operating activities consist of net income subject to adjustments for changes in operating assets and liabilities, depreciation, and equity-based compensation expense. Investing activities consist primarily of acquiring and selling property and equipment, distributions received from investments in investment funds, and cash paid as part of business acquisitions. Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes and earnout payments related to business acquisitions.


(in thousands)	Years Ended December 31,									For the Three Months Ended March 31,
	2011			2010			2009			2012			2011

Net cash provided by operating activities	$	15,401		$	11,419		$	8,311		$	4,502		$	2,798
Net cash (used in) provided by investing activities		(3,813	)		610			(24	)		176			11
Net cash used in financing activities		(11,259	)		(10,331	)		(9,335	)		(7,937	)		(6,002	)

Net change in cash	$	329		$	1,698		$	(1,048	)	$	(3,259	)	$	(3,193	)

Operating Activities

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

Operating activities provided $4.5 million and $2.8 million for the three months ended March 31, 2012 and 2011, respectively. This difference primarily is the result of an increase in net income of $0.7 million for the three months ended March 31, 2012, and increased working capital primarily resulting from the change in accrued compensation of $0.6 million for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

Investing Activities

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

For the three months ended March 31, 2012, investing activities provided $0.2 million primarily as a result of the sale of securities.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Year Ended December 31, 2010 versus Year Ended December 31, 2009

For the year ended December 31, 2010, investing activities provided $0.6 million primarily as a result of the funding of a sub-tenant escrow account.

Financing Activities

Three Months Ended March 31, 2012 versus Three Months Ended March 31, 2011

For the three months ended March 31, 2012 and 2011, financing activities used $7.9 million, and $6.0 million, respectively. The increase in net cash used in financing activities from 2011 to 2012 was primarily the result of higher partner incentive allocations paid in 2012 in addition to higher tax distributions paid in the first quarter of 2012 as compared to the same period in 2011. Incentive allocations and tax distributions increased directly as a result of increased profitability and operating cash flow.

Year Ended December 31, 2011 versus Year Ended December 31, 2010

Financing activities consist primarily of contributions from partners, distributions to partners, the issuance and payments on partner notes, and earnout payments related to business acquisitions. For the years ended December 31, 2011 and 2010, financing activities used $11.3 million, and $10.3 million, respectively. The increase in net cash used in financing activities from 2010 to 2011 was the result of an increase in earnout payments of $0.4 million related to the Marathon acquisition and increased distributions of $4.1 million made to principals as a result of higher partner incentive allocations paid in 2011 in addition to higher tax distributions paid in the first quarter of 2011 as compared to the same period in 2010. Incentive allocations and tax distributions increased directly as a result of increased profitability and operating cash flow. These increases were partially offset by lower payments of $2.9 million on notes payable due to the payment in full in 2011 of the note issued in connection with the Marathon acquisition, and the payment in full during 2010 of notes issued to former partners by us for the redemption of units under which we exercised our call right upon their termination of employment. In addition, cash received from principals on notes receivable was $1.1 million for the year ended December 31, 2011 compared to $0.2 million for the year ended December 31, 2010.

Year Ended December 31, 2010 versus Year Ended December 31, 2009

As of March 31, 2012, $3.2 million remains outstanding on the notes payable related to the Milbank acquisition. Accrued but unpaid interest on the notes payable related to the Milbank acquisition was approximately $0.1 million as of March 31, 2012.

As of March 31, 2012, $1.1 million remains outstanding on the notes issued to former principals. Accrued but unpaid interest on these notes issued to former principals was approximately $11 thousand as of March 31, 2012. The principal amounts outstanding under these notes bear interest at the U.S. Prime Rate plus one percent in effect at the time payments are due.

Contractual Obligations

The following table sets forth information regarding our consolidated contractual obligations as of December 31, 2011.


	Payments Due by Period
	Less Than								More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
	(in thousands)
Operating leases	$	19,096	$	3,448	$	6,687	$	6,532	$	2,429
Capital leases		55		21		34		—		—
Notes payable		4,739		1,469		2,706		564		—

Total	$	23,890	$	4,938	$	9,427	$	7,096	$	2,429

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2012, December 31, 2010 or December 31, 2009.

Critical Accounting Policies and Estimates

Business Combinations

Goodwill and Intangible Assets

Goodwill consists of the excess of the purchase price over the fair value of identifiable net assets of businesses acquired. Goodwill is not amortized and is evaluated for impairment using a two-step process that is performed at least annually, or whenever events or circumstances indicate that impairment may have occurred. During 2011, we changed our annual impairment test date from December 31 to October 1, effective October 1, 2011. The change was made in anticipation of our company having a requirement to issue its annual financial statements on an accelerated basis as compared to prior years. The change had no impact on our results of operations or any other financial statement line item. The first step is a comparison of the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, a second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied fair value of the goodwill. If the carrying amount of the goodwill is greater than the implied value, an impairment loss is recognized for the difference. The implied value of the goodwill is determined as of the test date by performing a purchase price allocation, as if the reporting unit had just been acquired, using currently estimated fair values of the individual assets and liabilities of the reporting unit, together with an estimate of the fair value of the reporting unit taken as a whole. The estimate of the fair value of the reporting unit is based upon information available regarding prices of similar groups of assets, or other valuation techniques including present value techniques based upon estimates of future cash flows. Our reporting unit is not at risk of failing step one as its estimated fair value determined during the company’s annual goodwill impairment test for 2011 exceeded its carrying amount by over 400%.

Revenue Recognition

•

The table below summarizes the approximate amount of assets under management for the periods indicated for which fair value is measured based on Level 1, Level 2 and Level 3 inputs.


	Level 1		Level 2		Level 3		Total
	(in billions)

December 31, 2011 AUM	$	7.5	$	1.1	$	1.5	$	10.1
March 31, 2012 AUM	$	8.3	$	1.2	$	1.5	$	11.1

The average value of our assets under management for the three months ended March 31, 2012 was approximately $10.6 billion. Assuming a 10% increase or decrease in our average assets under management and the change being proportionately distributed over all our products, the value would increase or decrease by approximately $1.1 billion, which would cause an annualized increase or decrease in revenues of approximately $4.3 million at our current weighted average fee rate of 0.40%.

Equity-Based Compensation

assumptions may affect the timing of the total amount of expense recognized over the vesting period. The service period is the period over which the employee performs the related services, which is normally the same as the vesting period. Equity-based awards that do not require future service are expensed immediately. Equity-based awards that have the potential to be settled in cash at the election of the employee or that pertain to redeemable partnership units are classified as liabilities, or Liability Awards, and are adjusted to fair value at the end of each reporting period. Distributions associated with Liability Awards not expected to vest are accounted for as part of compensation expense in our Consolidated Statements of Operations.

In order to determine the fair value of our limited partnership interests underlying equity-based compensation awards issued prior to the offering described in this prospectus, we first determined the market value of our invested capital, or MVIC. Our MVIC was estimated using a combination of two generally accepted approaches: the income approach using the discounted cash flow method, or DCF, and the market-based approach using the comparable company method. The DCF method estimates enterprise value based on the estimated present value of future net cash flows the business is expected to generate over a forecasted period and an estimate of the present value of cash flows beyond that period, which is referred to as terminal value. The estimated present value is calculated using our weighted average cost of capital, which accounts for the time value of money and the appropriate degree of risks inherent in the business. The market-based approach considers multiples of financial metrics based trading multiples of a selected peer group of companies. These multiples are then applied to our financial metrics to derive a range of indicated values. Once calculated, the discounted cash flow and comparable company methods are then weighted. Estimates of the volatility of our limited partnership interests were based on available information regarding the volatility of common stock of comparable, publicly traded companies.

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the provisions of our limited partnership agreement;

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our operating and financial performance;

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current business conditions and projections;

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lack of control discount;

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lack of marketability discount;

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historical trading activity of comparable publicly traded companies;

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the market performance of comparable publicly traded companies; and

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the U.S. and global capital market conditions.

Income Taxes

Recently Issued Accounting Pronouncements

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses”, or ASU 2010-20. ASU 2010-20 requires additional disclosures about the credit quality of financing receivables and the allowance for credit losses. The purpose of the additional disclosures is to enable users of financial statements to better understand the nature of credit risk inherent in an entity’s portfolio of financing receivables and how that risk is analyzed. The new disclosures were effective for our interim and annual reporting periods beginning January 1, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles – Goodwill and Other (Topic 350) When to Perform Step Two of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”, which enhanced guidance on when to perform step two of the goodwill impairment test for reporting units with zero or negative carrying amounts and requires step two to be performed if it is more likely than not that a goodwill impairment exists. This guidance was effective for our interim and annual reporting periods beginning January 1, 2011. As our reporting unit does not currently have a zero or negative carrying value, the adoption of this guidance did not have any impact on our financial statements.

financial instruments that are managed as part of a portfolio, an exception to fair value requirements is provided. That exception permits a reporting entity to measure the fair value of such financial assets and financial liabilities at the price that would be received to sell a net asset position for a particular risk or to transfer a net liability position for a particular risk in an orderly transaction between market participants at the measurement date. The amendments also clarify that premiums and discounts should only be applied if market participants would do so when pricing the asset or liability. Premiums and discounts related to the size of an entity’s holding (e.g., a blockage factor) rather than as a characteristic of the asset or liability (e.g., a control premium) are not permitted in a fair value measurement.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for our interim and annual periods commencing January 1, 2012. Early adoption is permitted. We will consider the guidance when performing our annual impairment assessment in 2012.

Subsequent Events

Commodity Advisors Acquisition

On January 5, 2012, we signed a Limited Liability Purchase Agreement, or the Purchase Agreement, with MW Commodity Advisors, LLC, or Commodity Advisors, to acquire the LLC interests, or the LLC Interests, of Commodity Advisors. Commodity Advisors is the general partner of MW Commodity Strategies, L.P., the Commodity Fund, a $30 million fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. The strategic acquisition of Commodity Advisors adds another strategy to our complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. On April 1, 2012, under the terms of the Purchase Agreement, we, in exchange for the LLC Interests, issued 631 and 6 units of Silvercrest L.P. and Silvercrest GP LLC, respectively, at closing, with an estimated fair value of $100 thousand , which is equal to the difference between the Closing Revenue, as defined in the Purchase Agreement, attributable to all limited partners minus Closing Revenue attributable to those limited partners who give notice that they want to withdraw from the Commodity Fund. As part of the Purchase Agreement, we could be obligated to make a future one-time earnout payment in units of Silvercrest L.P. and Silvercrest GP LLC equal to the difference between $800 thousand and the annualized revenue at closing only if incremental revenue, as defined, reaches an amount equal to $400 thousand prior to March 31, 2014, as defined in the Purchase Agreement.

Leased Space

On May 1, 2012, we reoccupied space at its headquarters that we had previously abandoned in 2009. As a result, we expect to release the remaining abandonment-related liability of $662 thousand, and to write off prepaid interest expense of $86 thousand, resulting in a net lease abandonment reversal of $576 thousand.

Qualitative and Quantitative Disclosures Regarding Market Risk

Our exposure to market risk is directly related to our role as investment adviser for the separate accounts we manage and the funds for which we act as sub-investment adviser. Most of our revenue for the year ended December 31, 2011 was derived from advisory fees, which are typically based on the market value of assets under management. Accordingly, a decline in the prices of securities would cause our revenue and income to decline due to a decrease in the value of the assets we manage. In addition, such a decline could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenue and income to decline further. Please see our discussion of market risks in “—Critical Accounting Policies and Estimates—Revenue Recognition.”

BUSINESS

Our Guiding Principles

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We will create, build and maintain an environment that encourages innovation and original thought and apply this fresh thinking to the needs of our clients and firm.

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We will attract, motivate and retain unusually talented and ambitious professionals who share a passion for the investment business and an antipathy for corporate bureaucracy and office politics.

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We will conduct ourselves in all our dealings as highly ethical, responsible and competent professionals who always place our clients’ financial interests ahead of our own.

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We will encourage and nurture an entrepreneurial, collegial and action-oriented business culture in which “fun” is inevitable and decisions are generally consensual.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. As of March 31, 2012, we managed assets totaling $11.1 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance together with high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of March 31, 2012, we had 375 client relationships with an average size of $28 million which represented approximately 98% of our assets under management and our top 50 relationships averaged $157 million. As a boutique, we are large enough to provide an array of comprehensive capabilities, yet agile enough to coordinate and deliver highly personalized client service.

We consider these to be our competitive strengths:

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We are a company offering independent, unconflicted advice, which is principally employee-owned.

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We have a strong record of organic and acquired growth and we have a scalable platform.

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We have a long-term track record of superior investment performance.

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We have a diverse and highly loyal clientele.

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We have proven senior management which has successfully executed our growth strategy.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Client assets have grown on average more than $1 billion per year since our founding and our annual client retention rate has averaged 98% since 2006. This growth includes a combination of market appreciation of assets under management as well as an increase in the amount of assets we manage for both new and existing clients. We believe our record of growth is a direct result of our demonstrated record of delivering excellent performance together with highly personalized service to our clients. As shown below, this results in a compound annual growth rate, or CAGR, in excess of 50% in assets under management since inception.

LOGO

Our clients engage us to advise them on traditional investment strategies focused on equities, fixed income and cash as well as non-traditional investment strategies including hedge funds, private equity funds, real estate and commodities. Our clients receive a full menu of proprietary investment capabilities together with a focused array of complementary non-proprietary capabilities offered by unaffiliated firms selected by us. In addition to our investment capabilities, we also provide our clients with family office services and related administrative services which include financial planning, tax planning and preparation, partnership accounting and fund administration, and consolidated wealth reporting. Our fees for our investment advisory services, non-proprietary services, and family office and related administrative services are structured to align our financial incentives with those of our clients to ensure they receive unconflicted advice. The vast majority of our fees are for discretionary asset management, and are based on the value of the assets we manage for our clients. These fee revenues increase if our clients’ assets grow in value; these revenues decrease if our clients’ assets decline in value. We charge a management fee based on assets under management for our investment advisory services. Unlike our management fees, our fees for family office services and related administrative services are generally not based on or correlated to market values. For these services, we generally charge our clients a negotiated fee based on the scope of work. These services create strong client relationships and contribute meaningfully to our record of client retention.

History, Organization and Philosophy

service teams with whom our clients had worked at DLJ Asset Management Group. Today, more than a quarter of our 88 employees are veterans of DLJ. Many of our principals, therefore, have worked together for 20 years and, in some cases, even longer.

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James C. Edwards Asset Management Inc., acquired in March 2004 with $889 million in assets under management, helped build out our New York presence;

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Marathon Capital Group LLC, acquired in October 2008 with $552 million in assets under management, established a Boston office for our company; and

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our pre-financial crisis high. Importantly, we remained profitable throughout the downturn. We expect to continue our pattern of complementing our organic growth in assets through selective hiring and acquisitions. We expect our growth to further accelerate as a direct result of growing client referrals and increasing our presence in the institutional marketplace.

Our Market Opportunity

Overview

Domestic High Net Worth Market

LOGO

Source: The Spectrem Group

The Wealth Management Industry

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Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

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Trust Companies combine fiduciary and investment services as well as ancillary financial services with little emphasis on performance.

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MFO/RIAs focus exclusively on the high net worth segment and, in the case of MFOs, are frequently dominated by one or two families.

Institutional Market

The asset management industry has experienced significant growth in worldwide assets under management during the past 15 years, fueled in significant respects by aging populations in both developed and emerging markets around the world, which have increased the pools of savings and particularly pension assets. For example, total pension assets in the United States grew from $6.8 trillion at the end of 1996 to $16.1 trillion at the end of 2011, according to Towers Watson. Furthermore, Towers Watson estimates that U.S. pension funds allocate 44% of year-end total assets to equities or $7.1 trillion. As of March 31, 2012, institutional assets only represented approximately 5% of our total assets under management or $556 million but, after a focused multi-year investment effort to make our capabilities known to institutional investment consultants, we believe we are now well positioned to attract meaningful institutional assets. As a result, we expect this percentage to increase significantly.

Competitive Strengths

Our key competitive strengths are as follows:

Independent, Unconflicted Advice

Demonstrated Track Record of Growing Assets Under Management

a multi-year effort to make our equity capabilities known to institutional investment consultants. Our acquired growth is the result of four strategic acquisitions we have consummated in New York, Boston and Charlottesville. Following this offering we expect the number and frequency of these acquisitions to increase.

Long-Term Track Record of Superior Investment Performance

PROPRIETARY EQUITY PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

2.3

21.5

2.5

5.7

6.1

Russell 1000 Value Index

4.8

22.8

-0.8

3.5

4.6

Small Cap Value Composite

4/1/02

3.4

28.5

9.1

10.8

10.1

Russell 2000 Value Index

-1.1

25.4

0.0

4.6

6.6

Smid Cap Value Composite

10/1/05

4.2

26.2

5.8

N/A

7.5

Russell 2500 Value Index

0.1

27.1

1.0

N/A

4.3

Multi Cap Value Composite

7/1/02

4.3

24.5

4.9

7.0

7.5

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.8

Equity Income Composite

12/1/03

6.6

22.0

6.0

8.4

10.2

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.6

Focused Value Composite

9/1/04

-0.3

25.9

4.4

8.0

9.1

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

4.9

Loyal, Diverse Base of Clients

Our suite of family office services has been an important component to building a strong relationship with our clients, leading to greater client retention. Nine out of our ten largest relationships and approximately 17% of our current relationships use one or more components of our family office services. In addition to assisting in client retention, these capabilities have been instrumental in attracting new clients from families which seek a comprehensive and efficient approach to overseeing their wealth beyond investment management.

Dedicated, Proven Senior Management

Our Growth Strategy

Organic Growth

We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm designed to deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown in excess of $1 billion per year without a commensurate increase in headcount. Importantly, we have achieved our growth while maintaining our profitability during one of the most challenging periods in the history of the U.S. financial markets. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients.

Where appropriate, our portfolio managers are also encouraged to introduce our clients to our family office services capabilities and we expect to see growth in client utilization of these services in the future. Roughly 18% of our current clients use our family office services (including nine of our ten largest clients) and some of these have closed their own family offices to consolidate those activities with us. This is a profitable business for us and it serves to tighten our ties to those clients who avail themselves of the services we offer. It is also extremely useful to us in new business competitions where we use these services as a differentiator from our competitors. We expect much greater penetration with our current clients in future years and we expect that many of our new clients will use these services extensively.

Complementing the efforts of our senior portfolio managers to cultivate client referrals, our recently created business development team is charged with identifying newly formed wealth (resulting from merger, acquisition or corporate finance) and then creating customized solicitations. Our objective is two-fold: we will expand awareness of our company and its capabilities by distributing our marketing materials to this new audience and we will attract a certain amount of new business. The basis of this effort is careful research designed to ascertain if the prospect has any relationship with us - or any of our clients or friends – and then our solicitation is tailored to those circumstances. This effort is relatively new but we are very encouraged by its early results.

services. We believe very few of our competitors invest the time and labor to create comparable proposals and we believe these customized proposals have underpinned much of our new business success. Simultaneously, our customized new business presentations distinguish us from both our much larger competitors who have major resources but cannot easily tailor solutions to suit clients’ needs as well as from our smaller competitors who do not have our depth of resources or capabilities.

Acquired Growth

From our inception, our organic growth has been complemented by selective hiring and strategic acquisitions which have served to enlarge our client base, expand our professional ranks, increase our geographic presence and broaden our service capabilities. We therefore expect to continue to recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We have used acquisitions to extend our presence into new geographies (Boston, Charlottesville) and to gain new investment expertise. The four strategic acquisitions we have completed have allowed us to benefit from economies of scale and scope.


RANK	CITY	RESIDENTS WITH A NET WORTH > $30 MILLION
1	New York, NY		7,270
2	Los Angeles, CA		4,350
3	San Francisco, CA		4,230
4	Chicago, IL		2,550
5	Washington, DC		2,300
6	Houston, TX		2,250
7	Dallas, TX		1,855
8	Atlanta, GA		960
9	Boston, MA		890
10	Seattle, WA		885
	Source: Cerulli Associates/Wealth-X

Institutional Growth

Brand Management

Our Business Model

Delivering Investment Performance

MODEL PORTFOLIO PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Income Portfolio

5/1/03

5.4

14.2

5.7

6.4

7.0

U.S. Stock/Bond Mix (50/50)¹

8.1

15.1

4.1

5.2

6.1

Balanced Portfolio

5/1/03

4.8

18.4

5.9

6.9

8.1

U.S. Stock/Bond Mix (60/40)¹

8.2

16.8

3.7

5.1

6.3

Growth Portfolio

5/1/03

4.2

23.1

5.5

7.2

9.1

U.S. Stock/Bond Mix (90/10)¹

2.7

13.4

0.7

4.8

6.0

¹	The equity benchmark is the S&P 500 Index and the fixed income benchmark is the Barclays Aggregate Bond Index.

We believe that it is impossible for a single manager to perform all forms of investing equally well. Thus, our core proprietary investment capabilities are focused on a narrow range of highly disciplined U.S. equity and fixed income management strategies. Our investment teams have exhibited strong performance records. With respect to these strategies, roughly 56% of our separately managed account assets are managed in our proprietary investment strategies. Each of these strategies is measured against its appropriate benchmark and the results are formally reported to our clients quarterly. This performance measurement is conducted under the rigors of the CFA Institute’s Global Investment Performance Standards, or GIPS, which requires annual independent audits and represents the highest institutional standard for investment performance measurement.

Proprietary Equity Strategies

LOGO

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When a stock is excessively valued in our models or the best case scenario is reflected in the stock price;

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Due to a stock’s outperformance, which can adversely affect a portfolio’s diversification;

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Due to underperformance, when a stock trails relevant benchmarks by more than 10%;

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When the investment thesis changes, due to a loss of confidence in management, a change in business prospects, or the deterioration in earnings quality.

Below is a breakdown of assets among the various proprietary equity strategies as of March 31, 2012:

LOGO

Each of our equity strategies has outperformed its benchmark as illustrated by the following chart:

PROPRIETARY EQUITY PERFORMANCE

AS OF 3/31/12

ANNUALIZED PERFORMANCE

INCEPTION

1-YEAR

3-YEAR

5-YEAR

7-YEAR

INCEPTION

Large Cap Value Composite

4/1/02

2.3

21.5

2.5

5.7

6.1

Russell 1000 Value Index

4.8

22.8

-0.8

3.5

4.6

Small Cap Value Composite

4/1/02

3.4

28.5

9.1

10.8

10.1

Russell 2000 Value Index

-1.1

25.4

0.0

4.6

6.6

Smid Cap Value Composite

10/1/05

4.2

26.2

5.8

N/A

7.5

Russell 2500 Value Index

0.1

27.1

1.0

N/A

4.3

Multi Cap Value Composite

7/1/02

4.3

24.5

4.9

7.0

7.5

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.8

Equity Income Composite

12/1/03

6.6

22.0

6.0

8.4

10.2

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

5.6

Focused Value Composite

9/1/04

-0.3

25.9

4.4

8.0

9.1

Russell 3000 Value Index

4.3

23.0

-0.8

3.6

4.9

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Proprietary Fixed Income Strategies

LOGO

Outsourced Manager Selection

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Highly Consistent Returns. We emphasize consistency of performance over strong performance marked by high volatility.

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Tax Sensitivity. We seek managers with a low turnover style of management designed to achieve attractive after-tax rates of return.

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Solid Operations, Technology. We require each manager to produce evidence that it has strong technology and operations capabilities as well as vigorous compliance adherence.

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Alignment of Interest. We require evidence that the strategy’s key people have significant equity in their company and are motivated to stay in place.

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Silvercrest Hedged Equity Fund is designed to complement and diversify long-only equity portfolios through investments with managers who employ long and short strategies;

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Silvercrest Emerging Markets Fund provides international and non-dollar exposure and diversification focused on long, short, credit and other managers who invest in emerging markets;

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Silvercrest Commodity Strategies Fund seeks to give investors comprehensive commodity exposure; and

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Silvercrest Special Situations Fund is designed to outperform traditional benchmarks with less volatility.

Delivering Client Service

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Financial Planning;

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Tax Planning and Preparation;

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Partnership Accounting and Fund Administration;

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Consolidated Wealth Reporting;

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Estate or Trust Agency; and

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Art Consultancy, Management.

Competition

•

Diversified Financial Institutions have divisions aimed at providing wealth management solutions to the high net worth segment that are usually staffed by brokers.

102

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Asset Management Firms offer proprietary institutional and retail asset management services catering to the high net worth segment largely with off-the-shelf products.

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Trust Companies combine fiduciary and investment services as well as ancillary financial services.

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MFO/RIAs focus exclusively on the high net worth segment and are frequently dominated by one or two families.

Employees

As of March 31, 2012, we had 86 full-time employees and two part-time employees.

Facilities

Legal Proceedings

In the normal course of business, we may be subject to various legal and administrative proceedings. Currently, there are no legal proceedings pending or threatened against us.

103

REGULATORY ENVIRONMENT

The legislative and regulatory environment in which we operate has undergone significant changes in the recent past. New laws or regulations, or changes in the enforcement of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will depend on our ability to monitor and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries have resulted in increased scrutiny of the industry and new rules and regulations for investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders.

In addition, as a result of recent market events, acts of serious fraud in the investment management industry and perceived lapses in regulatory oversight, U.S. and non-U.S. governmental and regulatory authorities may increase regulatory oversight of our businesses. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by U.S. and non-U.S. courts. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed on us or the markets in which we trade, or whether any of the proposals will become law. Compliance with any new laws or regulations could add to our compliance burden and costs and affect the manner in which we conduct our business.

SEC Regulation

104

CFTC Regulation

Due to recent rule amendments by the CFTC, Silvercrest Asset Management Group LLC and certain of its affiliates may be required to register with the CFTC and the National Futures Association, or the NFA, as a commodity pool operator and/or commodity trading adviser. Registration will subject us and our affiliates to substantive and material restrictions and requirements, including, among other things, reporting, recordkeeping, disclosure, self-examination and training requirements. Registration may also subject us to periodic on-site audits, and the CFTC is authorized to institute proceedings and impose sanctions for violations of the Commodity Exchange Act and/or CFTC rules.

Dodd-Frank

While the Dodd-Frank Act has not yet caused us to reconsider our business model, certain provisions will, and other provisions may, increase regulatory burdens and reporting and related compliance costs. In addition, the scope of many provisions of the Dodd-Frank Act are being determined by implementing regulations, some of which will require lengthy proposal and promulgation periods. Moreover, the Dodd-Frank Act mandates many regulatory studies, some of which pertain directly to the investment management industry, which could lead to additional legislation or regulation. The SEC and the CFTC adopted rules that require investment advisers registered with the SEC that advise one or more private funds to provide certain information to the Financial Stability Oversight Council on Form PF about their funds and assets under management, including the amount of borrowings, concentration of ownership and other performance information for purposes of assessing the systemic risk posed by private funds. We are subject to these rules and will have to provide a Form PF to the SEC. The Dodd-Frank Act will affect a broad range of market participants with whom we interact or may interact, including banks, non-bank financial institutions, rating agencies, mortgage brokers, credit unions, insurance companies and broker-dealers. Regulatory changes that will affect other market participants are likely to change the way in which we conduct business with our counterparties. The uncertainty regarding further implementation of the Dodd-Frank Act and its impact on the investment management industry and us cannot be predicted at this time but will continue to be a risk for our business.

ERISA-Related Regulation

To the extent that Silvercrest Asset Management Group LLC or any other of our affiliates is a “fiduciary” under ERISA with respect to benefit plan clients, it is subject to ERISA and to regulations promulgated thereunder. Among other things, ERISA and applicable provisions of the Internal Revenue Code impose certain duties on persons who are fiduciaries under ERISA, prohibit certain transactions involving ERISA plan clients and provide monetary penalties for violations of these prohibitions. Our failure to comply with these requirements could have a material adverse effect on our business.

Compliance

105

MANAGEMENT

Executive Officers and Directors

The following table provides information regarding our directors, nominees to our board of directors and executive officers.


Name	Age	Position
G. Moffett Cochran	61	Chairman, Chief Executive Officer and Director
Richard R. Hough III	42	President, Chief Operating Officer and Director
David J. Campbell	43	General Counsel and Secretary
Scott A. Gerard	44	Chief Financial Officer
Winthrop B. Conrad, Jr.	66	Director
Wilmot H. Kidd III	70	Director
Richard S. Pechter	67	Director

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through November 2009. Previously, he was Chief Financial Officer of Guideline, Inc., a publicly-held business research firm. Prior to Guideline, Mr. Gerard was a Division Controller with Citigroup Inc. and began his career with KPMG LLP. Mr. Gerard is a Certified Public Accountant and received a B.S. in accounting from the University of Buffalo.

Mr. Conrad provides institutional knowledge and continuity to our board. His experience as an attorney allows Mr. Conrad to provide guidance to us on legal and fiduciary matters. He has extensive experience with conventional corporate transactions, as well as finance, which provide us with important perspectives in those areas. With his broad experience in corporate legal matters, Mr. Conrad is uniquely equipped to provide the board with insight into capitalization strategies, capital markets mechanics and strategic expansion opportunities. Based on his experience and qualifications, Mr. Conrad was elected as a member of our board.

Board Composition

107

shares of Class A common stock and Class B common stock held by our employees. The parties of the stockholders’ agreement collectively will hold % of the combined voting power of our capital stock immediately after this offering (or approximately % if the underwriters exercise in full their option to purchase additional shares).

Staggered Board

•

Our Class I directors will be and ;

•

Our Class II directors will be and ; and

•

Our Class III director will be .

Our board of directors currently consists of five directors. Messrs. Conrad, Kidd and Pechter qualify as independent directors under the corporate governance standards of Nasdaq. Silvercrest was incorporated on July 11, 2011. As such, we have had only one annual meeting during the most recent fiscal year in which all directors attended. Upon being registered as a public company, we intend to have required annual meetings.

Board Leadership Structure

Board Oversight of Risk Management

108

and potential conflicts of interest. The Compensation Committee has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and the compensation structure generally, including whether it provides appropriate incentives that do not encourage excessive risk-taking. Senior management is responsible for assessing and managing our various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies.

Board Committees

Audit Committee

Our Audit Committee’s responsibilities will include, among others:

•

reviewing our financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent registered public accounting firm;

•

reviewing our financial risk and control procedures, compliance programs regarding risk assessment and management and significant tax, legal and regulatory matters; and

•

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee’s responsibilities will include, among others:

•

making recommendations to the board regarding the selection of candidates, qualification and competency requirements for service on the board and the suitability of proposed nominees as directors;

•

advising the board with respect to the corporate governance principles applicable to us;

•

overseeing the evaluation of the board and management;

•

reviewing and approving in advance any related party transaction, other than those that are pre-approved pursuant to pre-approval guidelines or rules established by the committee;

•

reviewing periodically the form and amounts of director compensation and making recommendations to the board with respect thereto; and

•

establishing guidelines or rules to cover specific categories of transactions.

109

Compensation Committee

Our Compensation Committee will assist our board of directors in the discharge of its responsibilities relating to the compensation of our executive officers.

Our Compensation Committee’s responsibilities will include, among others:

•

reviewing and approving, or making recommendations to our board of directors with respect to, the compensation of our executive officers;

•

overseeing and administering, and making recommendations to our board of directors with respect to, our cash and equity incentive plans; and

•

reviewing and making recommendations to the board of directors with respect to director compensation.

Compensation Committee Interlocks and Insider Participation

110

COMPENSATION DISCUSSION AND ANALYSIS

Philosophy and Objectives of Compensation Program

111

Determination of Compensation and Role of Directors and Principals in Compensation Decisions

Principal Components of Compensation

112

•

Stock Ownership Guidelines

113

Our principals have not historically been subject to mandated equity ownership or retention guidelines. It is our belief that the equity component of our compensation program ensures that our principals are also owners whose incentives are directly aligned with those of our company and our clients. As a public company, we intend to continue to promote broad and substantial equity ownership by our principals by using both equity-based compensation awards which may be granted on an annual basis, and performance awards that will be granted in appropriate circumstances. We may expand our equity ownership by creating opportunities for all employees, and not only our principals, to acquire equity interests in our company. In addition, following this offering, while an employee of Silvercrest L.P., our principals will be required to retain at least 50% of the Class B units in Silvercrest L.P. owned by the principal on the date of consummation of this offering.

Following this offering, as an element of compensation we intend to grant equity-based awards to those individuals considered to be critical to our company’s future success.

Tax Considerations

114

a private company, Section 162(m) does not currently apply to our compensation program. To the extent Section 162(m) becomes applicable to us, we will endeavor to structure compensation to qualify as performance-based under Section 162(m), where it is reasonable to do so while meeting our compensation objectives. Notwithstanding the foregoing, we reserve the right to pay amounts that are not deductible under Section 162(m) during any period when Section 162(m) is applicable to us.

Risk Considerations in our Compensation Program

In evaluating our compensation program, we have identified two primary risks relating to compensation: (i) the risk that compensation will not be sufficient to retain talent and (ii) the risk that compensation may provide unintended incentives. To combat the risk that our compensation might not be sufficient, we strive to use a compensation structure and set compensation levels for all employees in a way that we believe contributes to low rates of employee attrition. We do not use compensation consultants, but we receive regular and ongoing input from industry representatives and other market sources through our (1) participation on the Pershing Advisor Solutions with MFO/RIA peers; (2) participation in other custodian advisor forums and industry events; (3) review of compensation surveys by companies such as The Bower Group; (4) review of industry publications featuring stories on compensation practices and metrics; and (5) reviewing the Moss Adams Adviser Compensation and Staffing Study. We also make equity awards subject to multi-year vesting schedules to provide a long-term component to our compensation program and impose ongoing restrictions on the ability of our principals to dispose of their equity holdings acquired through equity awards. We believe that both the structure and levels of compensation have aided us in retaining key personnel as evidenced by the long-term tenure of our principals.

Summary Compensation Table


Name and Principal Position	Year	Salary ($)⁽²⁾		Bonus ($)⁽³⁾		Stock Awards ($)⁽⁴⁾		All Other Compensation Earnings ($)⁽⁵⁾		Total ($)
G. Moffett Cochran, Chief Executive Officer	2011	$	500,000		—	$	409,031	$	230,523	$	1,139,554
Scott A. Gerard, Chief Financial Officer	2011	$	325,000	$	200,000	$	67,982		—	$	592,982
Richard R. Hough, President and Chief Operating Officer ⁽¹⁾	2011	$	400,000	$	225,000	$	76,645		—	$	701,645
David J. Campbell, General Counsel and Secretary	2011	$	325,000	$	175,000	$	59,530		—	$	559,530

(1)	Mr. Hough was named our Chief Operating Officer in July 2010 and was named President in February 2012.

(2)	Amounts represent guaranteed payments made to our named executive officers.

115

(3)	Amounts represent cash bonuses earned at December 31, 2011 and paid in February 2012.

(4)

(5)

Employment Agreements

During fiscal 2011 Silvercrest Asset Management Group LLC was a party to employment agreements with each of Messrs. Campbell and Gerard that provided for at-will employment. These agreements did not provide compensation terms or duration of employment. They did include restrictive covenants concerning the protection of our confidential information and solicitation of our employees and clients. We do not have employment agreements with Mr. Hough or Mr. Cochran. As limited partners of Silvercrest L.P., each of our named executive officers (other than Mr. Cochran) may not, while employed and during the one-year period following termination of employment by the employee, without good reason, (i) contact any of our clients or vendors or otherwise solicit any of our clients or vendors to terminate their relationship with us; (ii) accept any business from any of our clients with whom the employee dealt while at our company; or (iii) hire any of our employees. As a founding partner of our company, Mr. Cochran is bound by more restrictive covenants that prevent him during his employment and for two years following termination of employment from (i) contacting any of our clients or vendors or otherwise soliciting any of our clients or vendors to terminate their relationship with us; (ii) accepting any business from any of our clients with whom he dealt with while at our company; (iii) competing with us; or (iv) hiring any of our employees.

Outstanding Equity Awards at Fiscal Year End 2011

The following table sets forth information relating to equity interests in Silvercrest L.P. and Silvercrest GP LLC issued to our named executive officers subject to vesting provisions.


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)		Market Value of Shares or Units of Stock That Have Not Vested (as of 12/31/2011) ($)⁽¹⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
G. Moffett Cochran⁽²⁾		2,525	$	611,156		—	$	—
Scott A. Gerard⁽³⁾		420	$	101,678		—	$	—
Richard R. Hough⁽⁴⁾		1,391	$	336,747		—	$	—
David J. Campbell⁽⁵⁾		826	$	199,966		—	$	—

(1)	Represents (i) $242.09 per unit, which is the effective per unit value as of December 31, 2011, multiplied by (ii) the number of unvested units.

116

(2)	420.75 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 842 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(3)	70 shares vest on each of February 28, 2012, 2013, 2014 and 2015. 140 shares, which represent performance units, may vest on February 28, 2015 if performance targets are met.

(4)

(5)

Option Exercises and Stock Vested Table

The following table sets forth information concerning interests in Silvercrest L.P. acquired upon the vesting of deferred equity units by the named executive officers.


	Equity Awards
Name	Number of L.P. Interests Acquired on Vesting (#)		Value Realized on Vesting ($)⁽¹⁾
G. Moffett Cochran		—	$	—
Scott A. Gerard		—	$	—
Richard R. Hough		184	$	27,296
David J. Campbell		92	$	13,648

(1)	Reflects the vesting date fair value computed in accordance with ASC 718 associated with deferred equity units in Silvercrest L.P.

Pension Benefits

We do not sponsor or maintain any benefit pension or retirement benefits for the benefit of our employees.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

We do not sponsor or maintain any nonqualified defined contribution or other nonqualified deferred compensation plans for the benefit of our employees.

Potential Payments Upon Termination or Change in Control

Severance Benefits

Deferred Equity Units and Performance Units

As part of bonus compensation for performance during 2009, Silvercrest Asset Management Group LLC awarded to its principals 50% of the annual bonus earned by them in deferred equity units and performance units. For performance during 2010, the percentage was 25%, except in the case of Mr. Cochran, for whom the percentage in 2010 was 100%. As of December 31, 2011, there were 22,353 deferred equity units and 12,795 performance units outstanding. The deferred equity units and performance units were not issued pursuant to a plan.

117

Deferred Equity Units

Performance Units

Dividend Equivalents

Treatment upon Termination of Employment

Voluntary Resignation and Termination with Cause

Involuntary Termination without Cause, Death, Disability and Retirement

Change in Control

118

Vesting and Redemption of Silvercrest L.P. Interests

Director Compensation

2012 Equity Incentive Plan

119

common stock. Incentive stock options may be granted only to employees; all other awards may be granted to employees, including officers, members, limited partners or partners who are engaged in the business of one or more of our subsidiaries, as well as non-employee directors and consultants.

Awards under the 2012 Equity Incentive Plan will be structured to comply with Section 409A of the Internal Revenue Code.

Shares Subject to the 2012 Equity Incentive Plan

Administration of the 2012 Equity Incentive Plan

Types of Equity-Based Awards

120

Non-qualified Stock Options

Incentive Stock Options

SARs

Restricted Stock

Restricted Stock Units

Performance Awards

121

Section 162(m) is applicable to us. To assure that the compensation attributable to performance-based stock will so qualify, our Compensation Committee can, but will not be required to, structure these awards so that stock will be issued or paid pursuant to the award only upon the achievement of certain pre-established performance goals during a designated performance period.

Dividend Equivalents

Class B Units

LTIP Awards

Other Equity-Based Awards

122

Adjustments

Change of Control

In general terms, a change of control under the 2012 Equity Incentive Plan occurs:

•

if a person, entity or affiliated group (with certain exceptions) acquires more than 50% of our then outstanding voting securities;

•

if we sell or dispose of all or substantially all of our assets;

•

if we are liquidated or dissolved;

•

We cease to be the general partner of Silvercrest L.P.

Section 162(m) Stockholder Approval Requirements

Amendment; Termination

123

CERTAIN RELATIONSHIPS AND

RELATED PARTY TRANSACTIONS

Reorganization

Promissory Notes

Shares Subject to Redemption

Management Fees

Silvercrest Asset Management Group LLC manages the personal funds of many of its employees and members of the families of those employees, including Messrs. Cochran, Campbell, Gerard, and Hough, pursuant to investment management agreements in which it has agreed to reduce the advisory fees it charges its employees and members of their families. The value of the discount to the investment advisory services provided to Mr. Cochran by our company in 2011 was approximately $218,000. The value of services provided to other executives by our company was not significant.

Policies and Procedures Regarding Transactions with Related Persons

124

Committee deems appropriate, recommendations from senior management, whether the transaction is on terms no less favorable than the terms generally available to a third party in similar circumstances and the extent of the related person’s interest in the transaction. Any related person transaction must be conducted at arm’s length. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberations or vote on the approval or ratification of the transaction. However, such a director may be counted in determining the presence of a quorum at a meeting of the Audit Committee that considers a transaction.

125

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

•

each person who beneficially owns more than 5% of the shares;

•

each of our named executive officers listed in the summary compensation table;

•

each member of our board of directors;

•

all executive officers and directors as a group; and

•

each selling stockholder selling Class A common stock in this offering.

This beneficial ownership information is presented on the following basis:

•

after giving effect to the issuance of an aggregate of shares of Class B common stock to the continuing members of Silvercrest L.P.;

•

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership held by that person, shares of common stock subject to equity awards held by that person that are currently exercisable or will become exercisable within 60 days after April , 2012 are deemed outstanding, while these shares are not deemed outstanding for computing percentage ownership of any other person.


	Class A								Class B
Beneficial Owner	No. of Shares Before Offering		Percentage		No. of Shares after Offering		Percentage		No. of Shares Before Offering		Percentage			No. of Shares after Offering		Percentage
Officers and Directors
G. Moffett Cochran (1)		—		—		—		—		113,155		21.06	%
Richard R. Hough III		—		—		—		—		8,773		1.63	%
Scott A. Gerard		—		—		—		—		3,252		*
Winthrop B. Conrad, Jr.		—		—		—		—		—		—			—		—
Wilmot H. Kidd III		—		—		—		—		—		—			—		—
Richard S. Pechter		—		—		—		—		—		—			—		—
David J. Campbell		—		—		—		—		4,773		*
All named executive officers and directors as a group (7 people).		—		—		—		—		129,953		24.19	%		129,953

126


	Class A								Class B
Beneficial Owner	No. of Shares Before Offering		Percentage		No. of Shares after Offering		Percentage		No. of Shares Before Offering		Percentage			No. of Shares after Offering		Percentage
5% Security Holders
Martin Jaffe		—		—		—		—		70,781		13.17	%

Vulcan Wealth Management LLC (2)		—		—		—		—		136,364		25.38	%		—		—

*	Less than 1%.

(1)	Includes amount of Class B units owned by The Moffett Cochran GRAT 2010 of which Mr. Cochran is the trustee.

(2)

127

DESCRIPTION OF CAPITAL STOCK

Common Stock

Class A Common Stock

Voting Rights

Dividend Rights

Class A stockholders are entitled to receive dividends, when and if declared by our board of directors, out of funds legally available therefore, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. Dividends consisting of shares of Class A common stock may be paid only as follows: (i) shares of Class A common stock may be paid only to holders of shares of Class A common stock and (ii) shares will be paid proportionately with respect to each outstanding share of our Class A common stock. See “Dividend Policy.”

Liquidation Rights

Other Matters

No shares of Class A common stock will be subject to redemption or have preemptive rights to purchase additional shares of Class A common stock.

128

Upon consummation of this offering, all the outstanding shares of Class A common stock will be legally issued, fully paid and non-assessable.

Exchanges of Class B units for Class A Common Stock and Registration Rights

Class B Common Stock

Issuance of Class B Common Stock with Class B units

Voting Rights

Dividend Rights

Our Class B stockholders will not participate in any dividends declared by our board of directors.

Liquidation Rights

Other Matters

129

No shares of Class B common stock will have preemptive rights to purchase additional shares of Class B common stock.

Upon consummation of this offering, all outstanding shares of Class B common stock will be legally issued, fully paid and non-assessable.

Preferred Stock

Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation

Issuance of Preferred Stock

Elimination of Stockholder Action by Written Consent

Elimination of the Ability to Call Special Meetings

Advance Notice Procedures for Stockholder Proposals

130

Classified Board of Directors

Removal of Directors; Board of Directors Vacancies

Amendment of Certificate of Incorporation and Bylaws

The General Corporation Law of the State of Delaware, or DGCL, provides generally that the affirmative vote of a majority of the outstanding shares of common stock entitled to vote is required to amend or repeal a corporation’s certificate of incorporation or bylaws, unless the certificate of incorporation requires a greater percentage. Our amended and restated certificate of incorporation generally requires the approval of the holders of at least two-thirds of the voting power of the issued and outstanding shares of our capital stock entitled to vote in connection with the election of directors, to amend any provisions of our amended and restated certificate of incorporation described in “—Anti-Takeover Effects of Delaware Law and Our Amended and Restated Certificate of Incorporation.” Our amended and restated certificate of incorporation and amended and restated bylaws provide that the holders of at least two-thirds of the voting power of the issued and outstanding shares of our capital stock entitled to vote in connection with the election of directors have the power to amend or repeal our bylaws. In addition, our amended and restated certificate of incorporation grants our board of directors the authority to amend and repeal our bylaws without a stockholder vote in any manner not inconsistent with the laws of the State of Delaware or our amended and restated certificate of incorporation.

Section 203 of the DGCL

Limitations on Liability and Indemnification of Officers and Directors

131

•

any breach of his duty of loyalty to us or our stockholders;

•

acts or omissions not in good faith, or which involve intentional misconduct or a knowing violation of law;

•

any transaction from which the director derived an improper personal benefit; or

•

improper distributions to stockholders.

Transfer Agent and Registrar

The transfer agent and registrar for our Class A common stock will be American Stock Transfer.

Listing

We intend to apply to list our Class A common stock on Nasdaq under the symbol “SAMG.”

132

SHARES ELIGIBLE FOR FUTURE SALE

Class A Common Stock Outstanding Upon Closing

shares of Class A common stock will be outstanding immediately after this offering (or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock). Subject to certain restrictions, following the first anniversary of the consummation of this offering, each holder (other than us) and certain permitted transferees will have the right to exchange their Class B units of Silvercrest L.P. for shares of our Class A common stock on a one-for-one basis pursuant to the terms of our second amended and restated limited partnership agreement. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” These shares of our Class A common stock issuable upon exchange of Class B units would be “restricted securities,” as defined in Rule 144. However, we will enter into a resale and registration rights agreement with the holders of the Class B units of Silvercrest L.P. that will require us to register under the Securities Act these shares of Class A common stock. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement.”

•

holders at any time may sell a number of shares sufficient to cover taxes due upon exchange of Class B units in any manner of sale permitted under the securities laws; and

•

the estate of any deceased holder or the beneficiaries thereof, at any time, may sell a number of shares sufficient to cover applicable estate and inheritance taxes.

In addition, our board of directors may at any time waive any restrictions on sale of our Class A common stock.

Lock-Up Agreements

Rule 144

133

Rule 701

Registration of Shares Under 2012 Equity Incentive Plan

Resale and Registration Rights Agreement

134

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK

•

banks, insurance companies or other financial institutions;

•

partnerships or other pass-through entities;

•

tax-exempt organizations;

•

tax-qualified retirement plans;

•

dealers in securities or currencies;

•

U.S. expatriates and certain former citizens or long-term residents of the U.S.;

•

controlled foreign corporations;

•

passive foreign investment companies;

•

persons that own, or have owned, actually or constructively, more than 5% of our Class A common stock; and

•

persons that will hold common stock as a position treated as a hedging transaction, “straddle” or “conversion transaction” for tax purposes.

135

Definition of Non-U.S. Holder

•

an individual citizen or resident of the U.S. as determined for U.S. federal income tax purposes;

•

a corporation (or any entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the U.S., any state thereof or the District of Columbia;

•

an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or

•

Distributions on Class A Common Stock

136

Gain on Sale or Other Taxable Disposition of Class A Common Stock

•

We believe we currently are not, and we do not anticipate becoming, a USRPHC for U.S. federal income tax purposes. However, no assurance can be offered in this regard.

Federal Estate Taxes

Backup Withholding and Information Reporting

137

Foreign Accounts

138

UNDERWRITING


Name		Number of Shares of Class A common stock
Sandler O’Neill & Partners, L.P.
Raymond James & Associates, Inc.
Total

•

the representations and warranties made by us are true and agreements have been performed;

•

there is no material adverse change in their determination in the financial markets or in our business; and

•

we deliver customary closing documents.

Over-Allotment Option

Commissions and Expenses

Per Share

Total without over-
allotment exercise

Total with over-
allotment exercise

Public offering price

Underwriting discount

Proceeds to us (before expenses)

In addition to the underwriting discount, we will reimburse the underwriters for their reasonable out-of-pocket non-legal expenses, up to $ , incurred in connection with their engagement as underwriters, regardless of whether this offering is consummated, including, without limitation, marketing, syndication and travel expenses. Further, we will reimburse the underwriters for their legal fees of up to $ incurred in connection with their engagement as underwriters, regardless of whether this offering is consummated. We will also pay for filing fees incident to, and the fees and disbursements (up to an aggregate of $ ) of counsel for the underwriters in connection with, securing any required review of the terms of this offering. We estimate that the total expenses of this offering, exclusive of the underwriting discounts and commissions, will be approximately $ , and are payable by us.

139

Offering Price Determination

•

the history and prospects for the industry in which we compete;

•

our financial information;

•

our earning prospects;

•

the prevailing securities markets at the time of this offering; and

•

the recent market prices of and the demand for publicly traded stock of comparable companies.

Indemnification

Lock-Up Agreement

•

The 180-day restricted period described in the preceding paragraph will be extended if:

•

prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 17-day period beginning on the last day of the 180-day restricted period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the date that is 15 calendar days plus three business days after the date on which the earnings release is issued or the material news or material event relating to us occurs.

Listing on the Nasdaq Global Market

We have applied to list our Class A common stock on The Nasdaq Global Market under the symbol “SAMG.”

Stabilization

In connection with this offering, the underwriters may, but are not obligated to, engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids.

140

•

Our Relationship with the Underwriters

141

LEGAL MATTERS

EXPERTS

The balance sheet of Silvercrest Asset Management Group Inc. as of May 11, 2012, included in this prospectus, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such balance sheet has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated financial statements of Silvercrest L.P. and its subsidiaries as of December 31, 2011 and December 2010, and for each of the years in the three-year period ended December 31, 2011, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

142

INDEX TO FINANCIAL STATEMENTS

SILVERCREST ASSET MANAGEMENT GROUP INC.


	Page

Silvercrest Asset Management Group Inc.

Report of Independent Registered Public Accounting Firm		F-3

Balance Sheet as of May 11, 2012		F-4

Notes to Balance Sheet		F-5

Silvercrest L.P. and Subsidiaries

Report of Independent Registered Public Accounting Firm		F-6

Consolidated Financial Statements of Silvercrest L.P. and its Subsidiaries for the three years ended December 31, 2011, December 31, 2010, and December 31, 2009:

Consolidated Statements of Financial Condition		F-7
Consolidated Statements of Operations		F-8
Consolidated Statements of Partners’ Deficit		F-9
Consolidated Statements of Cash Flows		F-10
Notes to Consolidated Financial Statements		F-12

Condensed Consolidated Financial Statements of Silvercrest L.P. and its Subsidiaries for the three months ended March 31, 2012 and 2011 (Unaudited):

Condensed Consolidated Statements of Financial Condition		F-32

Condensed Consolidated Statements of Operations		F-33

Condensed Consolidated Statements of Partners’ Deficit		F-34

Condensed Consolidated Statements of Cash Flows		F-35

Notes to Condensed Consolidated Financial Statements		F-38

Milbank Winthrop & Co., Inc.

Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the nine month period ended September 30, 2011 (Unaudited):

Consolidated Statements of Financial Condition		F-56
Consolidated Statements of Operations		F-58
Consolidated Statements of Changes in Stockholders’ Equity		F-59
Consolidated Statements of Cash Flows		F-60
Notes to Consolidated Financial Statements		F-62
Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2010:

Independent Auditors’ Report		F-74
Consolidated Statements of Financial Condition		F-75
Consolidated Statements of Income		F-76
Consolidated Statements of Changes in Stockholders’ Equity		F-77
Consolidated Statements of Cash Flows		F-78
Notes to Consolidated Financial Statements		F-80

F-1


Consolidated Financial Statements of Milbank Winthrop & Co., Inc. for the year ended December 31, 2009:

Independent Auditors’ Report			F-90
Consolidated Statement of Financial Condition			F-91
Consolidated Statement of Income			F-92
Consolidated Statement of Changes in Stockholders’ Equity			F-93
Consolidated Statement of Cash Flows			F-94
Notes to Consolidated Financial Statements			F-96
MW Commodity Advisors, LLC

Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2011:

Independent Auditors’ Report			F-108
Consolidated Statement of Financial Condition			F-109
Consolidated Statement of Operations			F-110
Consolidated Statement of Changes in Members’ Equity			F-111
Consolidated Statement of Cash Flows			F-112
Notes to Consolidated Financial Statements			F-113
Consolidated Financial Statements of MW Commodity Advisors, LLC for the year ended December 31, 2010:

Independent Auditors’ Report			F-122
Consolidated Statement of Financial Condition			F-123
Consolidated Statement of Income			F-124
Consolidated Statement of Changes in Member’s Equity			F-125
Consolidated Statement of Cash Flows			F-126
Notes to Consolidated Financial Statements			F-127

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder of Silvercrest Asset Management Group Inc.:

New York, New York

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012

F-3

Silvercrest Asset Management Group Inc.

Balance Sheet

May 11, 2012


Assets

Cash	$	100


Stockholder’s Equity

Class A common stock, $0.01 par value - 1,000 shares authorized, 10 shares issued and outstanding	$	—

Class B common stock, $0.01 par value - 1,000 shares authorized, 0 shares issued and outstanding		—

Additional paid-in capital		100


Total stockholder’s equity	$	100

See accompanying notes to balance sheet.

F-4

Silvercrest Asset Management Group Inc.

Notes to Balance Sheet

As of May 11, 2012

1.	ORGANIZATION

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.	STOCKHOLDER’S EQUITY

F-5

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Partners of Silvercrest L.P.:

New York, New York

As discussed in Note 2 to the consolidated financial statements, the Company changed its annual goodwill impairment testing date from December 31 to October 1, effective October 1, 2011.

/s/ DELOITTE & TOUCHE LLP

New York, New York

May 11, 2012

F-6

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Financial Condition

(In thousands)


	December 31,
	2011			2010

Assets
Cash and cash equivalents	$	7,354		$	7,025
Restricted certificates of deposit and escrow		1,130			1,465
Investments		1,128			1,316
Receivables, net		2,238			2,247
Due from Silvercrest Funds		2,043			1,255
Furniture, equipment and leasehold improvements, net		2,275			2,107
Goodwill		14,683			10,993
Intangible assets, net		13,810			5,771
Prepaid expenses and other assets		601			900

Total assets	$	45,262		$	33,079


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit
Accounts payable and accrued expenses		4,365			2,236
Accrued compensation		2,915			2,790
Notes payable		4,809			2,957
Deferred rent		3,287			3,552
Deferred tax and other liabilities		375			955

Total liabilities		15,751			12,490


Redeemable partners’ capital		91,201			51,744
Notes receivable from partners		(6,024	)		(6,125	)

Total redeemable partners’ capital		85,177			45,619


Commitments and Contingencies (Note 11)

Partners’ Deficit
Partners’ capital		44,359			41,909
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(100,025	)		(66,939	)

Total partners’ deficit		(55,666	)		(25,030	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	45,262		$	33,079

See accompanying notes to consolidated financial statements.

F-7

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Operations

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Revenue
Management and advisory fees	$	37,869		$	32,442		$	29,341
Performance fees and allocations		85			548			96
Family office services		4,833			3,841			3,097

Total revenue		42,787			36,831			32,534


Expenses
Compensation and benefits		17,492			16,528			15,630
General and administrative		10,849			9,459			13,006
Impairment charges		—			—			1,691

Total expenses		28,341			25,987			30,327

Income before other income (expense)		14,446			10,844			2,207

Other income (expense)
Gain on extinguishment of debt		—			—			3,934
Gain on settlement with former LongChamp shareholders		—			—			1,470
Loss on forgiveness of notes receivable		(34	)		(508	)		—
Change in value of options granted to equity holders		—			2			134
Other (expense) income		(210	)		30			—
Interest income		187			231			213
Interest expense		(164	)		(241	)		(467	)
Equity income from investments		950			1,241			274

Total other income		729			755			5,558


Income before (provision) benefit for income taxes		15,175			11,599			7,765
(Provision) benefit for income taxes		(566	)		(657	)		321

Net income	$	14,609		$	10,942		$	8,086

See accompanying notes to consolidated financial statements.

F-8

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Partners’ Deficit

(In thousands)


	Partners’ Capital			Excess of Liabilities, Redeemable Partners’ Capital and Partners’ Capital over Assets			Total Partners’ Deficit
January 1, 2009	$	37,521		$	(106,461	)	$	(68,940	)
Contributions from partners		—			4,842			4,842
Distributions to partners		—			(7,377	)		(7,377	)
Accretion to redemption value of redeemable partnership units		—			44,241			44,241
Net income		2,239			5,847			8,086

December 31, 2009		39,760			(58,908	)		(19,148	)
Contributions from partners		—			1,090			1,090
Distributions to partners		(823	)		(5,050	)		(5,873	)
Equity-based compensation		—			9			9
Accretion to redemption value of redeemable partnership units		—			(12,050	)		(12,050	)
Net income		2,972			7,970			10,942

December 31, 2010		41,909			(66,939	)		(25,030	)
Contributions from partners		—			849			849
Distributions to partners		(1,271	)		(8,723	)		(9,994	)
Equity-based compensation		—			489			489
Accretion to redemption value of redeemable partnership units		—			(36,589	)		(36,589	)
Net income		3,721			10,888			14,609

December 31, 2011	$	44,359		$	(100,025	)	$	(55,666	)

See accompanying notes to consolidated financial statements.

F-9

Silvercrest L.P.

And Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Operating Activities
Net income	$	14,609		$	10,942		$	8,086
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation		977			583			—
Depreciation and amortization		1,469			1,379			1,531
Amortization of acquired deferred revenue		(870	)		—			—
Deferred rent		(265	)		(418	)		647
Deferred income taxes		(275	)		(174	)		293
Goodwill, intangible and fixed asset impairment charge		—			—			1,691
Change in fair value of options granted		—			(2	)		(134	)
Gain on extinguishment of debt		—			—			(3,934	)
Gain on settlement with former LongChamp shareholders		—			—			(219	)
Loss on forgiveness of notes receivable		34			508			—
Non-cash interest income		(180	)		(207	)		(165	)
Non-cash interest expense		—			—			35
Distributions received from investment funds		1,231			274			1,014
Equity income from investments		(950	)		(1,241	)		(274	)
Provision for doubtful receivables		—			104			—
Other		92			—			—
Cash flows due to changes in operating assets and liabilities:
Receivables and due from Silvercrest funds		(780	)		(1,438	)		3,211
Prepaid expenses and other assets		192			422			(49	)
Payables and accrued expenses		644			(261	)		(980	)
Accrued compensation		(360	)		113			(2,702	)
Other liabilities		(282	)		646			(2	)
Interest payable on notes payable		115			189			262

Net cash provided by operating activities		15,401			11,419			8,311


Cash Flows From Investing Activities
Restricted certificates of deposit and escrow	$	335		$	689		$	(14	)
Acquisition of furniture, equipment and leasehold improvements		(606	)		(79	)		(10	)
Acquisition of Milbank, net of cash acquired		(3,357	)		—			—
Purchase of investments		(419	)		—			—
Proceeds from sale of investments		234			—			—

Net cash (used in) provided by investing activities		(3,813	)		610			(24	)

See accompanying notes to consolidated financial statements.

F-10


	For the year ended December 31,
	2011			2010			2009
Cash Flows From Operating Activities
Cash Flows From Financing Activities
Earnouts paid related to acquisitions	$	(663	)	$	(245	)	$	(488	)
Proceeds from issuance of partner interests		13			180			1,343
Redemptions of partner interests		(237	)		(225	)		—
Repayments of notes payable		(1,445	)		(4,373	)		(3,895	)
Payments on capital leases		(16	)		(2	)		—
Distributions to partners		(9,994	)		(5,873	)		(7,307	)
Payments from partners on notes receivable		1,083			207			1,012

Net cash used in financing activities		(11,259	)		(10,331	)		(9,335	)


Net increase (decrease) in cash and cash equivalents		329			1,698			(1,048	)
Cash and cash equivalents, beginning of year		7,025			5,327			6,375

Cash and cash equivalents, end of year	$	7,354		$	7,025		$	5,327


Supplemental Disclosures of Cash Flow Information
Net cash paid (refunded) during the year for:
Income taxes	$	855		$	(539	)	$	934
Interest		114			252			285

Supplemental Disclosures of Non-cash Financing Activities
Notes receivable:
From partners for capital contributions	$	836		$	187		$	3,500
Satisfied as part of share redemptions		—			734			901
Loss on forgiveness of notes receivable		34			508			—
Earnout accrual for acquisition of Marathon Capital Group, LLC		419			685			321
Earnout accrual for acquisition of Heritage Financial Management, LLC		—			—			291
Earnout accrual for acquisition of Milbank		1,726			—			—
Issuance of notes payable for redemption of partner interests		—			745			1,897
Issuance of notes payable for acquisition of Milbank		3,181			—			—
Issuance of partner interests as satisfaction of notes payable to partners		—			724			—
Issuance of shares for acquisition of Milbank		3,105			—			—

See accompanying notes to consolidated financial statements.

F-11

Silvercrest L.P.

and Subsidiaries

Notes to Consolidated Financial Statements

As of and For the Years Ended December 2011, 2010 and 2009

(Dollars in thousands)

1.	ORGANIZATION AND BUSINESS

Silvercrest was formed on December 10, 2008 and commenced operations on January 1, 2009 along with its general partner, Silvercrest GP LLC (“GP LLC”) as part of a restructuring that was completed to organize the Company more in line with industry standards and to increase tax efficiency. Pursuant to the reorganization each of the members of Silvercrest Asset Management Group LLC (“SAMG LLC”) contributed their limited liability company interests in SAMG LLC to Silvercrest L.P. in return for limited partnership interests in Silvercrest L.P. and member interests in Silvercrest GP LLC, such that immediately after giving effect to such issuances each member’s percentage ownership of the aggregate limited partnership interests was equal to its ownership interests immediately prior to such issuance, but reduced pro rata to take into account the 1% interest in Silvercrest L.P. owned by Silvercrest GP LLC, the general partner of Silvercrest L.P. As a result of the restructuring, SAMG LLC became a wholly owned subsidiary as of January 1, 2009. The reorganization was accounted for as a transaction between entities under common control and all balances of SAMG LLC were carried over to Silvercrest at their carrying values on December 31, 2008.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

F-12

Segment Reporting

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents.

Restricted Certificates of Deposit

Certain certificates of deposit held at a major financial institution are restricted and serve as collateral for letters of credit for the Company’s lease obligations as described in Note 11.

Equity Method Investments

Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting pursuant to ASC 323, Investments-Equity Method and Joint Ventures, (“ASC 323”), whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist.

F-13

Receivables and Due from Silvercrest Funds

Furniture, Equipment and Leasehold Improvements

Business Combinations

Goodwill and Intangible Assets

The Company has one reporting unit at December 31, 2011, 2010 and 2009. No goodwill impairment charges were recorded during the years ended December 31, 2011 and 2010. As discussed in Notes 6 and 7, goodwill and intangible assets related to the acquisition of LGI were determined to be impaired as of December 31, 2009.

F-14

Long-lived Assets

Derivative Instruments

The Company records the changes in fair value of derivative instruments in “Other income (expenses)” in the consolidated statement of operations.

The Company does not purchase, hold or sell derivative financial instruments for trading and speculative purposes.

Partner Distributions

Redeemable Partnership Units

The Company also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions.

F-15

Revenue Recognition

Equity-Based Compensation

Leases

Income Taxes

F-16

Recent Accounting Developments

F-17

unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing January 1, 2012. Early adoption is permitted. The Company will consider this guidance when performing its annual impairment assessment in 2012.

3.	ACQUISITION

F-18


Shares issued	$	3,105

Note payable due to Milbank		3,181

Cash paid on date of acquisition		4,170

Contingent consideration		1,726


Total purchase consideration	$	12,182


Cash	$	813

Prepaid expenses		57

Furniture and equipment		20

Deferred revenue		(871	)

Net deferred tax liability		(107	)

Capital lease		(17	)


Total fair value of net tangible assets acquired		(105	)

Goodwill		3,271

Customer relationships (20 years)		8,200

Non-compete agreements (3-5 years)		816


Total purchase consideration	$	12,182


	Pro Forma Twelve Months Ended December 31, 2011		Pro Forma Twelve Months Ended December 31, 2010

Total Revenue	$	47,522	$	41,617

Net Income	$	15,896	$	12,122

Milbank revenue and income before provision for income taxes for the two months ended December 31, 2011 that are included in the Consolidated Statement of Operations are $871 and $367, respectively.

F-19

4.	INVESTMENTS AND FAIR VALUE MEASUREMENTS

Summarized financial information for investments accounted for under the equity method as of and for the years ended December 31, 2011, 2010 and 2009 are as follows:


	As of and for the Years Ended
	December 31,
	2011		2010		2009

Total assets	$	257,349	$	266,979	$	268,770


Total liabilities	$	20,412	$	1,712	$	7,385


Income	$	17,398	$	18,771	$	19,433
Operating expenses		2,161		2,236		2,045
Realized and unrealized gain (loss) on investments		5,675		6,533		49,415

Net increase in members capital resulting from operations	$	20,913	$	23,068	$	66,802

Fair Value Measurements

F-20

Investments measured and reported at fair value are classified and disclosed in one of the following categories.

•

Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives.

•

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2011:


	Level I		Level II		Level III		Total

Assets
Cash equivalents – Money Market Funds	$	1,037	$	—	$	—	$	1,037

Free Standing Derivatives – Put Options		94		—		—		94

	$	1,131	$	—	$	—	$	1,131

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2010:

Level I

Level II

Level III

Total

Assets

Cash equivalents – Money Market Funds

1,034

—

1,034

F-21

5.	RECEIVABLES, NET

The following is a summary of receivables as of December 31, 2011 and 2010:


	2011			2010
Management and advisory fees receivable	$	1,433		$	1,442
Unbilled receivables		1,134			1,196
Other receivables		57			2

Receivables		2,624			2,640
Allowance for doubtful receivables		(386	)		(393	)

Receivables, net	$	2,238		$	2,247

6.	FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of December 31, 2011 and 2010:


	2011			2010
Leasehold improvements	$	3,466		$	2,982
Furniture and equipment		3,360			3,190
Artwork		338			332

Total cost		7,164			6,504
Accumulated depreciation and amortization		(4,889	)		(4,397	)

Furniture, equipment and leasehold improvements, net	$	2,275		$	2,107

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $492, $463 and $522, respectively.

In 2009, the Company dissolved LGI and wrote off all related fixed assets, totaling $43.

7.	GOODWILL

The following is a summary of the changes to the carrying amount of goodwill as of December 31, 2011 and 2010:


	2011			2010
January 1,
Gross balance	$	28,408		$	26,731
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance		10,993			9,316
Purchase price adjustments from earnouts		419			929
Acquisition of Milbank		3,271			—
Deferred tax liability adjustment		—			748

December 31,
Gross balance		32,098			28,408
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance	$	14,683		$	10,993

F-22

8.	INTANGIBLE ASSETS

The following is a summary of intangible assets as of December 31, 2011 and 2010:


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, January 1, 2011	$	7,710		$	750		$	8,460
Acquisition of certain assets of Milbank		8,200			816			9,016

Balance, December 31, 2011		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years

Accumulated amortization
Balance, January 1, 2011		(2,351	)		(338	)		(2,689	)
Amortization expense		(793	)		(184	)		(977	)

Balance, December 31, 2011		(3,144	)		(522	)		(3,666	)

Net book value	$	12,766		$	1,044		$	13,810


Cost
Balance, January 1, 2010	$	7,710		$	750		$	8,460

Balance, December 31, 2010		7,710			750			8,460
Useful lives		15-20 years			5 years

Accumulated amortization
Balance, January 1, 2010		(1,585	)		(188	)		(1,773	)
Amortization expense		(766	)		(150	)		(916	)

Balance, December 31, 2010		(2,351	)		(338	)		(2,689	)

Net book value	$	5,359		$	412		$	5,771

Amortization expense related to the intangible assets was $1,009 for the year ended December 31, 2009.

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:


2012	$	1,447
2013		1,370
2014		1,229
2015		1,100
2016		1,044
Thereafter		7,620

Total	$	13,810

F-23

9.	NOTES PAYABLE

The following is a summary of notes payable:


	December 31, 2011
	Interest Rate			Amount

Principal on fixed rate notes		5.0	%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		1,558
Interest payable					70

Total, December 31, 2011				$	4,809


	December 31, 2010
	Interest Rate			Amount

Principal on fixed rate notes		2.38	%	$	450
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		2,438
Interest payable					69

Total, December 31, 2010				$	2,957

Future amounts payable under the notes payable are as follows:


2012	$	1,469
2013		1,556
2014		1,150
2015		564

Total	$	4,739

10.

SETTLEMENT WITH FORMER SHAREHOLDERS OF THE LONGCHAMP GROUP, INC.

11.

COMMITMENTS AND CONTINGENCIES

Lease Commitments

F-24

Future minimum lease payments and rentals under lease agreements which expire through 2017 are as follows:


	Minimum Lease Commitments		Non- cancellable Subleases			Minimum Net Rentals

2012	$	3,448	$	(757	)	$	2,691
2013		3,342		(724	)		2,618
2014		3,345		(453	)		2,892
2015		3,293		(473	)		2,820
2016		3,239		(473	)		2,766
Thereafter		2,429		(354	)		2,075

Total	$	19,096	$	(3,234	)	$	15,862

The Company has capital leases for certain office equipment. The principal balance of these leases was $55 and $9 as of December 31, 2011 and 2010, respectively.

Partners’ Interests and Options Granted

In April 2007, certain former investor members of SAMG LLC sold their membership interests in SAMG LLC to Vulcan Wealth Management Group LLC (“Vulcan”). In addition, Vulcan invested an additional $10,000 in SAMG LLC in 2007, for an approximately 8% interest, and SAMG LLC incurred $592 of capital issuance costs associated with the transaction that were charged against the proceeds.

F-25

Contingent Consideration

In connection with its acquisition of MCG in October 2008, the Company entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of the closing of the acquisition. The contingent consideration related to the MCG acquisition is recorded on the date when the contingency is resolved. Contingent consideration payments made during the three years ended December 31, 2011, 2010 and 2009 were reflected in financing activities in the consolidated statement of cash flows.

Indemnification Agreement

12.

PARTNERS’ INCENTIVE ALLOCATIONS AND ALLOCATION OF INCOME AND LOSSES

Pursuant to Silvercrest’s Operating Agreement as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the years ended December 31, 2011, 2010 and 2009 amounted to $5,073, 2,691 and $7,171, respectively, and are included in excess of liabilities, redeemable partners’ capital and partners’ capital over assets in the Consolidated Statements of Financial Condition.

13.

NOTES RECEIVABLE FROM PARTNERS

F-26

Notes receivable from partners are as follows:


	2011			2010
Balance, January 1,	$	6,125		$	7,179
Repayment of notes		(1,083	)		(940	)
Forgiveness of notes receivable		(34	)		(508	)
Interest accrued and capitalized on notes receivable		180			207
New notes receivable issued to partners		836			187

Balance, December 31,	$	6,024		$	6,125

14.

RELATED PARTY TRANSACTIONS

F-27

15.

INCOME TAXES


	Year Ended December 31,
	2011			2010			2009
Current Provision:
Federal	$	6		$	(9	)	$	8
State and local		835			983			88

Total Current Provision	$	841		$	974		$	96


Deferred (Benefit) Provision:
Federal		(281	)		(224	)		(152	)
State and local		6			(93	)		(265	)

Total Deferred Benefit		(275	)		(317	)		(417	)

Total Provision (Benefit) for Income Taxes		566			657			(321	)

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their bases for income tax purposes.

A summary of the tax effects of the temporary differences is as follows:

The following table reconciles the provision for income taxes to the U.S. Federal statutory tax rate:


	Year Ended December 31,
	2011			2010			2009

Statutory U.S. federal income tax rate		35.00	%		35.00	%		35.00	%
Income passed through to Partners		(35.00	)%		(35.00	)%		(35.00	)%
State and local income taxes		5.72	%		5.68	%		-1.41	%

Other		-1.99	%		-0.02	%		-2.72	%


Effective income tax rate		3.73	%		5.66	%		-4.14	%

The Company files U.S. Federal, state and local tax returns. The 2009, 2010, and 2011 tax years of the Company remain subject to examination by U.S. Federal and most state and local tax authorities.

F-28

16.

REDEEMABLE PARTNERSHIP UNITS

17.

EQUITY-BASED COMPENSATION

F-29

The Company utilized both discounted cash flow and guideline company valuation methods to determine the grant date fair value of the Deferred Equity Units. The grant date fair values of Performance Units were determined by applying a performance probability factor to the Deferred Equity Unit Value. These methodologies included the use of third party data and discounts for lack of control and marketability. All Deferred Equity Units are considered to be liability awards and are adjusted to fair value at the end of each reporting period. For the years ended December 31, 2011 and 2010, the Company recorded compensation expense of $1,060 and $669, respectively, of which $128 and $123, respectively, relates to the Performance Units given that there is an explicit service period associated with the deferred Equity Units, and the likelihood that the performance target will be met is considered probable. Distributions include cash distributions paid on Liability Awards. Cash distributions paid on awards expected to be forfeited were $20 and $9 for the years ended December 31, 2011 and 2010, respectively, and are part of total compensation expense for the years then ended. As of December 31, 2011 and 2010, there was $2,260 and $2,114, respectively, of estimated unrecognized compensation expense related to unvested awards. As of December 31, 2011 and 2010, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 2.65 and 3.17 years, respectively.

A summary of this equity grant by the Company as of December 31, 2011, 2010 and 2009 during the periods then ended is presented below:


	Deferred Equity Units					Performance Units
	Units			Fair Value per unit		Units			Fair Value per unit
Deferred equity unit awards outstanding at January 1, 2010		—					—
Granted		15,808					7,904
Vested		—					—
Forfeited		—					—
Deferred equity unit awards outstanding at December 31, 2010		15,808		$	148.35		7904		$	81.19
Granted		10,802					5401
Vested		(4,257	)				—
Forfeited		—					(541	)
Deferred equity unit awards outstanding at December 31, 2010		22,353		$	157.16		12,764		$	60.24

The Company expects 10% of all awards to be forfeited and the related service period is four years.

18.

DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

F-30

that (i) the Award for any Participant in any Plan Year shall, in no event, exceed $10 per Unit and (ii) the aggregate number of Units is subject to increase or decrease, by the Administrator (as defined) in his sole discretion, during such Plan Year to reflect the addition of new employees becoming Participants or to reflect the termination of employment of any Participant. Each Participant may elect to receive their Award in cash, on a deferred basis, or a combination of both subject to various provisions in the Deferred Plan. The Deferred Plan was discontinued as of December 31, 2009. During the year ended December 31, 2010, $154 of payments were made to participants under the plan. The remaining liability at December 31, 2010 was $70, which was paid in full in March 2011.

19.

SOFT DOLLAR ARRANGEMENTS

The Company obtains research and other services through “soft dollar” arrangements. The Company receives credits from broker-dealers whereby technology-based research, market quotation and/or market survey services are effectively paid for in whole or in part by “soft dollar” brokerage arrangements. Section 28(e) of the Securities Exchange Act of 1934, as amended, provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services. To rely on the safe harbor offered by Section 28(e), (i) the Company must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities. If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services. For the years ended December 31, 2011, 2010 and 2009, the Company utilized “soft dollar” credits of $861, $812 and $724, respectively.

20.

SUBSEQUENT EVENT

ACQUISITION

The Company has evaluated subsequent events through May 11, 2012, which is the date the consolidated financial statements were available to be issued.

* * * * * *

F-31

Silvercrest L.P.

And Subsidiaries

Condensed Consolidated Statements of Financial Condition

(Unaudited)

(In thousands)


	March 31,			December 31,
	2012			2011
Assets
Cash and cash equivalents	$	4,095		$	7,354
Restricted certificates of deposit and escrow		1,046			1,130
Investments		74			1,128
Receivables, net		2,148			2,238
Due from Silvercrest Funds		1,918			2,043
Furniture, equipment and leasehold improvements, net		2,167			2,275
Goodwill		14,683			14,683
Intangible assets, net		13,448			13,810
Prepaid expenses and other assets		875			601

Total assets	$	40,454		$	45,262


Liabilities, Redeemable Partners’ Capital and Partners’ Deficit
Accounts payable and accrued expenses		3,667			4,365
Accrued compensation		1,176			2,915
Notes payable		4,362			4,809
Deferred rent		3,159			3,287
Deferred tax and other liabilities		281			375

Total liabilities		12,645			15,751


Redeemable partners’ capital		86,148			91,201
Notes receivable from partners		(5,229	)		(6,024	)

Total redeemable partners’ capital		80,919			85,177


Commitments and Contingencies (Note 10)

Partners’ Deficit
Partners’ capital		45,127			44,359
Excess of liabilities, redeemable partners’ capital and partners’ capital over assets		(98,237	)		(100,025	)

Total partners’ deficit		(53,110	)		(55,666	)

Total liabilities, redeemable partners’ capital and partners’ deficit	$	40,454		$	45,262

See accompanying notes to condensed consolidated financial statements.

F-32

Silvercrest L.P.

And Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands)


	Three months ended March 31,
	2012			2011
Revenue
Management and advisory fees	$	10,682		$	8,970
Performance fees and allocations		—			18
Family office services		1,198			1,077

Total revenue		11,880			10,065


Expenses
Compensation and benefits		4,768			4,169
General and administrative		2,566			2,157

Total expenses		7,334			6,326

Income before other income (expense)		4,546			3,739

Other income (expense)
Other income (expense)		32			(203	)
Interest income		45			46
Interest expense		(64	)		(39	)

Total other income (expense)		13			(196	)


Income before (provision) benefit for income taxes		4,559			3,543
(Provision) benefit for income taxes		(270	)		66

Net income	$	4,289		$	3,609

See accompanying notes to condensed consolidated financial statements.

F-33

Silvercrest L.P.

And Subsidiaries

Condensed Consolidated Statements of Partners’ Deficit

(Unaudited)

(In thousands)


	Partners’ Capital			Excess of Liabilities, Redeemable Partners’ Capital and Partners’ Capital over Assets			Total Partners’ Deficit

January 1, 2011	$	41,909		$	(66,939	)	$	(25,030	)
Contribution from partners		—			535			535
Distributions to partners		(272	)		(5,787	)		(6,059	)
Equity-based compensation		—			490			490
Accretion to redemption value of redeemable partnership units		—			(11,777	)		(11,777	)
Net income		955			2,654			3,609

March 31, 2011	$	42,592		$	(80,824	)	$	(38,232	)


January 1, 2012	$	44,359		$	(100,025	)	$	(55,666	)
Contribution from partners		—			112			112
Distributions to partners		(323	)		(7,532	)		(7,855	)
Equity-based compensation		—			1,014			1,014
Accretion to redemption value of redeemable partnership units		—			4,994			4,994
Net income		1,090			3,199			4,289

March 31, 2012	$	45,127		$	(98,237	)	$	53,110

See accompanying notes to condensed consolidated financial statements.

F-34

Silvercrest L.P.

And Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three months ended March 31,
	2012			2011
Cash Flows From Operating Activities
Net income	$	4,289		$	3,609
Adjustments to reconcile net income to net cash provided by operating activities:
Equity-based compensation		431			206
Depreciation and amortization		475			315
Deferred rent		(121	)		(125	)
Deferred income taxes		22			(242	)
Non-cash interest income		(43	)		(44	)
Distributions received from investment funds		961			1,187
Other		(4	)		—
Cash flows due to changes in operating assets and liabilities:
Receivables and due from Silvercrest funds		215			182
Prepaid expenses and other assets		(273	)		(401	)
Payables and accrued expenses		(232	)		(256	)
Accrued compensation		(1,152	)		(1,789	)
Other liabilities		(118	)		131
Interest payable on notes payable		52			25

Net cash provided by operating activities		4,502			2,798


Cash Flows From Investing Activities
Restricted certificates of deposit and escrow	$	84		$	83
Acquisition of furniture, equipment and leasehold improvements		(5	)		(72	)
Purchase of investments		(42	)		—
Proceeds from sale of investments		139			—

Net cash provided by investing activities		176			11


Cash Flows From Financing Activities
Earnouts paid related to acquisitions	$	(465	)	$	(362	)
Proceeds from issuance of partner interests		—			13
Redemptions of partner interests		(63	)		—
Repayments of notes payable		(499	)		(519	)
Payments on capital leases		(5	)		(2	)
Distributions to partners		(7,855	)		(6,059	)
Payments from partners on notes receivable		950			927

Net cash used in financing activities		(7,937	)		(6,002	)

See accompanying notes to condensed consolidated financial statements.

F-35


	Three months ended March 31,
	2012			2011
Cash Flows From Operating Activities
Net increase decrease in cash and cash equivalents		(3,259	)		(3,193	)
Cash and cash equivalents, beginning of period		7,354			7,025

Cash and cash equivalents, end of period	$	4,095		$	3,832

See accompanying notes to condensed consolidated financial statements.

F-36

Silvercrest L.P.

And Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Three months ended March 31,
	2012		2011

Supplemental Disclosures of Cash Flow Information
Net cash paid during the period for:
Income taxes	$	196	$	359
Interest		46		66

Supplemental Disclosures of Non-cash Financing Activities
Notes receivable:
From partners for capital contributions	$	112	$	522

See accompanying notes to condensed consolidated financial statements.

F-37

Silvercrest L.P.

and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

As of and For the Three Months Ended March 31, 2012 and 2011

(Dollars in thousands)

1.	ORGANIZATION AND BUSINESS

Silvercrest was formed on December 10, 2008 and commenced operations on January 1, 2009 along with its general partner Silvercrest GP LLC (“GP LLC”) as part of a restructuring that was completed to organize the Company more in line with industry standards and to increase tax efficiency. Pursuant to the reorganization each of the members of Silvercrest Asset Management Group LLC (“SAMG LLC”) contributed their limited liability company interests in SAMG LLC to Silvercrest L.P. in return for limited partnership interests in Silvercrest L.P. and member interests in Silvercrest GP LLC, such that immediately after giving effect to such issuance each member’s percentage ownership of the aggregate limited partnership interests was equal to its ownership interests immediately prior to such issuance, but was reduced pro rata to take into account the 1% interest in Silvercrest L.P. owned by Silvercrest GP LLC, the general partner of Silvercrest L.P. As a result of the restructuring, SAMG LLC became a wholly owned subsidiary of Silvercrest. The reorganization was accounted for as a transaction between entities under common control and all balances of SAMG LLC were carried over to Silvercrest at their carrying values on December 31, 2008.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Silvercrest and its wholly-owned subsidiaries, SAMG LLC, SFS, LGI, MCG, Silvercrest Investors LLC and Silvercrest Investors II LLC as of and for the three months ended March 31, 2012. All intercompany transactions and balances have been eliminated.

The initial step in the Company’s determination of whether a fund for which Silvercrest is the general partner is required to be consolidated is assessing whether the fund meets the definition of a variable interest entity (VIE). None of funds for which the Company is the general partner, met the definition of a VIE during the three months ended March 31, 2012 and 2011 and two years ended December 31, 2011, as the total equity at risk of each fund is sufficient for the fund to finance its activities without additional subordinated financial support provided by any parties, including the equity holders.

F-38

As of and for the three month periods ended March 31, 2012 and 2011 and the year ended December 2011, all of the funds for which we are the general partner have substantive “kick-out” rights and therefore Silvercrest did not consolidate any of the Silvercrest Funds.

Segment Reporting

Use of Estimates

Cash and Cash Equivalents

The Company considers all highly liquid securities with original maturities of 90 days or less when purchased to be cash equivalents.

Restricted Certificates of Deposit

Certain certificates of deposit held at a major financial institution are restricted and serve as collateral for letters of credit for the Company’s lease obligations as described in Note 11.

Equity Method Investments

F-39

method investments approximate their fair value at March 31, 2012 and 2011. The fair value of the equity method investments is estimated based on the Company’s share of the fair value of net assets of the equity method investee which consist of Level I and Level II securities. No impairment charges related to equity method investments were recorded during the three months ended March 31, 2012 and 2011.

Receivables and Due from Silvercrest Funds

Furniture, Equipment and Leasehold Improvements

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting. The acquisition method of accounting requires that purchase price, including the fair value of contingent consideration, of the acquisition be allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Contingent consideration is recorded as part of the purchase price when such consideration is not based on continuing employment of the selling shareholders. Contingent consideration that is related to continuing employment is recorded as compensation expense. Payments made for contingent consideration recorded as part of an acquisition’s purchase price are reflected as financing activities in the Company’s statements of cash flows.

Goodwill and Intangible Assets

The Company has one reporting unit at March 31, 2012 and 2011. No goodwill impairment charges were recorded during the three months ended March 31, 2012 and 2011.

F-40

Long-lived Assets

Derivative Instruments

The Company records the changes in fair value of derivative instruments in “Other income (expenses)” in the consolidated statement of operations.

The Company does not purchase, hold or sell derivative financial instruments for trading and speculative purposes.

Partner Distributions

Partner incentive allocations, which are determined by the general partner and approved by a vote of the partners, can be formula based or discretionary. Incentive allocations are considered distributions of net income as stipulated by the Company’s Amended and Restated Limited Partnership Agreement and are recognized in the period in which they are paid. In the event there is insufficient distributable cash flow to make incentive distributions the general partner in its sole and absolute discretion can determine not to make any distributions called for under the partnership agreement. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership.

Redeemable Partnership Units

The Company also makes distributions to its partners of various nature including incentive payments, profit distributions and tax distributions.

F-41

Revenue Recognition

Revenue is recognized ratably over the period in which services are performed. Revenue consists primarily of investment advisory fees, family office services fees and fund management fees. Investment advisory fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter, based on a contractually specified percentage of the assets managed. For investment advisory fees billed in advance, the value of assets managed is determined based on the value of the customer’s account as of the last trading day of the preceding quarter. For investment advisory fees billed in arrears the value of assets managed is determined based on the value of the customer’s account on the last day of the quarter being billed. Family office services fees are typically billed quarterly in advance after the beginning of the quarter or in arrears after the end of the quarter based on a contractual percentage of the assets managed or based on fixed fee arrangement. Management fees from proprietary and non-proprietary funds is calculated as a percentage of net asset values measured at the beginning of a month or quarter or at the end of a quarter, depending on the fund.

The Company accounts for performance based revenue in accordance with ASC 605-20-S99, “Accounting for Management Fees Based on a Formula”, by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements and no contingencies remain. Performance fee contingencies are typically resolved at the end of each annual period. In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets. The Company records performance fees and allocations as a component of revenue.

Equity-Based Compensation

Leases

Income Taxes

F-42

Recent Accounting Developments

The guidance also requires enhanced disclosures about fair value measurements, including, among other things, (a) for fair value measurements categorized within Level III of the fair value hierarchy, (1) a quantitative disclosure of the unobservable inputs and assumptions used in the measurement, (2) the valuation process used by the reporting entity, and (3) a narrative description of the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any, and (b) the categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed (for example, a financial instrument that is measured at amortized cost in the statement of financial position but for which fair value is disclosed). The guidance also amends disclosure requirements for significant transfers between Level I and Level II and now requires disclosure of all transfers between Levels I and II in the fair value hierarchy.

The amended guidance was effective for the Company on January 1, 2012 and did not have a material impact on the Company’s financial statements.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which provided new accounting guidance on testing goodwill for impairment. The enhanced guidance provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill. In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount. If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit. The guidance is effective for the Company for interim and annual periods commencing January 1, 2012. Early adoption is permitted. The Company will consider this guidance when performing its annual impairment assessment in 2012.

3.	ACQUISITION

F-43

Company’s presence in the New York market and the Company obtains investment managers that have significant experience and knowledge of the industry. Milbank’s clients will gain access to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. Under the terms of the Asset Purchase Agreement, the Company paid cash consideration of $3,357 (net of cash acquired of $813), issued units of the Company with a fair value of $3,105, and issued a promissory note to Milbank for $3,181. The promissory note bears interest at a rate of 5% per annum and is payable in four annual installments (see Note 9). The purchase price allocation includes an estimate of the fair value of the 19,757 units issued to the former owners of Milbank which was determined by calculating a per unit limited partnership interest fair value in the Company utilizing both discounted cash flow and guideline company valuation methodologies. Furthermore, as part of the Asset Purchase Agreement, the Company is obligated to make future earnout payments to Milbank. The Company determined that the acquisition-date fair value of the contingent consideration was $1,726 based on the likelihood that the financial and performance targets will be achieved. As of March 31, 2012, the Company determined that no fair value adjustments to contingent consideration were required as the likelihood that the financial and performance targets will be achieved has not changed since the acquisition date. Under the terms of the Asset Purchase Agreement, Milbank is entitled to receive six earnout payments. The earnout periods are as follows: November 1, 2011 through December 31, 2011, full calendar years 2012, 2013, 2014 and 2015, and January 1, 2016 through October 31, 2016. Each earnout payment is equal to 20% of EBITDA, as defined in the Asset Purchase Agreement. There is no required EBITDA milestone that needs to be achieved in order for an earnout payment to be made. The amount of the earnout payments will vary depending on the level of EBITDA that is generated in each respective earnout period. The fair value of the contingent consideration was based on discounted cash flow models using projected EBITDA for each earnout period. The discount rate applied to the to the projected EBITDA was determined based on the weighted average cost of capital for the Company and considered that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments. During 2011, the Company incurred $222 in costs related to the acquisition of Milbank, and has included these in general, administrative and other in the Consolidated Statement of Operations.


Shares issued	$	3,105

Note payable due to Milbank		3,181

Cash paid on date of acquisition		4,170

Contingent consideration		1,726


Total purchase consideration	$	12,182


Cash	$	813

Prepaid expenses		57

Furniture and equipment		20

Deferred revenue		(871	)

Net deferred tax liability		(107	)

Capital lease		(17	)


Total fair value of net tangible assets acquired		(105	)

Goodwill		3,271

Customer relationships (20 years)		8,200

Non-compete agreements (3-5 years)		816


Total purchase consideration	$	12,182

F-44

The pro forma information below represents consolidated results of operations as if the acquisition of Milbank occurred on January 1, 2011. The pro forma information has been included for comparative purposes and is not indicative of results of operations of the consolidated Company had the acquisition occurred as of January 1, 2011, nor is it necessarily indicative of future results.


	Pro Forma Three Months Ended March 31, 2011

Total Revenue	$	11,088
Net Income	$	3,903

4.	INVESTMENTS AND FAIR VALUE MEASUREMENTS

Investments include $74 and $1,034 as of March 31, 2012 and December 31, 2011, respectively, representing the Company’s equity method investments in affiliated investment funds which have been established and managed by the Company and its affiliates. The Company’s financial interest in these funds can range up to 2%. Despite the Company’s insignificant financial interest, the Company exerts significant influence over these funds as the Company typically serves as the general partner, managing member or equivalent for these funds. During 2007, the Silvercrest Funds granted rights to the unaffiliated investors in each respective fund to provide that a simple majority of the fund’s unaffiliated investors will have the right, without cause, to remove the general partner or equivalent of that fund or to accelerate the liquidation date of that fund in accordance with certain procedures. At March 31, 2012 and 2011, the Company determined none of the Silvercrest Funds were required to be consolidated. The Company’s involvement with these entities began on the dates that they were formed, which ranges from July 2003 to July 2008.

The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the United States Securities and Exchange Commission. As of and for the three months ended March 31, 2012, no individual equity method investment held by the Company met the significance criteria. As such, the Company is not required to present summarized financial information for investments accounted for under the equity method.

In 2011, the Company entered into derivative contracts that were not designated as accounting hedges. The fair value of these derivative assets is recorded within Investments in the Consolidated Statement of Financial Condition as of December 31, 2011. The Company entered into these derivative instruments in order to mitigate the risk of any exposure during the fourth quarter between the values of certain investor redemptions and the actual proceeds received by one of our funds when the underlying securities to these redemptions were sold. As of March 31, 2012, all derivative assets had been sold. For the three months ended March 31, 2012, realized gains and (losses) for options and other derivative contracts were $8 and ($10), respectively.

Fair Value Measurements

F-45

Investments measured and reported at fair value are classified and disclosed in one of the following categories.

•

Level I: Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments in Level I include listed equities and listed derivatives.

•

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of March 31, 2012:

Level I

Level II

Level III

Total

Assets

Cash equivalents – Money Market Funds

1,038

—

1,038

The following table summarizes the valuation of the Company’s financial assets by the fair value hierarchy as of December 31, 2011:


	Level I		Level II		Level III		Total

Assets
Cash equivalents – Money Market Funds	$	1,037	$	—	$	—	$	1,037

Free Standing Derivatives – Put Options		94		—		—		94

	$	1,131	$	—	$	—	$	1,131

F-46

5.	RECEIVABLES, NET

The following is a summary of receivables as of March 31, 2012 and December 31, 2011:


	2012			2011
Management and advisory fees receivable	$	801		$	1,433
Unbilled receivables		1,732			1,134
Other receivables		1			57

Receivables		2,534			2,624
Allowance for doubtful receivables		(386	)		(386	)

Receivables, net	$	2,148		$	2,238

6.	FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET

The following is a summary of furniture, equipment and leasehold improvements, net as of March 31, 2012 and December 31, 2011:


	2012			2011
Leasehold improvements	$	3,466		$	3,466
Furniture and equipment		3,365			3,360
Artwork		338			338

Total cost		7,169			7,164
Accumulated depreciation and amortization		(5,002	)		(4,889	)

Furniture, equipment and leasehold improvements, net	$	2,167		$	2,275

Depreciation expense for the three months ended March 31, 2012 and 2011 was $113 and $97, respectively.

7.	GOODWILL

The following is a summary of the changes to the carrying amount of goodwill as of March 31, 2012 and December 31, 2011:


	2012			2011
Beginning of Period:
Gross balance	$	32,098		$	28,408
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance		14,683			10,993
Purchase price adjustments from earnouts		—			419
Acquisition of Milbank		—			3,271

End of period
Gross balance		32,098			32,098
Accumulated impairment losses		(17,415	)		(17,415	)

Net balance	$	14,683		$	14,683

8.	INTANGIBLE ASSETS

The following is a summary of intangible assets as of March 31, 2012 and December 31, 2011:


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, March 31, 2012		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years

Accumulated amortization
Balance, January 1, 2012		(3,144	)		(522	)		(3,666	)
Amortization expense		(274	)		(88	)		(362	)

Balance, March 31, 2012		(3,418	)		(610	)		(4,028	)

Net book value	$	12,492		$	956		$	13,448

F-47


	Customer Relationships			Other Intangible Assets			Total
Cost
Balance, January 1, 2012	$	7,710		$	750		$	8,460
Acquisition of certain assets of Milbank		8,200			816			9,016

Balance, December 31, 2011		15,910			1,566			17,476
Useful lives		15-20 years			3-5 years

Accumulated amortization
Balance, January 1, 2011		(2,351	)		(338	)		(2,689	)
Amortization expense		(793	)		(184	)		(977	)

Balance, December 31, 2011		(3,144	)		(522	)		(3,666	)

Net book value	$	12,766		$	1,044		$	13,810

Amortization related to the Company’s finite life intangible assets is scheduled to be expensed over the next five years and thereafter as follows:


Remainder of 2012	$	1,085
2013		1,370
2014		1,229
2015		1,100
2016		1,044
Thereafter		7,620

Total	$	13,448

9.	NOTES PAYABLE

The following is a summary of notes payable:


	March 31, 2012
	Interest Rate			Amount

Principal on fixed rate notes		5.0	%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		1,104
Interest payable					77

Total, March 31, 2012				$	4,362

F-48


	December 31, 2011
	Interest Rate			Amount

Principal on fixed rate notes		5.0	%	$	3,181
Variable rate notes issued for redemption of partners’ interest (see Note 16)		Prime plus 1	%		1,558
Interest payable					70

Total, December 31, 2011				$	4,809

Future amounts payable under the notes payable are as follows:


Remainder of 2012	$	1,015
2013		1,556
2014		1,150
2015		564

Total	$	4,285

10.

COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space pursuant to operating leases that are subject to specific escalation clauses. Rent expense charged to operations for the three months ended March 31, 2012, and 2011 amounted to $864 and $832, respectively The Company received sub-lease income from subtenants for the three months ended March 31, 2012 and 2011 of $255 and $255, respectively. Therefore, for the three months ended March 31, 2012 and 2011, net rent expense amounted to $609 and $577, respectively, and is included in general, administrative and other expenses in the Consolidated Statement of Operations.

F-49

Future minimum lease payments and rentals under lease agreements which expire through 2017 are as follows:


	Minimum Lease Commitments		Non- cancellable Subleases			Minimum Net Rentals

Remainder of 2012	$	2,601	$	(469	)	$	2,132
2013		3,342		(600	)		2,742
2014		3,345		(317	)		3,028
2015		3,293		(331	)		2,962
2016		3,239		(331	)		2,908
Thereafter		2,429		(248	)		2,181

Total	$	18,249	$	(2,296	)	$	15,953

In 2010, an escrow account was funded by a sub-tenant whose sub-lease with the Company commenced on January 1, 2011. Pursuant to the sub-lease, the tenant was required to deposit the first 16 months of rent into the escrow account totaling $452. This account has been recorded as restricted certificates of deposit and escrow on the consolidated balance sheet. As of March 31, 2012, the remaining balance in the escrow account was $29.

The Company recorded a loss on sub-lease charge in 2011 of $150 (on a net present value basis). The related liability of $247, established in January 2011, was reduced by lease payments during the year of $85, resulting in an ending balance at December 31, 2011 of $162. This liability was further reduced by lease payments during the three months ended March 31, 2012 of $21, resulting in an ending balance at March 31, 2012 of $141. This liability is included in Deferred Rent on the Consolidated Statement of Financial Condition.

The Company has capital leases for certain office equipment. The principal balance of these leases was $49 and $55 as of March 31, 2012 and December 31, 2011, respectively.

Contingent Consideration

In connection with its acquisition of MCG in October 2008, the Company entered into a contingent consideration agreement whereby the former members of MCG were entitled to contingent consideration equal to 22% of adjusted annual EBITDA for each of the five years subsequent to the date of acquisition. As the acquisition was completed prior to January 1, 2009, contingent consideration is recognized when the contingency is resolved pursuant to the authoritative guidance on business combinations in effect at the date of acquisition. Contingent consideration payments made during the three months ended March 31, 2012 and 2011 were reflected in financing activities in the consolidated statement of cash flows.

Indemnification Agreement

F-50

11.

PARTNERS’ INCENTIVE ALLOCATIONS AND ALLOCATION OF INCOME AND LOSSES

Pursuant to Silvercrest’s Operating Agreement as amended and restated, partner incentive allocations are treated as distributions of net income. The remaining net income or loss after partner incentive allocations is generally allocated to the partners based on their pro rata ownership. Net income allocation is subject to the recovery of the allocated losses of prior periods. Distributions of partner incentive allocations of net income for the three months ended March 31, 2012 and 2011 amounted to $6,581 and $5,073, respectively, and are included in excess of liabilities, redeemable partners’ capital and partners’ capital over assets in the Consolidated Statements of Financial Condition.

12.

NOTES RECEIVABLE FROM PARTNERS

Notes receivable from partners as of March 31, 2012 and December 31, 2011 are as follows:


	March 31, 2012			December 31, 2011
Balance, beginning of period	$	6,024		$	6,125
Repayment of notes		(950	)		(1,083	)
Forgiveness of notes receivable		—			(34	)
Interest accrued and capitalized on notes receivable		43			180
New notes receivable issued to partners		112			836

Balance, end of period	$	5,229		$	6,024

Full recourse and limited recourse notes receivable from partners as of March 31, 2012 and December 31, 2011 are $2,737 and $2,492 and $3,549 and $2,475, respectively. There is no allowance for credit losses on notes receivable from partners as of March 31 2012 and December 31, 2011. During 2011, the Company forgave $34 of notes receivable in connection with the termination of a partner whose corresponding capital was forfeited.

13.

RELATED PARTY TRANSACTIONS

F-51

Silvercrest Capital Appreciation Fund LLC (currently in liquidation), Silvercrest International Equity Fund, L.P., Silvercrest Municipal Special Situations Fund LLC, Silvercrest Municipal Special Situations Fund II LLC, Silvercrest Select Growth Equity Fund, L.P., Silvercrest Global Partners, L.P., Silvercrest Small Cap, L.P. and Silvercrest Special Situations, L.P., which operate and invest separately as stand-alone funds.

For the three months ended March 31, 2012 and 2011, the Company earned from the above activities management fee income, which is included in Management and advisory fees in the Consolidated Statement of Operations, of $2,030 and $1,224, respectively, and performance fees and allocations of $0 and $18, respectively, which is included in performance fees in the Statement of Operations. As of March 31, 2012 and December 31, 2011, the Company was owed $1,918 and $2,043, respectively, from its various funds which are included in Due from Silvercrest Funds in the Consolidated Statements of Financial Condition.

For the three months ended March 31, 2012 and 2011, the Company earned advisory fees of $98 and $177, respectively, from assets managed on behalf of certain of its partners. As of March 31, 2012 and December 31, 2011, the Company is owed approximately $15 and $19, respectively, from certain of its partners, which are included in Due from Silvercrest Funds in the Consolidated Statements of Financial Condition.

14.

INCOME TAXES

The Company had $113 and $115 in deferred tax assets as of March 31, 2012 and March 31, 2011, respectively. These deferred tax assets resulted primarily from temporary differences in deferred rent expense and equity-based compensation. The Company had deferred tax liabilities of $303 and $152 as of March 31, 2012 and March 31, 2011, which primarily related to temporary differences between the financial statement and tax bases of intangible assets.

The current tax expense was $248 and $176 for the three months ended March 31, 2012 and 2011, respectively. The deferred tax expense (benefit) for the three months ended March 31, 2012 and 2011 was $22 and ($242), respectively, which when combined with current tax expense, resulted in an income tax provision (benefit) for the three months ended March 31, 2012 and 2011 of $270 and ($66), respectively, recognized in the Consolidated Statement of Operations.

The change from March 31, 2011 to March 31, 2012 is attributable primarily to the decrease in the projected tax rate applicable to the future operations of SFS offset by the long-term deferred tax liability established through purchase accounting for the book over tax basis of Milbank intangible assets in the fourth quarter of 2011.

In the normal course of business, the Company is subject to examination by federal, state, and local tax regulators. As of March 31, 2012, the Company’s U.S. federal income tax returns for the years 2008 through 2010 are open under the normal three-year statute of limitations and therefore subject to examination.

15.

REDEEMABLE PARTNERSHIP UNITS

F-52

issuance of a promissory note by the Company which is typically paid in installments over four years. The Company has recognized redeemable partners’ capital of $86,148 and $91,201 as of March 31, 2012 and December 31, 2011, respectively, which represents the amount of partners’ capital subject to both put and call rights.

16.

EQUITY-BASED COMPENSATION

F-53

and the likelihood that the performance target will be met is considered probable. Distributions include cash distributions paid on Liability Awards. Cash distributions paid on awards expected to be forfeited were $6 and $3 for the three months ended March 31, 2012 and 2011, respectively, and are part of total compensation expense for each of the three months then ended. As of March 31, 2012 and December 31, 2011, there was $2,094 and $2,222, respectively, of estimated unrecognized compensation expense related to unvested awards. As of March 31, 2012 and December 31, 2011, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 3.92 and 3.17 years, respectively.

A summary of this share activity for the Company as of March 31, 2012 and 2011 and changes during the periods then ended is presented below:


	Deferred Equity Units					Performance Units
	Units			Fair Value per unit		Units			Fair Value per unit
Balance at January 1, 2012		22,353					12,764
Granted		1,000					500
Vested		(6,565	)				—
Forfeited		—					(140	)

Balance at March 31, 2012		16,788		$	207.71		13,124		$	79.39


	Deferred Equity Units					Performance Units
	Units			Fair Value per unit		Units			Fair Value per unit
Balance at January 1, 2011		15,808					7,904
Granted		10,802					5,401
Vested		(3,952	)				—
Forfeited		—					(418	)

Balance at March 31, 2011		22,658		$	148.35		12,887		$	81.19

The Company expects 10% of all awards to be forfeited and the related service period is 4 years.

17.

DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

SAMG LLC has a defined contribution 401(k) savings plan (the “Plan”) for all eligible employees who meet the minimum age and service requirements as defined in the Plan. The Plan is designed to be a qualified plan under sections 401(a) and 401(k) of the Internal Revenue Code. For employees who qualify under the terms of the Plan, on an annual basis Silvercrest matches dollar for dollar an employee’s contributions up to the first four percent of compensation. For the three months ended March 31, 2012 and 2011, Silvercrest accrued matching contributions of $18 and $13, respectively, for the benefit of employees.

F-54

18.

SOFT DOLLAR ARRANGEMENTS

The Company obtains research and other services through “soft dollar” arrangements. The Company receives credits from broker-dealers whereby technology-based research, market quotation and/or market survey services are effectively paid for in whole or in part by “soft dollar” brokerage arrangements. Section 28(e) of the Securities Exchange Act of 1934, as amended, provides a “safe harbor” to an investment adviser against claims that it breached its fiduciary duty under state or federal law (including ERISA) solely because the adviser caused its clients’ accounts to pay more than the lowest available commission for executing a securities trade in return for brokerage and research services. To rely on the safe harbor offered by Section 28(e), (i) the Company must make a good-faith determination that the amount of commissions is reasonable in relation to the value of the brokerage and research services being received and (ii) the brokerage and research services must provide lawful and appropriate assistance to the Company in carrying out its investment decision-making responsibilities. If the use of soft dollars is limited or prohibited in the future by regulation, the Company may have to bear the costs of such research and other services. For the three months ended March 31, 2012 and 2011, the Company utilized “soft dollar” credits of $223 and $215, respectively.

19.

SUBSEQUENT EVENTS

ACQUISITION

On January 5, 2012, the Company signed a Limited Liability Company Purchase Agreement (the “LLC Agreement”) with MW Commodity Advisors, LLC (“Commodity Advisors”) to acquire the LLC interests (“LLC Interests”) of Commodity Advisors. Commodity Advisors is the general partner of MW Commodity Strategies, L.P. (the “Commodity Fund”), a fund whose investment objective is to seek superior risk adjusted returns through strategic, sector-based investments with commodity and macro trading investment managers. The strategic acquisition of Commodity Advisors adds another strategy to the Company’s complete investment management, wealth planning and reporting capabilities, including proprietary value equity and fixed income disciplines and alternative investment advisory services. On April 1, 2012, under the terms of the LLC Agreement, the Company, in exchange for the LLC Interests, issued 631 and 6 units of Silvercrest L.P. and Silvercrest GP LLC, respectively, at closing, with an estimated fair value of $100, which is equal to the difference between the Closing Revenue, as defined, attributable to all limited partners minus Closing Revenue attributable to those limited partners who give notice that they want to withdraw from the Commodity Fund. Furthermore, as part of the LLC Agreement, the Company could be obligated to make a future one-time earnout payment in shares equal to the difference between $800 and the annualized revenue at closing only if incremental revenue, as defined, reaches an amount equal to $400 prior to March 31, 2014, as defined in the LLC Agreement.

LEASED SPACE

On May 1, 2012, the Company reoccupied space at its headquarters that it had previously abandoned in 2009. As a result, the Company expects to release the remaining abandonment-related liability of $662, and to write off prepaid interest expense of $86, resulting in a net lease abandonment reversal of $576.

The Company has evaluated subsequent events through July 17, 2012, which is the date the consolidated financial statements were available to be issued.

* * * * * *

F-55

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010


	SEPTEMBER 30, 2011				DECEMBER 31, 2010
	(unaudited)
ASSETS
Cash and cash equivalents			$	339,099			$	163,256
Investments in securities and partnerships				8,247				7,818
Accounts receivable				710,965				97,148
Prepaid taxes				—				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $285,068 and $284,168)				28,426				27,073

Security deposit				15,220				15,220
Prepaid expenses and other				79,552				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	11,708,030			$	18,066,684
Investments in securities		102,190,687				123,483,737
Investments in Funds		167,976,499				198,373,114
Redemptions receivable from investments in Funds		395,139				9,624,700
Accrued income		101,398				173,463
Due from partner		81,402				—
Prepaid expenses and other		119,190		282,572,345		153,628		349,875,326

TOTAL ASSETS			$	283,753,854			$	350,326,654


LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Accrued expenses			$	39,210			$	21,400
Taxes payable				293,543				—
Deferred taxes				53,668				91,122
Consolidated Milbank Partnerships:
Contributions received in advance		—				500,000
Accrued expenses		287,743				639,584
Redemptions payable		2,211,744				34,305,163
Securities sold short		2,541,031		5,040,518		4,434,420		39,879,167

Total Liabilities			$	5,426,939			$	39,991,689

Commitments and Contingencies (see Note 5)

The accompanying notes are an integral part of these consolidated financial statements.

F-56

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

(continued)


	September 30, 2011		December 31, 2010
	(unaudited)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding	$	196	$	196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding		125		125
Additional paid in capital		454,839		454,839
Retained earnings		1,190,660		867,957

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity		1,645,820		1,323,117
Minority interests in Consolidated Milbank Partnerships		276,681,095		309,011,848

Total Stockholders’ Equity		278,326,915		310,334,965

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	283,753,854	$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-57

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011						2010
	(unaudited)						(unaudited)
REVENUES:
Investment advisory fees				$	1,501,604				$	1,355,072
Other income					535					1,016
Consolidated Milbank Partnerships
Dividends	$	1,629,197					$	1,477,273
Interest		394,230			2,023,427			521,669		1,998,942

Total revenues					3,525,566					3,355,030

EXPENSES:
Compensation and benefits					3,780,024					3,551,485
Rent					130,348					130,157
Insurance					105,167					99,247
Office and administrative					138,384					152,014
Computer services					80,251					69,574
Professional fees					134,371					27,806
Depreciation					900					900
Consolidated Milbank Partnerships:
Management and advisory fees		1,409,795						1,240,705
Interest and dividends		232,863						223,503
Professional fees		266,334						285,558
Office and administrative		42,694						127,245
Other expenses		83,436			2,035,122			90,158		1,967,169

Total expenses					6,404,567					5,998,352

LOSS BEFORE NET GAIN (LOSS) FROM CONSOLIDATED
MILBANK PARTNERSHIPS					(2,879,001	)				(2,643,322	)
Net gain (loss) from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		4,987,983						6,703,204
Realized gain on investments in Funds, net		766,884						—
Unrealized gain (loss) on investments in securities, net change		(19,574,394	)					2,940,362
Unrealized gain (loss) on investments in Funds, net change		(21,155,552	)		(34,975,079	)		14,582,651		24,226,217

INCOME (LOSS) BEFORE INCOME TAX EXPENSE					(37,854,080	)				21,582,895
Income tax expense					330,019					232,567

NET INCOME (LOSS)					(38,184,099	)				21,350,328

Minority interest in Consolidated Milbank Partnerships					(38,506,802	)				21,093,366

NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.				$	322,703				$	256,962

The accompanying notes are an integral part of these consolidated financial statements.

F-58

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 (unaudited)

AND THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at December 31, 2010		3,922		196		2,496		125		454,839		867,957		309,011,848			310,334,965
Contributions		—		—		—		—		—		—		12,539,311			12,539,311
Withdrawals		—		—		—		—		—		—		(6,363,262	)		(6,363,262	)
Net Income (Loss)		—		—		—		—		—		322,703		(38,506,802	)		(38,184,099	)

Balance at September 30, 2011 (unaudited)		3,922	$	196		2,496	$	125	$	454,839	$	1,190,660	$	276,681,095		$	278,326,915

The accompanying notes are an integral part of these consolidated financial statements.

F-59

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	322,703		$	256,962
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income (loss)		(38,506,802	)		21,093,366
Depreciation		900			900
Deferred taxes		(37,454	)		26,942
Sales of securities and partnerships		—			17,130
Unrealized (gain) on investments in securities and partnerships, net change		(429	)		(8,076	)
Realized loss on investments in securities and partnerships, net		—			8,119
Consolidated Milbank Partnerships:
Realized (gain) on investments in securities, net		(4,987,983	)		(6,703,204	)
Realized (gain) on investments in Funds, net		(766,884	)		—
Unrealized (gain) loss on investments in securities, net change		19,574,394			(2,940,362	)
Unrealized (gain) loss on investments in Funds, net change		21,155,552			(14,582,651	)
Purchases of investments in securities		(62,909,399	)		(146,801,804	)
Purchases of investments in Funds		(7,000,000	)		—
Sales of investments in securities		67,722,649			152,615,257
Sales of investments in Funds		17,007,947			4,060,065
(Increase) decrease in operating assets:
Accounts receivable		(613,817	)		(507,379	)
Prepaid taxes		34,915			43,955
Prepaid expenses and other		26,346			(22,391	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		6,358,654			6,075,279
Redemptions receivable from investments in Funds		9,229,561			82,760,368
Accrued income		72,065			137,334
Prepaid expenses and other		34,438			(22,572	)
Increase (decrease) in operating liabilities:
Accrued expenses		17,810			1,731
Taxes payable		293,543			130,337
Consolidated Milbank Partnerships:
Accrued expenses		(351,841	)		(1,299,427	)

Net cash provided by operating activities	$	26,676,868		$	94,339,879

The accompanying notes are an integral part of these consolidated financial statements.

F-60

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30:

(continued)


	2011			2010
	(unaudited)			(unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets	$	(2,253	)	$	(665	)


Net cash used in investing activities		(2,253	)		(665	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships		11,957,909			775,000
Withdrawals from Milbank Partnerships		(38,456,681	)		(95,064,326	)


Net cash used in financing activities		(26,498,772	)		(94,289,326	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		175,843			49,888

Cash and cash equivalents at beginning of period:		163,256			126,858


Cash and cash equivalents at end of period:	$	339,099		$	176,746


Supplemental cash flow information:
Cash paid during the period for taxes	$	1,561		$	31,333

Cash paid during the period for interest	$	215,690		$	200,505

The accompanying notes are an integral part of these consolidated financial statements.

F-61

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Use of Estimates

F-62

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Cash and Cash Equivalents

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-63

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

F-64

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes (continued)

Foreign Securities

Accounting Developments

F-65

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-66

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes investments under the fair value hierarchy the valuation of the Company’s as of September 30, 2011:


	Level 1			Level 2			Level 3			Total
Assets
Investments in Securities and Partnerships	$	3,247		$	—		$	5,000		$	8,247

From Consolidated Milbank Partnerships:

Investments in Securities		96,449,023			5,059,848			681,816			102,190,687
Investments in Funds		—			154,867,659			13,108,840			167,976,499

Total	$	96,452,270		$	159,927,507		$	13,795,656		$	270,175,433

Liabilities
Securities Sold Short	$	(927,955	)	$	(1,281,162	)	$	(331,914	)	$	(2,541,031	)


Assets	Investments
Beginning balance, December 31, 2010	$	8,568,283
Total gains or (losses), realized and unrealized		(188,890	)
Purchases and sales, net		5,416,263

Ending balance, September 30, 2011	$	13,795,656

The amount of gain (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at September 30, 2011	$	(267,353	)

F-67

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)


Liabilities	Securities Sold Short

Beginning balance, December 31, 2010	$	(312,096	)
Total gains or (losses), realized and unrealized		17,419
Purchases and sales, net		(37,237	)

Ending balance, September 30, 2011	$	(331,914	)
The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at September 30, 2011	$	17,419

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818

From consolidated affiliated Partnerships:

Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669

Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

F-68

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments

Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)


Ending balance, December 31, 2010	$	8,568,283


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210


Liabilities	Securities Sold Short

Beginning balance, December 31, 2009	$	(71,500	)
Total gains or (losses), realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250


Ending balance, December 31, 2010	$	(312,096	)


The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

F-69

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 4.

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest charge management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-70

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

NOTE 5.

LEASE COMMITMENT


	September 30, 2011		December 31, 2010
2011	$	37,350	$	149,400
2012		49,800		49,800

Total	$	87,150	$	199,200

Total rent expense for the nine months ended September 30, 2011 and 2010 was $130,348 and $130,157, respectively.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employees’ compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the nine months ended September 30, 2011 and 2010 were $8,460 and $10,013, respectively.

F-71

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at September 30, 2011 and December 31, 2010, respectively, are as follows:


	September 30, 2011		December 31, 2010
Insurance	$	59,091	$	86,685
Rent		12,450		12,450
Other		8,011		6,763


	$	79,552	$	105,898

NOTE 8.

RELATED PARTY TRANSACTIONS

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expenses for the nine months ended September 30, 2011 and 2010 has been determined as follows:


	2011			2010

Current taxes
Federal	$	257,231		$	143,938
State and local		110,242			61,687


		367,473			205,625

Deferred taxes
Federal		(37,454	)		26,942


	$	330,019		$	232,567

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-72

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Assets at cost:	September 30, 2011			December 31, 2010

Furniture and equipment	$	222,796		$	220,543
Leasehold improvements		90,698			90,698

Total cost		313,494			311,241

Less: accumulated depreciation		(285,068	)		(284,168	)


Net fixed assets	$	28,426		$	27,073

Depreciation expense for both the nine months ended September 30, 2011 and 2010 was $900.

NOTE 11.

SHARES OF STOCK

NOTE 12.

SUBSEQUENT EVENTS

F-73

INDEPENDENT AUDITORS’ REPORT

To the Stockholders of

Milbank Winthrop & Co., Inc.:

/s/ Fulvio & Associates, LLP

New York, New York

September 2, 2011

F-74

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

YEAR ENDED DECEMBER 31, 2010


ASSETS
Cash and cash equivalents			$	163,256
Investments in securities and partnerships				7,818
Accounts receivable				97,148
Prepaid taxes				34,915
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $284,168)				27,073
Security deposit				15,220
Prepaid expenses and other				105,898
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	18,066,684
Investments in securities		123,483,737
Investments in Funds		198,373,114
Redemptions receivable from investments in Funds		9,624,700
Accrued income		173,463
Prepaid expenses and other		153,628		349,875,326


TOTAL ASSETS			$	350,326,654


LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Accrued expenses			$	21,400
Deferred taxes				91,122
Consolidated Milbank Partnerships:
Contributions received in advance	$	500,000
Accrued expenses		639,584
Redemptions payable		34,305,163
Securities sold short		4,434,420		39,879,167

Total Liabilities				39,991,689


Commitments and Contingencies (see Note 5)

Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				867,957

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,323,117

Minority interests in Consolidated Milbank Partnerships				309,011,848

Total Stockholders’ Equity				310,334,965


TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	350,326,654

The accompanying notes are an integral part of these consolidated financial statements.

F-75

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:
Investment advisory fees			$	1,822,748
Other income				755
Consolidated Milbank Partnerships:
Dividends	$	1,996,373
Interest		663,103		2,659,476

Total revenues				4,482,979


EXPENSES:
Compensation and benefits				5,505,058
Rent				167,506
Insurance				133,034
Office and administrative				132,650
Computer services				93,653
Professional fees				39,606
Depreciation				6,751
Other				83,703
Consolidated Milbank Partnerships:
Management and advisory fees		1,591,767
Office and administrative		538,045
Professional fees		377,634
Interest and dividends		318,727		2,826,173


Total expenses				8,988,134


LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,505,155	)

Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		11,004,979
Unrealized gain on investments in securities, net change		9,205,034
Unrealized gain on investments in Funds, net change		28,901,005		49,111,018


INCOME BEFORE INCOME TAX EXPENSE				44,605,863

Income tax expense				76,383


NET INCOME				44,529,480


Minority Interests in Consolidated Milbank Partnerships				(44,462,064	)


NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	67,416

The accompanying notes are an integral part of these consolidated financial statements.

F-76

MILBANK WINTHROP & CO., INC

.CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total
Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695
Contributions		—		—		—		—		—		—		2,900,000			2,900,000
Redemptions		—		—		—		—		—		—		(37,863,210	)		(37,863,210	)
Net Income		—		—		—		—		—		67,416		44,462,064			44,529,480

Balance at September 30, 2011		3,922	$	196		2,496	$	125	$	454,839	$	867,957	$	309,011,848		$	310,334,965

The accompanying notes are an integral part of these consolidated financial statements.

F-77

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:

Net income				$	67,416
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	44,462,064
Depreciation		6,751
Deferred taxes		34,905
Sales of securities and partnerships		17,173
Unrealized gain on investments in securities and partnerships, net change		(331	)

Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(11,004,979	)
Unrealized gain on investments in securities, net change		(9,205,034	)
Unrealized gain on investments in funds, net change		(28,901,005	)
Purchases of investments in securities		(164,514,871	)
Purchases of investments in funds		(13,524	)
Sales of investments in securities		174,448,934
Sales of investments in funds		14,502,312

(Increase) decrease in operating assets:
Accounts receivable		57,783
Prepaid taxes		9,040
Security deposit		(203	)
Prepaid expenses and other		1,668
Consolidated Milbank Partnerships
Cash and cash equivalents		(473,962	)
Redemption receivable from investments in funds		74,517,538
Prepaid investments		61,430
Accrued income		18,754
Prepaid expenses and other		(36,671	)
Increase (decrease) in operating liabilities:
Accrued expenses		(18,081	)
Consolidated Milbank Partnerships
Accrued expenses		(1,009,006	)


Total Adjustments				$	92,960,685


Net Cash Provided by Operating Activities				$	93,028,101

The accompanying notes are an integral part of these consolidated financial statements.

F-78

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010

(continued)


CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of fixed assets	$	(5,627	)

Net cash used in investing activities		(5,627	)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships		3,375,000
Redemptions from Milbank Partnerships		(96,361,076	)

Net cash used in financing activities		(92,986,076	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		36,398

Cash and Cash Equivalents at December 31, 2009		126,858


Cash and Cash Equivalents at December 31, 2010	$	163,256


Supplemental cash flow information:
Cash paid during the period for taxes	$	32,438

The accompanying notes are an integral part of these consolidated financial statements.

F-79

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statements of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-80

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-81

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds.

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

F-82

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Furniture, Equipment and Leasehold Improvements

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

Accounting Developments

F-83

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Account Developments (continued)

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2010:


	Level 1		Level 2		Level 3		Total
Assets
Investment in securities and partnerships	$	2,818	$	—	$	5,000	$	7,818

From consolidated affiliated Partnerships:

Investment in securities		114,505,465		7,887,319		1,090,953		123,483,737
Investment in Funds		—		190,900,784		7,472,330		198,373,114

Total	$	114,508,283	$	198,788,103	$	8,568,283	$	321,864,669


Liabilities
Securities sold short	$	2,143,953	$	1,978,371	$	312,096	$	4,434,420

F-84

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


Assets	Investments
Beginning balance, December 31, 2009	$	168,393,421
Total gains or (losses), realized and unrealized		29,106,390
Purchases and sales, net		2,544,680
Transferred in (out) of Level 3		(191,476,208	)

Ending balance, December 31, 2010	$	8,568,283

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	1,540,210


Liabilities	Securities Sold Short

Beginning balance, December 31, 2009 Total gains or (losses),	$	(71,500	)
realized and unrealized		271,608
Purchases and sales, net		(526,454	)
Transferred in (out) of Level 3		14,250

Ending balance, December 31, 2010	$	(312,096	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2010	$	214,358

F-85

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 4

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-86

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

NOTE 5.

LEASE COMMITMENT


2011	$	149,400
2012		49,800

	$	199,200

Total rent expense for the year ended December 31, 2010 was $167,506.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2010 were $13,350.

F-87

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2010 are as follows:


Insurance	$	86,685
Rent		12,450
Other		6,763

	$	105,898

NOTE 8.

RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2010, Milbank earned $3,829,228 in advisory fees and $505,200 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2010 has been determined as follows:


Current taxes
Federal	$	(11,820	)
State and local		53,298

		41,478
Deferred taxes
Federal		34,905

	$	76,383

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-88

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Asset at cost:
Furniture and equipment	$	220,543
Leasehold improvement		90,698

Total cost
		311,241

Less accumulated depreciation		(284,168	)


Net fixed assets	$	27,073


Depreciation expense for the year ended December 31, 2010 was $6,751.

NOTE 11.

SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2010, 3,922 shares were issued and outstanding.

NOTE 12.

SUBSEQUENT EVENTS

F-89

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

Milbank Winthrop & Co., Inc.:

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Milbank Winthrop & Co., Inc. as of December 31, 2009, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

August 30, 2011

F-90

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2009


ASSETS
Cash and cash equivalents			$	126,858
Investments in securities and partnerships				24,660
Accounts receivable				18,173
Prepaid taxes				43,955
Furniture, equipment and leasehold improvements, at cost (net of accumulated depreciation of $277,417)				28,197
Security deposit				15,017
Prepaid expenses and other				107,566
Consolidated Milbank Partnerships:
Cash and cash equivalents	$	17,592,722
Investments in securities		112,117,035
Investments in Funds		183,960,896
Redemptions receivable from investments in Funds		84,142,238
Accrued income		253,647
Prepaid expenses and other		116,957		398,183,495

TOTAL ASSETS			$	398,547,921


LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Accrued expenses			$	39,481
Deferred taxes				56,217
Consolidated Milbank Partnerships:
Contributions received in advance	$	25,000
Accrued expenses		1,511,832
Redemptions payable		92,803,029
Securities sold short		3,343,667		97,683,538

Total Liabilities				97,779,226

Commitments and Contingencies (see Note 5)
Stockholders’ Equity:
Common stock:
7,000 Class A par $0.05 shares authorized; 3,922 shares issued and outstanding				196
7,000 Class B par $0.05 shares authorized; 2,496 shares issued and outstanding				125
Additional paid in capital				454,839
Retained earnings				800,541

Total Milbank Winthrop & Co., Inc. Stockholders’ Equity				1,255,701

Minority interests in Consolidated Milbank Partnerships				299,512,994

Total Stockholders’ Equity				300,768,695

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	398,547,921

The accompanying notes are an integral part of these consolidated financial statements.

F-91

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2009


REVENUES:
Investment advisory fees			$	1,732,854
Other income				5,074
Consolidated Milbank Partnerships:
Dividends	$	1,837,732
Interest		1,134,922		2,972,654

Total revenues				4,710,582


EXPENSES:
Compensation and benefits				5,293,535
Rent				164,251
Insurance				140,120
Office and administrative				134,206
Professional fees				109,482
Depreciation				2,097
Other				156,041
Consolidated Milbank Partnerships:
Management and advisory fees		1,582,597
Office and administrative		1,226,115
Professional fees		396,815
Interest and dividends		295,978		3,501,505


Total expenses				9,501,237


LOSS BEFORE NET GAINS FROM CONSOLIDATED MILBANK PARTNERSHIPS				(4,790,655	)
Net gains from investment activities of Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		2,239,337
Unrealized gain on investments in securities, net change		36,511,370
Realized gain on investments in Funds, net		1,861,609
Unrealized gain on investments in Funds, net change		56,060,996		96,673,312


INCOME BEFORE INCOME TAX EXPENSE				91,882,657

Income tax expense				138,669


NET INCOME				91,743,988


Minority Interests in Consolidated Milbank Partnerships				(91,653,265	)


NET INCOME ATTRIBUTABLE TO MILBANK WINTHROP & CO., INC.			$	90,723

The accompanying notes are an integral part of these consolidated financial statements.

F-92

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2009


	Number of Class A Shares		Par Value		Number of Class B Shares		Par Value		Additional Paid-in Capital		Retained Earnings		Minority Interests in Consolidated Milbank Partnerships			Total

Balance at December 31, 2008		3,922	$	196		2,496	$	125	$	454,839	$	709,818	$	299,398,031		$	300,563,009

Contributions		—		—		—		—		—		—		2,150,000			2,150,000

Redemptions		—		—		—		—		—		—		(93,688,302	)		(93,688,302	)

Net Income		—		—		—		—		—		90,723		91,653,265			91,743,988


Balance at December 31, 2009		3,922	$	196		2,496	$	125	$	454,839	$	800,541	$	299,512,994		$	300,768,695

The accompanying notes are an integral part of these consolidated financial statements.

F-93

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	90,723
Adjustments to reconcile net income to net cash provided by operating activities
Consolidated Milbank Partnerships:
Net income	$	91,653,265
Depreciation		2,097
Deferred taxes		56,217
Purchases of securities and partnerships		(28,808	)
Sales of securities and partnerships		103
Unrealized gain on investments in securities and partnerships, net change		(4,514	)
Consolidated Milbank Partnerships:
Realized gain on investments in securities, net		(2,239,337	)
Unrealized gain on investments in securities, net change		(36,511,370	)
Realized gain on investments in funds, net		(1,861,609	)
Unrealized gain on investments in funds, net change		(56,060,996	)
Purchases of investments in securities		(122,598,527	)
Purchases of investments in funds		(10,000,000	)
Sales of investments in securities		150,623,210
Sales of investments in funds		84,466,655
(Increase) decrease in operating assets:
Accounts receivable		16,348
Prepaid taxes		(43,955	)
Security deposit		(203	)
Prepaid expenses and other		(2,488	)
Consolidated Milbank Partnerships:
Cash and cash equivalents		(7,342,804	)
Redemption receivable from investments in funds		(52,342,738	)
Prepaid investments		7,000,000
Accounts receivable		159,750
Accrued income		215,963
Prepaid expenses and other		10,596
Increase (decrease) in operating liabilities:
Accrued expenses		16,792
Consolidated Milbank Partnerships:
Accrued expenses		805,938

Total Adjustments					45,989,585

Net cash provided by Operating Activities				$	46,080,308

The accompanying notes are an integral part of these consolidated financial statements.

F-94

MILBANK WINTHROP & CO., INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2009

(continued)


CASH FLOWS FROM FINANCING ACTIVITIES:

Contributions to Milbank Partnerships	$	2,175,000
Redemption from Milbank Partnerships		(48,233,273	)

Net cash used in financing activities		(46,058,273	)


NET CHANGE IN CASH AND CASH EQUIVALENTS		22,035

Cash and Cash Equivalents at December 31, 2008		104,823


Cash and Cash Equivalents at December 31, 2009	$	126,858


Supplemental cash flow information:
Cash paid during the period for taxes	$	88,729

The accompanying notes are an integral part of these consolidated financial statements.

F-95

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

NOTE 1.

ORGANIZATION

The Partnerships invest in a mix of securities and independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Basis of Consolidation

Milbank consolidates the Partnerships in which the General Partner is presumed to have control under Accounting Standards Codification (“ASC”) 810-20. Although Milbank holds non-substantive equity-at-risk in the Partnerships, Milbank’s related parties, including its de facto agents, hold substantive equity-at-risk. Further, the limited partners do not have the right to dissolve the Partnerships or have substantive kick out rights or participating rights that would overcome the presumption of control by Milbank. Accordingly, Milbank consolidates the assets, liabilities and operating results of the Partnerships and records the minority interests held by the limited partners in the accompanying financial statements. All material intercompany transactions and balances have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents includes cash in banks and readily available money market funds in investment accounts.

F-96

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Consolidated Milbank Partnerships - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnerships are not available to fund any of the liquidity needs of Milbank.

Fair Value Measurements

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with investing in those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

F-97

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

Milbank investment advisory fees are billed quarterly and recorded as revenue in the period earned. These fees are based on a percentage of assets under management.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

Accounts Receivable

Accounts Receivable consists of advisory fees due from clients and Funds

Redemptions Receivable from Investments in Funds

Redemptions receivable from investments in funds consists of withdrawal requests issued to the Funds, primarily to fund redemption requests of Fund partners.

Furniture, Equipment and Leasehold Improvements

F-98

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Leases

The Company expenses payments on operating leases on a straight line basis over the term of the lease.

Income Taxes

Foreign Securities

Accounting Developments

F-99

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-100

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-101

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

In January 2010, the FASB issued Accounting Standards Update 2010-06, Improving Disclosures About Fair Value Measurements (“ASU 2010-06”). ASU 2010-06 requires disclosing separately the amount of significant transfers in and out of the Level 1 and Level 2 categories and the reasons for the transfers and it requires that Level 3 purchases, sales, issuances and settlements activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. The Company is currently assessing the potential impacts, if any, on its consolidated financial statements and disclosures.

NOTE 3.

FAIR VALUE MEASUREMENTS

The following table summarizes the valuation of the Company’s investments under the fair value hierarchy, as described above, as of December 31, 2009:


	Level 1		Level 2		Level 3		Total
Assets

Investments in securities and partnerships	$	2,487	$	—	$	22,173	$	24,660

From Consolidated affiliated Partnerships:

Investments in securities		99,416,010		10,239,480		2,461,545		112,117,035

Investments in Funds		—		18,051,193		165,909,703		183,960,896


Total	$	99,418,497	$	28,290,673	$	168,393,421	$	296,102,591


Liabilities

Securities sold short	$	1,844,370	$	1,427,797	$	71,500	$	3,343,667

F-102

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 3.

FAIR VALUE MEASUREMENTS (continued)

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2009:


Assets	Investments

Beginning balance, December 31, 2008	$	203,148,415
Total gains or (losses), realized and unrealized		51,669,953
Purchases and sales, net		(70,575,571	)
Transferred in/out of Level 3		(15,849,376	)

Ending balance, December 31, 2009	$	168,393,421

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2009	$	52,044,937


Liabilities	Securities Sold Short
Beginning balance, December 31, 2008	$	(179,100	)
Total gains or (losses), realized and unrealized		52,368
Purchases and sales, net		55,232

Ending balance, December 31, 2009	$	(71,500	)

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to liabilities still held at December 31, 2009	$	7,300

F-103

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 4.

INVESTMENTS IN FUNDS

Cost is determined based on capital contributions to, and withdrawals from, the Funds, plus reinvested realized net income.

Substantially all of the Funds in which the Partnerships invest are charged management fees at varying rates, principally 0.75% to 2% annually of periodic net asset values.

F-104

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 4.

INVESTMENTS IN FUNDS (continued)

The activities of certain Funds include the purchase and sale of a variety of derivative financial instruments such as equity options, index options, swap agreements, futures and forward contracts, and other similar instruments. These derivatives are used for trading purposes and for managing risk associated with their portfolio of securities and securities sold short. The use of derivative instruments may involve elements of market risk in excess of the amount recognized in the statement of assets and liabilities of these Funds. In many cases, these Funds limit their risk by holding offsetting security or option positions.

NOTE 5.

LEASE COMMITMENT


2010	$	149,400
2011		149,400
2012		49,800

	$	348,600

Total rent expense for the year ended December 31, 2009 was $164,251.

NOTE 6.

PENSION PLAN

The Company sponsors a 401(k) retirement plan for its employees. The Company contributes 3% of eligible employee’s compensation. The plan also permits elective deferrals by employees.

Total Pension costs for the year ended December 31, 2009 were $15,150.

F-105

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 7.

PREPAID EXPENSES AND OTHER

The details of Milbank’s prepayments at December 31, 2009 are as follows:


Insurance	$	84,116
Rent		12,450
Other		11,000

	$	107,566

NOTE 8.

RELATED PARTY TRANSACTIONS

Milbank earns advisory fees for client assets invested with the Partnerships. It is also reimbursed for costs incurred in providing administrative services to the Partnerships. During 2009, Milbank earned $3,807,621 in advisory fees and $474,750 in administrative fees from the Partnerships.

These intercompany fees have been fully eliminated in the consolidated financial statements.

NOTE 9.

INCOME TAXES

The Company’s income tax expense for the year ended December 31, 2009 has been determined as follows:


Current taxes
Federal	$	14,347
State and local		68,100

		82,447
Deferred taxes
Federal		56,222

	$	138,669

Current taxes are provided using statutory tax rates as applied to taxable income. Deferred taxes are provided at approximately 35% of unrealized appreciation of investments in excess of tax basis.

F-106

MILBANK WINTHROP & CO., INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2009

(continued)

NOTE 10.

FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS


Assets at cost:
Furniture and equipment	$	214,916
Leasehold improvement		90,698

Total cost		305,614
Less accumulated depreciation		(277,417	)

Net fixed assets	$	28,197

Depreciation expense for the year ended December 31, 2009 was $2,097.

NOTE 11.

SHARES OF STOCK

Under the Certificate of Amendment of the Certificate of Incorporation dated January 9, 1997 (the “Certificate”), 7,000 shares of Class A Common Stock, having a par value of $0.05 per share, were authorized. Holders of Class A Common Stock are entitled to one vote per share. At December 31, 2009, 3,922 shares were issued and outstanding.

NOTE 12.

SUBSEQUENT EVENTS

F-107

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

/s/ Fulvio & Associates, LLP

New York, New York

March 15, 2012

F-108

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2011


ASSETS

Cash and cash equivalents			$	2,919
Accounts receivable				4,000
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	141,356
Investments in Funds		29,919,624
Other assets		488		30,061,468


TOTAL ASSETS			$	30,068,387

LIABILITIES AND MEMBER’S EQUITY

Liabilities:

Professional fees payable			$	4,915
MW Commodity Strategies, L.P.:
Redemptions payable		194,946
Professional fees payable		27,325
Other liabilities		20,614		242,885


Total Liabilities				247,800


Member’s Equity:

Member’s Equity				71,811

Minority interests in MW Commodity Strategies, L.P.				29,748,776


Total Member’s Equity				29,820,587


TOTAL LIABILITIES AND MEMBER’S EQUITY			$	30,068,387

The accompanying notes are an integral part of these consolidated financial statements.

F-109

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011


REVENUES:
MW Commodity Strategies, L.P.:				$	203

Interest
					203

Total revenues

EXPENSES:
Account fees					27,164
Other					9,703
MW Commodity Strategies, L.P.:
Professional fees	$	41,138
Other		17,031			58,169


Total expenses					95,036


LOSS BEFORE NET GAINS (LOSS) FROM
MW COMMODITY STRATEGIES, L.P.					(94,833	)

Net loss from MW Commodity Strategies, L.P.:
Realized loss on investments in Funds, net		(288,915	)
Unrealized loss on investments in Funds, net change		(2,287,676	)		(2,576,591	)


NET LOSS					(2,671,424	)


Minority Interests in MW Commodity Strategies, L.P.					2,793,270


NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC				$	121,846

The accompanying notes are an integral part of these consolidated financial statements.

F-110

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2011


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total
Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726

Contributions-		—			5,650,000			5,650,000

Withdrawals		(220,000	)		(758,715	)		(978,715	)

Net Income (Loss)		121,846			(2,793,270	)		(2,671,424	)


Member’s Equity - December 31, 2011	$	71,811		$	29,748,776		$	29,820,587

The accompanying notes are an integral part of these consolidated financial statements.

F-111

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2011


CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	121,846
Adjustments to reconcile net income to net cash used in operating activities:
MW Commodity Strategies, L.P.:
Net loss	$	(2,793,270	)
Realized loss on investments in Funds, net		288,915
Unrealized loss on investments in Funds, net change		2,287,676
Purchase of investments in Funds		(8,500,000	)
Proceeds from investments in Funds		4,273,076
(Increase) decrease in operating assets:
Accounts receivable		(4,000	)
MW Commodity Strategies, L.P.:
Cash and cash equivalents		909,153
Redemptions receivable from investments in Funds		100,000
Other assets		6,893
Increase (decrease) in operating liabilities:
Professional fees payable		4,915
MW Commodity Strategies, L.P.:
Professional fees payable		(46,575	)
Other liabilities		7,857

Total adjustments					(3,465,360	)

Net Cash Used in Operating Activities					(3,343,514	)


CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(220,000	)
MW Commodity Strategies, L.P.:
Contributions		5,650,000
Withdrawals		(2,155,810	)

Net Cash Provided by Financing Activities					3,274,190


NET CHANGE IN CASH AND CASH EQUIVALENTS					(69,324	)

Cash and Cash Equivalents at December 31, 2010					72,243

Cash and Cash Equivalents at December 31, 2011				$	2,919

The accompanying notes are an integral part of these consolidated financial statements.

F-112

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

NOTE 1.

ORGANIZATION

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

The Company follows the accrual method of accounting. Income is recorded when earned, and expenses are recorded when incurred in the period to which they pertain. Purchases and sales of securities are recorded on the trade date basis. Purchases and sales of Funds are recorded on the effective date as specified in the Funds’ investment agreements.

Use of Estimates

Cash and Cash Equivalents

F-113

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Basis of Consolidation

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

F-114

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

F-115

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Valuation and Revenue Recognition (continued)

•

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

F-116

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

Accounting Developments

F-117

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

F-118

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Accounting Developments (continued)

NOTE 3.

INVESTMENTS IN FUNDS


Fund and (Strategy)	Fair Value at December 31, 2011		Capital Liquidity

Covepoint Emerging Markets Macro Fund, L.P. CI. A. (d)	$	2,258,119	Quarterly
Covepoint Emerging Markets Macro Fund, L.P. CI. B. (d)		448,619	Quarterly
Dynamic Domestic Fund L.P. (d)		2,898,050	Monthly
Goldfinch Capital Management, L.P. (b)		1,939,801	Monthly
Hard Assets Partners 2X L.P. (d)		2,112,717	Quarterly
Peak Partners, L.P. (d)		1,922,912	Monthly
Tiverton Investments, LLC (d)		4,432,502	Monthly
Vardana Partners, LP (d)		2,728,342	Quarterly
Wexford Catalyst Fund, L.P. (d)		3,180,816	Quarterly
Bocage Global Resource Fund, L.P. (b)		4,257,486	Monthly
Taylor Woods (b)		3,250,111	Quarterly
Other Funds (a), (c)		490,149


Total Investments in Funds	$	29,919,624

F-119

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 3.

INVESTMENTS IN FUNDS (continued)

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

b) Futures and Derivatives Funds:

c) Macro Funds:

d) Multi-Strategy Funds:

F-120

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2011

(continued)

NOTE 4.

OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

NOTE 5.

COMMITMENTS AND CONTINGENCIES

NOTE 6.

RELATED PARTY TRANSACTIONS

Advisors earned $158,015 in management fees from the Partnership during 2011. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 7.

SUBSEQUENT EVENTS

F-121

INDEPENDENT AUDITORS’ REPORT

To the Member of

MW Commodity Advisors, LLC:

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MW Commodity Advisors, LLC as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Fulvio & Associates, LLP

New York, New York

October 28, 2011

F-122

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 2010


ASSETS

Cash and cash equivalents			$	72,243
MW Commodity Strategies, L.P.:
Cash and cash equivalents	$	1,050,509
Investments in Funds		28,269,291
Redemptions receivable		100,000
Other assets		7,381		29,427,181


TOTAL ASSETS			$	29,499,424


LIABILITIES AND MEMBER’S EQUITY

Liabilities:

MW Commodity Strategies, L.P.:
Redemptions payable	$	1,592,041
Professional fees payable		73,900
Other liabilities		12,757


Total Liabilities			$	1,678,698


Member’s Equity:

Member’s Equity				169,965


Minority interests in MW Commodity Strategies, L.P.				27,650,761


Total Member’s Equity				27,820,726


TOTAL LIABILITIES AND MEMBER’S EQUITY			$	29,499,424

The accompanying notes are an integral part of these consolidated financial statements.

F-123

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2010


REVENUES:

MW Commodity Strategies, L.P.:

Interest			$	679


Total revenues				679


EXPENSES:

Account fees				26,384

Liability fees				18,648

Filing fees				783

Other				2,211
MW Commodity Strategies, L.P.:

Professional fees	$	86,482

Other		14,510		100,992


Total expenses				149,018


LOSS BEFORE NET GAINS FROM MW COMMODITY STRATEGIES, L.P.				(148,339	)

Net gains from investment activities of MW Commodity Strategies, L.P.:

Realized gain on investments in Funds, net		84,434

Unrealized gain on investments in Funds, net change		1,125,925		1,210,359


NET INCOME			$	1,062,020


Minority Interests in MW Commodity Strategies, L.P.				(939,734	)


NET INCOME ATTRIBUTABLE TO MW COMMODITY ADVISORS, LLC			$	122,286

The accompanying notes are an integral part of these consolidated financial statements.

F-124

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CHANGES IN MEMBER’S EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2010


	MW Commodity Advisors, LLC Sole Member			Minority Interests in MW Commodity Strategies, L.P.			Total

Member’s Equity - December 31, 2009	$	167,590		$	26,957,046		$	27,124,636

Contributions		—			4,708,688			4,708,688

Withdrawals		(119,911	)		(4,954,707	)		(5,074,618	)

Net Income		122,286			939,734			1,062,020


Member’s Equity - December 31, 2010	$	169,965		$	27,650,761		$	27,820,726

The accompanying notes are an integral part of these consolidated financial statements.

F-125

MW COMMODITY ADVISORS, LLC

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2010


CASH FLOWS FROM OPERATING ACTIVITIES:

Net income				$	122,286
Adjustments to reconcile net income to net cash provided by operating activities:
MW Commodity Strategies, L.P.:
Net income	$	939,734
Proceeds from investments		69,911
Realized gain on investments in Funds, net		(84,434	)
Unrealized gain on investments in Funds, net change		(1,125,925	)
Purchase of investments in Funds		(4,000,000	)
Proceeds from investments in Funds		2,018,051
(Increase) decrease in operating assets:
Accounts receivable		8,669
MW Commodity Strategies, L.P.:
Cash and cash equivalents		9,101,694
Redemptions receivable from investments in Funds		1,235,938
Other assets		6,887
Increase (decrease) in operating liabilities:
MW Commodity Strategies, L.P.:
Professional fees payable		(92,106	)
Other liabilities		5,435

Total adjustments					8,083,854

Net Cash Flows Provided by Operating Activities					8,206,140

CASH FLOWS FROM FINANCING ACTIVITIES:
Withdrawals		(119,911	)
MW Commodity Strategies, L.P.:
Contributions		2,408,688
Withdrawals		(10,464,144	)

Net Cash Used in Financing Activities					(8,175,367	)

NET CHANGE IN CASH AND CASH EQUIVALENTS					30,773
Cash and Cash Equivalents at December 31, 2009					41,470

Cash and Cash Equivalents at December 31, 2010				$	72,243

The accompanying notes are an integral part of these consolidated financial statements.

F-126

MW COMMODITY ADVISORS, LLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2010

NOTE 1.

ORGANIZATION

The Partnership invests in various independent investment partnerships (the “Funds”).

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Basis of Accounting

Use of Estimates

Cash and Cash Equivalents

Basis of Consolidation

MW Commodity Strategies, L.P. - Cash and Cash Equivalents

Cash and cash equivalents held by the Partnership are not available to fund any of the liquidity needs of Advisors.

F-127

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value Measurements

GAAP establishes a framework for measuring fair value and requires disclosures about fair value measurements, including a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels explained below:

Level 1 - Valuations based on quoted prices available in active markets for identical investments.

Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The inputs or methodology used for valuing investments are not necessarily an indication of the risks associated with holding those investments.

Valuation and Revenue Recognition

Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under consistently applied procedures established by the General Partner.

Income from Funds is recognized based upon the Company’s allocable share of the earnings of the Funds which carry their investments at fair value, which include unrealized gains and losses.

The Funds generally value their investments according to the following guidelines:

•

Short-term investments are valued at amortized cost, which approximates fair value.

•

F-128

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

•

Interest and Dividends

Interest income is recognized on an accrual basis. Dividend income is recognized on the ex-dividend date.

Income Taxes

Accounting Developments

F-129

NOTE 2.

SIGNIFICANT ACCOUNTING POLICIES (continued)

activity be reported on a gross rather than a net basis. ASU 2010-06 also requires fair value measurement disclosures for each class of assets and liabilities and disclosures about valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for Level 2 and Level 3 measurements. These disclosures are effective for fiscal periods beginning after December 15, 2009, except for the Level 3 gross reporting which is effective for fiscal periods beginning after December 15, 2010. We do not anticipate that the adoption of ASU 2010-06 will have a material impact on the Company’s financial statements.

NOTE 3.

INVESTMENTS IN FUNDS


Fund and (Strategy)	Fair Value at December 31, 2010		Liquidity Capital

Covepoint Emerging Markets Macro Fund, L.P. (d)	$	4,005,911	Quarterly
Dynamic Domestic Fund L.P. (d)		2,711,778	Monthly
Goldfinch Capital Management, L.P. (b)		1,611,218	Monthly
Hard Assets Partners 2X L.P. (d)		2,440,332	Quarterly
Peak Partners, L.P. (d)		2,941,146	Monthly
Quantitative Global 1X Fund LLC (b)		2,795,278	Monthly
Tiverton Investments, LLC (d)		4,606,234	Monthly
Vardana Partners, LP (d)		1,731,625	Quarterly
Wexford Catalyst Fund, L.P. (d)		3,442,623	Quarterly
Other Investments (a),(c)		1,983,146

	$	28,269,291

As of December 31, 2010, the investments in the Funds had no remaining significant lockups.

The Fund investment strategies are as follows:

a) Equity Long/Short Funds:

b) Futures and Derivatives Funds:

F-130

NOTE 3.

INVESTMENTS IN FUNDS (continued)

c) Macro Funds:

d) Multi-Strategy Funds:

NOTE 4.

FAIR VALUE MEASUREMENTS

The following table discloses a reconciliation of investments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the year ended December 31, 2010:


	Investments in Funds
Beginning balance, December 31, 2009	$	25,076,983
Total gains or losses (realized and unrealized)		1,210,359
Purchases and sales, net		1,981,949
Transfer in (out) of Level 3		(28,269,291	)

Ending balance, December 31, 2010	$	—

The amount of gains (losses) included in income attributable to the change in unrealized gains (losses) relating to assets still held at December 31, 2010	$	—

Gains and losses (realized and unrealized), if any, are included in the net realized gain on investments in Funds and net change in unrealized gain on investments in Funds in the statement of income.

NOTE 5.

OFF-BALANCE SHEET RISK, CONCENTRATION OF CREDIT RISK, AND OTHER RISKS

F-131

NOTE 6.

COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties and which provide general indemnifications. The general indemnifications apply not only to the extent such representations and warranties are untrue but also may cover third parties such as the Partnership’s Administrator for claims related to the services performed for the Partnership. The Company’s maximum exposure under any such arrangements is unknown, as exposure only arises to the extent further claims that have not yet occurred are made against the Company.

NOTE 7.

RELATED PARTY TRANSACTIONS

Advisors earned $132,685 in management fees from the Partnership during 2010. These intercompany fees have been fully eliminated in these consolidated financial statements.

NOTE 8.

SUBSEQUENT EVENTS

Subsequent events have been evaluated through October 28, 2011, which is the date the financial statements were available to be issued. The Company is in negotiations to merge with an outside entity.

F-132

LOGO

Silvercrest Asset Management Group Inc.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.

Other Expenses of Issuance and Distribution.


SEC Registration Fee	$	*
FINRA Filing Fee	$	*
Nasdaq Listing Fee	$	*
Accounting Fees and Expenses	$	*
Legal Fees and Expenses	$	*
Printing Fees and Expenses	$	*
Miscellaneous	$	*

Total:	$	*

*	To be filed by amendment.

Item 14.

Indemnification of Directors and Officers.

Item 15.

Recent Sales of Unregistered Securities.

Item 16.

Exhibits and Financial Statements Schedules.


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement.

3.1*		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

II-1


Exhibit Number		Description of Document

3.2*		Bylaws of Silvercrest Asset Management Group Inc.

4.1*		Specimen stock certificate for shares of Class A common stock.

4.2*		2012 Exchange Agreement.

4.3*		Resale and Registration Rights Agreement.

4.4*		2012 Equity Incentive Plan.

4.5*		Stockholders Agreement.

4.6*		Form of Deferred Equity Unit Award Agreement.

4.7*		Form of Award Agreement under 2012 Equity Incentive Plan

5.1*		Opinion of Bingham McCutchen LLP.

10.1*		Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

10.2*		Tax Receivable Agreement.

10.3*		Form of Indemnification Agreement with directors.

21.1*		List of Subsidiaries.

23.1*		Consent of Deloitte & Touche LLP

23.2*		Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

23.3*		Consent of Cerulli Associates

24.1*		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

Item 17.

Undertakings.

(1)

(2)

(3)

The undersigned registrant hereby undertakes that:

(a)

II-2

(b)

II-3

SIGNATURES


SILVERCREST ASSET MANAGEMENT GROUP INC.

By:
		G. Moffett Cochran
		Chief Executive Officer

By:
		Scott A. Gerard
		Chief Financial Officer

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following:


Signature	Title	Date

	(Principal Executive Officer) and Director	, 2012
G. Moffett Cochran

	(Principal Financial and Accounting Officer)	, 2012
Scott A. Gerard

	Director	, 2012
Richard R. Hough III

	Director	, 2012
Winthrop B. Conrad, Jr.

	Director	, 2012
Wilmot H. Kidd III

	Director	, 2012
Richard S. Pechter

II-4


Exhibit Number		Description of Document

1.1*		Form of Underwriting Agreement.

3.1*		Amended and Restated Certificate of Incorporation of Silvercrest Asset Management Group Inc.

3.2*		Bylaws of Silvercrest Asset Management Group Inc.

4.1*		Specimen stock certificate for shares of Class A common stock.

4.2*		2012 Exchange Agreement.

4.3*		Resale and Registration Rights Agreement.

4.4*		2012 Equity Incentive Plan.

4.5*		Stockholders Agreement.

4.6*		Form of Deferred Equity Unit Award Agreement.

4.7*		Form of Award Agreement under 2012 Equity Incentive Plan

5.1*		Opinion of Bingham McCutchen LLP.

10.1*		Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

10.2*		Tax Receivable Agreement.

10.3*		Form of Indemnification Agreement with directors.

21.1*		List of Subsidiaries.

23.1*		Consent of Deloitte & Touche LLP

23.2*		Consent of Bingham McCutchen LLP (included as part of Exhibit 5.1).

23.3*		Consent of Cerulli Associates

24.1*		Power of Attorney (included in this Registration Statement under “Signatures”).

*	To be filed by amendment.

II-5

EX-99.3 12 d411733dex993.htm FORM S-1 FORM S-1

EXHIBIT 99.3

The Registrant is submitting this draft registration statement confidentially as an emerging growth company pursuant to Section 6(e) of the Securities Act of 1933.

As filed with the Securities and Exchange Commission on , 2012 Amendment No. 2 to Confidential Draft

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Silvercrest Asset Management Group Inc.

(Exact name of each registrant as specified in its charter)

Delaware

6282

45-5146560

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

David J. Campbell

General Counsel

Silvercrest Asset Management Group Inc.

1330 Avenue of the Americas, 38th Floor

New York, New York 10019

(212) 649-0600

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Floyd I. Wittlin

Christina E. Melendi

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

(212) 705-7000

Robert D. Goldbaum

David S. Huntington

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

(212) 373-3000

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

CALCULATION OF REGISTRATION FEE



Title of each class of securities to be registered	Amount to be Registered(1)	Proposed Maximum offering price per share	Proposed maximum aggregate offering price(2)	Amount of registration fee
Class A common stock, par value, $0.01 per share

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(2)	Including shares of Class A common stock which may be purchased by the underwriters to cover over-allotments, if any.

SUBJECT TO COMPLETION, DATED , 2012

PRELIMINARY PROSPECTUS

Shares

LOGO

Silvercrest Asset Management Group Inc.

Class A Common Stock

This is an initial public offering of shares of Class A common stock of Silvercrest Asset Management Group Inc. We are offering shares of Class A common stock.


	Per Share	Total
Public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds, before expenses, to Silvercrest Asset Management Group Inc.	$	$

(1)	See “Underwriting” beginning on page 139.

Sandler O’Neill + Partners, L.P., on behalf of the underwriters, expects to deliver the shares of Class A common stock on or about , 2012, subject to customary closing conditions.



Sandler O’Neill + Partners, L.P.		Raymond James

The date of this prospectus is , 2012.

TABLE OF CONTENTS


	Page

PROSPECTUS SUMMARY		1

RISK FACTORS		14

THE REORGANIZATION AND OUR HOLDING COMPANY STRUCTURE		37

USE OF PROCEEDS		48

DIVIDEND POLICY		49

CAPITALIZATION		50

DILUTION		51

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA		52

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION		57

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		69

BUSINESS		91

REGULATORY ENVIRONMENT		106


	Page

MANAGEMENT		108

COMPENSATION DISCUSSION AND ANALYSIS		113

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		127

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		129

DESCRIPTION OF CAPITAL STOCK		131

SHARES ELIGIBLE FOR FUTURE SALE		136

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK		138

UNDERWRITING		142

LEGAL MATTERS		145

EXPERTS		145

WHERE YOU CAN FIND MORE INFORMATION		145

INDEX TO FINANCIAL STATEMENTS		F-1

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your decision to invest in our Class A common stock. This summary is qualified in its entirety by the more detailed information, and consolidated financial statements and notes thereto, included elsewhere in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding to invest in our Class A common stock. Unless otherwise indicated, “Silvercrest” refers solely to Silvercrest Asset Management Group Inc. The terms “we,” “us” and “our” refer to Silvercrest L.P. and its consolidated subsidiaries when referring to events occurring prior to this offering, and these terms refer to Silvercrest Asset Management Group Inc. and its consolidated subsidiaries when referring to events occurring after this offering.

Our Company

We are a premier, full-service wealth management firm focused on providing financial advisory and related family office services to ultra-high net worth individuals and institutional investors. In addition to a wide range of investment capabilities, we offer a full suite of complementary and customized family office services for families seeking comprehensive oversight of their financial affairs. Between our founding in 2002 and March 31, 2012, the assets we manage have grown to $11.1 billion, which we believe makes us the largest investment adviser in the United States that is focused on high net worth clients and is principally owned by its employees. Our clients are among the wealthiest and most sophisticated in the world.

We were founded ten years ago on the premise that if we staffed and organized our business to deliver a combination of excellent investment performance and high-touch client service, we would quickly differentiate our business from a crowded field of firms nominally in the wealth management business. We seek to attract and serve a base of individuals and families with $10 million or more of investable assets, and we believe we are particularly well-positioned to offer comprehensive investment and family office service solutions to families with over $25 million of investable assets. As of March 31, 2012, our top 375 client relationships had an average size of $28 million and represented approximately 98% of our assets under management. Our top 50 relationships averaged $157 million in size.

We have grown during a time of extraordinary financial turmoil during which the value of a full-service, independent, client-focused firm has become ever-more apparent. Our growth and success at attracting ultra-high net worth clients, primarily by taking market share from our competitors, validates our original premise. Our organic growth has been complemented by selective hiring and by four completed acquisitions which have expanded not only our assets under management, but also our professional ranks, geographic footprint and service capabilities. Our annual client retention rate has averaged 98% since 2006 and, as shown below, the compound annual growth rate in assets under management since inception is in excess of 50%.

LOGO

As of March 31, 2012, approximately 95% of our assets under management were held for our individual clients and 5% for our institutional clients. Based on the strong investment results of our proprietary equity strategies, we have begun to attract a significant amount of institutional investor interest. The following chart summarizes the performance of each of our principal equity strategies relative to their appropriate benchmarks since inception.

LOGO

Our headquarters are located in New York City with additional offices in Boston, Massachusetts and Charlottesville, Virginia. We believe our track record of superior performance and our trusted reputation within the wealth management industry and among our clients is solely attributable to the talent and pedigree of our employees. As of March 31, 2012, we had 88 employees, including 37 employee-owners.

Our Market Opportunity

Key Competitive Strengths

•

Independent, Unconflicted Advice. We are an independent registered investment adviser and are not affiliated with a broker/dealer or a commercial bank. We employ a partnership culture and mindset with 37 of our employees owning equity in our company. We do not receive commissions, rebates, spreads or any other indirect or undisclosed forms of compensation. We are not controlled by any client or family and all of our investment decisions are made in the best interests of our clients. All of our fees are fully disclosed and transparent to our clients who have an unrestricted right to accept or reject them.

•

Demonstrated Track Record of Growing Assets Under Management. We have expanded our business through a combination of organic growth and acquired growth. Our value proposition to clients has

•

Long-Term Track Record of Superior Investment Performance. We have a proven ability to generate excellent investment performance through both our asset allocation work on behalf of clients as well as through security selection. We have a team-based approach that utilizes the same body of research to manage all of our proprietary equity strategies, which we believe generates superior, more consistent returns over time. Through March 31, 2012, each of our proprietary equity strategies has outperformed its respective benchmark since inception.

•

Loyal, Diverse Base of Clients. As a result of our focus on delivering outstanding investment performance combined with highly personalized client service, we have developed significant long-term relationships with a large majority of our clients. Since 2006, our annual client retention rate has averaged 98%. Today, our clients are represented in 42 states and the District of Columbia and no single client represents more than 5% of our total revenue.

•

Our Growth Strategy

•

Continuing To Support Our Organic Growth. We have a proven ability to identify, attract and retain ultra-high net worth clients who seek a firm that can deliver excellent investment performance and excellent client service. Our organizational model of separate and distinct business functions has proven scalable and our company’s assets under management have grown in excess of $1 billion per year, consisting of the market appreciation of our assets under management as well as an increase in the amount of assets we manage for both new and existing clients, without a commensurate increase in headcount. Going forward, we will continue to execute our proven business plan for attracting ultra-high net worth clients through client referrals, as well as through our recently created business development team charged with identifying and then creating customized solicitations for newly formed wealth.

•

Continuing Our Successful Track Record of Acquired Growth. From our inception, our organic growth has been complemented by selective hiring and strategic acquisitions. We expect to continue to acquire compatible wealth management companies, and recruit and hire senior portfolio managers with significant client relationships as well as successful investment professionals with capabilities currently not available internally to us. We intend to establish offices in major wealth centers on the West Coast, in the Southwest and in the Midwest to be closer to both our clients and to prospective clients.

•

Risks Facing our Company

Our business is subject to numerous risks that are described more fully in the section entitled “Risk Factors” on page 14.

Our Structure and Reorganization

Immediately following the reorganization, our only material asset will be the general partnership interests in Silvercrest L.P. We will use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners, including all Class B units held by third-party investors in Silvercrest L.P., and such Class B units acquired by us will be immediately converted into Class A units. These third-party investors will therefore no longer hold any portion of Silvercrest L.P’s Class B units as well as any of our Class B common stock subsequent to the reorganization. Following the reorganization and this offering, we will own all of the Class A units, which represent the general partnership interest in Silvercrest L.P., or approximately % of the partnership units of Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock). The remaining approximately % of the partnership units in Silvercrest L.P. (or % of the partnership units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) will be held by 37 of our principals. See “The Reorganization and Our Holding Company Structure” for a description of the reorganization and the structure of our company.

LOGO

(1)	Each share of Class B common stock is entitled to one vote per share. Class B stockholders will have the right to receive the par value of the Class B common stock upon our liquidation, dissolution or winding-up.

(2)

(3)	Each Class B unit is exchangeable for one share of Class A common stock. The principals will collectively hold Class B units, which will represent the right to receive % of the distributions made by Silvercrest L.P.

(4)	We will hold Class A units (or Class A units if the underwriters exercise their option to purchase additional shares of Class A common stock in full), which will represent the right to receive % of the distributions made by Silvercrest L.P.

The Offering


Class A common stock offered by us		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares.

Class A common stock to be outstanding immediately after this offering		shares of Class A common stock, or shares of Class A common stock if the underwriters exercise in full their option to purchase additional shares. If all Class B units of Silvercrest L.P. were to be exchanged for shares of our Class A common stock, shares of Class A common stock would be outstanding immediately after this offering.

Class B common stock to be outstanding immediately after this offering		shares of Class B common stock. Shares of our Class B common stock have voting rights but no economic rights (including no rights to dividends or distribution upon liquidation) and will be issued to our principals in an amount equal to the number of Class B units of Silvercrest L.P. that our principals hold following the reorganization. When a Class B unit is exchanged for a share of Class A common stock, the corresponding share of Class B common stock will be cancelled. See “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Coordination of Silvercrest Asset Management Group Inc. and Silvercrest L.P.”

Use of proceeds		We will receive net proceeds from our sale of Class A common stock in this offering of approximately $ million (or approximately $ million if the underwriters exercise in full their option to purchase additional shares) based on an assumed initial public offering price of $ per share (the midpoint in the price range set forth on the cover of this prospectus). We intend to use approximately $ million of the net proceeds from this offering to purchase Class B units of Silvercrest L.P. from its current limited partners. The purchase price for the Class B Units will be determined by the public offering price of our Class A common stock in this offering, less the amount of offering expenses incurred by us on a per share basis. We intend to use the remaining net proceeds of this offering for general corporate purposes, which may include business operations, investments in our business, the development of new investment strategies and strategic acquisitions.

Voting rights and stockholders’ agreement		One vote per share of Class A common stock and Class B common stock. Our principals who hold shares of Class B common stock will enter into a stockholders’ agreement pursuant to which they will agree to vote, while employed by us, the shares of Class A common stock and Class B common stock that they hold in accordance with the decision of the Executive Committee of Silvercrest L.P., consisting initially of G. Moffett Cochran, Richard R. Hough III, Scott A. Gerard and David J. Campbell. The vote of each member of the Executive Committee will be weighted based on the number of Class B units owned by the member relative to the number of Class B units held by all members of the Executive Committee at the time of a vote. See “The Reorganization and Our Holding Company


		Structure—Voting Rights of Class A and Class B Stockholders” and “The Reorganization and Our Holding Company Structure—Stockholders’ Agreement Among Class B Stockholders.”

Class B unit exchange		Pursuant to the second amended and restated limited partnership agreement of Silvercrest L.P., each Class B unit will be exchangeable for a share of our Class A common stock, subject to the exchange timing and volume limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.” All Class B units held by a principal will be exchanged automatically for shares of our Class A common stock upon the termination of employment of such principal, other than in the case of retirement, subject to certain limitations described under “The Reorganization and Our Holding Company Structure—Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.—Exchange Rights.”

Resale and registration rights		Pursuant to a resale and registration rights agreement that we will enter into with the holders of Class B units, we will agree to use our best efforts to file a registration statement for the sale of the shares of our Class A common stock that are issuable upon exchange of Class B units as soon as practicable after we become eligible to file a registration statement on Form S-3, which we expect to be one year after the consummation of this offering. We expect to cause that registration statement to be declared effective by the Securities and Exchange Commission, or the SEC, as soon as practicable thereafter. See “The Reorganization and Our Holding Company Structure—Resale and Registration Rights Agreement” for a description of the timing and manner limitations on resales of these shares of our Class A common stock.

Dividend policy		Upon completion of this offering, we will have no material assets other than our ownership of Class A units of Silvercrest L.P. Accordingly, our ability to pay dividends will depend on distributions from Silvercrest L.P. We intend to cause Silvercrest L.P. to make distributions to us with available cash generated from its subsidiaries’ operations in an amount sufficient to cover dividends. If Silvercrest L.P. makes such distributions, the holders of its Class B units will be entitled to receive equivalent distributions on a pro rata basis. The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors and may be discontinued at any time. In determining the amount of any future dividends, our board of directors will take into account any legal or contractual limitations, our actual and anticipated future earnings, cash flow, debt service and capital requirements and the amount of distributions to us from Silvercrest L.P. Following this offering, we intend to pay quarterly cash dividends. See “Dividend Policy.”

Tax Receivable Agreement		We will enter into a tax receivable agreement with the current partners of Silvercrest L.P., and any future holders of Class B units, that will require us to pay them 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that we actually


		realize (or are deemed to realize in the case of an early termination payment by us, or a change in control) as a result of the increases in tax basis and certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. This will be our obligation and not the obligation of Silvercrest L.P. We expect to benefit from the remaining 15% of cash savings, if any, realized. The tax receivable agreement will commence upon consummation of this offering and will continue until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on an agreed upon value of payments remaining to be made under the agreement. The tax receivable agreement will automatically terminate if a principal (i) is terminated for cause, (ii) breaches his or her non-solicitation covenants with our company or (iii) voluntarily resigns or retires and competes with our company in the 12-month period following resignation of employment or retirement, and no further payments will be made under the tax receivable agreement. See “The Reorganization and Our Holding Company Structure—Tax Receivable Agreement.”

Listing symbol		“SAMG.”

Unless otherwise noted, the number of shares of Class A common stock outstanding after this offering and other information based thereon in this prospectus excludes:

•

shares of Class A common stock, which may be issued upon the exercise of the underwriters’ option to purchase additional shares;

•

shares of Class A common stock reserved for issuance upon exchange of the Class B units that will be outstanding immediately after this offering;

•

Risk Factors

Summary Selected Historical and Pro Forma Consolidated Financial Data

The following table sets forth the summary selected historical consolidated financial data of Silvercrest L.P., which is deemed to be our predecessor for accounting purposes, as of the dates and for the periods indicated. The historical selected consolidated statement of operations data for the years ended December 31, 2011, 2010 and 2009, and the consolidated statements of financial position data as of December 31, 2011 and 2010 of Silvercrest L.P. have been derived from, and are qualified in their entirety by, the historical audited consolidated financial statements of Silvercrest L.P. included elsewhere in this prospectus. The consolidated statements of financial position data as of December 31, 2009 have been derived from financial statements not included in this prospectus. The summary selected consolidated statements of operations data for the three months ended March 31, 2012 and 2011 and the summary selected consolidated statement of financial condition data as of March 31, 2012 have been derived from the Silvercrest L.P. unaudited consolidated financial statements included elsewhere in this prospectus. These unaudited consolidated financial statements have been prepared on substantially the same basis as our audited consolidated financial statements and include all adjustments that we consider necessary for a fair presentation of our results of operations and financial condition for the periods and as of the dates presented. Our results for the three months ended March 31, 2012 are not necessarily indicative of our results for a full fiscal year.


	Historical Silvercrest L.P.										Pro Forma Silvercrest
	Year Ended December 31,						Three Months Ended March 31,				Year Ended December 31,	Three Months Ended March 31,
	2011		2010		2009		2012		2011		2011	2012

Statements of operations data:

Revenue:
Management and advisory fees	$	37,869	$	32,442	$	29,341	$	10,682	$	8,970
Performance fees and allocations		85		548		96		—		18
Family office services		4,833		3,841		3,097		1,198		1,077

Total revenue		42,787		36,831		32,534		11,880		10,065


Expenses:
Compensation and benefits		17,492		16,528		15,630		4,768		4,169
General and administrative		10,849		9,459		13,006		2,566		2,157
Impairment charges		—		—		1,691		—		—

Total expenses		28,341		25,987		30,327		7,334		6,326

Income before net loss from investment activities of Silvercrest Funds and other income (expenses)		14,446		10,844		2,207		4,546		3,739


	Historical Silvercrest L.P.															Pro Forma Silvercrest
	Year Ended December 31,									Three Months Ended March 31,						Year Ended December 31,	Three Months Ended March 31,
	2011			2010			2009			2012			2011			2011	2012

Other income (expense):
Gain on extinguishment of debt		—			—			3,934			—			—
Gain on settlement with former LongChamp shareholder		—			—			1,470			—			—
Loss on forgiveness of notes receivable		(34	)		(508	)		—			—			—
Change in value of options granted to equity holders		—			2			134			—			—
Interest income		187			231			213			45			46
Interest expense		(164	)		(241	)		(467	)		(64	)		(39	)
Other (expense) income		(210	)		30			—			32			(203	)
Equity income (loss) from investments		950			1,241			274			—			—

Total other income (expense)		729			755			5,558			13			(196	)


Income (loss) before non-controlling interests in income of consolidated entities and (provision) benefit for income taxes:		15,175			11,599			7,765			4,559			3,543

Non-controlling interests in income of consolidated entities		—			—			—			—			—

Income before provision for income taxes		15,175			11,599			7,765			4,559			3,543
(Provision) benefit for income taxes		(566	)		(657	)		321			(270	)		66

Net income	$	14,609		$	10,942		$	8,086		$	4,289		$	3,609


Selected statements of financial position data:

Total assets	$	45,262		$	33,079		$	29,964		$	40,454		$	28,5924
Notes payable		4,809			2,957			7,120			4,362			2,463
Total liabilities		15,751			12,490			14,893			12,645			9,067
Redeemable partners’ capital		85,177			45,619			34,220			80,919			57,758
Partners’ deficit		(55,666	)		(25,030	)		(19,148	)		(53,110	)		(38,232	)

Selected unaudited operating data:

Assets under management (billions of dollars) (1)	$	10.1		$	9.2		$	8.8		$	11.1		$	9.9
Adjusted EBITDA (2)	$	10,839		$	9,068		$	6,449		$	3,447		$	2,686
Adjusted EBITDA margin (3)		25.3	%		24.6	%		19.8	%		29.0	%		26.7	%

(1)	Reflected as of the last day of the period.

(2)

The following table contains a reconciliation of net income to Adjusted EBITDA (amounts in thousands).


	Year Ended December 31,									Three Months Ended March 31,
	2011			2010			2009			2012			2011

Reconciliation of non-GAAP financial measures:

Net income	$	14,609		$	10,942		$	8,086		$	4,289		$	3,609
Provision (benefit) for income taxes		566			657			(321	)		270			(66	)
Interest expense		164			241			467			64			39
Interest income		(187	)		(231	)		(213	)		(45	)		(46	)
Partner incentive allocations (A)		(8,775	)		(5,173	)		(2,591	)		(2,027	)		(1,575	)
Depreciation and amortization		1,469			1,379			1,531			475			315
Equity-based compensation		1,060			583			—			431			206
Other adjustments (B)		1,933			670			(460	)		(10	)		204


Adjusted EBITDA	$	10,839		$	9,068		$	6,499		$	3,447		$	2,686

(A)

(B)	Other adjustments consist of the following:


	Year Ended December 31,								Three Months Ended March 31,
	2011		2010			2009			2012			2011

Loss on forgiveness of notes receivable (a)	$	34	$	508		$	—		$	—		$	—
Gain on extinguishment of debt (b)		—		—			(3,934	)		—			—
Gain on settlement with former LongChamp shareholders (b)		—		—			(926	)		—			—
Write-off of LongChamp revenue (b)		—		64			557			—			—
Loss on sub-lease (c)		150		—			—			(21	)		213
Lease abandonment charge (d)		—		—			1,154						—
Goodwill, intangible, and fixed asset impairment charge (e)		—		—			1,691			—			—
Client reimbursement		—		—			1,132			—			—
Fund redemption costs (f)		827		—			—			9			—
IPO professional fees		578		—			—			2			—
Milbank acquisition costs (g)		222		—			—			—			—
Severance		69		100			—			—			—
Change in value of options granted to equity holders (h)		—		(2	)		(134	)		—			—
Other (i)		53		—			—			—			(9	)


Total other adjustments	$	1,933	$	670		$	(460	)	$	(10	)	$	204

(a)	Represents remaining balance on notes originally issued in connection with the issuance of equity that were forgiven in connection with the termination of principals.

(b)

(c)	Reflects a charge taken for the difference, on a present value basis, between the per square foot rental rate for our company’s primary lease and a sub-lease that we signed in 2011 with a sub-tenant for our headquarters in New York.

(d)	Reflects a charge for the remaining rent expense on a portion of our unutilized space at our headquarters that we abandoned in 2009 and subleased through September 29, 2017.

(e)	Includes goodwill and intangibles impairment charges related to the closing of our LGI business. Also reflects an impairment charge related to the write-off of leasehold improvements in the abandoned space in 2009.

(f)	Includes the costs associated with the reimbursement to one of our funds for the difference between the value of certain investor redemptions and the actual proceeds of the underlying securities in 2011.

(g)	Reflects the legal and accounting fees associated with the closing of the Milbank Winthrop & Co., Inc. acquisition that were expensed in 2011.

(h)	Reflects the change in fair value of options that were granted to previous equity holders to purchase membership in Silvercrest Asset Management Group LLC. The options expired on April 30, 2010.

(i)	Represents professional fees related to the Milbank acquisition and a Silvercrest fund.

(3)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

RISK FACTORS

Risks Related to our Investment Performance and the Financial Markets

•

The historical returns of our existing investment strategies may not be indicative of their future results or of the future results of investment strategies we may develop in the future.

We have presented the historical returns of our existing investment strategies under “Business—Our Business Model.” The historical returns of our strategies should not be considered indicative of the future results of these strategies or of the results of any other strategies that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The historical performance presented herein is as of March 31, 2012 and for periods then ended. The performance we achieve as of a subsequent date and for a subsequent period may be higher or lower and the difference may be material. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, such as in 2008, the first quarter of 2009 and the second quarter of 2010, general economic and market conditions have negatively affected investment opportunities and our strategies’ returns. These negative conditions may occur again, and in the future, we may not be able to identify and invest in profitable investment opportunities within our current or future strategies.

We derive a substantial portion of our revenues from a limited number of our strategies.

As of March 31, 2012, $6.7 billion of our assets under management were concentrated in discretionary managed accounts, representing approximately 81% of our investment management fees for the quarter ended March 31, 2012. In addition, $1.0 billion of our assets under management were invested in private partnerships, as of March 31, 2012, representing approximately 19% of our investment management fees for the quarter ended March 31, 2012. As a result, a substantial portion of our operating results depends upon the performance of those strategies and our ability to retain client assets. If a significant portion of the investors in our larger strategies decided to withdraw their investments or terminate their investment management agreements for any reason, including poor investment performance or adverse market conditions, our revenues from those strategies would decline, which would have a material adverse effect on our results of operations and financial condition.