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Business Combinations

12 Months Ended

Dec. 31, 2019

3.	BUSINESS COMBINATIONS

Acquisition of CamberView

On October 1, 2018, the Company completed the acquisition of CamberView. CamberView is a leading advisory firm providing independent advice to assist public company boards of directors and management teams in building strong and successful relationships with investors. The acquisition of CamberView expands the Company’s ability to serve clients.

Pursuant to the Agreement and Plan of Merger, by and among the Company, PJT Partners Holdings LP (“Purchaser”), Blue Merger Sub LLC, a wholly owned subsidiary of Purchaser, CamberView and CC CVP Partners Holdings, L.L.C., solely in its capacity as securityholder representative, dated as of August 27, 2018 (the “Agreement”), the Company acquired 100% ownership of CamberView. A portion of the closing consideration was placed into escrow to cover potential post-closing obligations of the selling unitholders.

This transaction was accounted for as a business combination and CamberView’s operating results have been included in the Company’s consolidated financial statements from the date of the transaction. The Company incurred $1.8 million of costs related to the acquisition, which were primarily recorded in Professional Fees in the Consolidated Statement of Operations for the year ended December 31, 2018.

The purchase price was comprised of the following:

Cash (a)	$	60,765
Common Stock (b)		71,423
Partnership Units (c)		3,961
Total Purchase Price	$	136,149

(a)	Reflects cash paid to selling unitholders and employees of CamberView at closing, payoff of an existing term loan facility held by CamberView at closing and settlement of escrow balances in March 2019.

(b)

Reflects the value of 1.4 million shares of PJT Partners Inc. Class A common stock issued to the selling unitholders of CamberView at closing based on the Company’s closing stock price of $51.55 on October 1, 2018 and the value of an additional 0.1 million shares of PJT Partners Inc. Class A common stock issued to the selling unitholders related to the settlement of escrow balances in March 2019 based on the Company’s closing stock price of $40.61 on March 15, 2019.

(c)

Reflects the value of 0.1 million Partnership Units issued to certain CamberView employees at closing using a fair value of $47.53, which represented the closing stock price of $51.55 on October 1, 2018 discounted for holding period risk as well as an additional 0.1 million Partnership Units issued to certain CamberView employees upon the settlement of escrow balances in March 2019 using a fair value of $37.44, which represented the closing stock price of $40.61 on March 15, 2019 discounted for holding period risk. Partnership Units shall be eligible for exchange in accordance with the Exchange Agreement starting on the first exchange date when the Partnership Units have been both outstanding and fully vested for at least six months as of the applicable exchange date.

The total purchase price includes Securityholder Representative Funds, as defined in the Agreement, of $1.0 million, which may be used to cover post-closing obligations of the selling unitholders. Any release of these proceeds to PJT Partners Inc. will not result in a change to the total purchase price above.

Under the terms of the acquisition agreement, the Company was required to replace a portion of CamberView employees’ former equity awards and, as such, was required to allocate a portion of the newly issued awards to the purchase price. The portion not included in the purchase price is recorded in compensation expense according to the vesting conditions of the respective equity award agreements.

The following table summarizes the allocation of the total purchase price:

	December 31, 2018		Measurement Period Adjustments			December 31, 2019
Assets
Cash	$	6,787	$	—		$	6,787
Accounts Receivable		2,602		—			2,602
Furniture, Equipment and Leasehold Improvements, Net		283		—			283
Other Assets		2,915		(81	)		2,834
Identifiable Intangible Assets		40,600		(1,700	)		38,900
Goodwill		103,745		(3,306	)		100,439
Deferred Tax Asset		111		(111	)		—
Total Assets		157,043		(5,198	)		151,845
Liabilities
Accrued Compensation and Benefits		192		—			192
Accounts Payable, Accrued Expenses and Other Liabilities		8,660		—			8,660
Deferred Rent Liability		230		—			230
Taxes Payable		54		—			54
Deferred Revenue		6,560		—			6,560
Total Liabilities		15,696		—			15,696
Net Assets	$	141,347	$	(5,198	)	$	136,149

The excess of the purchase price over the fair value of the net assets acquired of $100.4 million was recorded as goodwill. Goodwill included the in-place workforce, which allowed the Company to continue serving its existing client base, begin marketing to potential clients and avoid significant costs reproducing the workforce.

The business combination was treated as an asset purchase for tax purposes. Similar to the purchase accounting method used for book purposes, the excess of the purchase price paid over the fair value of the net assets acquired was recorded as goodwill for tax purposes. The amount of goodwill recorded for tax purposes was determined based on the consideration paid at closing and is amortized for tax purposes ratably over a fifteen year period.

The fair value of the intangible assets acquired, which consisted of CamberView’s customer relationships and trade name, is based, in part, on a valuation using an income approach. The Company considered, among other factors, the analyses of historical financial performance and an estimate of the future performance of the CamberView business. The risk adjusted discount rates used to compute the present value of individual intangible assets expected net cash flows were based upon PJT Partners Inc.’s estimated weighted average cost of capital. The estimated fair value ascribed to the identifiable intangible assets is amortized on a straight-line basis over the estimated useful life of each of the intangible assets over periods ranging between four to eight years. The carrying value of all other assets and liabilities was deemed to approximate their estimated fair value. Goodwill represented the excess of the purchase price over the fair value of net assets acquired.

The Consolidated Statement of Operations for the year ended December 31, 2019 includes the results of CamberView and the Consolidated Statement of Operations for the year ended December 31, 2018 includes the results of CamberView from the date of acquisition, October 1, 2018, through December 31, 2018. Supplemental information on an unaudited pro forma basis, as if the acquisition had been consummated as of January 1, 2017 is as follows:

	Year Ended December 31,
	2018		2017
Total Revenues	$	615,643	$	531,990
Net Income (Loss) Attributable to PJT Partners Inc.	$	26,195	$	(36,825	)

The unaudited pro forma results of operations do not purport to represent what the Company’s results of operations would actually have been had the acquisition occurred on January 1, 2017 or to project the Company’s results of operations for any future period. Actual future results may vary considerably based on a variety of factors beyond the Company’s control.