Following our IPO, we became a public company on July 16, 2021 and are taxed as a corporation for U.S. federal and state income tax purposes. We are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of any taxable income generated by the Operating Company that flows through to the Company.

Prior to our becoming a public company, other than BIGRM and Bridge PM, Inc., the Company and its subsidiaries were limited liability companies or limited partnerships and, as such, were not subject to income taxes; the individual owners of Bridge are required to report their distributive share of the Company’s realized income, gains, losses, deductions, or credits on their individual income tax returns.

In connection with the exchanges of Operating Company interests for Class A common stock by the Original Equity Owners in July and August 2021, the Company’s ownership in the Operating Company increased, which resulted in an increase to deferred tax assets in the amount of $62.2 million. Additionally, in connection with the exchange transactions the Company recorded a corresponding Tax Receivable Agreement liability of $44.4 million, representing 85% of the incremental net cash tax savings for the Company due to the exchanging Original Equity Owners.

The Company’s effective tax rate was 2% for the three months ended September 30, 2021. The Company’s effective tax rate is dependent on many factors, including the estimated amount of income subject to tax. Consequently, the effective tax rate can vary from period to period. The Company’s overall effective tax rate in each of the periods described above is less than the statutory rate primarily because (a) the Company was not subject to U.S. federal taxes prior to the Transactions and the IPO and (b) a portion of income is allocated to non-controlling interests, and the tax liability on such income is borne by the holders of such non-controlling interests.

The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized.

As of September 30, 2021, the Company had no unrecognized tax positions and does not expect any changes to uncertain tax positions within the next 12 months.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed combined and consolidated financial statements.