Bridge Investment Group Holdings Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATION AND GOODWILL

BUSINESS COMBINATION AND GOODWILL

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Acquisition of Newbury Partners LLC

On March 31, 2023 (the “Acquisition Date”), affiliates of Bridge closed on an acquisition to purchase substantially all of the assets of Newbury Partners LLC (“Newbury”), a Delaware limited liability company, pursuant to the terms of an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Operating Company, Newbury Partners-Bridge LLC, a Delaware limited liability company (an indirect wholly owned subsidiary of the Operating Company, Newbury, Richard Lichter and RLP Navigator LLC, a Delaware limited liability company. Bridge acquired substantially all of Newbury’s assets and assumed certain of Newbury’s liabilities for total consideration of $320.1 million paid in cash, subject to certain purchase price adjustments as set forth in the Asset Purchase Agreement (the “Newbury Acquisition”).

The following table summarizes the total consideration for the Newbury Acquisition and the related purchase price allocation for the assets acquired, liabilities assumed and non-controlling interests (in thousands):


Consideration
Cash	$	319,364
Liabilities assumed	736
Total consideration	$	320,100

Assets acquired and liabilities assumed
Net tangible acquired assets			$	77,732
Trade name(1)			3,000
Client relationship(1)			48,000
Management contracts(1)			98,000
Fair value of net identifiable assets acquired			$	226,732
Non-controlling interest(1)			(84,234)
Goodwill(1)			177,602
Total assets acquired and liabilities assumed, net			$	320,100

(1)The fair value was determined using Level 3 assumptions.

In connection with the Newbury Acquisition, the Company expensed transaction costs of approximately $3.6 million, of which $3.5 million is included in general and administrative expenses on the condensed consolidated statement of operations for the six months ended June 30, 2023.

In connection with the Newbury Acquisition, the Company allocated $98.0 million, $48.0 million, and $3.0 million of the purchase price to the fair value of management contracts, client relationships and trade name, respectively. The fair value of management contracts was estimated based upon estimated net cash flows generated from those contracts, discounted at 16.0%, with remaining lives estimated between 4 and 10 years for fund management contracts. The fair value of client relationships was estimated based upon estimated net cash flows expected to be generated under future management contracts, discounted at 22.0%, with a remaining estimated useful life of 14 years. The trade name was valued using a relief-from-royalty method, based on estimated savings from an avoided royalty rate of 1.0% on expected revenue discounted at 21.0%, with an estimated useful life of 10 years.

The carrying value of goodwill associated with Newbury was $177.6 million as of the Acquisition Date and is attributable to expected synergies and the assembled workforce of Newbury.

As part of the Newbury Acquisition, approximately $0.7 million of liabilities were assumed by the Operating Company as part of the total consideration. As of June 30, 2024, none of the assumed liabilities remained outstanding.

Unaudited supplemental information on a pro forma basis, as if the Newbury Acquisition had been consummated on January 1, 2022, is as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Total revenues and investment (loss) income	$	88,200	$	214,748	$	86,299	$	404,726
Net (loss) income attributable to Bridge Investment Group Holdings Inc.	(4,772)		12,319		(5,041)		21,423

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable. These results are not necessarily indicative of the Company’s consolidated financial condition or statements of operations in future periods or the results that actually would have been realized had the Company and Newbury been a combined entity during the periods presented. These pro forma amounts have been calculated after applying the following adjustments that were directly attributable to the Newbury Acquisition:

•adjustments to reflect the exclusion of accrued performance allocation income and related compensation for certain Newbury funds that were not acquired as part of the Newbury Acquisition;

•adjustments to include the impact of the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied on January 1, 2022, together with the consequential tax effects;

•adjustments to reflect compensation agreements and profits interests awards granted to certain transferred employees, as if they were granted on January 1, 2022;

•adjustments to include interest expense related to the 2023 Private Placement Notes and the draw on our Credit Facility (as defined herein) as if it had been consummated on January 1, 2023 and adjustments to exclude interest expense related to the line of credit that was not assumed by the Company in the Newbury Acquisition;

•adjustments to reflect the tax effects of the Newbury Acquisition and the related adjustments as if Newbury had been included in the Company’s results of operations as of January 1, 2022; and

•adjustments to reflect the pro-rata economic ownership attributable to Bridge.

Included in the pro forma financial information for the six months ended June 30, 2023 is $3.5 million and $4.6 million of transaction costs incurred by the Company and Newbury, respectively. There were no transaction costs incurred for the three months ended June 30, 2024.