Perella Weinberg Partners
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
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FY2024 · Filed Feb 27, 2025
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Item 8. Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Perella Weinberg Partners
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial condition of Perella Weinberg Partners (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), changes in equity and redeemable non-controlling interests and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2025, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| Transaction-related Advisory Service Revenue | |
| Description of the Matter | For the year ended December 31, 2024, the Company’s revenues totaled $878.0 million, a portion of which resulted from transaction-related advisory services. As explained in Note 2 to the consolidated financial statements, the Company provides transaction-related advisory services to its clients to assist with corporate finance activities that include, but are not limited to, mergers and acquisitions, reorganizations, tender offers, leveraged buyouts, and the pricing of securities to be issued. The Company recognizes revenue from transaction-related advisory services when or as its performance obligations are fulfilled. The recognition of transaction-related advisory services is often constrained until substantially all services have been provided, specified conditions have been met and/or certain milestones have been achieved, and it is probable that a significant revenue reversal will not occur in a future period. The determination of when and to what extent to recognize transaction-related advisory service revenues may require judgment, particularly when milestones are met near the end of a reporting period and in cases where additional services are expected to be provided subsequent to the achievement of the milestone.Auditing transaction-related advisory services revenue involved significant effort and was especially challenging due to the judgment involved to assess whether (1) all services have been provided, specified conditions have been met and/or certain milestones have been achieved and (2) it is probable a significant revenue reversal will not occur in a future period. |
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| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls over transaction-related advisory services revenue. This included, among others, testing management’s controls over the assessment of the fulfillment of its performance obligations and the evaluation of the revenue constraint for transactions that closed subsequent to the reporting period.To test the Company’s transaction-related advisory service revenue, our procedures included, among others, testing a sample of revenue transactions, including transactions occurring near the end of the reporting period to evaluate management’s assessment that it had met the conditions for revenue recognition. We made inquiries of management relating to their assessment of the satisfaction of performance obligations pursuant to the terms of the engagement letter and the probability of a significant revenue reversal in the future. We obtained and read the engagement letters and identified the services to be provided and the compensation to be received. We inspected relevant documentation such as transaction close documents, press releases, court approvals, executed agreements and correspondence between third parties and the Company. |
| Internal Reorganization Accounting and Reporting | |
| Description of the Matter | On April 1, 2024, as part of an internal reorganization, PWP AdCo Professionals LP (“AdCo Professionals”) merged with and into PWP Holdings LP (“PWP OpCo”) (the “Merger”). As a result of the Merger, (i) the partnership units of AdCo Professionals were converted into an equivalent number of partnership units of PWP OpCo, (ii) the net assets of AdCo Professionals became the net assets of PWP OpCo and (iii) PWP OpCo adopted an amended and restated limited partnership agreement that permits the Company to settle quarterly exchanges in cash or shares at the Company’s discretion. As disclosed in notes 1 and 11 to the consolidated financial statements, at the time of the Merger, the Company entered into vesting acceleration agreements with certain holders of AdCo Professionals partnership units which accelerated the vesting. The Merger and accelerated vesting resulted in certain of these partnership unit awards being modified from equity-classified to liability-classified awards with changes in fair value generally recorded as incremental equity-based compensation expense through the date of vesting. For the year ended December 31, 2024, the Company recorded $130.3 million of equity-based compensation expense related to the acceleration of these partnership unit awards. Of that amount, $69.5 million was related to liability-classified awards. In addition, as disclosed in Note 10 to the consolidated financial statements as a result of the Merger, the Non-controlling interests on the Company’s Consolidated Statements of Financial Condition were reclassified to Redeemable non-controlling interests within temporary equity. Further, subsequent to the Merger, the Company began allocating the remaining expense associated with these partnership unit awards between Perella Weinberg Partners and Non-controlling interests in proportion to their ownership interests of PWP OpCo, which is consistent with the allocation of the other profit and loss activity.Auditing the internal reorganization was especially challenging because of the complexity of the transaction and the related accounting guidance and reporting considerations. |
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| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls related to the internal reorganization. This included, among others, testing management’s controls over the evaluation and application of accounting and reporting guidance in recording and reporting the financial statement impacts of the internal reorganization.To test the Company’s evaluation of and accounting and reporting for the internal reorganization, our procedures included, among others, obtaining and reading the amended and restated PWP OpCo limited partnership agreement, vesting acceleration agreements and other relevant documents, assessing settlement and acceleration provisions, considering management’s conclusions regarding the accounting and reporting, and evaluating the Company’s financial statement presentation and disclosures, including equity-based compensation expense and non-controlling interest classification and measurement. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2007.
New York, New York
Consolidated Statements of Financial Condition
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