Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Registrant Name | ASSETMARK FINANCIAL HOLDINGS, INC. | |
Entity Central Index Key | 0001591587 | |
Entity File Number | 001-38980 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 30-0774039 | |
Entity Address, Address Line One | 1655 Grant Street | |
Entity Address, Address Line Two | 10th Floor | |
Entity Address, City or Town | Concord | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94520 | |
City Area Code | 925 | |
Local Phone Number | 521-2200 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | AMK | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | No | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Common Stock, Shares Outstanding | 72,400,000 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 65,024 | $ 105,354 |
Restricted cash | 7,000 | 7,000 |
Investments, at fair value | 370 | 333 |
Fees and other receivables | 10,295 | 8,760 |
Other current assets | 7,120 | 4,391 |
Total current assets | 93,133 | 126,756 |
Property, plant and equipment, net | 7,146 | 7,040 |
Capitalized software, net | 71,221 | 72,644 |
Other intangible assets, net | 654,440 | 642,420 |
Goodwill | 325,493 | 298,415 |
Total assets | 1,151,433 | 1,147,275 |
Current liabilities: | ||
Accounts payable | 1,410 | 730 |
Accrued liabilities and other current liabilities | 33,165 | 38,200 |
Current portion of long-term debt | 1,786 | 2,305 |
Current portion of acquisition earn-out | 8,000 | |
Total current liabilities | 36,361 | 49,235 |
Long-term debt, net | 242,432 | 242,817 |
Other long-term liabilities | 10,447 | 5,097 |
Deferred income tax liabilities, net | 146,682 | 151,115 |
Total long-term liabilities | 399,561 | 399,029 |
Total liabilities | 435,922 | 448,264 |
Commitments and contingencies | ||
Stockholder’s equity: | ||
Common stock, $0.001 par value (675,000,000 shares authorized and 66,150,000 shares issued and outstanding) (See Note 12) | 66 | 66 |
Additional paid-in capital | 646,594 | 635,096 |
Retained earnings | 68,851 | 63,846 |
Accumulated other comprehensive income, net of tax | 3 | |
Total stockholder’s equity | 715,511 | 699,011 |
Total liabilities and stockholder’s equity | 1,151,433 | 1,147,275 |
Federal | ||
Current assets: | ||
Income tax receivable | 2,875 | 586 |
State | ||
Current assets: | ||
Income tax receivable | $ 449 | $ 332 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 675,000,000 | 675,000,000 |
Common stock, shares issued | 66,150,000 | 66,150,000 |
Common stock, shares outstanding | 66,150,000 | 66,150,000 |
Unaudited Consolidated Statemen
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Revenue | ||||
Total revenue | $ 104,483 | $ 88,777 | $ 196,797 | $ 173,310 |
Expenses | ||||
Asset-based expenses | 31,625 | 28,719 | 59,727 | 55,524 |
Spread-based expenses | 1,595 | 444 | 2,073 | 805 |
Employee compensation | 35,489 | 26,663 | 67,374 | 51,403 |
General and operating expenses | 13,135 | 10,602 | 25,427 | 21,253 |
Professional fees | 4,469 | 2,049 | 6,855 | 4,325 |
Interest | 4,031 | 8,055 | ||
Depreciation and amortization | 7,613 | 6,698 | 14,509 | 12,735 |
Total expenses | 97,957 | 75,175 | 184,020 | 146,045 |
Income before income taxes | 6,526 | 13,602 | 12,777 | 27,265 |
Provision for income taxes | 3,289 | 4,337 | 6,729 | 8,209 |
Net income | 3,237 | 9,265 | 6,048 | 19,056 |
Other comprehensive income, net of tax | ||||
Unrealized gain on investments, net of tax | 2 | |||
Net comprehensive income | $ 3,237 | $ 9,267 | $ 6,048 | $ 19,056 |
Net income per share attributable to common shareholder: | ||||
Net income per share, basic | $ 0.05 | $ 0.14 | $ 0.09 | $ 0.29 |
Weighted average number of common shares outstanding, basic | 66,150,000 | 66,150,000 | 66,150,000 | 66,150,000 |
Asset Based Revenue | ||||
Revenue | ||||
Total revenue | $ 94,273 | $ 83,234 | $ 177,336 | $ 162,310 |
Spread Based Revenue | ||||
Revenue | ||||
Total revenue | 8,810 | 4,734 | 16,359 | 8,483 |
Other Revenue | ||||
Revenue | ||||
Total revenue | $ 1,400 | $ 809 | $ 3,102 | $ 2,517 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Stockholder's Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income |
Beginning balance at Dec. 31, 2017 | $ 885,958 | $ 66 | $ 784,464 | $ 101,420 | $ 8 |
Beginning balance, shares at Dec. 31, 2017 | 66,150,000 | ||||
Net income | 19,056 | 19,056 | |||
Share-based employee compensation | 2,739 | 2,739 | |||
Ending balance at Jun. 30, 2018 | 907,753 | $ 66 | 787,203 | 120,476 | 8 |
Ending balance, shares at Jun. 30, 2018 | 66,150,000 | ||||
Beginning balance at Mar. 31, 2018 | 897,043 | $ 66 | 785,760 | 111,211 | 6 |
Beginning balance, shares at Mar. 31, 2018 | 66,150,000 | ||||
Net income | 9,265 | 9,265 | |||
Other comprehensive income (loss) | 2 | 2 | |||
Share-based employee compensation | 1,443 | 1,443 | |||
Ending balance at Jun. 30, 2018 | 907,753 | $ 66 | 787,203 | 120,476 | 8 |
Ending balance, shares at Jun. 30, 2018 | 66,150,000 | ||||
Beginning balance at Dec. 31, 2018 | 699,011 | $ 66 | 635,096 | 63,846 | 3 |
Beginning balance, shares at Dec. 31, 2018 | 66,150,000 | ||||
Net income | 6,048 | 6,048 | |||
Other comprehensive income (loss) | 3 | (3) | |||
2018 dividend reclassification | 1,046 | (1,046) | |||
Share-based employee compensation | 10,452 | 10,452 | |||
Ending balance at Jun. 30, 2019 | 715,511 | $ 66 | 646,594 | 68,851 | |
Ending balance, shares at Jun. 30, 2019 | 66,150,000 | ||||
Beginning balance at Mar. 31, 2019 | 707,064 | $ 66 | 640,322 | 66,657 | 19 |
Beginning balance, shares at Mar. 31, 2019 | 66,150,000 | ||||
Net income | 3,237 | 3,237 | |||
Other comprehensive income (loss) | (16) | 3 | $ (19) | ||
2018 dividend reclassification | 1,046 | (1,046) | |||
Share-based employee compensation | 5,226 | 5,226 | |||
Ending balance at Jun. 30, 2019 | $ 715,511 | $ 66 | $ 646,594 | $ 68,851 | |
Ending balance, shares at Jun. 30, 2019 | 66,150,000 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 6,048 | $ 19,056 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 14,509 | 12,735 |
Interest | 347 | |
Deferred income taxes | 20 | (220) |
Share-based compensation | 10,452 | 2,739 |
Changes in certain assets and liabilities: | ||
Fees and other receivables, net | (1,461) | (1,926) |
Payable to related party | (314) | (61) |
Other current assets | (2,012) | 40 |
Accounts payable, accrued expenses and other liabilities | (17,675) | (15,783) |
Income tax receivable and payable | (2,406) | 1,811 |
Net cash provided by operating activities | 7,508 | 18,391 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Global Financial Private Capital, LLC | (35,906) | |
Purchase of investments | (21) | (300) |
Purchase of property and equipment | (838) | (344) |
Purchase of computer software | (9,823) | (7,521) |
Net cash used in investing activities | (46,588) | (8,165) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on long-term debt | (1,250) | |
Net cash used in financing activities | (1,250) | |
Net change in cash, cash equivalents, and restricted cash | (40,330) | 10,226 |
Cash, cash equivalents, and restricted cash at beginning of period | 112,354 | 57,147 |
Cash, cash equivalents, and restricted cash at end of period | 72,024 | 67,373 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Income taxes paid | 8,966 | $ 11,053 |
Interest paid | $ 7,708 |
Organization and Nature of Busi
Organization and Nature of Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Nature of Business | Note 1. Organization and Nature of Business These unaudited condensed consolidated financial statements include AssetMark Financial Holdings, Inc. and its subsidiaries, which include AssetMark Financial, Inc., which is the parent company of AssetMark, Inc., AssetMark Trust Company, AssetMark Brokerage, LLC, AssetMark Retirement Services, Inc., Global Financial Private Capital, LLC and Global Financial Advisory, LLC (collectively, the “Company”). The Company’s legal entity structure as of June 30, 2019: As of June 30, 2019, the Company was a wholly owned subsidiary of AssetMark Holdings LLC (“AssetMark Holdings”), which was organized for the purpose of acquiring the Company effective October 31, 2016. AssetMark Holdings was 98.58% owned by affiliates of Huatai Securities Co. Ltd. (“HTSC”) and 1.42% owned by management as of June 30, 2019. The Company was acquired from the private equity firms Aquiline Capital Partners LLC and Genstar Capital LLC. On July 17, 2019, immediately following the pricing of its initial public offering (the “IPO”), AssetMark Holdings liquidated and dissolved and distributed shares of the Company’s common stock to its members and the Company ceased to be a wholly owned subsidiary of AssetMark Holdings. The Company offers a broad array of wealth management solutions to individual investors through financial advisers by providing an open-architecture product platform along with tailored client advice, asset allocation options, practice management, support services and technology to the financial adviser channel. AssetMark Trust Company (“AssetMark Trust”) is a licensed trust company incorporated under the laws of the State of Arizona on August 24, 1994 and regulated by the Arizona Department of Financial Institutions. AssetMark Trust provides custodial recordkeeping services primarily to investor clients of registered investment advisers (including AMI) located throughout the United States. AssetMark, Inc. (“AMI”) is a registered investment adviser that was incorproated under the laws of the State of California on May 13, 1999. AMI offers a broad array of wealth management solutions to individual investors through financial advisers by providing an open-architecture product platform along with tailored client advice, asset allocation options, practice management, support services and techonolgy solutions to the financial adviser channel. AMI serves as investment adviser to the Company’s proprietary GuideMark Funds, GuidePath Funds and the Savos Dynamic Hedging Fund, each of which is a mutual fund offered to clients of financial advisers. AssetMark Retirement Services, Inc. (“ARS”), formerly known as Aris Corporation of America, was incorporated under the laws of the State of Pennsylvania on April 30, 1974. ARS serves as the record-keeper and third-party administrator for the Aris Retirement product, which are 401(k) or 403(b) investment offerings utilized by small businesses. AssetMark Brokerage, LLC is a limited-purpose broker-dealer located in Concord, California and was incorporated under the laws of the State of Delaware on September 25, 2013. Its primary function is to distribute the mutual funds of the Company and to sponsor the FINRA licensing of those AssetMark associates who provide distribution support through promotion of the AssetMark programs and strategies that employ the Company’s mutual funds. Global Financial Private Capital, LLC (“GFPC”) is a registered investment adviser that was incorporated under the laws of the State of Florida on June 7, 2004. GFPC provides a broad suite of integrated wealth management services for institutional and individual investors. Global Financial Advisory, LLC (“GFA”) is an insurance services company that was incorporated under the laws of the State of Delaware on June 30, 2016. GFA provides insurance services on an intermediary basis and is not a policy writer. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of only normal recurring adjustments, considered necessary for fair presentation have been included. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the year ended December 31, 2019 or any future period. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended December 31, 2018 included in the Company’s prospectus dated July 17, 2019 filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). Recent Accounting Pronouncements – Current Adoptions In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how to classify certain types of cash payments and receipts on the statement of cash flows. The following amendments in ASU 2016-15 are or may be relevant to the Company: (1) debt prepayment or extinguishment costs should be classified as financing cash outflows; (2) cash consideration payments made soon after an acquisition’s consummation date (approximately three months or less) should be classified as cash outflows for investing activities; payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability; payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (3) proceeds from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (4) for distributions received from equity-method investments, companies may elect either a cumulative-earnings approach or the nature-of-distribution approach to determine whether distributions received from the equity method investees are returns on investment (operating cash inflows) or returns of investment (investing cash inflows); and (5) in the absence of specific guidance, companies determine each separately identifiable cash source and classify the receipt or payment based on the nature of the cash flow. ASU 2016-15 was effective for non-emerging growth companies on January 1, 2018, and required retrospective application. Companies were required to adopt all amendments at the same time. The Company adopted this ASU on January 1, 2019, and it did not have a significant impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which makes targeted improvements to the accounting for, and presentation and disclosure of, financial instruments. ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. ASU 2016-01 does not affect the accounting for investments that would otherwise be consolidated or accounted for under the equity method. The new standard also affects financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The provisions of ASU 2016-01 were effective for the Company in fiscal years beginning after December 15, 2018. The Company adopted this ASU in 2019, and it did not have a significant impact on its consolidated financial statements. Recent Accounting Pronouncements – Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right of use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard was effective for non-emerging growth companies on January 1, 2019, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and plans to adopt the new standard on January 1, 2020. In August 2018, the FASB issued ASU 2018-15, Intangibles, Goodwill and Other, Internal-Use Software (Subtopic 350-40), which provides guidance to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a license to internal-use-software, then the software license is accounted for by the customer in accordance with Subtopic ASC 350-40. An intangible asset is recognized for the software license and a liability is also recognized. The new standard is effective for non-emerging growth companies on January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect that ASU 2018-15 will have on its consolidated financial statements and plans to adopt the new standard on January 1, 2021. |
Acquisition of Global Financial
Acquisition of Global Financial Private Capital, LLC and Global Financial Advisory, LLC | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisition of Global Financial Private Capital, LLC and Global Financial Advisory, LLC | Note 3. Acquisition of Global Financial Private Capital, LLC and Global Financial Advisory, LLC On August 11, 2018, the Company entered into a unit purchase agreement to acquire Global Financial Private Capital, LLC and Global Financial Advisory, LLC for $55,000, subject to a purchase price adjustment based on a client attrition calculation and closing conditions that included approval from the Committee on Foreign Investment in the United States ( “ ” |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Note 4. Goodwill and Intangible Assets Goodwill The Company’s goodwill balance was $325,493 and $298,415 as of June 30, 2019 and December 31, 2018, respectively. The Company, which has one reporting unit, performed an annual test for goodwill impairment in December for the years ended December 31, 2018 and 2017 and determined that goodwill was not impaired. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the Company’s annual assessment. Intangible Assets Information regarding the Company’s intangible assets is as follows: June 30, 2019 Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangible assets: Broker-dealer relationships $ 570,480 $ — $ 570,480 Definite-lived intangible assets: Trade names 45,830 (6,110 ) 39,720 Broker-dealer license 11,550 (1,540 ) 10,010 AssetMark Trust regulatory status 23,300 (3,107 ) 20,193 GFPC adviser relationships 14,250 (213 ) 14,037 Total $ 665,410 $ (10,970 ) $ 654,440 December 31, 2018 Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangible assets: Broker-dealer relationships $ 570,480 $ — $ 570,480 Definite-lived intangible assets: Trade names 45,830 (4,965 ) 40,865 Broker-dealer license 11,550 (1,251 ) 10,299 AssetMark Trust regulatory status 23,300 (2,524 ) 20,776 Total $ 651,160 $ (8,740 ) $ 642,420 The weighted average estimated remaining useful life was 16.7 years for trade names, the broker-dealer license, AssetMark Trust regulatory status and GFPC adviser relationships as of June 30, 2019. Amortization expense for definite-lived intangible assets was $1,009 for the three months ended June 30, 2019 and 2018. Amortization expense was $2,229 and $2,016 for the six months ended June 30, 2019 and 2018, respectively. The Company performed an annual test for intangible assets impairment in December for the years ended December 31, 2018 and 2017 and determined that intangible assets were not impaired. There have been no significant events or circumstances affecting the valuation of intangible assets subsequent to the Company’s annual assessment. The expected future amortization expense for intangible assets as of June 30, 2019 Remainder of 2019 $ 2,526 2020 5,052 2021 5,052 2022 5,052 2023 5,052 Thereafter 61,226 Total $ 83,960 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Payables And Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Note 5. Accrued Expenses and Other Current Liabilities The following table shows the breakdown of accrued expenses and other current liabilities: June 30, 2019 December 31, 2018 Accrued bonus $ 9,681 $ 14,553 Compensation and benefits payable $ 5,265 $ 5,882 Asset-based payables 2,941 4,041 Other accrued expenses 15,278 13,724 Total $ 33,165 $ 38,200 |
Other-Long-Term Liabilities
Other-Long-Term Liabilities | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other-Long-Term Liabilities | Note 6. Other-Long-Term Liabilities Other long-term liabilities consisted of the following: June 30, 2019 December 31, 2018 Contractor liability $ 3,324 $ 3,825 Deferred rent 1,160 1,272 Purchase commitments related to acquisition of GFPC 5,963 — Total $ 10,447 $ 5,097 |
Asset-Based Expenses
Asset-Based Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Operating Costs And Expenses [Abstract] | |
Asset-Based Expenses | Note 7. Asset-Based Expenses Asset-based expenses incurred by the Company relating to the generation of asset-based revenues are: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Strategist and manager fees $ 25,518 $ 22,807 $ 48,121 $ 44,542 Premier broker-dealer fees 2,444 2,039 4,536 3,831 Custody fees 1,275 1,352 2,449 3,429 Fund advisory fees 1,724 2,007 3,442 2,669 Marketing allowance 612 514 1,127 1,052 Other 52 — 52 1 Total asset-based expenses $ 31,625 $ 28,719 $ 59,727 $ 55,524 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Note 8. Debt On November 14, 2018, the Company executed a Credit Agreement with Credit Suisse AG for a $250,000 term loan and a revolving line of credit that permits the Company to borrow up to $20,000. Both the Term Loan and the Revolver bear interest at (x) the London InterBank Offered Rate (“LIBOR”) plus a margin of 3.50%, with a step down to 3.25% or (y) the Alternate Base Rate, as specified in the Credit Agreement, plus a margin of 2.50%, with a step down to 2.25%, in each case based on our achievement of a specified first-lien leverage ratio. Additionally, the Term Loan’s margin will be reduced by 0.25% following an initial public offering. The term loan matures on November 14, 2025 and the revolving line of credit matures on November 14, 2023. As of June 30, 2019, $248.7 million aggregate principal amount of the term loan remained outstanding and the revolving line of credit was undrawn. Interest expense was $4,031 and $0 for the three months ended June 30, 2019 and 2018, respectively. Interest expense was $8,055 and $0 for the six months ended June 30, 2019 and 2018, respectively. See Note 12 for information regarding the Company’s completion of the IPO and a subsequent partial principal repayment of the term loan. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9. Commitments and Contingencies Litigation The Company faces the risk of litigation and regulatory investigations and actions in the ordinary course of operating its businesses, including the risk of class action lawsuits. The Company’s pending legal and regulatory actions include proceedings specific to the Company and others generally applicable to business practices in the industries in which the Company operates. The Company is also subject to litigation arising out of its general business activities such as its contractual and employment relationships. In addition, the Company is subject to various regulatory inquiries, such as information requests, subpoenas, books and record examinations and market conduct and financial examinations from state, federal and other authorities. A substantial legal liability or a significant regulatory action against the Company could have an adverse effect on its business, financial condition and results of operations. Moreover, even if the Company ultimately prevails in the litigation, regulatory action or investigation, the Company could suffer significant reputational harm, which could have an adverse effect on its business, financial condition or results of operations. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 10. Income Taxes The Company’s effective income tax rate differs from the federal corporate tax rate of 21.0%, primarily as a result of state taxes and the income tax effects of the Company’s share-based compensation. Our effective tax rate was 50.4% and 31.9% for the three months ended June 30, 2019 and 2018, respectively. Our effective tax rate was 52.7% and 30.1% for the six months ended June 30, 2019 and 2018, respectively. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note Due to the outstanding Class C Common Units being accounted for as a liability-classified award, AssetMark Holdings maintained an investment in the Company and an offsetting share-based compensation liability of $24,992 as of June 30, 2019, which represented the estimated value of the share-based employee compensation. The Company recorded these amounts as an expense and an increase to paid-in capital in 2019 and 2018. As of June 30, 2019, the Company had a receivable due from AssetMark Holdings of $314, which represents the cash paid by the Company on behalf of AssetMark Holdings with respect to certain taxes payable in connection with the Company’s distribution to AssetMark Holdings in the fourth quarter of 2018. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12. Subsequent Events On July 3, 2019, the Company’s Board of Directors adopted, and the Company’s sole stockholder approved, the 2019 Equity Incentive Plan (the “Plan”), which became effective on July 17, 2019, the date of effectiveness of the Company’s registration statement on Form S-1. As of August 20, 2019, 4,801,954 shares were available for issuance under the Plan, which amount excluded the 85,737 shares of common stock subject to restricted stock units granted under the Plan immediately following the pricing of the Company’s IPO. Share and per share data shown in the accompanying unaudited condensed consolidated financial statements and related notes have not been retroactively revised to reflect these issuances, nor do they include the shares sold and related proceeds received by the Company from the IPO. On July 5, 2019, the Company filed an amended and restated certificate of incorporation effecting a 661,500-for-one forward stock split. The par value was adjusted to $0.001 per share of common stock in connection with such filing. The number of authorized shares of common stock was increased to 675,000,000 and 75,000,000 shares of preferred stock were authorized to be issued; no preferred stock had been issued as of August 20, 2019. All share and per share data shown in the accompanying unaudited condensed consolidated financial statements and related notes thereto have been retroactively revised to reflect the forward stock split. On July 22, 2019, the Company completed its IPO, in which the Company issued and sold an aggregate of 6.25 million shares of its common stock at a price to the public of $22.00 per share. The Company received aggregate net proceeds of $124.4 million from the IPO after deducting underwriting discounts and commissions and offering expenses payable by the Company. Immediately following the pricing of the IPO, AssetMark Holdings liquidated and dissolved and distributed shares of the Company’s common stock to its members as follows: holders of Class A Common Units and Class B Common Units of AssetMark Holdings received an aggregate of 59,840,951 shares of the Company’s common stock, and holders of Class C Common Units of AssetMark Holdings received an aggregate number of restricted stock awards equal to 6,309,049 shares of the Company’s common stock. As of July 22, 2019, 72.4 million shares of the Company’s common stock were outstanding. On July 26, 2019, the Company made a partial repayment of $125 million of the Company’s outstanding indebtedness under the term loan. Any material subsequent events have been considered for disclosure through August 20, 2019, the date on which the financial statements were made available. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – Current Adoptions In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, which clarifies how to classify certain types of cash payments and receipts on the statement of cash flows. The following amendments in ASU 2016-15 are or may be relevant to the Company: (1) debt prepayment or extinguishment costs should be classified as financing cash outflows; (2) cash consideration payments made soon after an acquisition’s consummation date (approximately three months or less) should be classified as cash outflows for investing activities; payments made thereafter should be classified as cash outflows for financing activities up to the amount of the original contingent consideration liability; payments made in excess of the amount of the original contingent consideration liability should be classified as cash outflows for operating activities; (3) proceeds from the settlement of insurance claims should be classified on the basis of the nature of the loss (or each component loss, if an entity receives a lump-sum settlement); (4) for distributions received from equity-method investments, companies may elect either a cumulative-earnings approach or the nature-of-distribution approach to determine whether distributions received from the equity method investees are returns on investment (operating cash inflows) or returns of investment (investing cash inflows); and (5) in the absence of specific guidance, companies determine each separately identifiable cash source and classify the receipt or payment based on the nature of the cash flow. ASU 2016-15 was effective for non-emerging growth companies on January 1, 2018, and required retrospective application. Companies were required to adopt all amendments at the same time. The Company adopted this ASU on January 1, 2019, and it did not have a significant impact on the Company’s consolidated financial statements and related disclosures. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which makes targeted improvements to the accounting for, and presentation and disclosure of, financial instruments. ASU 2016-01 requires that most equity investments be measured at fair value, with subsequent changes in fair value recognized in net income. ASU 2016-01 does not affect the accounting for investments that would otherwise be consolidated or accounted for under the equity method. The new standard also affects financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The provisions of ASU 2016-01 were effective for the Company in fiscal years beginning after December 15, 2018. The Company adopted this ASU in 2019, and it did not have a significant impact on its consolidated financial statements. Recent Accounting Pronouncements – Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right of use (ROU) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard was effective for non-emerging growth companies on January 1, 2019, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and plans to adopt the new standard on January 1, 2020. In August 2018, the FASB issued ASU 2018-15, Intangibles, Goodwill and Other, Internal-Use Software (Subtopic 350-40), which provides guidance to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. If a cloud computing arrangement includes a license to internal-use-software, then the software license is accounted for by the customer in accordance with Subtopic ASC 350-40. An intangible asset is recognized for the software license and a liability is also recognized. The new standard is effective for non-emerging growth companies on January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect that ASU 2018-15 will have on its consolidated financial statements and plans to adopt the new standard on January 1, 2021. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | Information regarding the Company’s intangible assets is as follows: June 30, 2019 Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangible assets: Broker-dealer relationships $ 570,480 $ — $ 570,480 Definite-lived intangible assets: Trade names 45,830 (6,110 ) 39,720 Broker-dealer license 11,550 (1,540 ) 10,010 AssetMark Trust regulatory status 23,300 (3,107 ) 20,193 GFPC adviser relationships 14,250 (213 ) 14,037 Total $ 665,410 $ (10,970 ) $ 654,440 December 31, 2018 Gross carrying amount Accumulated amortization Net carrying amount Indefinite-lived intangible assets: Broker-dealer relationships $ 570,480 $ — $ 570,480 Definite-lived intangible assets: Trade names 45,830 (4,965 ) 40,865 Broker-dealer license 11,550 (1,251 ) 10,299 AssetMark Trust regulatory status 23,300 (2,524 ) 20,776 Total $ 651,160 $ (8,740 ) $ 642,420 |
Summary of Expected Future Amortization Expense for Intangible Assets | The expected future amortization expense for intangible assets as of June 30, 2019 Remainder of 2019 $ 2,526 2020 5,052 2021 5,052 2022 5,052 2023 5,052 Thereafter 61,226 Total $ 83,960 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Payables And Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | The following table shows the breakdown of accrued expenses and other current liabilities: June 30, 2019 December 31, 2018 Accrued bonus $ 9,681 $ 14,553 Compensation and benefits payable $ 5,265 $ 5,882 Asset-based payables 2,941 4,041 Other accrued expenses 15,278 13,724 Total $ 33,165 $ 38,200 |
Other-Long-Term Liabilities (Ta
Other-Long-Term Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other-Long-Term Liabilities | Other long-term liabilities consisted of the following: June 30, 2019 December 31, 2018 Contractor liability $ 3,324 $ 3,825 Deferred rent 1,160 1,272 Purchase commitments related to acquisition of GFPC 5,963 — Total $ 10,447 $ 5,097 |
Asset-Based Expenses (Tables)
Asset-Based Expenses (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Operating Costs And Expenses [Abstract] | |
Schedule of Asset-Based Expenses | Asset-based expenses incurred by the Company relating to the generation of asset-based revenues are: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Strategist and manager fees $ 25,518 $ 22,807 $ 48,121 $ 44,542 Premier broker-dealer fees 2,444 2,039 4,536 3,831 Custody fees 1,275 1,352 2,449 3,429 Fund advisory fees 1,724 2,007 3,442 2,669 Marketing allowance 612 514 1,127 1,052 Other 52 — 52 1 Total asset-based expenses $ 31,625 $ 28,719 $ 59,727 $ 55,524 |
Organization and Nature of Bu_2
Organization and Nature of Business - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019 | |
Organization And Nature Of Business [Line Items] | |
Business acquisition, effective date | Oct. 31, 2016 |
Asset Mark Holdings | Huatai Securities Co. Ltd | |
Organization And Nature Of Business [Line Items] | |
Percentage of ownership interest | 98.58% |
Asset Mark Holdings | Management | |
Organization And Nature Of Business [Line Items] | |
Percentage of ownership interest | 1.42% |
Acquisition of Global Financi_2
Acquisition of Global Financial Private Capital, LLC and Global Financial Advisory, LLC - Additional Information (Details) - USD ($) $ in Thousands | Apr. 16, 2019 | Aug. 11, 2018 | Jun. 30, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | ||||
Goodwill recorded | $ 325,493 | $ 298,415 | ||
Global Financial Private Capital, LLC and Global Financial Advisory, LLC | ||||
Business Acquisition [Line Items] | ||||
Purchase price subject to adjustment | $ 55,000 | |||
Final purchase price, net of client attrition and working capital adjustments | $ 35,906 | |||
Business acquisition, working capital adjustments | 3,723 | |||
Goodwill recorded | 27,078 | |||
Adviser relationships | 14,250 | |||
Deferred tax assets | $ 4,452 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2018USD ($)ReportingUnit | Dec. 31, 2017ReportingUnit | |
Goodwill And Intangible Assets [Line Items] | ||||||
Goodwill | $ 325,493 | $ 325,493 | $ 298,415 | |||
Number of reporting units | ReportingUnit | 1 | 1 | ||||
Amortization of Intangible Assets | $ 1,009 | $ 1,009 | $ 2,229 | $ 2,016 | ||
Trade Names | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Weighted average estimated remaining useful life | 16 years 8 months 12 days | |||||
Broker-Dealer License | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Weighted average estimated remaining useful life | 16 years 8 months 12 days | |||||
AssetMark Trust Regulatory Status | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Weighted average estimated remaining useful life | 16 years 8 months 12 days | |||||
GFPC Adviser Relationships | ||||||
Goodwill And Intangible Assets [Line Items] | ||||||
Weighted average estimated remaining useful life | 16 years 8 months 12 days |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Accumulated amortization | $ (10,970) | $ (8,740) |
Definite-lived intangible assets, Net carrying amount | 83,960 | |
Intangible assets, Gross carrying amount | 665,410 | 651,160 |
Intangible assets, Net carrying amount | 654,440 | 642,420 |
Broker-Dealer Relationships | ||
Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, Net carrying amount | 570,480 | 570,480 |
Trade Names | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross carrying amount | 45,830 | 45,830 |
Definite-lived intangible assets, Accumulated amortization | (6,110) | (4,965) |
Definite-lived intangible assets, Net carrying amount | 39,720 | 40,865 |
Broker-Dealer License | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross carrying amount | 11,550 | 11,550 |
Definite-lived intangible assets, Accumulated amortization | (1,540) | (1,251) |
Definite-lived intangible assets, Net carrying amount | 10,010 | 10,299 |
AssetMark Trust Regulatory Status | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross carrying amount | 23,300 | 23,300 |
Definite-lived intangible assets, Accumulated amortization | (3,107) | (2,524) |
Definite-lived intangible assets, Net carrying amount | 20,193 | $ 20,776 |
GFPC Adviser Relationships | ||
Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross carrying amount | 14,250 | |
Definite-lived intangible assets, Accumulated amortization | (213) | |
Definite-lived intangible assets, Net carrying amount | $ 14,037 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Summary of Expected Future Amortization Expense for Intangible Assets (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Remainder of 2019 | $ 2,526 |
2020 | 5,052 |
2021 | 5,052 |
2022 | 5,052 |
2023 | 5,052 |
Thereafter | 61,226 |
Definite-lived intangible assets, Net carrying amount | $ 83,960 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Payables And Accruals [Abstract] | ||
Accrued bonus | $ 9,681 | $ 14,553 |
Compensation and benefits payable | 5,265 | 5,882 |
Asset-based payables | 2,941 | 4,041 |
Other accrued expenses | 15,278 | 13,724 |
Total | $ 33,165 | $ 38,200 |
Other-Long-Term Liabilities - S
Other-Long-Term Liabilities - Schedule of Other-Long-Term Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Other Liabilities Disclosure [Abstract] | ||
Contractor liability | $ 3,324 | $ 3,825 |
Deferred rent | 1,160 | 1,272 |
Purchase commitments related to acquisition of GFPC | 5,963 | |
Total | $ 10,447 | $ 5,097 |
Asset-Based Expenses - Schedule
Asset-Based Expenses - Schedule of Asset-Based Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating Costs And Expenses [Abstract] | ||||
Strategist and manager fees | $ 25,518 | $ 22,807 | $ 48,121 | $ 44,542 |
Premier broker-dealer fees | 2,444 | 2,039 | 4,536 | 3,831 |
Custody fees | 1,275 | 1,352 | 2,449 | 3,429 |
Fund advisory fees | 1,724 | 2,007 | 3,442 | 2,669 |
Marketing allowance | 612 | 514 | 1,127 | 1,052 |
Other | 52 | 52 | 1 | |
Total asset-based expenses | $ 31,625 | $ 28,719 | $ 59,727 | $ 55,524 |
Debt - Additional Information (
Debt - Additional Information (Details) - Credit Agreement - Credit Suisse AG - USD ($) | Nov. 14, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Debt Instrument [Line Items] | |||||
Debt instrument, amount outstanding | $ 248,700,000 | $ 248,700,000 | |||
Interest expense | $ 4,031,000 | $ 0 | $ 8,055,000 | $ 0 | |
Revolving Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 20,000,000 | ||||
Credit facility, maturity date | Nov. 14, 2023 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Maximum borrowing capacity | $ 250,000,000 | ||||
Debt instrument, percentage of additional reduction in margin following initial public offering | 0.25% | ||||
Term loan, maturity date | Nov. 14, 2025 | ||||
LIBOR | Revolving Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin percentage | 3.50% | ||||
Debt instrument, step down percentage | 3.25% | ||||
LIBOR | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin percentage | 3.50% | ||||
Debt instrument, step down percentage | 3.25% | ||||
Alternate Base Rate | Revolving Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin percentage | 2.50% | ||||
Debt instrument, step down percentage | 2.25% | ||||
Alternate Base Rate | Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, margin percentage | 2.50% | ||||
Debt instrument, step down percentage | 2.25% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||||
Federal corporate tax rate | 21.00% | |||
Effective tax rate | 50.40% | 31.90% | 52.70% | 30.10% |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - Asset Mark Holdings $ in Thousands | Jun. 30, 2019USD ($) |
Related Party Transaction [Line Items] | |
Offsetting share-based compensation liability | $ 24,992 |
Receivable due from related parties | $ 314 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) $ / shares in Units, $ in Millions | Aug. 20, 2019shares | Jul. 26, 2019USD ($) | Jul. 22, 2019USD ($)$ / sharesshares | Jul. 05, 2019$ / sharesshares | Jun. 30, 2019$ / sharesshares | Dec. 31, 2018$ / sharesshares |
Subsequent Event [Line Items] | ||||||
Common stock adjusted par value | $ / shares | $ 0.001 | $ 0.001 | ||||
Common stock, shares outstanding | 66,150,000 | 66,150,000 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Stock Split conversion ratio | 661,500 | |||||
Common stock adjusted par value | $ / shares | $ 0.001 | |||||
Common stock, shares outstanding | 72,400,000 | |||||
Subsequent Event | Term Loan | ||||||
Subsequent Event [Line Items] | ||||||
Partial repayment of outstanding indebtedness | $ | $ 125 | |||||
Subsequent Event | Restricted Stock | ||||||
Subsequent Event [Line Items] | ||||||
Exchange of shares with stockholders on liquidation | 6,309,049 | |||||
Subsequent Event | IPO | ||||||
Subsequent Event [Line Items] | ||||||
Stock Issued During Period, Shares, New Issues | 6,250,000 | |||||
Sale of Stock Price Per Share | $ / shares | $ 22 | |||||
Net proceeds from IPO | $ | $ 124.4 | |||||
Subsequent Event | Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares authorized | 675,000,000 | |||||
Exchange of shares with stockholders on liquidation | 59,840,951 | |||||
Subsequent Event | Preferred Stock | ||||||
Subsequent Event [Line Items] | ||||||
Number of shares authorized | 75,000,000 | |||||
Stock issued | 0 | |||||
Subsequent Event | 2019 Equity Incentive Plan | ||||||
Subsequent Event [Line Items] | ||||||
Share available for issuance under the plan | 4,801,954 | |||||
Restricted stock units granted under the plan | 85,737 |