Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 13, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | MEDLEY LLC | |
Entity Central Index Key | 0001536577 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 29,217,299 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 12,289 | $ 16,970 |
Investments, at fair value | 40,425 | 36,425 |
Management fees receivable | 9,805 | 10,274 |
Right-of-use assets under operating leases | 7,830 | |
Other assets | 13,994 | 14,145 |
Total Assets | 84,343 | 77,814 |
Liabilities, Redeemable Non-controlling Interests and Members' Deficit | ||
Senior unsecured debt, net | 117,809 | 117,618 |
Loans payable, net | 10,000 | 9,892 |
Due to former minority interest holder, net | 9,841 | 11,402 |
Operating lease liabilities | 9,754 | |
Accounts payable, accrued expenses and other liabilities | 19,614 | 26,444 |
Total Liabilities | 167,018 | 165,356 |
Commitments and Contingencies (Note 12) | ||
Redeemable Non-controlling Interests | 26,337 | 23,186 |
Members' Deficit | ||
Members' Equity | (108,510) | (109,981) |
Total members' deficit | (109,012) | (110,728) |
Total Liabilities, Redeemable Non-controlling Interests and Members' Deficit | 84,343 | 77,814 |
Consolidated Subsidiaries [Member] | ||
Members' Deficit | ||
Non-controlling interests | $ (502) | $ (747) |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues | ||
Total revenues from contracts with customers | $ 13,354 | $ 14,414 |
Investment Income, Carried Interest | 352 | 165 |
Principal Investment Gain (Loss) | 63 | (183) |
Total Revenues | 13,769 | 14,396 |
Expenses | ||
Compensation and benefits | 8,021 | 8,331 |
General, administrative and other expenses | 3,254 | 4,509 |
Total Expenses | 11,275 | 12,840 |
Other Income (Expense) | ||
Dividend income | 572 | 1,429 |
Interest expense | (2,898) | (2,681) |
Other income (expense), net | 3,571 | (9,755) |
Total other income (expense), net | 1,245 | (11,007) |
Income (loss) before income taxes | 3,739 | (9,451) |
Benefit from income taxes | (9) | (130) |
Net Income (Loss) | 3,748 | (9,321) |
Net Loss Attributable to Medley LLC | (447) | (4,807) |
Consolidated Subsidiaries [Member] | ||
Other Income (Expense) | ||
Net income (loss) attributable to non-controlling interests | 4,195 | (4,514) |
Management Fees [Member] | ||
Revenues | ||
Total revenues from contracts with customers | 10,913 | 12,085 |
Other Revenues and Fees [Member] | ||
Revenues | ||
Total revenues from contracts with customers | $ 2,441 | $ 2,329 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Incentive fees | $ 0 | $ 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Changes in Equity (unaudited) - USD ($) $ in Thousands | Total | AOCI Attributable to Parent [Member] | Non-controlling Interests [Member] | Non-controlling Interests [Member]Consolidated Subsidiaries [Member] |
Balance at Dec. 31, 2017 | $ (78,240) | $ (10,968) | $ (65,570) | $ (1,702) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | (9,321) | (4,807) | ||
Net income (loss) | (4,807) | |||
Contributions | 1,048 | 1,046 | 2 | |
Reclass of cumulative dividends on forfeited restricted stock units to compensation and benefits expense | 25 | 25 | ||
Partners' Capital Account, Distributions | (6,111) | (6,111) | ||
Noncontrolling Interest, Portion Recognized at Fair Value1 | 56 | 56 | ||
Balance at Mar. 31, 2018 | (91,628) | $ 0 | (89,984) | (1,644) |
Balance at Dec. 31, 2018 | (110,728) | (109,981) | (747) | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net income (loss) | 3,748 | (447) | 245 | |
Net income (loss) | (202) | |||
Contributions | 1,786 | 1,786 | ||
Reclass of cumulative dividends on forfeited restricted stock units to compensation and benefits expense | 132 | 132 | ||
Balance at Mar. 31, 2019 | $ (109,012) | $ (108,510) | $ (502) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities | ||
Net Income (Loss) | $ 3,748 | $ (9,321) |
Adjustments to reconcile net income (loss) to net cash provided and used by operating activities: | ||
Stock-based compensation | 1,786 | 1,046 |
Amortization of debt issuance costs | 234 | 185 |
Accretion of debt discount | 315 | 147 |
Provision for deferred taxes | 3 | 292 |
Depreciation and amortization | 178 | 219 |
Net change in unrealized (appreciation) depreciation on investments | (3,617) | 9,807 |
Income from equity method investments | (394) | (180) |
Reclassification of cumulative dividends paid on forfeited restricted stock units to compensation and benefits expense | 132 | 25 |
Lessee, Operating Lease, Non-Cash | 608 | |
Other non-cash amounts | 0 | 55 |
Changes in operating assets and liabilities: | ||
Management fees receivable | 469 | 4,595 |
Distributions of income received from equity method investments | 67 | 288 |
Purchase of investments | (629) | (415) |
Sale of investments | 472 | 392 |
Other assets | (149) | (566) |
Operating Lease, Payments | (680) | |
Accounts payable, accrued expenses and other liabilities | (4,776) | (3,929) |
Net cash (used in) provided by operating activities | (2,233) | 2,640 |
Cash flows from investing activities | ||
Distributions received from investment held at cost less impairment | 101 | 0 |
Capital contributions to equity method investments | 0 | (14) |
Net cash provided by (used in) investing activities | 101 | (14) |
Cash flows from financing activities | ||
Payments to former minority interest holder | (1,750) | 0 |
Capital contributions from non-controlling interests | 0 | 2 |
Distributions to non-controlling interests and redeemable non-controlling interests | (799) | (8,549) |
Net cash used in financing activities | (2,549) | (8,547) |
Net decrease in cash and cash equivalents | (4,681) | (5,921) |
Cash and cash equivalents, beginning of period | 16,970 | 36,215 |
Cash and cash equivalents, end of period | 12,289 | 30,294 |
Supplemental cash flow information | ||
Right-of-use assets under operating leases | 7,830 | |
Operating lease liabilities | 9,754 | |
Operating Lease, Right-of-Use Asset, Accretion | 208 | |
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | 3,144 | |
Issuance of non-controlling interest at fair value | 0 | 56 |
ASU 2016-02 [Member] | ||
Supplemental cash flow information | ||
Right-of-use assets under operating leases | 8,233 | |
Operating lease liabilities | 10,229 | |
ASC 606 [Member] | ||
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | 0 | (89) |
ASU 2016-01 [Member] | ||
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | $ 0 | $ 336 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Medley LLC is an alternative asset management firm offering yield solutions to retail and institutional investors. The Company's national direct origination franchise provides capital to the middle market in the United States of America. Medley LLC provides investment management services to permanent capital vehicles, long-dated private funds and separately managed accounts and serves as the general partner to the private funds, which are generally organized as pass-through entities. Medley LLC is headquartered in New York City. The Company’s business is currently comprised of only one reportable segment, the investment management segment, and substantially all of the Company operations are conducted through this segment. The investment management segment provides investment management services to permanent capital vehicles, long-dated private funds and separately managed accounts. The Company conducts its investment management business in the U.S., where substantially all its revenues are generated. Registered Public Offering of Medley Notes On August 9, 2016, Medley LLC completed a registered public offering of $25.0 million of an aggregate principal amount of 6.875% senior notes due 2026 (the "2026 Notes") at a public offering price of 100% of the principal amount. On October 18, 2016, Medley LLC completed a public offering of an additional $28.6 million in aggregate principal amount of the 2026 Notes at a public offering price of $24.45 for each $25.00 principal amount of notes. The notes mature on August 15, 2026 and interest is payable quarterly. The notes will be redeemable in whole or in part at Medley's option on or after August 15, 2019 at a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest payments. The Company used the net proceeds from the offering to repay a portion of the outstanding indebtedness under the Company's Term Loan Facility. The 2026 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLX.” On January 18, 2017, Medley LLC completed a registered public offering of $34.5 million of an aggregate principal amount of 7.25% senior notes due 2024 (the “2024 Notes”) at a public offering price of 100% of the principal amount. On February 22, 2017, Medley LLC completed a public offering of an additional $34.5 million in aggregate principal amount of the 2024 Notes at a public offering price of $25.25 for each $25.00 principal amount of notes. The 2024 Notes mature on January 30, 2024 and interest is payable quarterly commencing on April 30, 2017. The notes will be redeemable in whole or in part at Medley's option on or after January 30, 2020 at a redemption price of 100% of the aggregate principal amount plus accrued and unpaid interest payment. The Company used the net proceeds from the offering to repay the remaining outstanding indebtedness under the Term Loan Facility and for general corporate purposes. The 2024 Notes are listed on the New York Stock Exchange and trade thereon under the trading symbol “MDLQ.” Medley LLC Reorganization In connection with the IPO of Medley Management Inc. (“MDLY”) Medley LLC amended and restated its limited liability agreement to modify its capital structure by reclassifying the 23,333,333 interests held by the pre-IPO members into a single new class of units (“LLC Units”). The pre-IPO members also entered into an exchange agreement under which they (or certain permitted transferees thereof) have the right, subject to the terms of an exchange agreement, to exchange their LLC Units for shares of Medley Management Inc.’s Class A common stock on a one -for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. In addition, pursuant to the amended and restated limited liability agreement, Medley Management Inc. became the sole managing member of Medley LLC. The pre-IPO owners were, subject to limited exceptions, prohibited from transferring any LLC Units held by them or any shares of Class A common stock received upon exchange of such LLC Units, until September 29, 2017, which was the third anniversary of the date of the closing of the IPO, without the Company’s consent. Thereafter and prior to the fourth and fifth anniversaries of the closing of the IPO, such holders may not transfer more than 33 1/3% and 66 2/3%, respectively, of the number of LLC Units held by them, together with the number of any shares of Class A common stock received by them upon exchange therefore, without the Company’s consent. Agreement and Plan of Merger On August 9, 2018 MDLY entered into a definitive Agreement and Plan of Merger with Sierra Income Corporation (“Sierra” or “SIC”), pursuant to which MDLY would merge with and into Sierra Management Inc., a newly formed Delaware corporation (“Merger Sub”), and MDLY’s existing asset management business would continue to operate as a wholly owned subsidiary of Sierra. MDLY's Class A stockholders would receive 0.3836 shares of Sierra’s common stock, $3.44 per share of cash consideration and $0.65 per share in special cash dividends for each share of Class A common stock held by them. Medley LLC unitholders will convert their units into shares of Class A common stock and would receive 0.3836 shares of Sierra’s common stock, $3.44 per share of cash consideration and $0.35 per share in a special cash dividend for each share of Class A common stock held by them. Simultaneously, pursuant to the Agreement and Plan of Merger by and between Medley Capital Corporation (“MCC”) and Sierra, MCC would merge with and into SIC, with SIC as the surviving entity. MCC shareholders would receive 0.805 shares of the Sierra’s common stock for each share of MCC common stock they hold. On February 11, 2019, a putative stockholder class action related to the MCC Merger was commenced in the Court of Chancery of the State of Delaware by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd (collectively, "FrontFour"). The action, as consolidated, is captioned in re Medley Capital Corporation Stockholder Litigation, C.A. No. 2019-0100-KSJM (the "Class Action"). The complaint alleged that MCC’s directors (Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, and Arthur S. Ainsberg) breached their fiduciary duties to MCC stockholders in connection with the MCC Merger, and that MDLY, Sierra, MCC Advisors LLC, Medley Group LLC, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. On March 11, 2019, following a two-day trial, the Court issued a Memorandum Opinion (the "Decision") denying FrontFour’s requests to (i) permanently enjoin the MCC Merger and (ii) require MCC to conduct a shopping process for MCC on terms proposed by FrontFour in its complaint. The Court held that MCC’s directors breached their fiduciary duties in entering into the MCC Merger, but rejected FrontFour’s claim that Sierra aided and abetted those breaches of fiduciary duties. The Court ordered defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of MCC stockholders on the MCC Merger until such disclosures have been made and stockholders have had the opportunity to assimilate this information. On April 15, 2019, certain parties in the Class Action reached agreement on the principal terms of a settlement, which are contained in a binding term sheet, dated April 15, 2019 (the "Settlement Term Sheet"), among Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MCC, MCC Advisors LLC, Medley LLC, and Medley Group LLC (the "Medley Parties"), on the one hand, and FrontFour, on behalf of itself and a class of similarly situated stockholders of MCC, on the other hand. In connection with the Settlement Term Sheet and in exchange and consideration for the release of MDLY by the Plaintiffs and the Class (each as defined in the Settlement Term Sheet), MDLY entered into an acknowledgement and agreement (the "Acknowledgement") pursuant to which Medley agreed to certain actions and undertakings that are described in greater detail in the Settlement Term Sheet including, among other matters: (i) agreeing to participate and cooperate in the discussions and efforts to amend certain provisions of the Merger Agreements, (ii) agreeing to consent to amendments to the MCC Merger Agreement relating to the creation of go shop process to solicit superior transactions to the MCC Merger, if and when presented to MDLY by Sierra and MCC and (iii) agreeing to amendments to the MDLY Merger Agreement, and, if and when presented to MDLY by Sierra and MCC, agreeing to consent to amendments to the MCC Merger Agreement, to extend the outside date in the Merger Agreements to October 31, 2019 and to modify the merger consideration payment mechanics contained therein to provide for the creation of a settlement fund, consisting of $17 million in cash and $30 million of Sierra stock, which amount defendants in the Class Action (other than MDLY) will cause to be contributed to the fund, and distributed to eligible members of the Class, after certain deductions, following the closing of the MCC Merger and in accordance with the terms of the Settlement Stipulation (as defined in the Settlement Term Sheet). Pursuant to, and in accordance with the terms and conditions of, the Acknowledgment, MDLY has also undertaken to work in good faith to agree to supplemental disclosures relating to the Mergers consistent with the decision in connection with the Class Action, as well as to use reasonable efforts to obtain exemptive relief from the SEC to allow for the consummation of the Mergers. Transaction expenses, primarily consisting of professional fees, related to the pending merger are included in general, administrative and other expenses and were approximately $0.3 million and $0.9 million for the three months ended March 31, 2019 and 2018, respectively. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Medley LLC and its consolidated subsidiaries (collectively, “Medley” or the “Company”). Additionally, the accompanying condensed consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP may be omitted. In the opinion of management, the unaudited condensed consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. Therefore, this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for any future interim period or the full year ending December 31, 2019. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , the Company consolidates those entities where it has a direct and indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates entities that the Company concludes are variable interest entities (“VIEs”), for which the Company is deemed to be the primary beneficiary and entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity. For legal entities evaluated for consolidation, the Company must determine whether the interests that it holds and fees paid to it qualify as a variable interest in an entity. This includes an evaluation of the management fees and performance fees paid to the Company when acting as a decision maker or service provider to the entity being evaluated. If fees received by the Company are customary and commensurate with the level of services provided, and the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, the interest that the Company holds would not be considered a variable interest. The Company factors in all economic interests including proportionate interests through related parties, to determine if fees are considered a variable interest. An entity in which the Company holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk have the right to direct the activities of the entity that most significantly impact the legal entity’s economic performance, (c) the voting rights of some investors are disproportionate to their obligation to absorb losses or rights to receive returns from a legal entity. For limited partnerships and other similar entities, non-controlling investors must have substantive rights to either dissolve the fund or remove the general partner (“kick-out rights”) in order to not qualify as a VIE. For those entities that qualify as a VIE, the primary beneficiary is generally defined as the party who has a controlling financial interest in the VIE. The Company is generally deemed to have a controlling financial interest if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. The primary beneficiary evaluation is generally performed qualitatively on the basis of all facts and circumstances. However, quantitative information may also be considered in the analysis, as appropriate. These assessments require judgment. Each entity is assessed for consolidation on a case-by-case basis. For those entities evaluated under the voting interest model, the Company consolidates the entity if it has a controlling financial interest. The Company has a controlling financial interest in a voting interest entity (“VOE”) if it owns a majority voting interest in the entity. Consolidated Variable Interest Entities As of March 31, 2019 and December 31, 2018, Medley LLC had three majority owned subsidiaries, Medley Seed Funding I LLC, Medley Seed Funding II LLC and STRF Advisors LLC, which are consolidated VIEs. Each of these entities was organized as a limited liability company and was legally formed to either manage a designated fund or to strategically invest capital as well as isolate business risk. As of March 31, 2019 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $25.1 million and less than $0.1 million , respectively. As of December 31, 2018 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $22.2 million and less than $0.1 million , respectively. Except to the extent of the assets of these VIEs that are consolidated, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company. Seed Investments The Company accounts for seed investments through the application of the voting interest model under ASC 810-10-25-1 through 25-14 and consolidates a seed investment when the investment advisor holds a controlling interest, which is, in general, 50% or more of the equity in such investment. For seed investments in which the Company does not hold a controlling interest, the Company accounts for such seed investment under the equity method of accounting, at its ownership percentage of such seed investment’s net asset value. The Company seed funded $2.1 million to Sierra Total Return Fund ("STRF"), which commenced investment operations in June 2017. As of March 31, 2019 , the Company owned 100% of the equity of STRF and, as such, consolidates STRF in its condensed consolidated financial statements. The condensed balance sheet of STRF as of March 31, 2019 and December 31, 2018 is presented in the table below. As of March 31, 2019 December 31, 2018 Assets (in thousands) Cash and cash equivalents $ 173 $ 274 Investments, at fair value 2,210 1,952 Other assets 336 248 Total assets $ 2,719 $ 2,474 Liabilities and Equity Accrued expenses and other liabilities $ 501 $ 330 Equity 2,218 2,144 Total liabilities and equity $ 2,719 $ 2,474 As of March 31, 2019 , the Company's condensed consolidated balance sheet reflects the elimination of $0.2 million of other assets, $0.2 million of accrued expenses and other liabilities and $2.2 million of equity as a result of the consolidation of STRF. As of December 31, 2018, the Company's condensed consolidated balance sheet reflects the elimination of $0.2 million of other assets, $0.1 million of accrued expenses and other liabilities and $2.1 million of equity as a result of the consolidation of STRF. During the three months ended March 31, 2019 and 2018, the fund did not generate any significant income or losses from operations. Non-Consolidated Variable Interest Entities The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary. The Company's interest in these entities is in the form of insignificant equity interests and fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. As of March 31, 2019 , the Company recorded investments, at fair value, attributed to these non-consolidated VIEs of $4.1 million , receivables of $1.7 million included as a component of other assets and a clawback obligation of $7.2 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. The clawback obligation assumes a hypothetical liquidation of a fund’s investments, at their then current fair values, and a portion of tax distributions relating to performance fees which would need to be returned. As of December 31, 2018 , the Company recorded investments, at fair value, attributed to non-consolidated VIEs of $4.2 million , receivables of $1.8 million included as a component of other assets and a clawback obligation of $7.2 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. As of March 31, 2019 , the Company’s maximum exposure to losses from these entities is $5.8 million . Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Management’s estimates are based on historical experience and other factors, including expectations of future events that management believes to be reasonable under the circumstances. These assumptions and estimates also require management to exercise judgment in the process of applying the Company’s accounting policies. Significant estimates and assumptions by management affect the carrying value of investments, performance compensation payable and certain accrued liabilities. Actual results could differ from these estimates, and such differences could be material. Non-Controlling Interests in Consolidated Subsidiaries Non-controlling interests in consolidated subsidiaries represent the component of equity in such consolidated entities held by third-parties. These interests are adjusted for contributions to and distributions from Medley entities and are allocated income or loss from Medley entities based on their ownership percentages. Redeemable Non-Controlling Interests Redeemable non-controlling interests represents interests of certain third parties that are not mandatorily redeemable but redeemable for cash or other assets at a fixed or determinable price or a fixed or determinable date, at the option of the holder or upon the occurrence of an event that is not solely within the control of the Company. These interests are classified in the mezzanine section on the Company's condensed consolidated balance sheets. Cash and Cash Equivalents Cash and cash equivalents include liquid investments in money market funds and demand deposits. The Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits as of March 31, 2019 and December 31, 2018. The Company monitors the credit standing of these financial institutions and has not experienced, and has no expectations of experiencing, any losses with respect to such balances. Investments Investments include equity method investments that are not consolidated but over which the Company exerts significant influence. The Company measures the carrying value of its public non-traded equity method investment at Net Asset Value ("NAV") per share. The Company measures the carrying value of its privately-held equity method investments by recording its share of the underlying income or loss of these entities. Unrealized appreciation (depreciation) resulting from changes in fair value of the equity method investments is reflected as a component of investment income in the consolidated statements of operations along with the income and expense allocations from such investments. The carrying amounts of equity method investments are reflected in Investments, at fair value in the consolidated balance sheets. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value. The Company evaluates its equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. For presentation in its consolidated statements of cash flows, the Company treats distributions received from certain equity method investments using the cumulative earnings approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Investments also include publicly traded common stock. The Company measures the fair value of its publicly traded common stock at the quoted market price on the primary market or exchange on which they trade. Any realized gains (losses) from the sale of investments and unrealized appreciation (depreciation) resulting from changes in fair value are recorded in other income (expenses), net, effective January 1, 2018. Prior to January 1, 2018, the Company recorded changes in the fair value of its available for sale securities in its statements of other comprehensive income with an offset to accumulated other comprehensive loss. As a result of the adoption of this new guidance, on January 1, 2018, the Company reclassed $11.0 million of cumulative unrealized losses, net of income tax benefit, from accumulated other comprehensive loss to members' deficit on the Company's condensed consolidated balance sheet. Investments of Consolidated Fund In accordance with ASC 820, Fair Value Measurements and Disclosures , the consolidated fund has categorized its investments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 5. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Investments for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. The consolidated fund weighs the use of third-party broker quotations, if any, in determining fair value based on management's understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, debt investments with remaining maturities within 60 days that are not credit impaired are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value. Investments for which market quotations are not readily available are valued at fair value as determined by the consolidated fund’s board of trustees based upon input from management and third party valuation firms. Because these investments are illiquid and because there may not be any directly comparable companies whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent with traditional asset pricing standards, that is objective and consistently applied across all loans and through time. Revenues Effective January 1, 2018, the Company recognizes revenue in accordance with ASC 606, Revenues from Contracts with Customers . The Company recognizes revenue under the core principle of depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for such goods or services. To achieve this, the Company applies a five step approach: (1) identify the contract(s) with a customer, (2) identify the performance obligations within the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when, or as, each performance obligation is satisfied. Carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager. Such fees represent a capital allocation to the general partner or investment manager and are accounted for under ASC 323, Investments - Equity Method and Joint Ventures. As such, these types of performance fees are not in the scope of ASC 606. As a result of the adoption of this new revenue guidance, the Company recorded a cumulative effect decrease to members' deficit of $3.6 million , net of benefit from income taxes of $0.1 million , as of January 1, 2018, which relates to (1) certain performance fee revenue that would not have met the “probable that significant reversal will not occur” criteria of $3.0 million and (2) the reversal of reimbursable fund formation costs which were deferred on the Company’s consolidated balance sheet of $0.7 million . Management Fees Medley provides investment management services to both public and private investment vehicles. Management fees include base management fees, other management fees, and Part I incentive fees, as described below. Base management fees are calculated based on either (i) the average or ending gross assets balance for the relevant period, (ii) limited partners’ capital commitments to the funds, (iii) invested capital, (iv) NAV or (v) lower of cost or market value of a fund’s portfolio investments. Depending upon the contracted terms of the investment management agreement, management fees are paid either quarterly in advance or quarterly in arrears, and are recognized as earned over the period the services are provided. Certain management agreements provide for Medley to receive other management fee revenue derived from up front origination fees paid by the funds' and/or separately managed accounts' underlying portfolio companies. These fees are recognized when the Company becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net investment income (excluding gains and losses) above a hurdle rate. As it relates to MCC, these fees are subject to netting against realized and unrealized losses. Part I incentive fees are paid quarterly and are recognized as earned in the period the services are provided. Performance Fees Performance fees are contractual fees which do not represent a capital allocation of income to the general partner or investment manager that are earned based on the performance of certain funds, typically, the Company’s separately managed accounts. Performance fees are earned based on the fund performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Other Revenues and Fees Medley provides administrative services to certain affiliated funds and is reimbursed for direct and allocated expenses incurred in providing such administrative services, as set forth in the respective underlying agreements. These fees are recognized as revenue in the period administrative services are rendered. Medley also acts as the administrative agent on certain deals for which Medley may earn loan administration fees and transaction fees. These fees are recognized as revenue over the period to which the fees directly relate. Investment Income (loss) - Carried Interest Carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager. Carried interest are allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents and are accounted for under ASC 323, Investments - Equity Method and Joint Ventures. Accordingly, these performance fees are reflected as carried interest within investment income on the Company's consolidated statements of operations and balances due for such fees are included as a part of equity method investments within Investments, at fair value on the Company's consolidated balance sheets. Under ASC 323, the Company records carried interest based upon an assumed liquidation of that fund's net assets as of the reporting date, regardless of whether such amounts have been realized. For any given period, carried interest on the Company's condensed consolidated statements of operations may include reversals of previously recognized carried interest due to a decrease in the value of a particular fund that results in a decrease of cumulative fees earned to date. Since fund return hurdles are cumulative, previously recognized carried interest also may be reversed in a period of appreciation that is lower than the particular fund's hurdle rate. Carried interest received in prior peri ods may be required to be returned by the Company in future periods if the funds’ investment performance declines below certain levels. Each fund is considered separately in this regard and, for a given fund, carried interest can never be negative over the life of a fund. If upon a hypothetical liquidation of a fund’s investments, at their then current fair values, previously recognized and distributed carried interest would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2019 , the Company had not received any carried interest distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of carried interest. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2019 and December 31, 2018, the Company had accrued $7.2 million for clawback obligations that would need to be paid if the funds were liquidated at fair value as of the end of the reporting period. The Company’s actual obligation, however, would not become payable or realized until the end of a fund’s life. During the three months ended March 31, 2019 and 2018, the Company did not record any reversals of previously recognized performance fees. Investment Income (loss) - Other Other investment income is comprised of unrealized appreciation (depreciation) resulting from changes in fair value of the Company's equity method investments in addition to the income and expense allocations from such investments. Stock-based Compensation Stock-based compensation expense relating to equity based awards are measured at fair value as of the grant date, reduced for actual forfeitures in the period they occur, and expensed over the requisite service period on a straight-line basis as a component of compensation and benefits on the Company's consolidated statements of operations. Income Taxes The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal, state and local income taxes since all income, gains and losses are passed through to its members. However, a portion of taxable income from Medley LLC and its subsidiaries are subject to New York City's unincorporated business tax, which is included in the Company's provision for income taxes. The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions and other tax matters as a component of its provision for income taxes. For interim periods, the Company accounts for income taxes based on its estimate of the effective tax rate for the year. Discrete items and changes in its estimate of the annual effective tax rate are recorded in the period they occur. Reclassification of Prior Period Presentation Performance fee compensation reported in the prior period has been reclassified to compensation and benefits to conform to the current period presentation in the condensed consolidated statements of operations. This reclassification had no effect on the reported results of operations. Recently Issued Accounting Pronouncements Adopted as of January 1, 2019 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase the transparency and comparability among organizations as it relates to lease assets and lease liabilities, by requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months, with exceptions. Effective January 1, 2019, the Company adopted this guidance using a modified retrospective approach, which was required for all leases that exist at or commence after the date of the initial application with an option to use certain practical expedients. The Company has elected to use these practical expedients, which allow the Company to treat lease and non-lease components of its leases as a single component, have the ability to use hindsight in determining the lease term and assessing impairment of right-of-use assets, not to reassess lease classification or whether an arrangement is or contains a lease and not to reassess its initial accounting for direct lease costs. The adoption of the new lease standard at January 1, 2019 resulted in the recognition of right-of-use assets and lease liabilities of $8.2 million and $10.2 million , respectively, consisting primarily of operating leases related to the rental of office space. The adoption of this guidance did not have a significant impact on the Company's consolidated statements of operations or cash flows. Additionally, this adoption did not impact any covenants associated with the Company's financial obligations. Recently Issued Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework –Changes to the Disclosure Requirements for Fair Value Measurement . This ASU modifies the disclosure requirements in Topic 820, Fair Value Measurement , by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty, and adding new disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. The adoption of this ASU is not expected to have a significant impact on the Company's consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The amendments in this ASU require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts and requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. The adoption of this ASU is not expected to have a significant impact on the Company's consolidated financial statements. The Company does not believe any other recently issued, but not yet effective, revisions to authoritative guidance will have a material effect on its consolidated balance sheets, results of operations or cash flows. |
REVENUES FROM CONTRACTS WITH CU
REVENUES FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts with Customers | REVENUES FROM CONTRACTS WITH CUSTOMERS The majority of the Company's revenues are derived from investment management and advisory contracts that are accounted for in accordance with ASC 606. Performance Obligations Performance obligations are the unit of account under the new revenue recognition standard and represent the distinct goods or services that are promised to the customer. The majority of the Company's contracts have a single performance obligation to provide asset management, advisory and other related services to permanent capital vehicles, long-dated private funds and separately managed accounts. The Company also has a separate performance obligation to act as an agent for certain third party lenders and provide loan administration services to certain borrowers. These loan administration services also represent a single performance obligation. The Company primarily provides investment management services to a fund by managing the fund’s investments and maximizing returns on those investments. The Company’s asset management, advisory and other related services are transferred over time to the customer on a day-to-day basis. The contracts with each fund create a distinct performance obligation for each quarter the Company provides the promised services to the customer, from which the customer can benefit from each individual quarter of service. Furthermore, each quarter of the promised services is considered separately identifiable because there is no integration of the promised services between quarters, each quarter does not modify services provided prior to that quarter, and the services provided are not interdependent or interrelated. Most services provided to these funds are provided continuously over the contract period, so the services in the contract generally represents a single performance obligation comprising a series of distinct service periods. A contract’s transaction price is allocated to the series of distinct services that constitute a single performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The management fees earned by the Company are largely dependent on fluctuations in the market and, thus, the determination of such fees is highly susceptible to factors outside the Company's influence. Management fees typically have a large number and broad range of possible consideration amounts and historical experience is generally not indicative of future performance of the market. Hence, the Company is applying the exemption provided under the new revenue recognition guidance as the Company is unable to estimate the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied and the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Reimbursement of certain expenses incurred on behalf of the Company's funds are reported on a gross basis on the statements of operations if the Company is determined to be acting as the principal in those transactions. Significant Judgments The Company's contracts with customers generally include a single performance obligation to provide asset management, advisory and other related services on a quarterly basis. Revenues are recognized as such performance obligation is satisfied and the constraint on the management fees is lifted on a quarterly basis, hence, the Company does not need to exercise significant judgments in regards to management fees. Consideration for management fees is received on a quarterly basis as the performance obligations are satisfied. With respect to performance fees based on the economic performance of its SMAs, significant judgment is required when determining recognition of revenues. Such judgments include: • whether the fund is near final liquidation • whether the fair value of the remaining assets in the fund is significantly in excess of the threshold at which the Company would earn an incentive fee • the probability of significant fluctuations in the fair value of the remaining assets • the SMA’s remaining investments are under contract for sale with contractual purchase prices that would result in no clawback and it is highly likely that the contracts will be consummated As such, the Company will consider the above factors at each reporting period to determine whether there is an amount of the SMA performance fees which should be recognized as revenue because it is probable that there will not be a significant future revenue reversal, hence, the “constraint” on the performance fees has been lifted. The Company accounts for performance fees which represent capital allocations to the general partner or investment manager pursuant to accounting rules relating to investments accounted for under the equity method of accounting. As such, these types of performance fees are not within the scope of the new revenue recognition standard and the above significant judgments and constraints do not apply to them. Refer to Note 2 “ Summary of Significant Accounting Policies ” and Note 4 " Investments " for additional information. Revenue by Category The following table present the Company's revenue from contracts with customers disaggregated by type of customer for the three months ended March 31, 2019. Permanent Long-dated SMAs Other Total (in thousands) Management fees $ 7,529 $ 1,860 $ 1,524 $ — $ 10,913 Other revenues and fees 1,780 — — 661 2,441 Total revenues from contracts with customers $ 9,309 $ 1,860 $ 1,524 $ 661 $ 13,354 The following table present the Company's revenue from contracts with customers disaggregated by type of customer for the three months ended March 31, 2018. Permanent Long-dated SMAs Other Total (in thousands) Management fees $ 8,392 $ 2,061 $ 1,632 $ — $ 12,085 Other revenues and fees 1,845 — — 484 2,329 Total revenues from contracts with customers $ 10,237 $ 2,061 $ 1,632 $ 484 $ 14,414 The Other revenues and fees balances above primarily consist of revenues earned by Medley while serving as loan administrative agent on certain deals, including loan administration fees and transaction fees. Additionally, this balance includes reimbursable origination and deal expenses as well as reimbursable entity formation and organizational expenses. The Company's asset management, advisory and other related services are transferred over time and the Company recognizes these revenues over time as well. Contract Balances For certain customers, the Company has a performance obligation to provide loan administration services. The timing of revenue recognition may differ from the timing of invoicing to such customers or receiving consideration. For the majority of these services cash deposits are received prior to the performance obligation being met. The performance obligation of acting as a loan administrator is satisfied over time, therefore, the Company defers any payments received upfront as deferred revenue and recognizes revenue on a pro-rata basis over time as the loan administrative services are performed. These contract liabilities are reported as deferred revenue within accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets and amounted to $0.3 million as of March 31, 2019 and December 31, 2018. During the three months ended March 31, 2019 and 2018, the Company recognized revenue from amounts included in deferred revenue of $0.2 million for each of those periods, and received cash deposits of $0.1 million and $0.2 million , respectively. The Company did not have any contract assets as of March 31, 2019 or December 31, 2018. Assets Recognized for the Costs to Obtain or Fulfill a Contract As part of providing investment management services to a fund, the Company might incur certain placement fees to third parties for obtaining new investors for the fund. Any placement fees incurred to third party placement agents for placing investors into a fund are variable as it is based on a percentage of future fees and cannot be reasonably estimated. The Company determined that placement fees which are paid in cash over time, as fees are earned, do not relate to a new contract at the time the payment is made. These costs do not represent a cost to obtain a new contract but rather a cost to fulfill an existing contract. The Company does not recognize any assets for the incremental costs of obtaining or fulfilling a contract with a customer and expenses placement fees as incurred. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy: • Level I – Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II – Valuations based on inputs other than quoted prices in active markets included in Level I, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non- active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. • Level III – Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets and liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level III information, assuming no additional corroborating evidence. The following tables summarize the fair value hierarchy of the Company's financial assets measured at fair value: As of March 31, 2019 Level I Level II Level III Total Assets (in thousands) Investments of consolidated fund $ 272 $ — $ 1,938 $ 2,210 Investment in shares of MCC 24,124 — — 24,124 Total Assets $ 24,396 $ — $ 1,938 $ 26,334 As of December 31, 2018 Level I Level II Level III Total Assets (in thousands) Investments of consolidated fund $ 258 $ — $ 1,694 $ 1,952 Investment in shares of MCC 20,633 — — 20,633 Total Assets $ 20,891 $ — $ 1,694 $ 22,585 Included in investments of consolidated fund as of March 31, 2019 are Level I assets of $0.3 million in equity investments and Level III assets of $1.9 million , which consists of senior secured loans and equity investments. Included in investments of consolidated fund as of December 31, 2018 are Level I assets of $0.3 million in equity investments and Level III assets of $1.7 million , which consists of senior secured loans and preferred equity investments. The significant unobservable inputs used in the fair value measurement of Level III assets of the consolidated fund's investments in senior secured loans include market yields. Significant increases or decreases in market yields in isolation would result in a significantly higher or lower fair value measurement. There were no significant unrealized gains or losses related to the investments of consolidated fund for each of the three months ended March 31, 2019 and 2018. The following is a summary of changes in fair value of the Company's financial assets that have been categorized within Level III of the fair value hierarchy: Level III Financial Assets as of March 31, 2019 Balance at December 31, 2018 Purchases Transfers In or (Out) of Level III Unrealized Appreciation/(Depreciation) Sale of Level III Assets Balance at March 31, 2019 (in thousands) Investments of consolidated fund $ 1,694 342 — 53 (151 ) $ 1,938 A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting all levels of the fair value hierarchy are reported as transfers in or out of Level I, II or III category as of the beginning of the quarter during which the reclassifications occur. There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2019. When determining the fair value of publicly traded equity securities, the Company uses the quoted closing market price as of the valuation date on the primary market or exchange on which they trade. Our equity method investments for which fair value is measured at NAV per share, or its equivalent, using the practical expedient, are not categorized in the fair value hierarchy. The Company's investments of consolidated fund are treated as investments at fair value and any realized and unrealized gains and losses from those investments are recorded through the condensed consolidated statement of operations. The Company's treatment is consistent with that of STRF, which is considered an investment company under ASC 946, Financial Services - Investment Companies, for standalone reporting purposes. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2019 | |
Schedule of Investments [Abstract] | |
Investments | INVESTMENTS Investments consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Equity method investments, at fair value $ 13,775 $ 13,422 Investment in shares of MCC, at fair value 24,124 20,633 Investment held at cost less impairment 316 418 Investments of consolidated fund 2,210 1,952 Total investments, at fair value $ 40,425 $ 36,425 Equity Method Investments Medley measures the carrying value of its public non-traded equity method investment in Sierra Income Corporation (“SIC” or "Sierra"), a related party, at NAV per share. Unrealized appreciation (depreciation) resulting from changes in NAV per share is reflected as a component of investment income (loss) in the consolidated statements of operations. The carrying value of the Company’s privately-held equity method investments is determined based on the amounts invested by the Company plus the equity in earnings or losses of the investee allocated based on the respective underlying agreements, less distributions received. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. There were no impairment losses recorded during the three months ended March 31, 2019 and 2018. The Company's equity method investment in shares of Sierra were $7.5 million and $7.4 million as of March 31, 2019 and December 31, 2018, respectively. The remaining balance as of March 31, 2019 and December 31, 2018 relates primarily to the Company’s investments in Medley Opportunity Fund II, LP ("MOF II"), Medley Opportunity Fund III LP (“MOF III”), Medley Opportunity Fund Offshore III LP (“MOF III Offshore”) and Aspect-Medley Investment Platform B LP ("Aspect B"). For performance fees earned which represent a capital allocation to the general partner or investment manager, the Company accounts for them under the equity method of accounting . As of March 31, 2019 and December 31, 2018, the balance due to the Company for such performance fees was $0.7 million and $0.4 million , respectively. Revenues associated with these performance fees are classified as carried interest within investment income on the Company's condensed consolidated statements of operations. The entities in which the Company's investments are accounted for under the equity method are considered to be related parties. Investments in shares of MCC, at fair value As of March 31, 2019 and December 31, 2018, the Company held 7,756,938 shares of MCC which are carried at fair value based upon the quoted market price on the exchange on which the shares trade. During the three months ended March 31, 2019 and 2018, the Company recognized unrealized gains of $3.5 million and unrealized losses of $9.6 million , respectively, which are included as a component of other income (expense), net on the Company’s condensed consolidated statements of operations. Investment Held at Cost Less Impairment The Company measures its investment in CK Pearl at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer as well as any distributions received during the period. The carrying amount of this investment was $0.3 million and $0.4 million as of March 31, 2019 and December 31, 2018, respectively. The Company performs a quantitative and qualitative assessment at each reporting date to determine whether the investment is impaired and an impairment loss equal to the difference between the carrying value and fair value is recorded within other income (expenses), net on the Company's consolidated statement of operations if an impairment has been determined. There were no impairment losses recorded during the three months ended March 31, 2019 and 2018. Investments of consolidated fund Medley measures the carrying value of investments held by its consolidated fund at fair value. As of March 31, 2019 , investments of consolidated fund consisted of $0.5 million of equity investments and $1.7 million of senior secured loans. As of December 31, 2018, investments of consolidated fund consisted of $0.4 million of equity investments and $1.6 million of senior secured loans Refer to Note 5 " Fair Value Measurements " for additional information. |
OTHER ASSETS
OTHER ASSETS | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | OTHER ASSETS Other assets consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Fixed assets, net of accumulated depreciation and amortization of $3,624 and $3,446, respectively $ 2,963 $ 3,140 Security deposits 1,975 1,975 Administrative fees receivable (Note 13) 1,749 1,645 Deferred tax assets (Note 14) 3,144 3,144 Due from affiliates (Note 13) 2,855 2,215 Prepaid expenses and taxes 381 761 Other assets 927 1,265 Total other assets $ 13,994 $ 14,145 |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | LEASES On January 1, 2019, the company adopted ASC 842, Leases, under the modified retrospective method where any transition adjustments are recorded through a cumulative adjustment to retained earnings in the period of adoption. This new accounting standard requires a dual approach for lessee accounting whereby a lessee accounts for lease arrangements as either operating leases or finance leases. A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. The Company has elected the transition relief package of practical expedients permitted within ASC 842. Accordingly, the Company has not reassessed the classification of its existing leases as of the transition date, whether existing contracts at the transition date contain a lease, or whether unamortized initial direct costs before the transition adjustments would have met the definition of initial direct costs at lease commencement. The Company also applied practical expedients to not separate lease and non-lease components for all new leases as well as leases commencing before the effective date if certain criteria are met, and does not record leases on its consolidated balance sheet with expected terms of twelve months or less. Upon adoption of ASC 842, the Company recognized $8.2 million of right-of-use assets under operating leases and operating lease liabilities of $10.2 million . Under ASC 842, at the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and lease liabilities. Lease liabilities and the corresponding right-of-use assets are recorded based on the present values of lease payments over the expected lease terms. The Company’s expected lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. When determining if a renewal option is reasonably certain of being exercised, the Company considers several factors, including but not limited to, the significance of leasehold improvements incurred on the property, whether the asset is difficult to replace, or specific characteristics unique to the particular lease that would make it reasonably certain that the Company would exercise such option. The Company has concluded that renewal and early termination options are not reasonably certain of being exercised by the Company and thus not included in its right-of-use assets and operating lease liabilities. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rates, which are the rates that would be incurred to borrow on a collateralized basis, over similar terms, amounts equal to the lease payments in a similar economic environment. Variable payments that do not depend on a rate or index are not included in the lease liability and are recognized as incurred. If significant events, changes in circumstances, or other events indicate that the lease term or other inputs have changed, the Company would reassess lease classification, remeasure the lease liability by using revised inputs as of the reassessment date, and adjust the underlying right-of-use asset. Substantially all of the Company's operating leases are comprised of its office space in New York City and San Francisco which expire at various times through September 2023. The Company does not have any contracts that would be classified as a finance lease nor any operating leases that contain variable payments. The components of lease cost and other information for the three months ended March 31, 2019 are as follows (dollars in thousands): Lease cost Operating lease costs $ 625 Variable lease costs — Sublease income (115 ) Total lease cost $ 510 Other information Weighted-average remaining lease term (in years) 4.5 Weighted-average discount rate 8.2 % Future payments for operating leases as of March 31, 2019 are as follows (in thousands): Remaining 2019 $ 2,042 2020 2,846 2021 2,483 2022 2,441 2023 1,823 Total future lease payments 11,635 Less imputed interest (1,881 ) Operating lease liabilities, as reported $ 9,754 Rent expense amounted to $0.6 million for the three months ending March 31, 2018 . There is no material difference between the amount of lease expense recognized under the new lease accounting standard versus the superseded lease accounting standard. |
SENIOR UNSECURED DEBT
SENIOR UNSECURED DEBT | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Senior Unsecured Debt | SENIOR UNSECURED DEBT The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $2,855 and $2,946, respectively $ 50,740 $ 50,649 2024 Notes, net of unamortized premium and debt issuance costs of $1,931 and $2,031 respectively 67,069 66,969 Total senior unsecured debt $ 117,809 $ 117,618 2026 Notes On August 9, 2016 and October 18, 2016, the Company issued debt consisting of $53.6 million in aggregate principal amount of senior unsecured notes due 2026 at a stated coupon rate of 6.875% (the "2026 Notes"). The net proceeds from these offerings were used to pay down a portion of the Company's outstanding indebtedness under its Term Loan Facility. Interest is payable quarterly. The 2026 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after August 15, 2019 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2026 notes were recorded net of discount and direct issuance costs of $3.8 million which are being amortized over the term of the notes using the effective interest rate method. The 2026 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLX.” The fair value of the 2026 Notes based on their underlying quoted market price was $37.7 million as of March 31, 2019 . Interest expense on the 2026 Notes, including accretion of note discount and amortization of debt issuance costs, was $1.0 million for each of the three months ended March 31, 2019 and 2018. 2024 Notes On January 18, 2017 and February 22, 2017, the Company issued $69.0 million in aggregate principal amount of senior unsecured notes due 2024 at a stated coupon rate of 7.25% (the "2024 Notes"). The net proceeds from these offerings were used to pay down the remaining portion of the Company's outstanding indebtedness under its Term Loan Facility (Note 8) with the remaining to be used for general corporate purposes. Interest is payable quarterly and interest payments commenced on April 30, 2017. The 2024 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after January 30, 2020 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2024 notes were recorded net of premium and direct issuance costs of $2.8 million which are being amortized over the term of the notes using the effective interest rate method. The 2024 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLQ.” The fair value of the 2024 Notes based on their underlying quoted market price was $52.0 million as of March 31, 2019 . Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $1.4 million for each of the three months ended March 31, 2019 and 2018. LOANS PAYABLE Loans payable consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Non-recourse promissory notes, net of unamortized discount of $0 and $108, respectively $ 10,000 $ 9,892 Total loans payable $ 10,000 $ 9,892 CNB Credit Agreement On August 19, 2014, the Company entered into a $15.0 million senior secured revolving credit facility with City National Bank (as amended, the “Revolving Credit Facility”). The most recent amendment dated September 22, 2017 extended the Revolving Credit Facility maturity date to March 31, 2020 and provided for an incremental facility in an amount up to $10.0 million upon the fulfillment of certain customary conditions, as well as other changes. The Company intended to use any proceeds from borrowings under the Revolving Credit Facility for general corporate purposes, including funding of its working capital needs. Borrowings under the Revolving Credit Facility bore interest, at the option of the Company, either (i) at an Alternate Base Rate, as defined, plus an applicable margin not to exceed 0.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 2.5% . As of and during the three months ended March 31, 2019 , there were no amounts drawn under the Revolving Credit Facility and the Company had not incurred any borrowings under the Revolving Credit Facility since its inception. The capitalized terms below are defined in the Revolving Credit Facility, where applicable. The Revolving Credit Facility also contained financial covenants that required the Company to maintain a Maximum Net Leverage Ratio, as defined, of not greater than 5.0 to 1.0, a Total Leverage Ratio, as defined, of not greater than 7.0 to 1.0 and Core EBITDA, as defined, of not less than $15.0 million . These ratios were calculated on a trailing twelve months basis and were calculated using the Company’s financial results and included adjustments made to calculate Core EBITDA. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default. The Revolving Credit Facility also contained customary negative covenants and other customary events of default, including defaults based on events of bankruptcy and insolvency, dissolution, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties. Effective May13, 2019 the Company terminated the Revolving Credit Facility. There were no early termination penalties incurred by the Company in connection with the termination of this facility. Amortization of deferred issuance costs associated with the Revolving Credit Facility were $0.1 million and less than $0.1 million for the three months ending March 31, 2019 and 2018, respectively. Non-Recourse Promissory Notes In April 2012, the Company borrowed $10.0 million under two non-recourse promissory notes. Proceeds from the borrowings were used to purchase 1,108,033 shares of common stock of SIC, which were pledged as collateral for the obligations. Interest on the notes is paid monthly and is equal to the dividends received by the Company related to the pledged shares. The Company may prepay the notes in whole or in part at any time without penalty and the lenders may call the notes if certain conditions are met. The notes are scheduled to mature in June 2019 . The proceeds from the notes were recorded net of issuance costs of $3.8 million and were being accreted, using the effective interest method, over the original term of the non-recourse promissory notes. Total interest expense under these notes, including accretion of the notes discount, was $0.3 million for each of the three months ending March 31, 2019 and 2018, respectively. The fair value of the outstanding balance of the notes was $10.0 million as of March 31, 2019 and December 31, 2018, respectively. On January 31, 2019, the Company entered into a termination agreement with the lenders which will become effective upon the closing of the Company's pending merger with SIC. In accordance with the provisions of the termination agreement, the Company will be required to pay the lenders $6.5 million on or prior to the merger closing date, reimburse the lenders for their out of pocket legal fees and enter into a new $6.5 million promissory note ("New Promissory Note"). The New Promissory Note will bear interest at LIBOR plus 7.0% and maturity will be six months after the merger closing date. Such consideration would be for the full satisfaction of the two aforementioned non-recourse promissory notes and related agreements, including the Company's revenue share payable, as further described in Note 12. Contractual Maturities of Loans Payable As further described above, upon closing of the Company's pending merger with SIC, the Company's two non-recourse promissory and revenue sharing arrangement would be settled for payment of $6.5 million on or prior to the merger closing date and delivery of the New Promissory Note. If the pending merger does not close, $10.0 million of future principal payments will be due, relating to loans payable, during the year ending December 31, 2019. |
DUE TO FORMER MINORITY INTEREST
DUE TO FORMER MINORITY INTEREST HOLDER | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
DUE TO FORMER MINORITY INTEREST HOLDER | DUE TO FORMER MINORITY INTEREST HOLDER This balance consists of the following: As of March 31, 2019 December 31, 2018 (in thousands) Due to former minority interest holder, net of unamortized discount of $2,409 and $2,598, respectively $ 9,841 $ 11,402 Total due to former minority interest holder $ 9,841 $ 11,402 In January 2016, the Company executed an amendment to SIC Advisors' operating agreement which provided the Company with the right to redeem membership units owned by the minority interest holder, Strategic Capital Advisory Services, LLC. The Company’s redemption right was triggered by the termination of the dealer manager agreement between SIC and SC Distributors LLC ("DMA Termination"), an affiliate of the minority interest holder. As a result of this redemption feature, the Company reclassified the non-controlling interest in SIC Advisors from the equity section of its consolidated balance sheet to redeemable non-controlling interests in the mezzanine section of its consolidated balance sheet based on its fair value as of the amendment date. On July 31, 2018, a DMA Termination event occurred and, as a result, the Company reclassified the redeemable non-controlling interest in SIC Advisors from redeemable non-controlling in the mezzanine section of its consolidated balance sheet to due to former minority interest holder, a component of total liabilities on the Company's consolidated balance sheet, based on its fair value as of that date. In December, 2018, Medley LLC entered into a Letter Agreement with Strategic Capital Advisory Services, LLC, whereby consideration of $14.0 million was agreed upon for the satisfaction in full of all amounts owed by Medley under the LLC Agreement. The amount due will be paid in sixteen equal installments through August 5, 2022. The Company evaluated this agreement under ASC 470-50, Debt - Modifications and Extinguishment , to determine if modification or extinguishment treatment was necessary. After performing this analysis, the Company determined modification treatment was appropriate and a new effective interest rate was established on the modification date. As of March 31, 2019 future payments due to former minority interest holder are as follows (in thousands): Remaining in 2019 $ 2,625 2020 3,500 2021 3,500 2022 2,625 Total future payments $ 12,250 The amount due will be paid in quarterly installments over a four year period, beginning 2019. For the three months ended March 31, 2019, the amortization of the discount was $0.2 million and is included as a component of interest expense on the Company's consolidated statements of operations. |
LOANS PAYABLE
LOANS PAYABLE | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Loans Payable | SENIOR UNSECURED DEBT The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $2,855 and $2,946, respectively $ 50,740 $ 50,649 2024 Notes, net of unamortized premium and debt issuance costs of $1,931 and $2,031 respectively 67,069 66,969 Total senior unsecured debt $ 117,809 $ 117,618 2026 Notes On August 9, 2016 and October 18, 2016, the Company issued debt consisting of $53.6 million in aggregate principal amount of senior unsecured notes due 2026 at a stated coupon rate of 6.875% (the "2026 Notes"). The net proceeds from these offerings were used to pay down a portion of the Company's outstanding indebtedness under its Term Loan Facility. Interest is payable quarterly. The 2026 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after August 15, 2019 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2026 notes were recorded net of discount and direct issuance costs of $3.8 million which are being amortized over the term of the notes using the effective interest rate method. The 2026 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLX.” The fair value of the 2026 Notes based on their underlying quoted market price was $37.7 million as of March 31, 2019 . Interest expense on the 2026 Notes, including accretion of note discount and amortization of debt issuance costs, was $1.0 million for each of the three months ended March 31, 2019 and 2018. 2024 Notes On January 18, 2017 and February 22, 2017, the Company issued $69.0 million in aggregate principal amount of senior unsecured notes due 2024 at a stated coupon rate of 7.25% (the "2024 Notes"). The net proceeds from these offerings were used to pay down the remaining portion of the Company's outstanding indebtedness under its Term Loan Facility (Note 8) with the remaining to be used for general corporate purposes. Interest is payable quarterly and interest payments commenced on April 30, 2017. The 2024 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after January 30, 2020 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2024 notes were recorded net of premium and direct issuance costs of $2.8 million which are being amortized over the term of the notes using the effective interest rate method. The 2024 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLQ.” The fair value of the 2024 Notes based on their underlying quoted market price was $52.0 million as of March 31, 2019 . Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $1.4 million for each of the three months ended March 31, 2019 and 2018. LOANS PAYABLE Loans payable consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Non-recourse promissory notes, net of unamortized discount of $0 and $108, respectively $ 10,000 $ 9,892 Total loans payable $ 10,000 $ 9,892 CNB Credit Agreement On August 19, 2014, the Company entered into a $15.0 million senior secured revolving credit facility with City National Bank (as amended, the “Revolving Credit Facility”). The most recent amendment dated September 22, 2017 extended the Revolving Credit Facility maturity date to March 31, 2020 and provided for an incremental facility in an amount up to $10.0 million upon the fulfillment of certain customary conditions, as well as other changes. The Company intended to use any proceeds from borrowings under the Revolving Credit Facility for general corporate purposes, including funding of its working capital needs. Borrowings under the Revolving Credit Facility bore interest, at the option of the Company, either (i) at an Alternate Base Rate, as defined, plus an applicable margin not to exceed 0.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 2.5% . As of and during the three months ended March 31, 2019 , there were no amounts drawn under the Revolving Credit Facility and the Company had not incurred any borrowings under the Revolving Credit Facility since its inception. The capitalized terms below are defined in the Revolving Credit Facility, where applicable. The Revolving Credit Facility also contained financial covenants that required the Company to maintain a Maximum Net Leverage Ratio, as defined, of not greater than 5.0 to 1.0, a Total Leverage Ratio, as defined, of not greater than 7.0 to 1.0 and Core EBITDA, as defined, of not less than $15.0 million . These ratios were calculated on a trailing twelve months basis and were calculated using the Company’s financial results and included adjustments made to calculate Core EBITDA. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default. The Revolving Credit Facility also contained customary negative covenants and other customary events of default, including defaults based on events of bankruptcy and insolvency, dissolution, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties. Effective May13, 2019 the Company terminated the Revolving Credit Facility. There were no early termination penalties incurred by the Company in connection with the termination of this facility. Amortization of deferred issuance costs associated with the Revolving Credit Facility were $0.1 million and less than $0.1 million for the three months ending March 31, 2019 and 2018, respectively. Non-Recourse Promissory Notes In April 2012, the Company borrowed $10.0 million under two non-recourse promissory notes. Proceeds from the borrowings were used to purchase 1,108,033 shares of common stock of SIC, which were pledged as collateral for the obligations. Interest on the notes is paid monthly and is equal to the dividends received by the Company related to the pledged shares. The Company may prepay the notes in whole or in part at any time without penalty and the lenders may call the notes if certain conditions are met. The notes are scheduled to mature in June 2019 . The proceeds from the notes were recorded net of issuance costs of $3.8 million and were being accreted, using the effective interest method, over the original term of the non-recourse promissory notes. Total interest expense under these notes, including accretion of the notes discount, was $0.3 million for each of the three months ending March 31, 2019 and 2018, respectively. The fair value of the outstanding balance of the notes was $10.0 million as of March 31, 2019 and December 31, 2018, respectively. On January 31, 2019, the Company entered into a termination agreement with the lenders which will become effective upon the closing of the Company's pending merger with SIC. In accordance with the provisions of the termination agreement, the Company will be required to pay the lenders $6.5 million on or prior to the merger closing date, reimburse the lenders for their out of pocket legal fees and enter into a new $6.5 million promissory note ("New Promissory Note"). The New Promissory Note will bear interest at LIBOR plus 7.0% and maturity will be six months after the merger closing date. Such consideration would be for the full satisfaction of the two aforementioned non-recourse promissory notes and related agreements, including the Company's revenue share payable, as further described in Note 12. Contractual Maturities of Loans Payable As further described above, upon closing of the Company's pending merger with SIC, the Company's two non-recourse promissory and revenue sharing arrangement would be settled for payment of $6.5 million on or prior to the merger closing date and delivery of the New Promissory Note. If the pending merger does not close, $10.0 million of future principal payments will be due, relating to loans payable, during the year ending December 31, 2019. |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accounts Payable, Accrued Expenses and Other Liabilities | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES Accounts payable, accrued expenses and other liabilities consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Accrued compensation and benefits $ 4,256 $ 7,438 Due to affiliates (Note 13) 7,191 7,635 Revenue share payable (Note 12) 3,020 2,976 Accrued interest 1,294 1,294 Professional fees 1,720 2,594 Deferred rent — 2,035 Deferred tax liabilities (Note 14) 62 60 Accounts payable and other accrued expenses 2,071 2,412 Total accounts payable, accrued expenses and other liabilities $ 19,614 $ 26,444 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Operating Leases Refer to Note 6 to these condensed consolidated financial statements. Consolidation of Business Activities During the three months ended March 31, 2018, the Company initiated the consolidation of its business activities to its New York office. The Company believes this will enhance operations by consolidating origination, underwriting and asset management operations and personnel in a single location. During the three months ended March 30, 2018, the Company recorded $1.4 million in severance costs. Capital Commitments to Funds As of March 31, 2019 and December 31, 2018, the Company had aggregate unfunded commitments of $0.3 million to certain long-dated private funds. Other Commitments In April 2012, the Company entered into an obligation to pay to a third party a fixed percentage of management and incentive fees received by the Company from SIC. The agreement was entered into contemporaneously with the $10.0 million non-recourse promissory notes that were issued to the same parties (Note 9). The two transactions were deemed to be related freestanding contracts and the $10.0 million of loan proceeds were allocated to the contracts using their relative fair values. At inception, the Company recognized an obligation of $4.4 million representing the present value of the future cash flows expected to be paid under this agreement. As of March 31, 2019 and December 31, 2018, this obligation amounted to $3.0 million , and is recorded as revenue share payable, a component of accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. The change in the estimated cash flows for this obligation is recorded in other income (expense), net on the consolidated statements of operations. On January 31, 2019, the Company entered into a termination agreement with the lenders which would become effective upon the closing of the Company's pending merger with SIC. In accordance with the provisions of the termination agreement, the Company would pay the lenders $6.5 million on or prior to the merger closing date, reimburse the lenders for their out of pocket legal fees and enter into a six month $6.5 million promissory note. The promissory note would bear interest at seven percentage points over the LIBOR Rate, as defined in the termination agreement. Such consideration would be for the full satisfaction of the two non-recourse promissory notes disclosed in Note 9 as well as the Company's obligation above. Legal Proceedings From time to time, the Company is involved in various legal proceedings, lawsuits and claims incidental to the conduct of its business. Its business is also subject to extensive regulation, which may result in regulatory proceedings against it. Except as described below, the Company is not currently party to any material legal proceedings. One of the Company's subsidiaries, MCC Advisors LLC, was named as a defendant in a lawsuit on May 29, 2015, by Moshe Barkat and Modern VideoFilm Holdings, LLC (“MVF Holdings”) against MCC, MOF II, MCC Advisors LLC, Deloitte Transactions and Business Analytics LLP A/K/A Deloitte ERG (“Deloitte”), Scott Avila (“Avila”), Charles Sweet, and Modern VideoFilm, Inc. (“MVF”). The lawsuit is pending in the California Superior Court, Los Angeles County, Central District, as Case No. BC 583437. The lawsuit was filed after MCC, as agent for the lender group, exercised remedies following a series of defaults by MVF and MVF Holdings on a secured loan with an outstanding balance at the time in excess of $65 million . The lawsuit sought damages in excess of $100 million . Deloitte and Avila have settled the claims against them in exchange for payment of $1.5 million . On June 6, 2016, the court granted the Medley defendants’ demurrers on several counts and dismissed Mr. Barkat’s claims with prejudice except with respect to his claim for intentional interference with contract. On March 18, 2018, the court granted the Medley defendants’ motion for summary adjudication with respect to Mr. Barkat’s sole remaining claim against the Medley Defendants for intentional interference. Now that the trial court has ruled in favor of the Medley defendants on all counts, the only remaining claims in the Barkat litigation are MCC and MOF II’s affirmative counterclaims against Mr. Barkat and MVF Holdings, which MCC and MOF II are diligently prosecuting. On August 29, 2016, MVF Holdings filed another lawsuit in the California Superior Court, Los Angeles County, Central District, as Case No. BC 631888 (the “Derivative Action”), naming MCC Advisors LLC and certain of Medley’s employees as defendants, among others. The plaintiff in the Derivative Action, asserts claims against the defendants for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unfair competition, breach of the implied covenant of good faith and fair dealing, interference with prospective economic advantage, fraud, and declaratory relief. MCC Advisors LLC and the other defendants believe the causes of action asserted in the Derivative Action are without merit and all defendants intend to continue to assert a vigorous defense. All proceedings in the Derivative Action have been stayed as a result of the chapter 11 bankruptcy proceedings of MVF, which were commenced on May 16, 2018. On August 29, 2016, however, despite the automatic stay of the MVF Bankruptcy, the Plaintiff filed an amended complaint seeking to restyle the derivative action into a direct action to circumvent the MVF bankruptcy’s automatic stay. To date, the California Superior Court has not proceeded with the amended complaint. Medley LLC, Medley Capital Corporation, Medley Opportunity Fund II LP, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube were named as defendants, along with other various parties, in a putative class action lawsuit captioned as Royce Solomon, Jodi Belleci, Michael Littlejohn, and Giulianna Lomaglio v. American Web Loan, Inc., AWL, Inc., Mark Curry, MacFarlane Group, Inc., Sol Partners, Medley Opportunity Fund, II, LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, Seth Taube, DHI Computing Service, Inc., Middlemarch Partners, and John Does 1-100, filed on December 15, 2017, amended on March 9, 2018, and amended a second time on February 15, 2019, in the United States District Court for the Eastern District of Virginia, Newport News Division, as Case No. 4:17-cv-145 (hereinafter, “Class Action 1”). Medley Opportunity Fund II LP and Medley Capital Corporation were also named as defendants, along with various other parties, in a putative class action lawsuit captioned George Hengle and Lula Williams v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed February 13, 2018, in the United States District Court, Eastern District of Virginia, Richmond Division, as Case No. 3:18-cv-100 (“Class Action 2”). Medley Opportunity Fund II LP and Medley Capital Corporation were also named as defendants, along with various other parties, in a putative class action lawsuit captioned John Glatt, Sonji Grandy, Heather Ball, Dashawn Hunter, and Michael Corona v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed August 9, 2018 in the United States District Court, Eastern District of Virginia, Newport News Division, as Case No. 4:18-cv-101 (“Class Action 3”) (together with Class Action 1 and Class Action 2, the “Virginia Class Actions”). Medley Opportunity Fund II LP was also named as a defendant, along with various other parties, in a putative class action lawsuit captioned Christina Williams and Michael Stermel v. Red Stone, Inc. (as successor in interest to MacFarlane Group, Inc.), Medley Opportunity Fund II LP, Mark Curry, Brian McGowan, Vincent Ney, and John Doe entities and individuals, filed June 29, 2018 and amended July 26, 2018, in the United States District Court for the Eastern District of Pennsylvania, as Case No. 2:18-cv-2747 (the “Pennsylvania Class Action”) (together with the Virginia Class Actions, the “Class Action Complaints”). The plaintiffs in the Class Action Complaints filed their putative class actions alleging claims under the Racketeer Influenced and Corrupt Organizations Act, and various other claims arising out of the alleged payday lending activities of American Web Loan. The claims against Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube (in Class Action 1, as amended); Medley Opportunity Fund II LP and Medley Capital Corporation (in Class Action 2 and Class Action 3); and Medley Opportunity Fund II LP (in the Pennsylvania Class Action), allege that those defendants in each respective action exercised control over, or improperly derived income from, and/or obtained an improper interest in, American Web Loan’s payday lending activities as a result of a loan to American Web Loan. The loan was made by Medley Opportunity Fund II LP in 2011. American Web Loan repaid the loan from Medley Opportunity Fund II LP in full in February of 2015, more than 1 year and 10 months prior to any of the loans allegedly made by American Web Loan to the alleged class plaintiff representatives in Class Action 1. In Class Action 2, the alleged class plaintiff representatives have not alleged when they received any loans from American Web Loan. In Class Action 3, the alleged class plaintiff representatives claim to have received loans from American Web Loan at various times from February 2015 through April 2018. In the Pennsylvania Class Action, the alleged class plaintiff representatives claim to have received loans from American Web Loan in 2017. By orders dated August 7, 2018 and September 17, 2018, the Court presiding over the Virginia Class Actions consolidated those cases for all purposes. On October 12, 2018, Plaintiffs in Class Action 3 filed a notice of voluntary dismissal of all claims, and on October 29, 2018, Plaintiffs in Class Action 2 filed a notice of voluntary dismissal of all claims. Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube never made any loans or provided financing to, or had any other relationship with, American Web Loan. Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, Seth Taube are seeking indemnification from American Web Loan, various affiliates, and other parties with respect to the claims in the Class Action Complaints. Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube believe the alleged claims in the Class Action Complaints are without merit and they intend to defend these lawsuits vigorously. On January 25, 2019, two purported class actions were commenced in the Supreme Court of the State of New York, County of New York, by alleged stockholders of Medley Capital Corporation, captioned, respectively, Helene Lax v. Brook Taube, et al., Index No. 650503/2019, and Richard Dicristino, et al. v. Brook Taube, et al., Index No. 650510/2019 (together with the Lax Action, the “New York Actions”). Named as defendants in each complaint are Brook Taube, Seth Taube, Jeffrey Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, John E. Mack, Mark Lerdal, Richard T. Allorto, Jr., Medley Capital Corporation, Medley Management Inc., Sierra Income Corporation, and Sierra Management, Inc. The complaints in each of the New York Actions allege that the individuals named as defendants breached their fiduciary duties in connection with the proposed merger of MCC with and into Sierra, and that the other defendants aided and abetted those alleged breaches of fiduciary duties. Compensatory damages in unspecified amounts are sought. On February 27, 2019, the Court entered a stipulated scheduling order requiring that defendants respond to the complaints 45 days following the later of (a) the stockholder vote on the proposed merger and (b) plaintiffs’ filing of a consolidated, amended complaint. A preliminary conference is scheduled to take place on July 23, 2019. The defendants believe the claims asserted in the New York Actions are without merit and they intend to defend these lawsuits vigorously. At this time, we are unable to determine whether an unfavorable outcome from these matters is probable or remote or to estimate the amount or range of potential loss, if any. On February 11, 2019, a purported stockholder class action was commenced in the Court of Chancery of the State of Delaware by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd. (together, “FrontFour”), captioned FrontFour Capital Group LLC, et al. v. Brook Taube, et al., Case No. 2019-0100 (the “FrontFour Action”), against defendants Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MDLY, Sierra, MCC, MCC Advisors LLC (“MCC Advisors”), Medley Group, and Medley LLC. The complaint, as amended on February 12, 2019, alleged that the individuals named as defendants breached their fiduciary duties to MCC stockholders in connection with the proposed merger of MCC with Sierra (the “MCC Merger”), and that MDLY, Sierra, MCC Advisors, Medley Group, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. The complaint sought to enjoin the vote of MCC stockholders on the proposed merger and enjoin enforcement of certain provisions of the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”). The Court held a trial on the plaintiffs’ claims on March 6-7, 2019 and issued a Memorandum Opinion (the “Decision”) on March 11, 2019. The Court denied the plaintiffs’ requests to (i) permanently enjoin the proposed merger and (ii) require MCC to conduct a “shopping process” for MCC on terms proposed by the plaintiffs in their complaint. The Court held that MCC’s directors breached their fiduciary duties in entering into the proposed merger, but rejected the plaintiffs’ claim that Sierra aided and abetted those breaches of fiduciary duties. The Court ordered the defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of MCC stockholders on the proposed merger until such disclosures have been made and stockholders have had the opportunity to assimilate this information. On March 20, 2019, another purported stockholder class action was commenced by Stephen Altman against Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, Mark Lerdal, and John E. Mack in the Court of Chancery of the State of Delaware, captioned Altman v. Taube, Case No. 2019-0219 (the “Altman Action”). The complaint alleged that the defendants breached their fiduciary duties to stockholders of MCC in connection with the vote of MCC stockholders on the proposed mergers. On April 8, 2019, the Court granted a stipulation consolidating the FrontFour Action and the Altman Action, designating the amended complaint in the FrontFour Action as the operative complaint, and designating the plaintiffs in the FrontFour Action and their counsel the lead plaintiffs and lead plaintiffs’ counsel, respectively. On April 15, 2019, the parties reached agreement on the principal terms of a settlement of the FrontFour Action. The principal terms of the settlement are contained in a binding term sheet, dated April 15, 2019 (the “Settlement Term Sheet”), by and among MCC, Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MCC Advisors, Medley LLC and Medley Group LLC (the “Medley Parties”), on the one hand, and FrontFour, on behalf of itself and a class of similarly situated stockholders of MCC, on the other hand. The Settlement Term Sheet is intended to form the basis of a definitive stipulation of settlement in the FrontFour Action. The Settlement Term Sheet provides that MCC will seek to obtain the agreement and/or consent of Sierra to effect certain amendments to (i) the MCC Merger Agreement and (ii) the Agreement and Plan of Merger, dated as of August 9, 2018, by and among MDLY, Sierra, and Sierra Management, Inc. (the “MDLY Merger Agreement,” together with the MCC Merger Agreement, the “Merger Agreements”). If the foregoing amendments are entered into they will, among other matters (as described in further detail in the Settlement Term Sheet): (a) extend the Outside Date (as defined in the Merger Agreements) to October 31, 2019; (b) permit MCC’s special committee of independent directors (the “MCC Special Committee”) to undertake a sixty-day “go shop” process to solicit superior transactions to the MCC Merger and (c) if the MCC Merger is consummated, create a settlement fund, consisting of $17 million in cash and $30 million of Sierra stock, with the number of shares of Sierra stock to be calculated using the pro forma net asset value reported in the future proxy supplement describing the amendments to the MCC Merger Agreement, which will be distributed to eligible members of the Class (as defined in the Settlement Term Sheet). In connection with the Settlement Term Sheet, MDLY has executed an acknowledgement and agreement to take certain actions, including consenting to certain amendments to the Merger Agreements, in furtherance of the transactions contemplated thereby. In addition, the Settlement Term Sheet provides that MCC and FrontFour will enter into a Governance Agreement pursuant to which, among other matters, FrontFour will be subject to customary standstill restrictions and be required to vote in favor of the MCC Merger at a meeting of stockholders to approve the MCC Merger Agreement and in favor of the directors nominated by the board of directors of MCC (the “Board”) for election at MCC’s 2019 annual meeting of stockholders. Under the Settlement Term Sheet, the parties have agreed to cooperate to reduce the agreements reflected therein to a definitive stipulation of settlement (the “Settlement Stipulation”), and to obtain approval of Court of Chancery of the State of Delaware as soon as reasonably practicable thereafter. The Settlement Stipulation will provide for mutual releases between and among FrontFour and the Class, on the one hand, and the Medley Parties, on the other hand, of all claims that were or could have been asserted in the FrontFour Action. The Medley Parties will also release all claims arising out of or relating to the prosecution and settlement of the FrontFour Action and all claims that were or could have been asserted (other than claims against NexPoint Advisors, L.P. and its affiliates) in the litigation pending in the United States District Court for the Southern District of New York captioned Medley Capital Corporation v. FrontFour Capital Group LLC, et al., No. 1:19-cv-02055-LTS (S.D.N.Y.) (the “Federal Action”), and FrontFour and the Class will release all claims arising out of or relating to the prosecution and settlement of the Federal Action. Under the Settlement Term Sheet, MCC and FrontFour have also undertaken to work together in good faith to agree to supplemental disclosures relating to the transactions contemplated by the Merger Agreements consistent with the Decision. If the contemplated amendments to the Merger Agreements have not been entered into by May 15, 2019, the Settlement Term Sheet may be terminated by MCC or FrontFour. The contemplated amendments to the Merger Agreements require the agreement of Sierra and there can be no assurance that such agreement will be obtained or that agreements on the amendments to the Merger Agreements will be reached. In connection with the execution of the Settlement Term Sheet, effective as of April 15, 2019, the Board appointed David A. Lorber and Lowell W. Robinson to the Board to fill the vacancies on the Board created by the resignations of Mark Lerdal and John E. Mack, respectively. MCC is seeking to obtain the agreement and/or consent of Sierra to effect certain amendments to the MCC Merger Agreement and the MDLY Merger Agreement as provided in the Settlement Term Sheet. At this time, MCC cannot provide any assurance whether the Mergers, or any other transaction involving the parties, will be consummated. MARILYN S. ADLER, v. MEDLEY CAPITAL LLC et. al. (Supreme Court of New York, March 2019). Marilyn Adler, a former employee who served as a Managing Director of Medley Capital LLC, has filed suit in the New York Supreme Court, Commercial Part, against Medley Capital LLC, MCC Advisors, Medley SBIC GP, LLC, Medley Capital Corporation, Medley Management Inc., as well as Brook Taube, and Seth Taube, individually. Ms. Adler alleges that she is due in excess of $6.5 million in compensation based upon her role with Medley’s SBIC Fund. Her claims are for breach of contract, unjust enrichment, conversion, tortious interference, as well as a claim for an accounting of funds maintained by the defendants. The lawsuit was filed on March 1, 2019 and is in its very initial stages. The Company believes the claims are without merit, intends to vigorously defend them, and has asserted counterclaims against Ms. Adler for breach of contract and breach of fiduciary duties. While management currently believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s consolidated financial position or overall trends in consolidated results of operations, litigation is subject to inherent uncertainties. The Company reviews relevant information with respect to litigation and regulatory matters on a quarterly and annual basis. The Company establishes liabilities for litigation and regulatory actions when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no liability is established. Employment Agreements In connection with the Company's pending merger with Sierra, the pre-IPO owners entered into employment agreements which would become effective upon the successful completion of the merger. Each employment agreement sets forth a base salary, which is subject to change at the discretion of the Board or compensation committee of the post-merged entity. The initial term of the employment agreements range from 24 to 30 months. The combined initial base salaries of the pre-IPO members would be $3.0 million . Under the employment agreements, each pre-IPO owner is eligible to receive each year a short-term incentive paid in cash and a long-term incentive in the form of an equity award, each paid after the end of the year. Each employment agreement provides that the post merged entity's Board or compensation committee will establish a target annual bonus for each year of no less than a specified percentage of each pre-IPO owner's base salary and will establish performance and other objectives for the year for such annual bonus, in consultation with management. During their first year of employment, the combined target annual bonuses could amount up to $12.6 million of which $4.7 million would consist of cash and $7.9 million in the form of restricted stock units which would vest over a three year period. The employment agreements also set forth bonuses for 2018 which the Board or the compensation committee of the post-merger company may increase in recognition of performance in excess of performance objectives. The aggregate 2018 bonuses to the pre-IPO owners amount to $12.6 million of which $4.7 million would be payable in cash and $7.9 million in the form of restricted stock units which would vest over a three year period. As the 2018 bonus amounts per the employment agreements are not effective until the closing of the merger they were not accrued for as of December 31, 2018. Actual bonuses to the pre-IPO owners accrued for as of March 31, 2019 and December 31, 2018 were $0.7 million . The long-term equity incentive will be made in the form of an equity award, vesting in three equal annual installments. The cash and equity award portions of the annual bonuses paid under the employment agreements will be subject to recoupment by the Combined Company to the extent required by applicable law (including without limitation Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Act) and/or the rules and regulations of the NYSE. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Substantially all of Medley’s revenue is earned through agreements with its non-consolidated funds for which it collects management and performance fees for providing asset management, advisory and other related services. Administration Agreements In January 2011 and April 2012, Medley entered into administration agreements with MCC (the “MCC Admin Agreement”) and Sierra (the “SIC Admin Agreement”), respectively, whereby, as part of its performance obligation to provide asset management, advisory and other related services, Medley agreed to provide administrative services necessary for the operations of MCC and Sierra. MCC and Sierra agreed to pay Medley for the costs and expenses incurred in providing such administrative services, including an allocable portion of Medley’s overhead expenses and an allocable portion of the cost of MCC and Sierra's officers and their respective staffs. Additionally, Medley has entered into administration agreements with other entities that it manages (the “Funds Admin Agreements”), whereby Medley agreed to provide administrative services necessary for the operations of these other vehicles. These other entities agreed to pay Medley for the costs and expenses incurred in providing such administrative services, including an allocable portion of Medley’s overhead expenses and an allocable portion of the cost of these other vehicles' officers and their respective staffs. Medley records these administrative fees as revenue in the period when the performance obligation of providing such administrative services is satisfied and are included in other revenues and fees on the condensed consolidated statements of operations. Amounts due from these agreements are included as a component of other assets on the Company's condensed consolidated balance sheets. Total revenues recorded under these agreements for the three months ended March 31, 2019 and 2018 are reflected in the table below: For the Three Months Ended 2019 2018 (in thousands) MCC Admin Agreement $ 881 $ 901 SIC Admin Agreement 663 699 Funds Admin Agreements 236 245 Total administrative fees from related parties $ 1,780 $ 1,845 Amounts due from related parties under these agreements are reflected in the table below: As of March 31, 2019 December 31, 2018 (in thousands) Amounts due from MCC under the MCC Admin Agreement $ 668 $ 804 Amounts due from SIC under the SIC Admin Agreement 622 619 Amounts due from entities under the Funds Admin Agreements 459 222 Total administrative fees receivable $ 1,749 $ 1,645 Management fee Waiver During the three months ended March 31, 2018, the Company voluntarily waived $0.4 million in management fees for MCC. There were no management fee waivers during the three months ended March 31, 2019. Reimbursement Agreement In connection with the amended and restated limited liability agreement of Medley LLC, Medley LLC agreed to, at the sole discretion of the managing member, reimburse Medley Management Inc. for all expenses incurred, other than expenses incurred in connection with its income tax obligations. From time to time, the company may also advance funds to Medley Management Inc. to cover its operating needs. For the three months ended March 31, 2019 and 2018, the Company recorded reimbursable expenses of $0.9 million and $0.7 , respectively, which were recorded as a component of general, administrative and other expenses on the consolidated statements of operations. As of March 31, 2019 and December 31, 2018, amounts due from Medley Management Inc. were $1.1 million and $0.8 million , respectively, and were recorded as a component of accounts payable, accrued expenses and other liabilities on the consolidated balance sheet. Organization Agreement Pursuant to the organization agreement between Medley Management Inc. and Medley LLC, Medley Management Inc. may from time to time make grants of restricted stock units or other awards providing the holder with the contractual right to receive cash payments pursuant to an equity plan to employees, advisors or other persons, as defined, in respect of Medley LLC and its subsidiaries. These awards may entitle the holder thereof to receive dividends paid with respect to the shares of Class A common stock underlying such awards as if such holder were a holder of record of the underlying shares of Class A common stock. Medley LLC has agreed that it assumes any obligation to pay such dividend equivalent amounts to the holders of the respective awards. Additionally, pursuant to this agreement, the number of LLC Units held by Medley Management Inc., shall, at all times, equal the number of shares of Class A common stock outstanding and Medley LLC has agreed to issue additional LLC units equal to the number of shares of Medley Management Inc. issued pursuant to its equity plan. Investments Refer to Note 4 " Investments " for information related to the Company's investments in related parties. Exchange Agreement Prior to the completion of the Company's IPO, Medley LLC's limited liability agreement was restated among other things, to modify its capital structure by reclassifying the interests held by its existing owners (i.e. the members of Medley prior to the IPO) into the LLC Units. Medley’s existing owners also entered into an exchange agreement under which they (or certain permitted transferees thereof) have the right (subject to the terms of the exchange agreement as described therein), to exchange their LLC Units for shares of Medley Management Inc.’s Class A common stock on a one -for-one basis at fair value, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount on the Company’s consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. The Company's deferred tax assets were $3.1 million as of March 31, 2019 and December 31, 2018, which consists primarily of temporary differences relating to certain accrued expenses, stock-based compensation, unrealized losses and a tax benefit relating to tax goodwill. Deferred tax liabilities were $0.1 million as of March 31, 2019 and December 31, 2018. The tax provision for deferred income taxes results from temporary differences arising principally from certain accrued expenses, amortization of tax goodwill, stock-based compensation and depreciation. The Company’s effective tax rate was (0.2)% and 1.4% for the three months ended March 31, 2019 and 2018, respectively. The variance in the effective tax rate was primarily attributed to income (losses) allocated to one of our non-controlling interests of $4.0 million and $(5.2) million for the three months ended March 31, 2019 and 2018, respectively, which are not subject to income taxes. Interest expense and penalties related to income tax matters are recognized as a component of the provision for income taxes and were not significant during the three ended March 31, 2019 and 2018 . As of and during the three months ended March 31, 2019 and 2018, there were no uncertain tax positions taken that were not more likely than not to be sustained. |
COMPENSATION EXPENSE
COMPENSATION EXPENSE | 3 Months Ended |
Mar. 31, 2019 | |
Retirement Benefits [Abstract] | |
Compensation Expense | COMPENSATION EXPENSE Compensation generally includes salaries, bonuses, equity and profit sharing awards. Bonuses, equity and profit sharing awards are accrued over the service period to which they relate. Guaranteed payments made to our senior professionals who are members of Medley LLC are recognized as compensation expense. The guaranteed payments to the Company’s Co-Chief Executive Officers are performance based and are periodically set subject to maximums based on the Company’s total assets under management. Such maximums aggregated to $1.3 million during each of the three months ended March 31, 2019 and 2018. During the three months ended March 31, 2019 and 2018 , neither of the Company’s Co-Chief Executive Officers received any guaranteed payments. Retirement Plan The Company sponsors a defined-contribution 401(k) retirement plan that covers all employees. Employees are eligible to participate in the plan immediately, and participants are 100% vested from the date of eligibility. The Company makes contributions to the plan of 3% of an employee’s eligible wages, up to a maximum limit as determined by the Internal Revenue Service. The Company also pays all administrative fees related to the plan. The Company's accrued contributions to the plan were $0.3 million for each of the three months ended March 31, 2019 and 2018. As of March 31, 2019 and December 31, 2018 the Company's outstanding liability to the plan was $0.8 million and $0.5 million , respectively. Stock-Based Compensation In connection with the IPO of Medley Management Inc., Medley Management Inc. and Medley LLC adopted the Medley Management Inc. 2014 Omnibus Incentive Plan (the “Plan”). The purpose of the Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors (and prospective directors, officers, employees, consultants and advisors) of the Company can acquire and maintain an equity interest in the Company, Medley Management Inc. or be paid incentive compensation, including incentive compensation measured by reference to the value of Medley Management Inc.’s Class A common stock or Medley LLC’s unit interests, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Medley Management Inc.'s stockholders. The Plan provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), restricted LLC Units of Medley LLC, stock bonuses, other stock-based awards and cash awards. The maximum aggregate number of awards available to be granted under the plan, as amended, is 4,500,000 , of which all or any portion may be issued as shares of Medley Management Inc.’s Class A common stock or Medley LLC’s unit interests. Shares of Class A common stock issued by the Company in settlement of awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the market or by private purchase or a combination of the foregoing. As of March 31, 2019 , there were 1.0 million awards available to be granted under the Plan. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Non-controlling Interests | REDEEMABLE NON-CONTROLLING INTERESTS Changes in redeemable non-controlling interests during the three months ended March 31, 2019 and 2018 are reflected in the table below: For the Three Months Ended March 31, 2019 2018 (in thousands) Beginning balance $ 23,186 $ 53,741 Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries 3,950 (4,516 ) Distributions (799 ) (2,438 ) Ending balance $ 26,337 $ 46,787 In January 2016, the Company executed an amendment to SIC Advisors' operating agreement which provided the Company with the right to redeem membership units owned by the minority interest holder. The Company’s redemption right is triggered by the termination of the dealer manager agreement between Sierra and SC Distributors LLC ("DMA Termination"), an affiliate of the minority interest holder. As a result of this redemption feature, the Company reclassified the non-controlling interest in SIC Advisors from the equity section to redeemable non-controlling interests in the mezzanine section of the consolidated balance sheet based on its fair value as of the amendment date. The fair value of the non-controlling interest was determined to be $12.2 million on the date of the amendment and was adjusted through a charge to members' deficit in Medley LLC. On July 31, 2018, a DMA Termination event occurred and the membership units owned by the minority interest holder were redeemed by Medley. In connection with the DMA Termination, the Company reclassified SIC Advisors' minority interest balance from redeemable non-controlling interests in the mezzanine section of its consolidated balance sheet to due to former minority interest holder (Note 10), a component of total liabilities, at its then fair value. The fair value of the non-controlling interest was determined to be $12.3 million on the DMA Termination date and was adjusted through a $1.0 million charge to members' deficit in Medley LLC. During the three months ended March 31, 2018, profits allocated to this non-controlling interest were $0.8 million and distributions paid were $1.4 million . There were no profits or distributions allocated to this non-controlling interest subsequent the Company's redemption of the membership units held by the former minority interest holder. On June 3, 2016, the Company entered into a Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC (the ‘‘Investors’’) to invest up to $50.0 million in new and existing Medley managed funds (the ‘‘Joint Venture’’). The Company agreed to contribute up to $10.0 million and an interest in STRF Advisors LLC, the investment advisor to Sierra Total Return Fund, in exchange for common equity interests in the Joint Venture. On June 6, 2017, the Company entered into an amendment to its Master Investment Agreement with the Investors, which provided for, among other things, an increase in the Company’s capital contribution to up to $13.8 million and extended the term of the Joint Venture from seven to ten years. The Investors agreed to invest up to $40.0 million in exchange for preferred equity interests in the Joint Venture. As of March 31, 2018, the Company and the Investors had fully satisfied their capital contributions. On account of the preferred equity interests, the Investors will receive an 8% preferred distribution, 15% of the Joint Venture’s profits, and all of the profits from the contributed interest in STRF Advisors LLC. Medley has the option, subject to certain conditions, to cause the Joint Venture to redeem the Investors’ interest in exchange for repayment of the outstanding investment amount at the time of redemption, plus certain other considerations. The Investors have the right, after ten years , to redeem their interests in the Joint Venture. As such, the Investors’ interest in the Joint Venture is included as a component of redeemable non-controlling interests on the Company’s consolidated balance sheets and amounted to $27.1 million and $ 23.9 million as of March 31, 2019 and December 31, 2018, respectively. Total contributions to the Joint Venture amounted to $53.8 million through March 31, 2019 , and were used to purchase $51.8 million of MCC shares on the open market and seed fund $2.0 million to STRF. During the three months ended March 31, 2019, profits allocated to this non-controlling interest were $4.0 million . During the three months ended March 31, 2018, losses allocated to this non-controlling interest were $5.2 million . Distributions paid during the three months ended March 31, 2019 and 2018 were $0.8 million and $1.0 million , respectively. In October 2016, the Company executed an operating agreement for STRF Advisors LLC which provided the Company with the right to redeem membership units owned by the minority interest holder. The Company’s redemption right is triggered by the termination of the dealer manager agreement between STRF and SC Distributors LLC, an affiliate of the minority interest holder. As a result of this redemption feature, the non-controlling interest in STRF Advisors LLC is classified as in redeemable non-controlling interests in the mezzanine section of the balance sheet. During the three months ended March 31, 2019 and 2018, net losses allocated to this redeemable non-controlling interest were less than $0.1 million and $0.1 million , respectively. As of March 31, 2019 and December 31, 2018, the balance of the redeemable non-controlling interest in STRF Advisors LLC was $(0.7) million , respectively. |
MARKET AND OTHER RISK FACTORS
MARKET AND OTHER RISK FACTORS | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Market and Other Risk Factors | MARKET AND OTHER RISK FACTORS Due to the nature of the Medley funds’ investment strategy, their portfolio of investments has significant market and credit risk. As a result, the Company is subject to market and other risk factors, including, but not limited to the following: Market Risk The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions that are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Credit Risk There are no restrictions on the credit quality of the investments the Company intends to make. Investments may be deemed by nationally recognized rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Some investments may have low-quality ratings or be unrated. Lower rated and unrated investments have major risk exposure to adverse conditions and are considered to be predominantly speculative. Generally, such investments offer a higher return potential than higher rated investments, but involve greater volatility of price and greater risk of loss of income and principal. In general, the ratings of nationally recognized rating organizations represent the opinions of agencies as to the quality of the securities they rate. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the relevant securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events. The Company may use these ratings as initial criteria for the selection of portfolio assets for the Company but is not required to utilize them. Limited Liquidity of Investments The funds managed by the Company invest and intend to continue to invest in investments that may not be readily marketable. Illiquid investments may trade at a discount from comparable, more liquid investments and, at times there may be no market at all for such investments. Subordinate investments may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market or the small size of the issue (relative to issues of comparable interests). As a result, the funds managed by the Company may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. Counterparty Risk Some of the markets in which the Company, on behalf of its underlying funds, may affect its transactions are “over-the-counter” or “interdealer” markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight, unlike members of exchange-based markets. This exposes the Company to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Company to suffer loss. Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Company has concentrated its transactions with a single or small group of counterparties. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of issuance of the condensed consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of and for the three months ended March 31, 2019. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Medley LLC and its consolidated subsidiaries (collectively, “Medley” or the “Company”). Additionally, the accompanying condensed consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP may be omitted. In the opinion of management, the unaudited condensed consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. Therefore, this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for any future interim period or the full year ending December 31, 2019. |
Principles of Consolidation | Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , the Company consolidates those entities where it has a direct and indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates entities that the Company concludes are variable interest entities (“VIEs”), for which the Company is deemed to be the primary beneficiary and entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity. For legal entities evaluated for consolidation, the Company must determine whether the interests that it holds and fees paid to it qualify as a variable interest in an entity. This includes an evaluation of the management fees and performance fees paid to the Company when acting as a decision maker or service provider to the entity being evaluated. If fees received by the Company are customary and commensurate with the level of services provided, and the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, the interest that the Company holds would not be considered a variable interest. The Company factors in all economic interests including proportionate interests through related parties, to determine if fees are considered a variable interest. An entity in which the Company holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk have the right to direct the activities of the entity that most significantly impact the legal entity’s economic performance, (c) the voting rights of some investors are disproportionate to their obligation to absorb losses or rights to receive returns from a legal entity. For limited partnerships and other similar entities, non-controlling investors must have substantive rights to either dissolve the fund or remove the general partner (“kick-out rights”) in order to not qualify as a VIE. For those entities that qualify as a VIE, the primary beneficiary is generally defined as the party who has a controlling financial interest in the VIE. The Company is generally deemed to have a controlling financial interest if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. The primary beneficiary evaluation is generally performed qualitatively on the basis of all facts and circumstances. However, quantitative information may also be considered in the analysis, as appropriate. These assessments require judgment. Each entity is assessed for consolidation on a case-by-case basis. For those entities evaluated under the voting interest model, the Company consolidates the entity if it has a controlling financial interest. The Company has a controlling financial interest in a voting interest entity (“VOE”) if it owns a majority voting interest in the entity. |
Consolidated and Non-Consolidated Variable Interest Entities | Non-Consolidated Variable Interest Entities The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary. The Company's interest in these entities is in the form of insignificant equity interests and fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Consolidated Variable Interest Entities As of March 31, 2019 and December 31, 2018, Medley LLC had three majority owned subsidiaries, Medley Seed Funding I LLC, Medley Seed Funding II LLC and STRF Advisors LLC, which are consolidated VIEs. Each of these entities was organized as a limited liability company and was legally formed to either manage a designated fund or to strategically invest capital as well as isolate business risk. As of March 31, 2019 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $25.1 million and less than $0.1 million , respectively. As of December 31, 2018 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $22.2 million and less than $0.1 million , respectively. Except to the extent of the assets of these VIEs that are consolidated, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company. |
Seed Investments | Seed Investments The Company accounts for seed investments through the application of the voting interest model under ASC 810-10-25-1 through 25-14 and consolidates a seed investment when the investment advisor holds a controlling interest, which is, in general, 50% or more of the equity in such investment. For seed investments in which the Company does not hold a controlling interest, the Company accounts for such seed investment under the equity method of accounting, at its ownership percentage of such seed investment’s net asset value. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Management’s estimates are based on historical experience and other factors, including expectations of future events that management believes to be reasonable under the circumstances. These assumptions and estimates also require management to exercise judgment in the process of applying the Company’s accounting policies. Significant estimates and assumptions by management affect the carrying value of investments, performance compensation payable and certain accrued liabilities. Actual results could differ from these estimates, and such differences could be material. |
Non-Controlling Interests in Consolidated Subsidiaries and Redeemable Non-Controlling Interests | Non-Controlling Interests in Consolidated Subsidiaries Non-controlling interests in consolidated subsidiaries represent the component of equity in such consolidated entities held by third-parties. These interests are adjusted for contributions to and distributions from Medley entities and are allocated income or loss from Medley entities based on their ownership percentages. Redeemable Non-Controlling Interests Redeemable non-controlling interests represents interests of certain third parties that are not mandatorily redeemable but redeemable for cash or other assets at a fixed or determinable price or a fixed or determinable date, at the option of the holder or upon the occurrence of an event that is not solely within the control of the Company. These interests are classified in the mezzanine section on the Company's condensed consolidated balance sheets. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include liquid investments in money market funds and demand deposits. The Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits as of March 31, 2019 and December 31, 2018. The Company monitors the credit standing of these financial institutions and has not experienced, and has no expectations of experiencing, any losses with respect to such balances. |
Investments | Investments Investments include equity method investments that are not consolidated but over which the Company exerts significant influence. The Company measures the carrying value of its public non-traded equity method investment at Net Asset Value ("NAV") per share. The Company measures the carrying value of its privately-held equity method investments by recording its share of the underlying income or loss of these entities. Unrealized appreciation (depreciation) resulting from changes in fair value of the equity method investments is reflected as a component of investment income in the consolidated statements of operations along with the income and expense allocations from such investments. The carrying amounts of equity method investments are reflected in Investments, at fair value in the consolidated balance sheets. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value. The Company evaluates its equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. For presentation in its consolidated statements of cash flows, the Company treats distributions received from certain equity method investments using the cumulative earnings approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Investments also include publicly traded common stock. The Company measures the fair value of its publicly traded common stock at the quoted market price on the primary market or exchange on which they trade. Any realized gains (losses) from the sale of investments and unrealized appreciation (depreciation) resulting from changes in fair value are recorded in other income (expenses), net, effective January 1, 2018. Prior to January 1, 2018, the Company recorded changes in the fair value of its available for sale securities in its statements of other comprehensive income with an offset to accumulated other comprehensive loss. As a result of the adoption of this new guidance, on January 1, 2018, the Company reclassed $11.0 million of cumulative unrealized losses, net of income tax benefit, from accumulated other comprehensive loss to members' deficit on the Company's condensed consolidated balance sheet. |
Revenues | Revenues Effective January 1, 2018, the Company recognizes revenue in accordance with ASC 606, Revenues from Contracts with Customers . The Company recognizes revenue under the core principle of depicting the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for such goods or services. To achieve this, the Company applies a five step approach: (1) identify the contract(s) with a customer, (2) identify the performance obligations within the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when, or as, each performance obligation is satisfied. Carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager. Such fees represent a capital allocation to the general partner or investment manager and are accounted for under ASC 323, Investments - Equity Method and Joint Ventures. As such, these types of performance fees are not in the scope of ASC 606. As a result of the adoption of this new revenue guidance, the Company recorded a cumulative effect decrease to members' deficit of $3.6 million , net of benefit from income taxes of $0.1 million , as of January 1, 2018, which relates to (1) certain performance fee revenue that would not have met the “probable that significant reversal will not occur” criteria of $3.0 million and (2) the reversal of reimbursable fund formation costs which were deferred on the Company’s consolidated balance sheet of $0.7 million . Management Fees Medley provides investment management services to both public and private investment vehicles. Management fees include base management fees, other management fees, and Part I incentive fees, as described below. Base management fees are calculated based on either (i) the average or ending gross assets balance for the relevant period, (ii) limited partners’ capital commitments to the funds, (iii) invested capital, (iv) NAV or (v) lower of cost or market value of a fund’s portfolio investments. Depending upon the contracted terms of the investment management agreement, management fees are paid either quarterly in advance or quarterly in arrears, and are recognized as earned over the period the services are provided. Certain management agreements provide for Medley to receive other management fee revenue derived from up front origination fees paid by the funds' and/or separately managed accounts' underlying portfolio companies. These fees are recognized when the Company becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net investment income (excluding gains and losses) above a hurdle rate. As it relates to MCC, these fees are subject to netting against realized and unrealized losses. Part I incentive fees are paid quarterly and are recognized as earned in the period the services are provided. Performance Fees Performance fees are contractual fees which do not represent a capital allocation of income to the general partner or investment manager that are earned based on the performance of certain funds, typically, the Company’s separately managed accounts. Performance fees are earned based on the fund performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Other Revenues and Fees Medley provides administrative services to certain affiliated funds and is reimbursed for direct and allocated expenses incurred in providing such administrative services, as set forth in the respective underlying agreements. These fees are recognized as revenue in the period administrative services are rendered. Medley also acts as the administrative agent on certain deals for which Medley may earn loan administration fees and transaction fees. These fees are recognized as revenue over the period to which the fees directly relate. Investment Income (loss) - Carried Interest Carried interest are performance based fees that represent a capital allocation of income to the general partner or investment manager. Carried interest are allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents and are accounted for under ASC 323, Investments - Equity Method and Joint Ventures. Accordingly, these performance fees are reflected as carried interest within investment income on the Company's consolidated statements of operations and balances due for such fees are included as a part of equity method investments within Investments, at fair value on the Company's consolidated balance sheets. Under ASC 323, the Company records carried interest based upon an assumed liquidation of that fund's net assets as of the reporting date, regardless of whether such amounts have been realized. For any given period, carried interest on the Company's condensed consolidated statements of operations may include reversals of previously recognized carried interest due to a decrease in the value of a particular fund that results in a decrease of cumulative fees earned to date. Since fund return hurdles are cumulative, previously recognized carried interest also may be reversed in a period of appreciation that is lower than the particular fund's hurdle rate. Carried interest received in prior peri ods may be required to be returned by the Company in future periods if the funds’ investment performance declines below certain levels. Each fund is considered separately in this regard and, for a given fund, carried interest can never be negative over the life of a fund. If upon a hypothetical liquidation of a fund’s investments, at their then current fair values, previously recognized and distributed carried interest would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2019 , the Company had not received any carried interest distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of carried interest. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2019 and December 31, 2018, the Company had accrued $7.2 million for clawback obligations that would need to be paid if the funds were liquidated at fair value as of the end of the reporting period. The Company’s actual obligation, however, would not become payable or realized until the end of a fund’s life. During the three months ended March 31, 2019 and 2018, the Company did not record any reversals of previously recognized performance fees. Investment Income (loss) - Other Other investment income is comprised of unrealized appreciation (depreciation) resulting from changes in fair value of the Company's equity method investments in addition to the income and expense allocations from such investments. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation expense relating to equity based awards are measured at fair value as of the grant date, reduced for actual forfeitures in the period they occur, and expensed over the requisite service period on a straight-line basis as a component of compensation and benefits on the Company's consolidated statements of operations. |
Income Taxes | Income Taxes The Company is treated as a partnership for income tax purposes and is therefore not subject to U.S. federal, state and local income taxes since all income, gains and losses are passed through to its members. However, a portion of taxable income from Medley LLC and its subsidiaries are subject to New York City's unincorporated business tax, which is included in the Company's provision for income taxes. The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions and other tax matters as a component of its provision for income taxes. For interim periods, the Company accounts for income taxes based on its estimate of the effective tax rate for the year. Discrete items and changes in its estimate of the annual effective tax rate are recorded in the period they occur. |
Recently Issued Accounting Pronouncements Adopted and Not Yet Adopted | Recently Issued Accounting Pronouncements Adopted as of January 1, 2019 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase the transparency and comparability among organizations as it relates to lease assets and lease liabilities, by requiring lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months, with exceptions. Effective January 1, 2019, the Company adopted this guidance using a modified retrospective approach, which was required for all leases that exist at or commence after the date of the initial application with an option to use certain practical expedients. The Company has elected to use these practical expedients, which allow the Company to treat lease and non-lease components of its leases as a single component, have the ability to use hindsight in determining the lease term and assessing impairment of right-of-use assets, not to reassess lease classification or whether an arrangement is or contains a lease and not to reassess its initial accounting for direct lease costs. The adoption of the new lease standard at January 1, 2019 resulted in the recognition of right-of-use assets and lease liabilities of $8.2 million and $10.2 million , respectively, consisting primarily of operating leases related to the rental of office space. The adoption of this guidance did not have a significant impact on the Company's consolidated statements of operations or cash flows. |
Fair Value Measurements | Fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy: • Level I – Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II – Valuations based on inputs other than quoted prices in active markets included in Level I, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non- active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. • Level III – Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets and liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level III information, assuming no additional corroborating evidence. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Condensed Balance Sheet of STRF | The condensed balance sheet of STRF as of March 31, 2019 and December 31, 2018 is presented in the table below. As of March 31, 2019 December 31, 2018 Assets (in thousands) Cash and cash equivalents $ 173 $ 274 Investments, at fair value 2,210 1,952 Other assets 336 248 Total assets $ 2,719 $ 2,474 Liabilities and Equity Accrued expenses and other liabilities $ 501 $ 330 Equity 2,218 2,144 Total liabilities and equity $ 2,719 $ 2,474 |
REVENUES FROM CONTRACTS WITH _2
REVENUES FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenue by Category | The following table present the Company's revenue from contracts with customers disaggregated by type of customer for the three months ended March 31, 2019. Permanent Long-dated SMAs Other Total (in thousands) Management fees $ 7,529 $ 1,860 $ 1,524 $ — $ 10,913 Other revenues and fees 1,780 — — 661 2,441 Total revenues from contracts with customers $ 9,309 $ 1,860 $ 1,524 $ 661 $ 13,354 The following table present the Company's revenue from contracts with customers disaggregated by type of customer for the three months ended March 31, 2018. Permanent Long-dated SMAs Other Total (in thousands) Management fees $ 8,392 $ 2,061 $ 1,632 $ — $ 12,085 Other revenues and fees 1,845 — — 484 2,329 Total revenues from contracts with customers $ 10,237 $ 2,061 $ 1,632 $ 484 $ 14,414 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Financial Assets | The following tables summarize the fair value hierarchy of the Company's financial assets measured at fair value: As of March 31, 2019 Level I Level II Level III Total Assets (in thousands) Investments of consolidated fund $ 272 $ — $ 1,938 $ 2,210 Investment in shares of MCC 24,124 — — 24,124 Total Assets $ 24,396 $ — $ 1,938 $ 26,334 As of December 31, 2018 Level I Level II Level III Total Assets (in thousands) Investments of consolidated fund $ 258 $ — $ 1,694 $ 1,952 Investment in shares of MCC 20,633 — — 20,633 Total Assets $ 20,891 $ — $ 1,694 $ 22,585 |
Changes in Fair Value of Financial Assets Categorized within Level 3 | The following is a summary of changes in fair value of the Company's financial assets that have been categorized within Level III of the fair value hierarchy: Level III Financial Assets as of March 31, 2019 Balance at December 31, 2018 Purchases Transfers In or (Out) of Level III Unrealized Appreciation/(Depreciation) Sale of Level III Assets Balance at March 31, 2019 (in thousands) Investments of consolidated fund $ 1,694 342 — 53 (151 ) $ 1,938 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Schedule of Investments [Abstract] | |
Composition of Investments | Investments consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Equity method investments, at fair value $ 13,775 $ 13,422 Investment in shares of MCC, at fair value 24,124 20,633 Investment held at cost less impairment 316 418 Investments of consolidated fund 2,210 1,952 Total investments, at fair value $ 40,425 $ 36,425 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Assets | Other assets consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Fixed assets, net of accumulated depreciation and amortization of $3,624 and $3,446, respectively $ 2,963 $ 3,140 Security deposits 1,975 1,975 Administrative fees receivable (Note 13) 1,749 1,645 Deferred tax assets (Note 14) 3,144 3,144 Due from affiliates (Note 13) 2,855 2,215 Prepaid expenses and taxes 381 761 Other assets 927 1,265 Total other assets $ 13,994 $ 14,145 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Lease Cost | The components of lease cost and other information for the three months ended March 31, 2019 are as follows (dollars in thousands): Lease cost Operating lease costs $ 625 Variable lease costs — Sublease income (115 ) Total lease cost $ 510 Other information Weighted-average remaining lease term (in years) 4.5 Weighted-average discount rate 8.2 % |
Future Payments for Operating Leases | Future payments for operating leases as of March 31, 2019 are as follows (in thousands): Remaining 2019 $ 2,042 2020 2,846 2021 2,483 2022 2,441 2023 1,823 Total future lease payments 11,635 Less imputed interest (1,881 ) Operating lease liabilities, as reported $ 9,754 |
SENIOR UNSECURED DEBT (Tables)
SENIOR UNSECURED DEBT (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Unsecured Debt | The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $2,855 and $2,946, respectively $ 50,740 $ 50,649 2024 Notes, net of unamortized premium and debt issuance costs of $1,931 and $2,031 respectively 67,069 66,969 Total senior unsecured debt $ 117,809 $ 117,618 Loans payable consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Non-recourse promissory notes, net of unamortized discount of $0 and $108, respectively $ 10,000 $ 9,892 Total loans payable $ 10,000 $ 9,892 |
DUE TO FORMER MINORITY INTERE_2
DUE TO FORMER MINORITY INTEREST HOLDER (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Former Minority Interest | This balance consists of the following: As of March 31, 2019 December 31, 2018 (in thousands) Due to former minority interest holder, net of unamortized discount of $2,409 and $2,598, respectively $ 9,841 $ 11,402 Total due to former minority interest holder $ 9,841 $ 11,402 |
Schedule of Maturities | As of March 31, 2019 future payments due to former minority interest holder are as follows (in thousands): Remaining in 2019 $ 2,625 2020 3,500 2021 3,500 2022 2,625 Total future payments $ 12,250 |
LOANS PAYABLE (Tables)
LOANS PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $2,855 and $2,946, respectively $ 50,740 $ 50,649 2024 Notes, net of unamortized premium and debt issuance costs of $1,931 and $2,031 respectively 67,069 66,969 Total senior unsecured debt $ 117,809 $ 117,618 Loans payable consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Non-recourse promissory notes, net of unamortized discount of $0 and $108, respectively $ 10,000 $ 9,892 Total loans payable $ 10,000 $ 9,892 |
ACCOUNTS PAYABLE, ACCRUED EXP_2
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Components of Accounts Payable, Accrued Expenses, and Other Liabilities | Accounts payable, accrued expenses and other liabilities consist of the following: As of March 31, 2019 December 31, 2018 (in thousands) Accrued compensation and benefits $ 4,256 $ 7,438 Due to affiliates (Note 13) 7,191 7,635 Revenue share payable (Note 12) 3,020 2,976 Accrued interest 1,294 1,294 Professional fees 1,720 2,594 Deferred rent — 2,035 Deferred tax liabilities (Note 14) 62 60 Accounts payable and other accrued expenses 2,071 2,412 Total accounts payable, accrued expenses and other liabilities $ 19,614 $ 26,444 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Total revenues recorded under these agreements for the three months ended March 31, 2019 and 2018 are reflected in the table below: For the Three Months Ended 2019 2018 (in thousands) MCC Admin Agreement $ 881 $ 901 SIC Admin Agreement 663 699 Funds Admin Agreements 236 245 Total administrative fees from related parties $ 1,780 $ 1,845 Amounts due from related parties under these agreements are reflected in the table below: As of March 31, 2019 December 31, 2018 (in thousands) Amounts due from MCC under the MCC Admin Agreement $ 668 $ 804 Amounts due from SIC under the SIC Admin Agreement 622 619 Amounts due from entities under the Funds Admin Agreements 459 222 Total administrative fees receivable $ 1,749 $ 1,645 |
REDEEMABLE NON-CONTROLLING IN_2
REDEEMABLE NON-CONTROLLING INTERESTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Schedule of Redeemable Noncontrolling Interest | Changes in redeemable non-controlling interests during the three months ended March 31, 2019 and 2018 are reflected in the table below: For the Three Months Ended March 31, 2019 2018 (in thousands) Beginning balance $ 23,186 $ 53,741 Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries 3,950 (4,516 ) Distributions (799 ) (2,438 ) Ending balance $ 26,337 $ 46,787 |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Initial Public Offering) (Details) | 3 Months Ended |
Mar. 31, 2019segment | |
Subsidiary, Sale of Stock [Line Items] | |
Number of reportable segments | 1 |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION (Medley LLC Reorganization) (Details) | Sep. 29, 2014shares | Mar. 31, 2019 |
Class of Stock [Line Items] | ||
Transfer of units to common stock, prior to fourth anniversary | 33.33% | |
Transfer of units to common stock, prior to fifth anniversary | 66.66% | |
Common Class A [Member] | ||
Class of Stock [Line Items] | ||
Common stock exchange ratio | 1 | |
Medley LLC [Member] | ||
Class of Stock [Line Items] | ||
Conversion of pre-IPO interests to LLC Units (in shares) | 23,333,333 |
ORGANIZATION AND BASIS OF PRE_4
ORGANIZATION AND BASIS OF PRESENTATION (Agreement and Plan of Merger) (Details) $ / shares in Units, $ in Millions | Aug. 09, 2018USD ($)$ / shares | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) |
Business Acquisition [Line Items] | |||
Transaction expenses | $ | $ 0.3 | $ 0.9 | |
Sierra [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration (USD per share) | $ 3.44 | ||
Cash Acquired from Acquisition | $ | $ 17 | ||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ | $ 30 | ||
Sierra [Member] | MCC Advisors LLC [Member] | |||
Business Acquisition [Line Items] | |||
Exchange ratio | 0.805 | ||
Sierra [Member] | Medley LLC [Member] | |||
Business Acquisition [Line Items] | |||
Exchange ratio | 0.3836 | ||
Sierra [Member] | Common Class A [Member] | |||
Business Acquisition [Line Items] | |||
Exchange ratio | 0.3836 | ||
Special cash dividends (USD per share) | $ 0.65 | ||
Sierra [Member] | Common Class A [Member] | Medley LLC [Member] | |||
Business Acquisition [Line Items] | |||
Cash consideration (USD per share) | 3.44 | ||
Special cash dividends (USD per share) | $ 0.35 |
ORGANIZATION AND BASIS OF PRE_5
ORGANIZATION AND BASIS OF PRESENTATION (Registered Public Offering of Medley Notes) (Details) - Senior Notes [Member] - USD ($) | Feb. 22, 2017 | Jan. 18, 2017 | Oct. 18, 2016 | Aug. 09, 2016 | Mar. 31, 2019 |
Senior Notes Due 2026 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 28,600,000 | $ 25,000,000 | $ 53,600,000 | ||
Debt Instrument Discounted Offering Price | $ 24.45 | ||||
Debt Instrument Offering Price | $ 25 | ||||
Stated interest rate | 6.875% | 6.875% | |||
Senior Notes Due 2024 [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 34,500,000 | $ 34,500,000 | $ 69,000,000 | ||
Debt Instrument Discounted Offering Price | $ 25.25 | ||||
Debt Instrument Offering Price | $ 25 | ||||
Stated interest rate | 7.25% | 7.25% | |||
On or after August 15, 2019 [Member] | Senior Notes Due 2026 [Member] | |||||
Debt Instrument [Line Items] | |||||
Redemption percentage | 100.00% | 100.00% | 100.00% | ||
On or after January 30, 2020 [Member] | Senior Notes Due 2024 [Member] | |||||
Debt Instrument [Line Items] | |||||
Redemption percentage | 100.00% | 100.00% | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Consolidated and Non-Consolidated Variable Interest Entities Narrative) (Details) $ in Millions | Mar. 31, 2019USD ($)subsidiary | Dec. 31, 2018USD ($) |
Variable Interest Entity [Line Items] | ||
Total assets of consolidated variable interest entity | $ 25.1 | $ 22.2 |
Total liabilities of consolidated variable interest entity, less than | 0.1 | 0.1 |
Fair value of investments in non-consolidated VIEs | 4.1 | 4.2 |
Receivables included as a component of other assets and clawback obligation | 1.7 | 1.8 |
Accrued clawback obligations | 7.2 | $ 7.2 |
Maximum loss exposure | $ 5.8 | |
Medley LLC [Member] | ||
Variable Interest Entity [Line Items] | ||
Number of majority owned subsidiaries | subsidiary | 3 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Seed Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 12,289 | $ 16,970 |
Investments, at fair value | 40,425 | 36,425 |
Other assets | 13,994 | 14,145 |
Total Assets | 84,343 | 77,814 |
Liabilities, Redeemable Non-controlling Interests and Members' Deficit | ||
Accrued expenses and other liabilities | 19,614 | 26,444 |
Total Liabilities, Redeemable Non-controlling Interests and Members' Deficit | 84,343 | 77,814 |
STRF [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Amount funded | 2,100 | |
Assets | ||
Cash and cash equivalents | 173 | 274 |
Investments, at fair value | 2,210 | 1,952 |
Other assets | 336 | 248 |
Total Assets | 2,719 | 2,474 |
Liabilities, Redeemable Non-controlling Interests and Members' Deficit | ||
Accrued expenses and other liabilities | 501 | 330 |
Equity | 2,218 | 2,144 |
Total Liabilities, Redeemable Non-controlling Interests and Members' Deficit | 2,719 | 2,474 |
Other assets eliminated | 200 | 200 |
Accrued expense and other liabilities eliminated (less than) | 200 | 100 |
Equity eliminated | $ 2,200 | $ 2,100 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Accrued clawback obligations | $ 7,200 | $ 7,200 | |||
Right-of-use assets under operating leases | 7,830 | ||||
Provision for income taxes | 9 | $ 130 | |||
Performance fees | 13,354 | $ 14,414 | |||
Operating lease liabilities | 9,754 | ||||
ASC 606 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Decrease in equity | $ (3,600) | ||||
Provision for income taxes | (100) | ||||
Reimbursable Fund | 700 | ||||
ASU 2016-01 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Decrease in equity | 11,000 | ||||
ASU 2016-02 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Right-of-use assets under operating leases | 8,233 | $ 8,200 | |||
Operating lease liabilities | $ 10,229 | $ 10,200 | |||
Performance Fee [Member] | ASC 606 [Member] | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Performance fees | $ 3,000 |
REVENUES FROM CONTRACTS WITH _3
REVENUES FROM CONTRACTS WITH CUSTOMERS (Revenue by Category) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | $ 13,354 | $ 14,414 |
Management Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 10,913 | 12,085 |
Other Revenues and Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 2,441 | 2,329 |
Permanent Capital Vehicles [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 9,309 | 10,237 |
Permanent Capital Vehicles [Member] | Management Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 7,529 | 8,392 |
Permanent Capital Vehicles [Member] | Other Revenues and Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 1,780 | 1,845 |
Long-dated Private Funds [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 1,860 | 2,061 |
Long-dated Private Funds [Member] | Management Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 1,860 | 2,061 |
Long-dated Private Funds [Member] | Other Revenues and Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 0 | 0 |
SMAs [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 1,524 | 1,632 |
SMAs [Member] | Management Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 1,524 | 1,632 |
SMAs [Member] | Other Revenues and Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 0 | 0 |
Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 661 | 484 |
Other [Member] | Management Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | 0 | 0 |
Other [Member] | Other Revenues and Fees [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Total revenues from contracts with customers | $ 661 | $ 484 |
REVENUES FROM CONTRACTS WITH _4
REVENUES FROM CONTRACTS WITH CUSTOMERS (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Contract liabilities | $ 0.3 | $ 0.3 |
Deferred revenue | 0.2 | 0.2 |
Cash deposits | $ 0.1 | $ 0.2 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | $ 40,425 | $ 36,425 |
Equity method investments, at fair value | 13,775 | 13,422 |
Level III [Member] | Consolidated Subsidiaries [Member] | Investments [Member] | ||
Level III Financial Assets as of December 31, 2017 | ||
Beginning balance | 1,694 | |
Purchases | 342 | |
Transfers In or (Out) of Level III | 0 | |
Unrealized Appreciation/(Depreciation) | 53 | |
Sale of Level III Assets | (151) | |
Ending balance | 1,938 | |
Reported Value Measurement [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity method investments, at fair value | 500 | 400 |
Reported Value Measurement [Member] | Senior Notes [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 1,700 | 1,600 |
Reported Value Measurement [Member] | Level I [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity method investments, at fair value | 300 | 300 |
Reported Value Measurement [Member] | Level III [Member] | Senior Notes [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 1,900 | 1,700 |
Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 24,124 | 20,633 |
Total Assets | 26,334 | 22,585 |
Nonrecurring [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 2,210 | 1,952 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level I [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 24,124 | 20,633 |
Total Assets | 24,396 | 20,891 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level I [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 272 | 258 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 0 | 0 |
Total Assets | 0 | 0 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level II [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 0 | 0 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 0 | 0 |
Total Assets | 1,938 | 1,694 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level III [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | $ 1,938 | $ 1,694 |
INVESTMENTS (Composition of Inv
INVESTMENTS (Composition of Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Investment [Line Items] | ||
Equity method investments, at fair value | $ 13,775 | $ 13,422 |
Investment held at cost less impairment | 316 | 418 |
Investments of consolidated fund | 2,210 | 1,952 |
Total investments, at fair value | 40,425 | 36,425 |
MCC Member] | ||
Investment [Line Items] | ||
Investment in shares of MCC, at fair value | $ 24,124 | $ 20,633 |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Schedule of Investments [Line Items] | |||
Loss from other than temporary impairment equity investments | $ 0 | $ 0 | |
Equity method investments, at fair value | 13,775,000 | $ 13,422,000 | |
Performance fees | 700,000 | 400,000 | |
Consolidated Subsidiaries [Member] | Reported Value Measurement [Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | 500,000 | 400,000 | |
Consolidated Subsidiaries [Member] | Senior Notes [Member] | Reported Value Measurement [Member] | |||
Schedule of Investments [Line Items] | |||
Investments of consolidated fund | 1,700,000 | 1,600,000 | |
Sierra Income Corporation [Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | $ 7,500,000 | $ 7,400,000 | |
MCC Member] | |||
Schedule of Investments [Line Items] | |||
Shares in MCC (in shares) | 7,756,938 | 7,756,938 | |
Cumulative unrealized gains (losses) | $ 3,500,000 | $ (9,600,000) | |
CK Pearl Fund [Member] | |||
Schedule of Investments [Line Items] | |||
Investment held at cost less impairment | $ 300,000 | $ 400,000 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fixed assets, net of accumulated depreciation and amortization of $3,624 and $3,446, respectively | $ 2,963 | $ 3,140 |
Security deposits | 1,975 | 1,975 |
Administrative fees receivable (Note 13) | 1,749 | 1,645 |
Deferred tax asset | 3,144 | 3,144 |
Due from affiliates (Note 13) | 2,855 | 2,215 |
Prepaid expenses and taxes | 381 | 761 |
Other assets | 927 | 1,265 |
Total other assets | 13,994 | 14,145 |
Accumulated depreciation | $ 3,624 | $ 3,446 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2019 | Jan. 01, 2019 | |
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets under operating leases | $ 7,830 | ||
Operating lease liabilities | 9,754 | ||
Rent expense | $ 600 | ||
ASU 2016-02 [Member] | |||
Lessee, Lease, Description [Line Items] | |||
Right-of-use assets under operating leases | 8,233 | $ 8,200 | |
Operating lease liabilities | $ 10,229 | $ 10,200 |
LEASES (Lease Cost) (Details)
LEASES (Lease Cost) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease costs | $ 625 |
Variable lease costs | 0 |
Sublease income | (115) |
Total lease cost | $ 510 |
Weighted-average remaining lease term (in years) | 4 years 6 months |
Weighted-average discount rate | 8.20% |
LEASES (Future Payments for Ope
LEASES (Future Payments for Operating Leases) (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Leases [Abstract] | |
Remaining 2019 | $ 2,042 |
2020 | 2,846 |
2021 | 2,483 |
2022 | 2,441 |
2023 | 1,823 |
Total future lease payments | 11,635 |
Less imputed interest | (1,881) |
Operating lease liabilities, as reported | $ 9,754 |
SENIOR UNSECURED DEBT (Schedule
SENIOR UNSECURED DEBT (Schedule of Senior Unsecured Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Feb. 22, 2017 | Oct. 18, 2016 |
Debt Instrument [Line Items] | ||||
Senior unsecured debt, net | $ 117,809 | $ 117,618 | ||
Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt, net | 117,809 | 117,618 | ||
Senior Notes [Member] | Senior Notes Due 2026 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt, net | 50,740 | 50,649 | ||
Debt instrument, unamortized discount (premium) and debt issuance costs | 2,855 | 2,946 | $ 3,800 | |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt, net | 67,069 | 66,969 | ||
Debt instrument, unamortized discount (premium) and debt issuance costs | $ 1,931 | $ 2,031 | $ 2,800 |
SENIOR UNSECURED DEBT (Narrativ
SENIOR UNSECURED DEBT (Narrative) (Details) - Senior Notes [Member] - USD ($) | Feb. 22, 2017 | Jan. 18, 2017 | Oct. 18, 2016 | Aug. 09, 2016 | Mar. 31, 2019 | Dec. 31, 2018 |
Senior Notes Due 2026 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 28,600,000 | $ 25,000,000 | $ 53,600,000 | |||
Stated interest rate | 6.875% | 6.875% | ||||
Discount (premium) and direct issuance costs | $ 3,800,000 | 2,855,000 | $ 2,946,000 | |||
Notes payable, fair value disclosure | 37,700,000 | |||||
Interest expense, including amortization of discount and debt issuance costs | $ 1,000,000 | |||||
Senior Notes Due 2026 [Member] | On or after August 15, 2019 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Redemption percentage | 100.00% | 100.00% | 100.00% | |||
Senior Notes Due 2024 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 34,500,000 | $ 34,500,000 | $ 69,000,000 | |||
Stated interest rate | 7.25% | 7.25% | ||||
Discount (premium) and direct issuance costs | $ 2,800,000 | 1,931,000 | $ 2,031,000 | |||
Notes payable, fair value disclosure | 52,000,000 | |||||
Interest expense, including amortization of discount and debt issuance costs | $ 1,400,000 | |||||
Senior Notes Due 2024 [Member] | On or after January 30, 2020 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Redemption percentage | 100.00% | 100.00% | 100.00% |
DUE TO FORMER MINORITY INTERE_3
DUE TO FORMER MINORITY INTEREST HOLDER (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($)installment | |
Debt Instrument [Line Items] | ||
Due to former minority interest holder, net | $ 9,841 | $ 11,402 |
Future payments: | ||
Total future payments | 10,000 | 9,892 |
Due to Former Minority Interest Holder [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized discount | 2,409 | 2,598 |
Debt consideration | $ 14,000 | |
Number of installments | installment | 16 | |
Future payments: | ||
Remaining in 2019 | 2,625 | |
2020 | 3,500 | |
2021 | 3,500 | |
2022 | 2,625 | |
Total future payments | $ 12,250 | |
Debt maturity term | 4 years | |
Debt discount | $ 200 |
LOANS PAYABLE (Schedule of Debt
LOANS PAYABLE (Schedule of Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 10,000 | $ 9,892 |
Nonrecourse Promissory Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 10,000 | 9,892 |
Unamortized discount | $ 0 | $ 108 |
LOANS PAYABLE (Narrative) (Deta
LOANS PAYABLE (Narrative) (Details) | Jan. 01, 2019USD ($) | Aug. 19, 2014USD ($) | Apr. 30, 2012USD ($)shares | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Jan. 31, 2019USD ($) |
Debt Instrument [Line Items] | ||||||
Amortization of debt issuance costs | $ 234,000 | $ 185,000 | ||||
Future principal payments due in 2019 | 10,000,000 | |||||
Nonrecourse Promissory Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 | |||||
Interest expense | 300,000 | |||||
Number of shares of common stock purchased (in shares) | shares | 1,108,033 | |||||
Unamortized debt issuance expense | $ 3,800,000 | |||||
Notes payable, fair value disclosure | 10,000,000 | |||||
New Promissory Note [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 6,500,000 | |||||
Debt maturity term | 6 months | |||||
Repayments of Debt | $ 6,500,000 | |||||
New Promissory Note [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 7.00% | |||||
Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 15,000,000 | |||||
Amount drawn under credit facility | 0 | |||||
Net Leverage Ratio | 5 | |||||
Total Leverage Ratio | 7 | |||||
Core EBITDA | $ 15,000,000 | |||||
Amortization of debt issuance costs | 100,000 | $ 100,000 | ||||
Revolving Credit Facility [Member] | Alternate Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 0.25% | |||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 2.50% | |||||
Revolving Credit Facility [Member] | Amended Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) | Jan. 01, 2019USD ($) | Aug. 09, 2018USD ($) | May 29, 2015USD ($) | Feb. 28, 2015 | Apr. 30, 2012USD ($) | Mar. 31, 2019USD ($)installment | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | Jan. 31, 2019USD ($) |
Loss Contingencies [Line Items] | |||||||||
Loss Contingency, Estimate of Possible Loss | $ 6,500,000 | ||||||||
Rent expense | $ 600,000 | ||||||||
Severance costs | 1,400,000 | ||||||||
Compensation | 3,000,000 | ||||||||
Pending Merger, Employment Agreements, Target Bonuses | 12,600,000 | $ 12,600,000 | |||||||
Pending Merger, Employment Agreements, Target Cash Bonuses | $ 4,700,000 | 4,700,000 | |||||||
Share-based Compensation Arrangement By Share-based Payment Award, Number Of Equal Installments | installment | 3 | ||||||||
American Web Loan [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Repayment of loan | 1 year 10 months | ||||||||
Nonrecourse Promissory Notes [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Proceeds from issuance of debt | $ 10,000,000 | ||||||||
Present value of future cash flows expected to be paid | 4,400,000 | ||||||||
Contractual obligation | $ 3,000,000 | ||||||||
Debt instrument, face amount | $ 10,000,000 | ||||||||
New Promissory Note [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Repayments of Debt | $ 6,500,000 | ||||||||
Debt maturity term | 6 months | ||||||||
Debt instrument, face amount | $ 6,500,000 | ||||||||
Consolidated Funds [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Unfunded capital commitments | $ 300,000 | 300,000 | |||||||
MCC Member] | Moshe Barkat and MVF Holdings [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Debt default | $ 65,000,000 | ||||||||
Damages sought | 100,000,000 | ||||||||
Settlement amount | $ 1,500,000 | ||||||||
Minimum [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Salaries And Wages, Term Of Employee Agreements | 24 months | ||||||||
Maximum [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Salaries And Wages, Term Of Employee Agreements | 30 months | ||||||||
Management [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Accrued Bonuses | $ 700,000 | ||||||||
Restricted Stock Units (RSUs) [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Pending Merger, Employment Agreements, Target Bonuses | $ 7,900,000 | $ 7,900,000 | |||||||
Pending Merger, Employment Agreements, Vesting Period | 3 years | 3 years | |||||||
Sierra [Member] | |||||||||
Loss Contingencies [Line Items] | |||||||||
Cash Acquired from Acquisition | $ 17,000,000 | ||||||||
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | $ 30,000,000 |
ACCOUNTS PAYABLE, ACCRUED EXP_3
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 4,256 | $ 7,438 |
Due to affiliates (Note 13) | 7,191 | 7,635 |
Revenue share payable (Note 12) | 3,020 | 2,976 |
Accrued interest | 1,294 | 1,294 |
Professional fees | 1,720 | 2,594 |
Deferred rent | 0 | 2,035 |
Deferred tax liabilities (Note 14) | 62 | 60 |
Accounts payable and other accrued expenses | 2,071 | 2,412 |
Total accounts payable, accrued expenses and other liabilities | $ 19,614 | $ 26,444 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | |||
Total revenues from contracts with customers | $ 13,354 | $ 14,414 | |
Total administrative fees receivable | 1,749 | $ 1,645 | |
Reimbursable Expenses | 900 | 700 | |
Due from Related Parties | $ 1,000 | 800 | |
Common Class A [Member] | |||
Related Party Transaction [Line Items] | |||
Common stock exchange ratio | 1 | ||
Affiliated Entity [Member] | |||
Related Party Transaction [Line Items] | |||
Total revenues from contracts with customers | $ 1,780 | 1,845 | |
MCC Advisors LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Management fees waived | 400 | ||
MCC Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees receivable | 668 | 804 | |
MCC Admin Agreement [Member] | Affiliated Entity [Member] | |||
Related Party Transaction [Line Items] | |||
Total revenues from contracts with customers | 881 | 901 | |
SIC Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees receivable | 622 | 619 | |
SIC Admin Agreement [Member] | Affiliated Entity [Member] | |||
Related Party Transaction [Line Items] | |||
Total revenues from contracts with customers | 663 | 699 | |
Funds Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees receivable | 459 | $ 222 | |
Funds Admin Agreement [Member] | Affiliated Entity [Member] | |||
Related Party Transaction [Line Items] | |||
Total revenues from contracts with customers | $ 236 | $ 245 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax asset | $ 3,144,000 | $ 3,144,000 | |
Deferred tax liabilities, less than | $ 100,000 | ||
Effective tax rate | (0.20%) | 1.40% | |
Effective Income Tax Rate Reconciliation, Noncontrolling Interest Income (Loss), Amount | $ 4,000,000 | $ (5,200,000) | |
Uncertain tax positions | $ 0 | $ 0 |
COMPENSATION EXPENSE (Performan
COMPENSATION EXPENSE (Performance Fee Compensation Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Chief Executive Officer [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Maximum aggregate compensation | $ 1.3 | $ 1.3 |
COMPENSATION EXPENSE (Retiremen
COMPENSATION EXPENSE (Retirement Plan Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Dec. 31, 2018 | |
Retirement Benefits [Abstract] | ||
Percentage vested from participants eligibility date | 100.00% | |
Contributions as a percent of employee eligible wages | 3.00% | |
Accrued contributions | $ 0.3 | |
Retirement plan liability | $ 0.8 | $ 0.8 |
COMPENSATION EXPENSE (Stock-Bas
COMPENSATION EXPENSE (Stock-Based Compensation Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares authorized for grant (in shares) | 4,500,000 | |
Incentive Plan shares available for grant (in shares) | 1,000,000 | |
Stock-based compensation | $ 1,786 | $ 1,046 |
REDEEMABLE NON-CONTROLLING IN_3
REDEEMABLE NON-CONTROLLING INTERESTS (Schedule of Redeemable Non-controlling Interest) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Beginning balance | $ 23,186 | |
Ending balance | 26,337 | |
Nonredeemable Noncontrolling Interest [Member] | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Beginning balance | 23,186 | $ 53,741 |
Net income (loss) attributable to redeemable non-controlling interests in consolidated subsidiaries | 3,950 | (4,516) |
Distributions | (799) | (2,438) |
Ending balance | 26,337 | $ 46,787 |
Nonredeemable Noncontrolling Interest [Member] | Accounts Payable, Accrued Expenses and Other Liabilities [Member] | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Fair value adjustment to redeemable non-controlling interest in SIC Advisors LLC | (1,000) | |
Fair value adjustment | $ 1,000 |
REDEEMABLE NON-CONTROLLING IN_4
REDEEMABLE NON-CONTROLLING INTERESTS (Narrative) (Details) - USD ($) | Jun. 06, 2017 | Jun. 03, 2016 | Mar. 31, 2019 | Mar. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Jul. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2016 |
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Distributions to members and redeemable non-controlling interests | $ 799,000 | $ 8,549,000 | |||||||
Balance of redeemable non-controlling interest | (26,337,000) | $ (23,186,000) | |||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Distributions to members and redeemable non-controlling interests | 800,000 | 1,000,000 | |||||||
Investments and contributions | $ 13,800,000 | $ 10,000,000 | |||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | Minimum [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Investment period | 7 years | ||||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | Maximum [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Investment period | 10 years | ||||||||
Medley and ''Investors'' [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Investments and contributions | $ 50,000,000 | ||||||||
Contributions to the joint venture | 53,800,000 | ||||||||
Medley and ''Investors'' [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | MCC Advisors LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Purchases of available for sale securities | $ 51,800,000 | ||||||||
Investors [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Percent of preferred distributions given to Investors | 8.00% | ||||||||
Investors [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Investments and contributions | $ 40,000,000 | ||||||||
Percent of Joint Venture profits given to Investors | 15.00% | ||||||||
Period before Investors can redeem their interests | 10 years | ||||||||
STRF [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Net income allocated to non-controlling interest | 100,000 | ||||||||
Balance of redeemable non-controlling interest | (700,000) | ||||||||
Seed investment | 2,100,000 | ||||||||
STRF [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Seed investment | 2,000,000 | ||||||||
Nonredeemable Noncontrolling Interest [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Balance of redeemable non-controlling interest | (26,337,000) | (46,787,000) | $ (23,186,000) | $ (53,741,000) | |||||
Nonredeemable Noncontrolling Interest [Member] | SIC Advisors LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Fair value of non-controlling interest | $ 12,300,000 | $ 12,200,000 | |||||||
Net income allocated to non-controlling interest | 800,000 | ||||||||
Distributions to members and redeemable non-controlling interests | 1,400,000 | ||||||||
Non-controlling Interests [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Net income allocated to non-controlling interest | 4,000,000 | (5,200,000) | |||||||
Non-controlling Interests [Member] | Investors [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Balance of redeemable non-controlling interest | (27,100,000) | $ (23,900,000) | |||||||
Accounts Payable, Accrued Expenses and Other Liabilities [Member] | Nonredeemable Noncontrolling Interest [Member] | |||||||||
Redeemable Noncontrolling Interest [Line Items] | |||||||||
Fair value adjustment to redeemable non-controlling interest in SIC Advisors LLC (Note 15) | $ 1,000,000 |
Uncategorized Items - mdlq-2019
Label | Element | Value |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (3,599,000) |
Accounting Standards Update 2014-09 [Member] | Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (3,599,000) |
Accounting Standards Update 2016-01 And 2018-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 0 |
Accounting Standards Update 2016-01 And 2018-02 [Member] | AOCI Attributable to Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 10,968,000 |
Accounting Standards Update 2016-01 And 2018-02 [Member] | Noncontrolling Interest [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (10,968,000) |