Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | 8-May-15 | |
Document Information [Line Items] | ||
Entity Registrant Name | Fifth Street Asset Management Inc. | |
Entity Central Index Key | 1611988 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 6,000,033 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 42,856,854 |
Consolidated_Statements_of_Fin
Consolidated Statements of Financial Condition (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $1,300,364 | $3,238,008 |
Prepaid expenses | 856,405 | 1,150,013 |
Investments in equity method investees | 112,635 | 4,115,429 |
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | 0 |
Beneficial interest in CLO: available-for-sale | 3,443,940 | 0 |
Due from affiliates | 2,367,700 | 3,799,542 |
Fixed assets, net | 9,977,576 | 10,274,263 |
Deferred tax assets | 57,972,039 | 57,972,039 |
Deferred financing costs | 2,306,931 | 2,432,764 |
Other assets | 4,137,943 | 4,197,358 |
Total assets | 106,953,005 | 114,147,838 |
Liabilities | ||
Accounts payable and accrued expenses | 2,318,452 | 3,045,651 |
Accrued compensation and benefits | 3,241,602 | 11,095,548 |
Income taxes payable | 1,033,118 | 361,052 |
Loans payable | 4,050,351 | 4,000,000 |
Credit facility payable | 15,000,000 | 12,000,000 |
Dividend payable | 2,075,259 | 0 |
Deferred rent liability | 3,217,417 | 3,261,434 |
Total liabilities | 87,424,352 | 90,263,503 |
Commitments and contingencies | ||
Equity | ||
Preferred stock, $0.01 par value; 5,000,000 shares authorized; none issued and outstanding as of March 31, 2015 and December 31, 2014 | 0 | 0 |
Additional paid-in capital | 6,454,985 | 4,975,073 |
Retained earnings | 523,066 | 1,288,995 |
Total stockholders' equity, Fifth Street Asset Management Inc. | 7,466,620 | 6,752,637 |
Non-controlling interests in Fifth Street Holdings L.P. | 12,062,033 | 17,131,698 |
Total equity | 19,528,653 | 23,884,335 |
Total liabilities and equity | 106,953,005 | 114,147,838 |
Principal Owner [Member] | ||
Liabilities | ||
Due to related party | 9,046,929 | 9,063,792 |
Affiliated Entity [Member] | ||
Liabilities | ||
Due to related party | 67,979 | 62,781 |
Recipients of Tax Receivable Agreements [Member] | ||
Liabilities | ||
Due to related party | 47,373,245 | 47,373,245 |
Common Class A [Member] | ||
Equity | ||
Common stock | 60,000 | 60,000 |
Common Class B [Member] | ||
Equity | ||
Common stock | 428,569 | 428,569 |
Management Fees Receivable [Member] | ||
Assets | ||
Accounts receivable, related parties | 23,344,726 | 26,861,787 |
Performance Fees Receivable [Member] | ||
Assets | ||
Accounts receivable, related parties | $89,602 | $106,635 |
Consolidated_Statements_of_Fin1
Consolidated Statements of Financial Condition (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Preferred stock, par value (dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Class A [Member] | ||
Common stock par value (dollars per share) | $0.01 | $0.01 |
Common stock authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock issued (in shares) | 6,000,033 | 6,000,033 |
Common shares outstanding (shares) | 6,000,033 | 6,000,033 |
Common Class B [Member] | ||
Common stock par value (dollars per share) | $0.01 | $0.01 |
Common stock authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock issued (in shares) | 42,856,854 | 42,856,854 |
Common shares outstanding (shares) | 42,856,854 | 42,856,854 |
Management Fees Receivable [Member] | ||
Part I fees | $8,501,254 | $11,307,080 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Revenues | ||
Management fees (includes Part I Fees of $8,501,254 and $8,780,508 for the three months ended March 31, 2015 and 2014, respectively) | $23,579,398 | $22,702,726 |
Performance fees | 89,602 | 0 |
Other fees | 1,201,124 | 1,064,639 |
Total revenues | 24,870,124 | 23,767,365 |
Expenses | ||
Compensation and benefits | 9,307,686 | 7,375,578 |
Fund offering and start-up expenses | 0 | 145,848 |
General, administrative and other expenses | 2,801,309 | 1,616,176 |
Depreciation and amortization | 402,706 | 126,674 |
Total expenses | 12,511,701 | 9,264,276 |
Other income (expense) | ||
Interest income | 12,108 | 4,638 |
Interest expense | -371,181 | -24,657 |
Income (loss) from equity method investments | -9,952 | 5,444 |
Other income, net | 61,000 | 0 |
Total other income (expense), net | -308,025 | -14,575 |
Income before provision for income taxes | 12,050,398 | 14,488,514 |
Provision for income taxes | 1,222,066 | 0 |
Net income | 10,828,332 | 14,488,514 |
Net income attributable to non-controlling interests in Fifth Street Holdings L.P. | -9,519,002 | 0 |
Net income attributable to Fifth Street Asset Management Inc. | 1,309,330 | 0 |
Common Class A [Member] | ||
Other income (expense) | ||
Net income per share attributable to Fifth Street Asset Management Inc. Class A common stock - Basic and Diluted (in dollars per share) | $0.22 | |
Weighted average shares of Class A common stock outstanding - Basic | 6,000,033 | |
Weighted average shares of Class A common stock outstanding - Diluted | 6,042,777 | |
Predecessor [Member] | ||
Other income (expense) | ||
Net income | $0 | $14,488,514 |
Consolidated_Statements_of_Inc1
Consolidated Statements of Income (Parenthetical) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Statement [Abstract] | ||
Part I fees | $8,501,254 | $8,780,508 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Equity (USD $) | Total | Common Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Non-Controlling Interests in Fifth Street Holdings L.P. [Member] |
Common Class A [Member] | Common Class B [Member] | |||||
Beginning balance at Dec. 31, 2014 | $23,884,335 | $60,000 | $428,569 | $4,975,073 | $1,288,995 | $17,131,698 |
Beginning balance, shares at Dec. 31, 2014 | 6,000,033 | 42,856,854 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Capital contributions | 20,000 | 20,000 | ||||
Distributions to members | -14,608,667 | -14,608,667 | ||||
Accrued dividends - $0.30 per Class A common share | -1,800,010 | -1,800,010 | ||||
Accrued dividends on unvested restricted stock units | -275,249 | -275,249 | ||||
Amortization of equity-based compensation | 1,479,912 | 1,479,912 | ||||
Net income | 10,828,332 | 1,309,330 | 9,519,002 | |||
Ending balance at Mar. 31, 2015 | $19,528,653 | $60,000 | $428,569 | $6,454,985 | $523,066 | $12,062,033 |
Ending balance, shares at Mar. 31, 2015 | 6,000,033 | 42,856,854 |
Consolidated_Statements_of_Cha1
Consolidated Statements of Changes in Equity (Parenthetical) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Statement of Stockholders' Equity [Abstract] | |
Dividend declared (in dollars per share) | $0.30 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities | ||
Net income | $10,828,332 | $14,488,514 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 331,932 | 58,406 |
Amortization of fractional interests in aircrafts | 70,774 | 68,268 |
Amortization of deferred financing costs | 125,833 | 0 |
Amortization of equity-based compensation | 1,485,110 | 518,712 |
Income from equity method investments | 9,952 | -5,444 |
Fair value adjustment b due to former member | 0 | 161,217 |
Deferred rent | -44,017 | 466,043 |
Changes in operating assets and liabilities: | ||
Prepaid expenses | 293,608 | -445,278 |
Due from affiliates | 1,431,842 | 615,333 |
Other assets | -11,359 | 68,268 |
Accounts payable and accrued expenses | -727,199 | 1,252,334 |
Accrued compensation and benefits | -7,853,946 | 2,634,427 |
Income taxes payable | 672,066 | 0 |
Net cash provided by operating activities | 10,023,524 | 18,296,762 |
Cash flows from investing activities | ||
Purchases of fixed assets | -35,245 | -4,515,121 |
Purchases of equity method investments | 0 | -1,631,654 |
Purchases of beneficial interest in CLO | -612,889 | 0 |
Distributions received from equity method investments | 225,282 | 0 |
Net cash used in investing activities | -422,852 | -6,146,775 |
Cash flows from financing activities | ||
Borrowings under credit facility | 9,000,000 | 0 |
Repayments under credit facility | -6,000,000 | 0 |
Proceeds from issuance of loans payable | 50,351 | 0 |
Distributions to members | -14,608,667 | -8,742,986 |
Net cash used in financing activities | -11,538,316 | -7,330,452 |
Net increase (decrease) in cash and cash equivalents | -1,937,644 | 4,819,535 |
Cash and cash equivalents, beginning of period | 3,238,008 | 4,015,728 |
Cash and cash equivalents, end of period | 1,300,364 | 8,835,263 |
Supplemental disclosures of cash flow information: | ||
Cash paid during the period for interest | 210,390 | 24,657 |
Cash paid during the period for income taxes | 550,000 | 0 |
Non-cash investing activities: | ||
Non-cash distributions received from equity method investments | 3,874,195 | 0 |
Non-cash purchases of subordinated debt interest in CLO | 2,831,051 | 0 |
Non-cash purchases of beneficial interest in CLO | 1,043,144 | 0 |
Non-cash investing activities: | ||
Non-cash contribution to FSOF | 106,635 | 0 |
Non-cash distribution from FSOF | 106,635 | 0 |
Management Fees Receivable [Member] | ||
Changes in operating assets and liabilities: | ||
Receivables | 3,517,061 | -1,292,963 |
Performance Fees Receivable [Member] | ||
Changes in operating assets and liabilities: | ||
Receivables | -89,602 | 0 |
Affiliated Entity [Member] | ||
Changes in operating assets and liabilities: | ||
Due to Principal & affiliates | -16,863 | 19,122 |
Former Member [Member] | ||
Changes in operating assets and liabilities: | ||
Due to Principal & affiliates | 0 | -310,197 |
Non-controlling Interests [Member] | ||
Cash flows from financing activities | ||
Capital contributions | 20,000 | 0 |
Members [Member] | ||
Cash flows from financing activities | ||
Capital contributions | $0 | $1,412,534 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation | ||||||||||||
Fifth Street Asset Management Inc. ("FSAM"), together with its consolidated subsidiaries (collectively, the "Company"), is a leading alternative asset management firm headquartered in Greenwich, CT that provides asset management services to its investment funds, which, to date, consist primarily of Fifth Street Finance Corp. (formed on January 2, 2008, "FSC") and Fifth Street Senior Floating Rate Corp. (formed on May 22, 2013, "FSFR"), both publicly-traded business development companies regulated under the Investment Company Act of 1940 (together, the "BDCs"). The Company conducts substantially all of its operations through its consolidated subsidiary, Fifth Street Management LLC ("FSM"). | |||||||||||||
The accompanying consolidated financial statements include (1) the results of the Company subsequent to the Reorganization as described below and (2) prior to the Reorganization, the financial results of Fifth Street Management Group (the "Predecessor") which includes affiliated entities either wholly or substantially owned and/or under the voting control of Leonard M. Tannenbaum. Historical financial results relating to the Predecessor are presented as net income attributable to Predecessor. | |||||||||||||
The Company's primary sources of revenues are management fees, primarily from the BDCs, which are driven by the amount of the assets under management and quarterly investment performance of the funds it manages. The Company conducts substantially all of its operations through one reportable segment that provides asset management services to its alternative investment vehicles. The Company generates all of its revenues in the United States. | |||||||||||||
Reorganization | |||||||||||||
In anticipation of its initial public offering (the "IPO") that closed November 4, 2014, FSAM was incorporated in Delaware on May 8, 2014 as a holding company with its primary asset expected to be a limited partnership interest in Fifth Street Holdings L.P. ("Fifth Street Holdings"). Fifth Street Holdings was formed on June 27, 2014 by Leonard M. Tannenbaum and another member of FSM (the "Principals") as a Delaware limited partnership. Prior to the transactions described below, the Principals were the general partners and limited partners of Fifth Street Holdings. Fifth Street Holdings has a single class of limited partnership interests (the "Holdings LP Interests"). Immediately prior to the IPO: | |||||||||||||
• | The Principals contributed their general partnership interests in Fifth Street Holdings to FSAM in exchange for 100% of the FSAM's Class B common stock; | ||||||||||||
• | The members of FSM contributed 100% of their membership interests in FSM to Fifth Street Holdings in exchange for Holdings LP Interests; and | ||||||||||||
• | The members of FSCO GP LLC ("FSCO GP"), a Delaware limited liability company, formed on January 6, 2014 to serve as the general partner of Fifth Street Opportunities Fund, L.P. (''FSOF,'' formerly Fifth Street Credit Opportunities Fund, L.P.) contributed 100% of their membership interests in FSCO GP to Fifth Street Holdings in exchange for Holdings LP Interests. | ||||||||||||
As a result of the above transactions, FSAM became the general partner of Fifth Street Holdings, which was also organized to be a holding company for FSM and FSCO GP. As a holding company, FSAM conducts all of its operations through FSM and FSCO GP, wholly-owned subsidiaries of Fifth Street Holdings, including the provision of management services to FSC, FSFR and other affiliated private funds. Fifth Street Management Group is the Company's predecessor prior to the IPO. | |||||||||||||
In connection with the Reorganization, FSAM entered into the Exchange Agreement with the Fifth Street Holdings Limited Partners that granted each Fifth Street Holdings Limited Partner and certain permitted transferees the right, beginning two years after the closing of the IPO and subject to vesting and minimum retained ownership requirements, on a quarterly basis, to exchange such person's Holdings LP Interests for shares of Class A common stock of FSAM, on a one-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. As a result, each Fifth Street Holdings Limited Partner, over time, has the ability to convert his or her illiquid ownership interests in Fifth Street Holdings into Class A common stock that can more readily be sold in the public markets. | |||||||||||||
These collective actions are referred to herein as the "Reorganization." | |||||||||||||
Initial Public Offering | |||||||||||||
On November 4, 2014, FSAM issued 6,000,000 shares of Class A common stock in the IPO at a price of $17.00 per common share. The net proceeds totaled $95.9 million after deducting underwriting commissions of $6.1 million and before offering costs of approximately $3.9 million that were borne by FSAM. The net proceeds were used to purchase a 12.0% limited partnership interest in Fifth Street Holdings from its limited partners. | |||||||||||||
Immediately following the Reorganization transactions described above and the closing of the IPO on November 4, 2014: | |||||||||||||
• | the Principals held 42,856,854 shares of Class B common stock and 42,856,854 Holdings LP Interests, the Holdings Limited Partners, including the Principals, held 44,000,000 Holdings LP Interests and FSAM held 6,000,000 Holdings LP Interests; and | ||||||||||||
• | through their holdings of Class B common stock, the Principals, in the aggregate, had approximately 97.3% of the voting power of FSAM's common stock. | ||||||||||||
FSAM's purchase of Holdings LP Interests concurrent with its IPO, and the subsequent and future exchanges by holders of Holdings LP Interests for shares of FSAM's Class A common stock pursuant to the Exchange Agreement are expected to result in increases in its share of the tax basis of the tangible and intangible assets of Fifth Street Holdings, which will increase the tax depreciation and amortization deductions that otherwise would not have been available to FSAM. These increases in tax basis and tax depreciation and amortization deductions are expected to reduce the amount of cash taxes that FSAM would otherwise be required to pay in the future. FSAM entered into a tax receivable agreement ("TRA") with certain limited partners of Fifth Street Holdings (the "TRA Recipients") that requires it to pay them 85% of the amount of cash savings, if any, in U.S. federal, state, local and foreign income tax that FSAM actually realizes (or, under certain circumstances, is deemed to realize) as a result of the increases in tax basis in connection with exchanges by the TRA Recipients described above and certain other tax benefits attributable to payments under the tax receivable agreement. | |||||||||||||
In connection with the above transactions, the previous members of FSM agreed to allocate to the limited partners of Fifth Street Holdings and FSAM the Company's earnings (excluding the compensation charges related to the Reorganization) from October 1, 2014 through the date of the IPO. | |||||||||||||
Basis of Presentation | |||||||||||||
The unaudited interim consolidated financial statements presented in this quarterly report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented, have been reflected as required by Regulation S-X, Rule 10-01. Such adjustments are of a normal and recurring nature. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||
Prior to the completion of the IPO, the historical consolidated financial statements consisted of the combined results of Fifth Street Management Group which includes affiliated entities either wholly or substantially owned and/or under the voting control of Leonard M. Tannenbaum at the time of the Reorganization and IPO. As such, FSAM's acquisition of a 12.0% partnership interest in Fifth Street Holdings and related Reorganization have been accounted for as transactions among entities under common control, pursuant to ASC 805-50, and recorded on a historical cost basis. | |||||||||||||
After the completion of the IPO, FSAM became the general partner of Fifth Street Holdings and acquired a 12.0% limited partnership interest in Fifth Street Holdings. Accordingly, Fifth Street Holdings and its wholly-owned subsidiaries (including FSM) are consolidated in FSAM's financial statements. The Company has presented the Consolidated Statements of Income after giving effect to the Reorganization, as discussed above. All amounts attributable to the Company's Predecessor are recorded as "Net income attributable to Predecessor" within the consolidated financial statements. Subsequent to November 4, 2014, 88.0% of the net income attributable to Fifth Street Holdings limited partnership interests is recorded as "net income attributable to non-controlling interests in Fifth Street Holdings." | |||||||||||||
On October 13, 2014, FSAM effectuated a 1-for-3 reverse stock split. All share information has been retroactively adjusted to reflect the reverse stock split. | |||||||||||||
Deconsolidation of Combined Funds | |||||||||||||
During the year ended December 31, 2014, the Company formed the following entities (collectively referred to as the “Combined Funds”) whose financial results were included in the Company’s combined financial statements in previous filings with the SEC: | |||||||||||||
• | FSCO GP, a Delaware limited liability company, formed on January 6, 2014 to serve as the general partner of FSOF, which primarily invests in yield-oriented corporate credit assets and equities; | ||||||||||||
• | Fifth Street EIV, LLC ("Fifth Street EIV"), a Delaware limited liability company formed on February 7, 2014 to hold FSM's equity interest in Fifth Street Senior Loan Fund I, LLC ("SLF I"), which primarily invests in senior secured loans to middle-market companies; and | ||||||||||||
• | Fifth Street EIV II, LLC ("Fifth Street EIV II"), a Delaware limited liability company formed on July 10, 2014 to hold certain of the Company's employees' equity interests in Fifth Street Senior Loan Fund II, LLC ("SLF II"), which primarily invests in senior secured loans to middle-market companies. | ||||||||||||
Such Combined Funds were included in the financial statements based on the then existing consolidation guidance. In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810) - Amendments to the Consolidation Analysis ("ASU 2015-02"), as discussed in Note 2. The Company has elected to early adopt such guidance, which resulted in deconsolidation of the Combined Funds. The Company determined that these entities were variable interest entities and that the Company was not the primary beneficiary because under ASU 2015-02, the Company's fee arrangements, which are commensurate with the level of effort performed and include only customary terms, do not represent variable interests. Also see Note 2 for the related disclosures for certain unconsolidated variable interest entities. There was no gain or loss recognized as a result of the deconsolidation of the Combined Funds and the Company will continue to earn management and/or performance fees from these funds. Although total assets and equity significantly decreased as a result of the Combined Funds' deconsolidation, it did not change net income or equity attributable to controlling interests in FSAM. | |||||||||||||
Impact of Reorganization and Deconsolidation of Combined Funds | |||||||||||||
The following table shows the impact on the Consolidated Statement of Income for the three months ended March 31, 2014 for the deconsolidation of previously combined funds and the Reorganization: | |||||||||||||
For the three months ended March 31, 2014 | Deconsolidation of Combined Funds and Effects of Reorganization | For the three months ended March 31, 2014, | |||||||||||
as adjusted | |||||||||||||
Revenues | $ | 23,753,029 | $ | 14,336 | $ | 23,767,365 | |||||||
Net income | $ | 14,859,754 | $ | (371,240 | ) | $ | 14,488,514 | ||||||
Net income attributable to redeemable non-controlling interests in Combined Fund | $ | (391,416 | ) | $ | 391,416 | $ | — | ||||||
Net loss attributable to non-controlling interests in | $ | 20,176 | $ | (20,176 | ) | $ | — | ||||||
Combined Fund | |||||||||||||
Net income attributable to Predecessor | $ | — | $ | (14,488,514 | ) | $ | (14,488,514 | ) | |||||
Net income attributable to non-controlling interests in Fifth Street Holdings L.P. | $ | — | $ | — | $ | — | |||||||
Net income attributable to controlling interests in Fifth Street Management Group | $ | 14,488,514 | $ | (14,488,514 | ) | $ | — | ||||||
Net income attributable to Fifth Street Asset | $ | — | $ | — | $ | — | |||||||
Management Inc. |
Significant_Accounting_Policie
Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Significant Accounting Policies | Significant Accounting Policies | ||||||||
Principles of Consolidation | |||||||||
The consolidated financial statements include the accounts of the Company and entities in which it, directly or indirectly, is determined to have a controlling financial interest under ASC 810, as amended by ASU No. 2015-02. Under the variable interest model, the Company determines whether, if by design, an entity has equity investors who lack substantive participating or kick-out rights. If equity investors do not have such rights, the entity is considered a variable interest entity ("VIE") and must be consolidated by its primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. | |||||||||
Under the consolidation guidance, the Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion continually. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective investment funds could affect an entity's status as a VIE or the determination of the primary beneficiary. At each reporting date, the Company assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. | |||||||||
For equity investments where the Company does not control the investee, and where it is not the primary beneficiary of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting. The evaluation of whether the Company exerts control or significant influence over the financial and operational policies of its investees requires significant judgment based on the facts and circumstances surrounding each individual investment. Factors considered in these evaluations may include the type of investment, the legal structure of the investee, the terms and structure of the investment agreement, including investor voting or other rights, the terms of the Company's investment advisory agreement or other agreements with the investee, any influence the Company may have on the governing board of the investee, the legal rights of other investors in the entity pursuant to the fund’s operating documents and the relationship between the Company and other investors in the entity. | |||||||||
Consolidated Variable Interest Entities | |||||||||
FSAM is the sole general partner of Fifth Street Holdings and, as such, it operates and controls all of the business and affairs of Fifth Street Holdings and its wholly-owned subsidiaries, FSM and FSCO GP. Under ASC 810, Fifth Street Holdings meets the definition of a variable interest entity because the limited partners do not hold substantive kick-out or participating rights. Since FSAM has the obligation to absorb expected losses that could be significant to Fifth Street Holdings and is the sole general partner, FSAM is considered to be the primary beneficiary of Fifth Street Holdings. | |||||||||
As a result, the Company consolidates the financial results of Fifth Street Holdings and its wholly-owned subsidiaries and records a non-controlling interest for the economic interest in Fifth Street Holdings held by the limited partners as a separate component of stockholders' equity in its Consolidated Statements of Financial Condition for the remaining economic interests in Fifth Street Holdings. The non-controlling interest in the income of Fifth Street Holdings is included in the Consolidated Statements of Income as a reduction of net income. | |||||||||
As of March 31, 2015 and December 31, 2014, the Company has recorded the following amounts in its Consolidated Statements of Financial Condition relating to Fifth Street Holdings: | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 1,295,793 | $ | 3,236,830 | |||||
Management fees receivable | 23,344,726 | 26,861,787 | |||||||
Performance fees receivable | 89,602 | 106,635 | |||||||
Prepaid expenses | 856,405 | 1,150,013 | |||||||
Investments in equity method investees | 112,635 | 4,115,429 | |||||||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | — | |||||||
Beneficial interest in CLO: available-for-sale | 3,443,940 | — | |||||||
Due from affiliates (1) | 5,723,310 | 8,369,501 | |||||||
Fixed assets, net | 9,977,576 | 10,274,263 | |||||||
Deferred tax assets | 2,705,934 | 2,705,934 | |||||||
Deferred financing costs | 2,306,931 | 2,432,764 | |||||||
Other assets | 4,137,943 | 4,197,358 | |||||||
Total assets | $ | 55,037,939 | $ | 63,450,514 | |||||
Liabilities | |||||||||
Accounts payable and accrued expenses | $ | 2,318,452 | $ | 2,830,053 | |||||
Accrued compensation and benefits | 3,241,602 | 11,095,548 | |||||||
Income taxes payable | 1,232,651 | — | |||||||
Loans payable | 4,050,351 | 4,000,000 | |||||||
Credit facility payable | 15,000,000 | 12,000,000 | |||||||
Due to Principal | 9,046,929 | 9,063,791 | |||||||
Due to affiliates (2) | 759,123 | 747,505 | |||||||
Deferred rent liability | 3,217,417 | 3,261,434 | |||||||
Total liabilities | 38,866,525 | 42,998,331 | |||||||
Equity | 16,171,414 | 20,452,183 | |||||||
Total liabilities and equity | $ | 55,037,939 | $ | 63,450,514 | |||||
_____________ | |||||||||
(1) The amounts due from affiliates include $3,355,610 that is eliminated in consolidation. | |||||||||
(2) The amounts due to affiliates include $691,144 that is eliminated in consolidation. | |||||||||
The liabilities recognized as a result of consolidating Fifth Street Holdings do not represent additional claims on FSAM’s general assets; rather, they represent claims against the specific assets of Fifth Street Holdings and its subsidiaries. Conversely, assets recognized as a result of consolidating Fifth Street Holdings do not represent additional assets that could be used to satisfy claims against FSAM's general assets. | |||||||||
Unconsolidated Variable Interest Entities | |||||||||
The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary as of March 31, 2015. The Company's interest in such entities generally is in the form of direct equity interests and fixed fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. The Company's interests in these non-consolidated VIEs and their respective maximum exposure to loss relating to non-consolidated VIEs as of March 31, 2015 is $4,689,321. | |||||||||
Use of Estimates | |||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions affecting amounts reported in the consolidated financial statements and accompanying notes. The most significant of these estimates are related to: (i) the valuation of equity-based compensation, (ii) the estimate of future taxable income, which impacts the carrying amount of the Company’s deferred income tax assets and (iii) the determination of net tax benefits in connection with the Company's tax receivable agreements. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions. | |||||||||
Concentration of Credit Risk and Other Risks and Uncertainties | |||||||||
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. | |||||||||
For the three months ended March 31, 2015 and 2014, 100% of revenues and receivables were earned or derived from advisory or administrative services provided to the BDCs and other affiliated entities. | |||||||||
The Company is dependent on its chief executive officer, Leonard M. Tannenbaum, who holds 91.2% of the combined voting power of the Company through his ownership of shares of common stock. If for any reason the services of the Company's chief executive officer were to become unavailable, there could be a material adverse effect on the Company's operations, liquidity and profitability. | |||||||||
Fair Values of Financial Instruments | |||||||||
The carrying amounts of cash and cash equivalents, management and performance fees receivable from affiliates, prepaid expenses, due from/to affiliates, accounts payable and accrued expenses, accrued compensation and benefits and income taxes payable approximate fair value due to the immediate or short-term maturity of these financial instruments. | |||||||||
Cash and Cash Equivalents | |||||||||
Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. The Company places its cash and cash equivalents with U.S. financial institutions and, at times, amounts may exceed federally insured limits. The Company monitors the credit standing of these financial institutions. | |||||||||
Investments in Equity Method Investees | |||||||||
Investments in equity method investees consists of the Company's interests in unconsolidated VIEs. Entities and investments over which the Company exercises significant influence but which do not meet the requirements for consolidation are accounted for using the equity method of accounting, whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. | |||||||||
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. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment when the loss in value is deemed other than temporary. No impairment charges related to equity method investments were recorded during the three months ended March 31, 2015 and 2014. | |||||||||
The primary equity method investment of the Company is its general partnership interest in FSOF, a credit-oriented hedge fund which was previously consolidated. | |||||||||
Subordinated Debt and Beneficial Interest in CLO | |||||||||
The Company carries its subordinated debt interest in CLO at amortized cost and records contractually earned interest as interest income. The Company classifies its subordinated debt interest in CLO, which has a contractual maturity of January 20, 2027, as a held-to-maturity security. | |||||||||
There were no unrealized or realized gains or losses on the Company's subordinated debt interest in CLO during the three months ended March 31, 2015. Additionally, there were no sales or transfers of the Company's subordinated debt interest in CLO during the three months ended March 31, 2015. | |||||||||
The beneficial interest in CLO meets the definition of a debt security under ASC 325-40. Accordingly, the Company recognizes the accretable yield as interest income over the life of the beneficial interest using the effective yield method. In order to determine the interest recorded in each period, the Company estimates the timing and amount of future cash flows attributable to the beneficial interests over the estimated life of the CLO. The Company reevaluates the estimated future cash flows periodically to determine whether an adjustment to the accretable yield is required or if an other-than-temporary impairment should be recorded. | |||||||||
Beneficial interests in CLOs are classified as an available-for-sale security, and accordingly, the Company carries its beneficial interest, which has a contractual maturity of January 20, 2027, at fair value. All realized gains (losses) as well as other-than-temporary impairment losses that are recorded in earnings are reported in the Consolidated Statements of Income. Unrealized gains (losses) are reported in other comprehensive income. | |||||||||
There were no unrealized or realized gains or losses on the Company's beneficial interest in CLO during the three months ended March 31, 2015. Additionally, there were no sales or transfers of the Company's beneficial interest in CLO during the three months ended March 31, 2015. | |||||||||
Fixed Assets | |||||||||
Fixed assets consist of furniture, fixtures and equipment (including automobiles, computer hardware and software) and leasehold improvements, and are recorded at cost, less accumulated depreciation and amortization. Depreciation of furniture, fixtures and equipment is computed using the straight-line method over the estimated useful lives of the respective assets (three to eight years). Amortization of improvements to leased properties is computed using the straight-line method based upon the initial term of the applicable lease or the estimated useful life of the improvements, whichever is shorter, and ranges from five to ten years. Routine expenditures for repairs and maintenance are charged to expense when incurred. Major betterments and improvements are capitalized. Upon retirement or disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Consolidated Statements of Income. The Company evaluates fixed assets for impairment whenever events or changes in circumstances indicate that an asset's carrying value may not be fully recovered. During the three months ended March 31, 2015 and 2014, there were no impairments recognized. | |||||||||
Deferred Financing Costs | |||||||||
Deferred financing costs consist of fees and expenses paid in connection with the closing of Fifth Street Holdings' credit facility and are capitalized at the time of payment. Deferred financing costs are amortized using the straight line method over the term of the credit facility and are included in interest expense Company's Consolidated Statements of Income. | |||||||||
Deferred Rent | |||||||||
The Company recognizes rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases, there are free rent periods and escalations in payments over the base lease term. The effects of these items have been reflected in rent expense on a straight-line basis over the expected lease term. Landlord contributions and tenant allowances are included in the straight-line calculations and are being deferred over the lease term and are reflected as a reduction in rent expense. | |||||||||
Revenue Recognition | |||||||||
The Company has three principal sources of revenues: management fees, performance fees and other fees. These revenues are derived from the Company's agreements with the funds it manages, primarily the BDCs. The investment advisory agreements on which revenues are based are generally renewable on an annual basis by the general partner or the board of directors of the respective funds. | |||||||||
Management Fees | |||||||||
Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of the investment portfolios managed by the Company. All management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy and range from 0.40% to 2.00% for base management fees, which are asset or capital-based. | |||||||||
Management fees from affiliates also include quarterly incentive fees on the net investment income from the BDCs ("Part I Fees"). Part I Fees are generally equal to 20.0% of the BDCs' net investment income (before Part I Fees and performance fees payable based on capital gains), subject to fixed "hurdle rates" as defined in the respective investment advisory agreement. No fees are recognized until the BDCs' net investment income exceeds the respective hurdle rate, with a "catch-up" provision that serves to ensure the Company receives 20.0% of the BDCs' net investment income from the first dollar earned. Such fees are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to repayment (or clawback) and cash settled each quarter. Management fees from affiliates are recognized as revenue in the period investment advisory services are rendered, subject to the Company's assessment of collectability. | |||||||||
Performance Fees | |||||||||
Performance fees are earned from the funds managed by the Company based on the performance of the respective funds. The contractual terms of performance fees vary by fund structure and investment strategy and are generally 15.0% to 20.0%. | |||||||||
The Company has elected to adopt Method 2 of ASC 605-20, Revenue Recognition for Revenue Based on a Formula. Under this method, the Company records revenue when it is entitled to performance-based fees, subject to certain hurdles or benchmarks. The performance fees for any period are based upon an assumed liquidation of the fund's net assets on the reporting date, and distribution of the net proceeds in accordance with the fund's income allocation provisions. The performance fees may be subject to reversal to the extent that the performance fees recorded exceed the amount due to the general partner or investment manager based on a fund's cumulative investment returns. | |||||||||
Performance fees related to the BDCs ("Part II Fees") are calculated and payable in arrears as of the end of each fiscal year of the BDCs and equal 20.0% of the BDCs' realized capital gains, if any, on a cumulative basis since inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. | |||||||||
Other Fees | |||||||||
The Company also provides administrative services to the BDCs and private funds and the fees earned are reported within Revenues — Other fees. These fees generally represent the portion of compensation, overhead and other expenses incurred by the Company directly attributable to the funds, but may also be based on a fund's asset value. The Company selects the vendors, incurs the expenses, and is the primary obligor under the related arrangements. Such reimbursement is at cost with no profit to, or markup by, the Company. The Company is considered the principal under these arrangements and is required to record the expense and related reimbursement revenue on a gross basis. Other fees are recognized in the periods during which the related expenses are incurred and the reimbursements are contractually earned. | |||||||||
Compensation and Benefits | |||||||||
Compensation generally includes salaries, bonuses and equity-based compensation charges. Bonuses are accrued over the service period to which they relate. All payments made to the Predecessor's managing member since inception and all payments made to the Predecessor's equity members since December 1, 2012 (see Note 11) related to their granted or purchased interests are accounted for as distributions on the equity held by such members. | |||||||||
Equity-Based Compensation | |||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of this guidance, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. | |||||||||
The Company recognizes expense related to equity-based compensation transactions in which it receives employee services in exchange for: (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company's equity instruments. Equity-based compensation expense represents expenses associated with the: (i) granting of Part I Fee-sharing arrangements prior to the Reorganization; (ii) conversion of and acceleration in vesting of interests in the Predecessor in connection with the Reorganization; and (iii) the granting of restricted stock units, options to purchase shares of Class A common stock and stock appreciation rights granted in connection with the IPO. | |||||||||
Stock-based compensation expense is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The effect of such change in estimated forfeitures is recognized through a cumulative catch-up adjustment that is included in the period of the change in estimate. | |||||||||
The value of the portion of the award that is ultimately expected to vest on a straight-line basis over the requisite service period is included within compensation and benefits (except for grants to non-employees which are included in general, administrative and other expenses) in the Company’s Consolidated Statements of Income. | |||||||||
The Company records deferred tax assets or liabilities for equity compensation plan awards based on deductions for income tax purposes of stock-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company is expected to receive a tax deduction. In addition, differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company's income tax returns are recorded as adjustments to additional paid-in capital. If the tax deduction is less than the deferred tax asset, the calculated shortfall reduces the pool of excess tax benefits. If the pool of excess tax benefits is reduced to zero, then subsequent shortfalls would increase the income tax expense. | |||||||||
Reimbursable Expenses | |||||||||
In the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for professional travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses are not an obligation of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). | |||||||||
Fund Offering and Start-up Expenses | |||||||||
In certain instances, the Company may bear offering costs related to capital raising activities of the Fifth Street Funds, including underwriting commissions, which are expensed as incurred. In addition, the Company expenses all costs associated with starting new investment funds. Included in the Consolidated Statement of Income for the three months ended March 31, 2014 is approximately $146,000 of expenses associated with the formation of FSOF and SLF I. | |||||||||
Income Taxes | |||||||||
Prior to the completion of the IPO, substantially all of the Company's earnings flowed through to the former members of FSM without being subject to entity level income taxes. Accordingly, no provision for income taxes has been recorded in the consolidated financial statements prior to the IPO. | |||||||||
Fifth Street Holdings complies with the requirements of the Internal Revenue Code that are applicable to limited partnerships, which allow for the complete pass-through of taxable income or losses to Fifth Street Holdings limited partners, including FSAM, who are individually responsible for any federal tax consequences. Subsequent to the IPO, the tax provision includes the income tax obligation related to FSAM's allocated portion of Fifth Street Holdings' income, which is net of any tax incurred at Fifth Street Holdings' subsidiaries that are subject to income tax. | |||||||||
Also, as a result of the Reorganization, certain subsidiaries were converted from pass-through entities to taxable entities. Accordingly, the portion of the Company's subsidiaries' earnings attributable to non-controlling interests are subject to tax when reported as a component of the non-controlling interests' taxable income on their individual tax returns. | |||||||||
The Company accounts for income taxes under the asset and liability method prescribed by ASC 740, "Income Taxes." As a result of the Company's acquisition of limited partnership interests in Fifth Street Holdings, the Company expects to benefit from amortization and other tax deductions reflecting the step-up in tax basis in the acquired assets. Those deductions will be used by the Company and will be taken into account in determining the Company's taxable income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. Further, the Company records its income taxes receivable and payable based upon its estimated income tax liability. | |||||||||
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company recognizes interest and penalties associated with tax matters such as franchise tax liabilities, if applicable, as general and administrative and other expenses. | |||||||||
Class A Earnings per Share | |||||||||
The Company computes basic earnings per share attributable to FSAM’s Class A common stockholders by dividing income attributable to FSAM by the weighted-average Class A common shares outstanding for the period. Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in the Company's earnings. Potentially dilutive securities include outstanding options to acquire Class A common shares, unvested restricted stock units and Fifth Street Holdings limited partnership interests which are exchangeable for shares of Class A common stock. The dilutive effect of stock options and restricted stock units is reflected in diluted earnings per share of Class A common stock by application of the treasury stock method. | |||||||||
Under the treasury stock method, if the average market price of a share of Class A common stock increases above the option's exercise price, the proceeds that would be assumed to be realized from the exercise of the option would be used to acquire outstanding shares of Class A common stock. The dilutive effect of awards is directly correlated with the fair value of the shares of Class A common stock. However, the awards may be anti-dilutive when the market price of the underlying shares exceeds the option's exercise price. This result is possible because the compensation expense attributed to future services but not yet recognized is included as a component of the assumed proceeds upon exercise. | |||||||||
Reclassifications | |||||||||
Certain reclassifications of prior period amounts have been made to conform to the current period presentation. Such amounts did not impact results of operations, cash flows or earnings per share. | |||||||||
Recent Accounting Pronouncements | |||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the requisite service period, which clarifies the recognition of stock-based compensation over the required service period, if it is probable that the performance condition will be achieved. This guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and should be applied prospectively. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In August 2014, the FASB issued ASU 2014-13, Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity ("CFE"). This new guidance requires reporting entities to use the more observable of the fair value of the financial assets or the financial liabilities to measure the financial assets and the financial liabilities of a CFE when a CFE is initially consolidated. It permits entities to make an accounting policy election to apply this same measurement approach after initial consolidation or to apply other GAAP to account for the consolidated CFE's financial assets and financial liabilities. It also prohibits all entities from electing to use the fair value option in ASC 825 to measure either the financial assets or financial liabilities of a consolidated CFE that is within the scope of this issue. This guidance is effective for fiscal years beginning after December 15, 2015, and interim periods therein. Early adoption is permitted using a modified retrospective transition approach as described in the pronouncement. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern, which requires management to evaluate, at each annual and interim reporting period, the company's ability to continue as a going concern within one year of the date the financial statements are issued and provide related disclosures. This accounting guidance is effective for the Company on a prospective basis beginning in the first quarter of fiscal 2016 and is not expected to have a material effect on its consolidated financial statements. | |||||||||
In February 2015, the FASB issued ASU 2015-02, which provides guidance on evaluating whether a reporting entity should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs. Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership under the voting interest model, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. As of December 31, 2014, the Company has elected to early adopt such guidance in these consolidated financial statements which resulted in deconsolidation of the Combined Funds. Although total assets and equity significantly decreased as a result of the Combined Funds' deconsolidation, it did not change net income or equity attributable to controlling interests in FSAM. | |||||||||
In April 2015, the FASB issued ASU 2015-03, which changes the presentation of debt issuance costs in a reporting entity's financial statements. Under this new guidance, debt issuance costs will be presented as a direct deduction from the related debt liability instead of an asset. This accounting change is consistent with the current presentation under U.S. GAAP for debt discounts and it also converges the guidance under U.S. GAAP with that in the International Financial Reporting Standards. Debt issuance costs will reduce the proceeds from debt borrowings in the statement of cash flows instead of being presented as a separate caption in the financing section of that statement. Amortization of debt issuance costs will continue to be reported as interest expense in the statement of income. This accounting update does not affect the current accounting guidance for the recognition and measurement of debt issuance costs. This update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is allowed for all entities for financial statements that have not been previously issued. This guidance is not expected to have a material effect on the consolidated financial statements as it will result in a reclassification on the Consolidated Statements of Financial Condition. Accordingly, there will be no impact on total equity or net income as a result of adoption of this guidance. |
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements | ||||||||||||||||||||
ASC 820 – Fair Value Measurements and Disclosures ("ASC 820") – defines fair value as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. 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 or reliable, valuation techniques are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the investments or market and the investments' complexity. | |||||||||||||||||||||
Assets and liabilities recorded at fair value in the Company's consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. | |||||||||||||||||||||
Hierarchical levels, defined by ASC 820 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows: | |||||||||||||||||||||
• | Level 1 — Unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | ||||||||||||||||||||
• | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data at the measurement date for substantially the full term of the assets or liabilities. | ||||||||||||||||||||
• | Level 3 — Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. | ||||||||||||||||||||
The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the three months ended March 31, 2015: | |||||||||||||||||||||
Beneficial interest in CLO: available-for-sale | |||||||||||||||||||||
Fair value at December 31, 2014 | $ | — | |||||||||||||||||||
Purchases of investments | 3,443,940 | ||||||||||||||||||||
Fair value at March 31, 2015 | $ | 3,443,940 | |||||||||||||||||||
The Company did not have any financial instruments carried at fair value as of December 31, 2014. | |||||||||||||||||||||
Significant Unobservable Inputs for Level 3 Financial Instruments | |||||||||||||||||||||
The following table provides quantitative information related to the significant unobservable inputs for Level 3 financial instruments, which are carried at fair value as of March 31, 2015: | |||||||||||||||||||||
Assets | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Beneficial interest in CLO: available-for-sale | $ | 3,443,940 | Recent market transactions | N/A | N/A | N/A | |||||||||||||||
Financial Instruments Disclosed, But Not Carried At Fair Value | |||||||||||||||||||||
The following table presents the carrying value and fair value of the Company's financial assets and liabilities disclosed, but not carried, at fair value as of March 31, 2015 and the level of each financial asset and liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Subordinated debt interest in CLO: held-to-maturity | $ | 1,043,144 | $ | 1,043,144 | $ | — | $ | — | $ | 1,043,144 | |||||||||||
Loans payable | 4,050,351 | 4,047,138 | — | — | 4,047,138 | ||||||||||||||||
Credit facility payable | 15,000,000 | 15,000,000 | — | — | 15,000,000 | ||||||||||||||||
Note payable included in Due to Principal | 5,564,451 | 5,564,451 | — | — | 5,564,451 | ||||||||||||||||
Payables to related parties pursuant to tax receivable agreements | 47,373,245 | 42,352,014 | — | — | 42,352,014 | ||||||||||||||||
Total | $ | 73,031,191 | $ | 68,006,747 | $ | — | $ | — | $ | 68,006,747 | |||||||||||
The following table presents the carrying value and fair value of the Company's financial assets and liabilities disclosed, but not carried, at fair value as of December 31, 2014 and the level of each financial asset and liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,049,110 | $ | — | $ | — | $ | 4,049,110 | |||||||||||
Credit facility payable | 12,000,000 | 12,000,000 | — | — | 12,000,000 | ||||||||||||||||
Note payable included in Due to Principal | 5,564,451 | 5,564,451 | — | — | 5,564,451 | ||||||||||||||||
Payables to related parties pursuant to tax receivable agreements | 47,373,245 | 42,352,014 | — | — | 42,352,014 | ||||||||||||||||
Total | $ | 68,937,696 | $ | 63,965,575 | $ | — | $ | — | $ | 63,965,575 | |||||||||||
The carrying value of the subordinated debt interest in CLO approximates fair value as the Company acquired this interest near period end. The Company utilizes a bond yield approach to estimate the fair value of its loans payable, which are included in Level 3 of the hierarchy. Under the bond yield approach, the Company uses its incremental borrowing rate to determine the present value of the future cash flows streams related to the liability. | |||||||||||||||||||||
The carrying values of the credit facility payable and the notes payable included in Due to Principal approximate their fair value and are included in Level 3 of the hierarchy. | |||||||||||||||||||||
The Company utilizes a discounted cash flow approach to estimate the fair value of its payables to related parties pursuant to tax receivable agreements, which is included in Level 3 of the hierarchy. Under the discounted cash flow approach, the Company estimates the present value of estimated future tax benefits pursuant to the tax receivable agreement discounted using a market interest rate. |
Due_from_Affiliates
Due from Affiliates | 3 Months Ended |
Mar. 31, 2015 | |
Related Party Transactions [Abstract] | |
Due from Affiliates | Due from Affiliates |
In connection with administration agreements that are in place (see Note 10), the Company provides certain administrative services for the BDCs and private funds, including office facilities and equipment, and clerical, bookkeeping and recordkeeping services at such facilities. For providing these services, facilities and personnel, the BDCs and private funds reimburse the Company for direct fund expenses and the BDCs reimburse the Company for the allocable portion of overhead and other expenses incurred by the Company in performing its obligations under the administration agreements. | |
Also, in the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses are not obligations of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). |
Fixed_Assets
Fixed Assets | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Fixed Assets | Fixed Assets | ||||||||
Fixed assets consist of the following: | |||||||||
31-Mar-15 | December 31, 2014 | ||||||||
Furniture, fixtures and equipment | $ | 3,658,563 | $ | 3,563,172 | |||||
Leasehold improvements | 7,804,659 | 7,864,805 | |||||||
Fixed assets, cost | 11,463,222 | 11,427,977 | |||||||
Less: accumulated depreciation and amortization | (1,485,646 | ) | (1,153,714 | ) | |||||
Fixed assets, net book value | $ | 9,977,576 | $ | 10,274,263 | |||||
Depreciation and amortization expense related to fixed assets for the three months ended March 31, 2015 and 2014 was $331,932 and $58,406 respectively. |
Other_Assets
Other Assets | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Other Assets | Other Assets | ||||||||
Other assets consist of the following: | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Security deposits | $ | 453,375 | $ | 453,375 | |||||
Fractional interests in aircrafts (a) | 3,514,509 | 3,585,283 | |||||||
Other | 170,059 | 158,700 | |||||||
$ | 4,137,943 | $ | 4,197,358 | ||||||
__________________ | |||||||||
(a) | In November 2013, the Company entered into an agreement that entitled it to the use of a corporate aircraft for five years. The amount paid, less the estimated trade-in value, is being amortized on a straight-line basis over the expected five-year term of the agreement. In December 2014, the Company sold half of this interest and entered into an agreement for a second corporate aircraft for five years. Amortization expense for the three months ended March 31, 2015 and 2014 was $70,774 and $68,268, respectively. |
Due_to_Former_Members
Due to Former Members | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Due to Former Members | Due to Former Member | ||||||||
On November 5, 2010, the Company entered into a separation agreement with a member that provided for (i) the repurchase of the member's pro rata share of Part I Fees based on a formula, as defined in the separation agreement, over a five year period ending on September 30, 2015, and (ii) upon the closing of a sale transaction of the Company, the allocation by the managing member to the former member of any proceeds from the sale up to a maximum of $6,000,000. Accordingly, the Company recorded a liability for the present value of the expected future payments of the member's pro rata share of Part I Fees as of the date of the separation agreement and adjusted this liability to fair value at each reporting date. All amounts due to this former member were paid in November 2014. Included in compensation expense for the three months ended March 31, 2014 were fair value adjustments related to this liability that increased compensation expense in the amount of $161,217. | |||||||||
Related Party Transactions | |||||||||
Due to Principal | |||||||||
On October 29, 2014, the Company issued notes payable to a Principal in the amount of $5,564,451 representing an initial estimate of the undistributed earnings of the Predecessor as of the IPO. Such notes bear interest at 1.0% per annum and are due no later than June 30, 2015. As of March 31, 2015, the Company has accrued an additional $3,482,478 representing the finalization of the amount of undistributed earnings of the Predecessor to the Principal as of the IPO. | |||||||||
Payments Pursuant to Tax Receivable Agreements | |||||||||
As of March 31, 2015, the Company recorded a liability of $47,373,245 representing the payments due to the TRA Recipients under the TRA. | |||||||||
Within the next 12 month period, the Company expects to pay $343,621 of the total amount of the estimated TRA liability. To determine the current amount of the payments due to the TRA Recipients, the Company estimated the amount of taxable income that FSAM generated from October 1, 2014 through December 31, 2014. Next, the Company estimated the amount of the specified deductions subject to the TRA which are expected to be realized by FSAM in its 2014 tax return. This amount was then used as a basis for determining the Company's increase in estimated tax cash savings as a result of such deductions on which a current TRA obligation became due (i.e. payable within 12 months of the Company's year-end). These calculations are performed pursuant to the terms of the TRAs. | |||||||||
Payments are anticipated to be made under the TRAs indefinitely, and are due within 45 calendar days after the date FSAM files its federal income tax return. The payments are to be made in accordance with the terms of the TRAs. The timing of the payments is subject to certain contingencies including the Company having sufficient taxable income to utilize all of the tax benefits defined in the TRAs. | |||||||||
Obligations pursuant to the TRAs are obligations of FSAM. They do not impact the non-controlling interests in Fifth Street Holdings. These obligations are not income tax obligations and have no impact on the tax provision or the allocation of taxes. In general, items of income, gain, loss and deduction are allocated on the basis of the limited partners' ownership interests pursuant to the Fifth Street Holdings limited partnership agreement after taking into consideration all relevant sections of the Internal Revenue Code. | |||||||||
Other Related Party Transactions | |||||||||
All of the Company's revenue is earned from its affiliates, including management fees, performance fees and other fees. | |||||||||
For the three months ended March 31, 2015 and 2014, the Company earned $22,977,325 and $22,688,390, respectively, in management fees relating to services provided to the BDCs. As of March 31, 2015 and December 31, 2014, management fees receivable in the amounts of $22,977,325 and $26,508,013, are due from the BDCs. For the three months ended March 31, 2015 and 2014, the Company voluntarily waived $111,240 and $233,800 of management fees from the BDCs, respectively. | |||||||||
Performance fees earned for the three months ended March 31, 2015 totaled $89,602. No performance fees were earned during the three months ended March 31, 2014. | |||||||||
The Company also has entered into administration agreements under which the Company provides administrative services for the BDCs and private funds (collectively, the "Fifth Street Funds"), including office facilities and equipment, and clerical, bookkeeping and recordkeeping services at such facilities. Under the administration agreements, the Company also performs or oversees the performance of the BDCs' required administrative services, which includes being responsible for the financial records which the BDCs are required to maintain and preparing reports to the BDCs' stockholders and reports filed with the SEC. In addition, the Company assists each of the BDCs in determining and publishing its net asset value, overseeing the preparation and filing of its tax returns and the printing and dissemination of reports to the each of the BDC's stockholders, and generally overseeing the payment of each Fifth Street Fund's expenses and the performance of administrative and professional services rendered to the funds. For providing these services, facilities and personnel, the Fifth Street Funds reimburse the Company for direct fund expenses and the BDCs reimburse the Company for the allocable portion of overhead and other expenses incurred by the Company in performing its obligations under the administration agreements, including rent and such BDC's allocable portion of the costs of compensation and related expenses of such BDC's chief financial officer and chief compliance officer and their staffs. Such reimbursement is at cost with no profit to, or markup by, the Company. Included in Revenues — other fees in the Consolidated Statements of Income for the three months ended March 31, 2015 and 2014 were $1,201,124 and $1,064,639, respectively, related to amounts charged for the above services provided to the Fifth Street Funds. The Company may also provide, on the BDCs' behalf, managerial assistance to such BDC's portfolio companies. Each of the administration agreements may be terminated by either the Company or the BDC without penalty upon 60 days' written notice to the other party. | |||||||||
Receivables for reimbursable expenses from the Fifth Street Funds are included within due from affiliates and totaled $2,260,613 and $3,723,160 at March 31, 2015 and December 31, 2014, respectively. | |||||||||
On July 22, 2013, the Company entered into a lease agreement for office space for its headquarters in Greenwich, CT. The landlord is an entity controlled by Leonard M. Tannenbaum. The lease agreement requires monthly rental payments at market rates, expires on September 30, 2024 and can be renewed at the request of the Company for two additional five year periods. Rental payments under this lease of approximately $2,000,000 per year began on October 11, 2014. | |||||||||
The Company's fractional interests in corporate aircrafts are used primarily for business purposes. Occasionally, certain of the members have used the aircraft for personal use. The Company charges these members for such personal use based on market rates. There were no such charges for the three months ended March 31, 2015 and 2014. | |||||||||
On December 22, 2014, FSM entered into a limited liability company agreement, as majority member, with Leonard Tannenbaum’s brother, as minority member, for the purpose of forming MMKT Exchange LLC (previously IMME LLC), a Delaware limited liability company (“MMKT”). The purpose of MMKT is to develop technology related to the financial services industry. FSM made a total capital contribution of $80,000 for an 80% membership interest in MMKT. The Company has consolidated MMKT in its consolidated financial statements based on its 80% membership interest. | |||||||||
On February 24, 2015, FSM purchased a convertible promissory note (the “MMKT Note”) from MMKT in an aggregate principal amount of $800,000. The MMKT Note bears interest at 8% per annum and matures on August 31, 2016. | |||||||||
In addition, an external party holds $50,000 in principal amount of a convertible promissory note with the same terms as the MMKT Note and the Company recorded $351 of interest expense in the Consolidated Statement of Income associated with this convertible promissory note. | |||||||||
As of March 31, 2015 and December 31, 2014 amounts due to and from affiliates were comprised of the following: | |||||||||
As of March 31, 2015 | As of December 31, 2014 | ||||||||
Management fees receivable: | |||||||||
Base management fees receivable - BDCs | $ | 14,476,071 | $ | 15,200,933 | |||||
Part I Fees receivable - BDCs | 8,501,254 | 11,307,080 | |||||||
Collateral management fees receivable - SLF I and SLF II | 367,401 | 351,274 | |||||||
Management fees receivable - FSOF | — | 2,500 | |||||||
$ | 23,344,726 | $ | 26,861,787 | ||||||
Performance fees receivable: | |||||||||
Performance fees receivable - FSOF | $ | 89,602 | $ | 106,635 | |||||
$ | 89,602 | $ | 106,635 | ||||||
Due from affiliates: | |||||||||
Reimbursed expenses due from the BDCs | $ | 2,208,917 | $ | 3,596,975 | |||||
Reimbursed expenses due from private funds | 51,696 | 126,185 | |||||||
Due from employees | 30,428 | 59,489 | |||||||
Other amounts due from affiliated entities | 76,659 | 16,893 | |||||||
$ | 2,367,700 | $ | 3,799,542 | ||||||
Due to affiliates: | |||||||||
Distribution payable to former members of Predecessor | $ | 59,316 | $ | 59,316 | |||||
SARs liability | 8,663 | 3,465 | |||||||
$ | 67,979 | $ | 62,781 | ||||||
Debt
Debt | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Debt Disclosure [Abstract] | ||||
Debt | Debt | |||
Loan Payable | ||||
On October 7, 2013, the Company borrowed $4,000,000 from the Department of Economic and Community Development (the "DECD") of the State of Connecticut. Proceeds from the loan were utilized to partially fund the build-out costs of the Company's new headquarters in Greenwich, CT. The loan bears interest at a fixed rate of 2.5% per annum, matures on November 21, 2023 and requires interest-only payments through November 1, 2017, at which point monthly payments of principal and interest are required until maturity or such time that the loan is repaid in full. As security for the loan, the Company has granted the State of Connecticut a blanket interest in the Company's personal property, subject only to prior security interests permitted by the State of Connecticut. For the three months ended March 31, 2015 and 2014, interest expense related to this loan in the amounts of $24,657 and $24,657, respectively, is included in interest and other income (expense) in the Consolidated Statements of Income. | ||||
Outstanding principal amounts related to this loan maturing over the next five years are as follows: | ||||
2015 | $ | — | ||
2016 | — | |||
2017 | 51,551 | |||
2018 | 627,050 | |||
2019 | 642,908 | |||
Under the terms of the agreement, the Company is eligible for forgiveness of up to $3,000,000 of the principal amount of the loan based on certain job creation milestones, as mutually agreed to by the Company and the DECD. If the Company is unable to meet these job creation milestones, the DECD may impose a penalty upon the Company in an amount equal to $78,125 per job below the required amount. To date, no penalties have been assessed by the DECD. | ||||
Credit Facility | ||||
On November 4, 2014, Fifth Street Holdings entered into an unsecured revolving credit facility which matures on November 4, 2019 with certain lenders party thereto from time to time and Sumitomo Mitsui Banking Corporation, as administrative agent and joint lead arranger, and Morgan Stanley Senior Funding, Inc., as syndication agent and joint lead arranger. The revolving credit facility provides for $176 million of borrowing capacity, with a $100 million accordion feature, and bears interest at a variable rate based on either LIBOR or a base rate plus an applicable margin with an unused commitment fee paid quarterly, which is subject to change based on a total leverage ratio. Borrowings under the revolving credit facility accrue interest at an annual rate of LIBOR plus 2.00% per annum and the unused commitment fee under the facility is 0.30% per annum. The revolving credit facility contains customary affirmative and negative covenants for agreements of this type, including financial maintenance requirements, delivery of financial and other information, compliance with laws, further assurances and limitations with respect to indebtedness, liens, fundamental changes, restrictive agreements, dispositions of assets, acquisitions and other investments, conduct of business and transactions with affiliates. The revolving credit facility has a term of five years. As of March 31, 2015, the Company had $15,000,000 of borrowings outstanding under the credit facility which had a fair value of $15,000,000 and was in compliance with all debt covenants. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies |
Leases | |
The Company leases office space in various locations throughout the United States and maintains its headquarters in Greenwich, CT. On July 22, 2013, the Company entered into a lease agreement with a related party (see Note 10) for office space in Greenwich, CT that expires on September 30, 2024. Other non-cancelable office leases in other locations expire through 2019. The Company's rental lease agreements are generally subject to escalation provisions on base rental payments, as well as certain costs incurred by the property owner and are recognized on a straight-line basis over the term of the lease agreements. | |
In July 2014, the Company terminated the operating lease for its White Plains, NY office. Under the terms of the agreement with the landlord, the Company paid an early termination fee of $616,852 at that time and was obligated to pay rent through November 30, 2015. Accordingly, upon lease termination, the Company had recognized an additional expense in the amount of $460,658 representing the fair value of the remaining lease obligation. During March 2015, the Company reached an agreement with its landlord to cancel a significant portion of its remaining lease obligation which resulted in a reduction of rent expense in the amount of $341,044. | |
Capital Commitments | |
As of March 31, 2015, the Company does not have any unfunded capital commitments. | |
Litigation | |
From time to time, the Company may be involved in litigation and claims incidental to the conduct of the Company's business. The Company may also be subject, from time to time, to reviews, inquiries and investigations by regulatory agencies that have regulatory authority over the Company's business activities. The Company is currently not subject to any pending judicial, administrative or arbitration proceedings that are expected to have a material impact on the Company's consolidated results of operations or financial condition. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Related Party Transactions | Due to Former Member | ||||||||
On November 5, 2010, the Company entered into a separation agreement with a member that provided for (i) the repurchase of the member's pro rata share of Part I Fees based on a formula, as defined in the separation agreement, over a five year period ending on September 30, 2015, and (ii) upon the closing of a sale transaction of the Company, the allocation by the managing member to the former member of any proceeds from the sale up to a maximum of $6,000,000. Accordingly, the Company recorded a liability for the present value of the expected future payments of the member's pro rata share of Part I Fees as of the date of the separation agreement and adjusted this liability to fair value at each reporting date. All amounts due to this former member were paid in November 2014. Included in compensation expense for the three months ended March 31, 2014 were fair value adjustments related to this liability that increased compensation expense in the amount of $161,217. | |||||||||
Related Party Transactions | |||||||||
Due to Principal | |||||||||
On October 29, 2014, the Company issued notes payable to a Principal in the amount of $5,564,451 representing an initial estimate of the undistributed earnings of the Predecessor as of the IPO. Such notes bear interest at 1.0% per annum and are due no later than June 30, 2015. As of March 31, 2015, the Company has accrued an additional $3,482,478 representing the finalization of the amount of undistributed earnings of the Predecessor to the Principal as of the IPO. | |||||||||
Payments Pursuant to Tax Receivable Agreements | |||||||||
As of March 31, 2015, the Company recorded a liability of $47,373,245 representing the payments due to the TRA Recipients under the TRA. | |||||||||
Within the next 12 month period, the Company expects to pay $343,621 of the total amount of the estimated TRA liability. To determine the current amount of the payments due to the TRA Recipients, the Company estimated the amount of taxable income that FSAM generated from October 1, 2014 through December 31, 2014. Next, the Company estimated the amount of the specified deductions subject to the TRA which are expected to be realized by FSAM in its 2014 tax return. This amount was then used as a basis for determining the Company's increase in estimated tax cash savings as a result of such deductions on which a current TRA obligation became due (i.e. payable within 12 months of the Company's year-end). These calculations are performed pursuant to the terms of the TRAs. | |||||||||
Payments are anticipated to be made under the TRAs indefinitely, and are due within 45 calendar days after the date FSAM files its federal income tax return. The payments are to be made in accordance with the terms of the TRAs. The timing of the payments is subject to certain contingencies including the Company having sufficient taxable income to utilize all of the tax benefits defined in the TRAs. | |||||||||
Obligations pursuant to the TRAs are obligations of FSAM. They do not impact the non-controlling interests in Fifth Street Holdings. These obligations are not income tax obligations and have no impact on the tax provision or the allocation of taxes. In general, items of income, gain, loss and deduction are allocated on the basis of the limited partners' ownership interests pursuant to the Fifth Street Holdings limited partnership agreement after taking into consideration all relevant sections of the Internal Revenue Code. | |||||||||
Other Related Party Transactions | |||||||||
All of the Company's revenue is earned from its affiliates, including management fees, performance fees and other fees. | |||||||||
For the three months ended March 31, 2015 and 2014, the Company earned $22,977,325 and $22,688,390, respectively, in management fees relating to services provided to the BDCs. As of March 31, 2015 and December 31, 2014, management fees receivable in the amounts of $22,977,325 and $26,508,013, are due from the BDCs. For the three months ended March 31, 2015 and 2014, the Company voluntarily waived $111,240 and $233,800 of management fees from the BDCs, respectively. | |||||||||
Performance fees earned for the three months ended March 31, 2015 totaled $89,602. No performance fees were earned during the three months ended March 31, 2014. | |||||||||
The Company also has entered into administration agreements under which the Company provides administrative services for the BDCs and private funds (collectively, the "Fifth Street Funds"), including office facilities and equipment, and clerical, bookkeeping and recordkeeping services at such facilities. Under the administration agreements, the Company also performs or oversees the performance of the BDCs' required administrative services, which includes being responsible for the financial records which the BDCs are required to maintain and preparing reports to the BDCs' stockholders and reports filed with the SEC. In addition, the Company assists each of the BDCs in determining and publishing its net asset value, overseeing the preparation and filing of its tax returns and the printing and dissemination of reports to the each of the BDC's stockholders, and generally overseeing the payment of each Fifth Street Fund's expenses and the performance of administrative and professional services rendered to the funds. For providing these services, facilities and personnel, the Fifth Street Funds reimburse the Company for direct fund expenses and the BDCs reimburse the Company for the allocable portion of overhead and other expenses incurred by the Company in performing its obligations under the administration agreements, including rent and such BDC's allocable portion of the costs of compensation and related expenses of such BDC's chief financial officer and chief compliance officer and their staffs. Such reimbursement is at cost with no profit to, or markup by, the Company. Included in Revenues — other fees in the Consolidated Statements of Income for the three months ended March 31, 2015 and 2014 were $1,201,124 and $1,064,639, respectively, related to amounts charged for the above services provided to the Fifth Street Funds. The Company may also provide, on the BDCs' behalf, managerial assistance to such BDC's portfolio companies. Each of the administration agreements may be terminated by either the Company or the BDC without penalty upon 60 days' written notice to the other party. | |||||||||
Receivables for reimbursable expenses from the Fifth Street Funds are included within due from affiliates and totaled $2,260,613 and $3,723,160 at March 31, 2015 and December 31, 2014, respectively. | |||||||||
On July 22, 2013, the Company entered into a lease agreement for office space for its headquarters in Greenwich, CT. The landlord is an entity controlled by Leonard M. Tannenbaum. The lease agreement requires monthly rental payments at market rates, expires on September 30, 2024 and can be renewed at the request of the Company for two additional five year periods. Rental payments under this lease of approximately $2,000,000 per year began on October 11, 2014. | |||||||||
The Company's fractional interests in corporate aircrafts are used primarily for business purposes. Occasionally, certain of the members have used the aircraft for personal use. The Company charges these members for such personal use based on market rates. There were no such charges for the three months ended March 31, 2015 and 2014. | |||||||||
On December 22, 2014, FSM entered into a limited liability company agreement, as majority member, with Leonard Tannenbaum’s brother, as minority member, for the purpose of forming MMKT Exchange LLC (previously IMME LLC), a Delaware limited liability company (“MMKT”). The purpose of MMKT is to develop technology related to the financial services industry. FSM made a total capital contribution of $80,000 for an 80% membership interest in MMKT. The Company has consolidated MMKT in its consolidated financial statements based on its 80% membership interest. | |||||||||
On February 24, 2015, FSM purchased a convertible promissory note (the “MMKT Note”) from MMKT in an aggregate principal amount of $800,000. The MMKT Note bears interest at 8% per annum and matures on August 31, 2016. | |||||||||
In addition, an external party holds $50,000 in principal amount of a convertible promissory note with the same terms as the MMKT Note and the Company recorded $351 of interest expense in the Consolidated Statement of Income associated with this convertible promissory note. | |||||||||
As of March 31, 2015 and December 31, 2014 amounts due to and from affiliates were comprised of the following: | |||||||||
As of March 31, 2015 | As of December 31, 2014 | ||||||||
Management fees receivable: | |||||||||
Base management fees receivable - BDCs | $ | 14,476,071 | $ | 15,200,933 | |||||
Part I Fees receivable - BDCs | 8,501,254 | 11,307,080 | |||||||
Collateral management fees receivable - SLF I and SLF II | 367,401 | 351,274 | |||||||
Management fees receivable - FSOF | — | 2,500 | |||||||
$ | 23,344,726 | $ | 26,861,787 | ||||||
Performance fees receivable: | |||||||||
Performance fees receivable - FSOF | $ | 89,602 | $ | 106,635 | |||||
$ | 89,602 | $ | 106,635 | ||||||
Due from affiliates: | |||||||||
Reimbursed expenses due from the BDCs | $ | 2,208,917 | $ | 3,596,975 | |||||
Reimbursed expenses due from private funds | 51,696 | 126,185 | |||||||
Due from employees | 30,428 | 59,489 | |||||||
Other amounts due from affiliated entities | 76,659 | 16,893 | |||||||
$ | 2,367,700 | $ | 3,799,542 | ||||||
Due to affiliates: | |||||||||
Distribution payable to former members of Predecessor | $ | 59,316 | $ | 59,316 | |||||
SARs liability | 8,663 | 3,465 | |||||||
$ | 67,979 | $ | 62,781 | ||||||
Equity_and_EquityBased_Compens
Equity and Equity-Based Compensation | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
Equity and Equity Based Compensation | Equity and Equity Based Compensation | ||||||||||||||
FSAM Ownership Structure | |||||||||||||||
Subsequent to the Reorganization and IPO as described in Note 1, FSAM has two classes of common stock, Class A common stock and Class B common stock, which are described as follows: | |||||||||||||||
Class A common stock | |||||||||||||||
Holders of shares of Class A common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Additionally, holders of shares of Class A common stock are entitled to receive dividends when and if declared by the Board of Directors, subject to any statutory or contractual restrictions on the payment of dividends and to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock. | |||||||||||||||
Upon dissolution, liquidation or the sale of all or substantially all of the Company's assets, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any, the holders of shares of Class A common stock would be entitled to receive the Company's remaining assets available for distribution on pro rata basis. | |||||||||||||||
Holders of shares of Class A common stock do not have preemptive, subscription, redemption or conversion rights. | |||||||||||||||
Class B common stock | |||||||||||||||
Holders of Class B common stock are entitled to five votes for each share held of record on all matters submitted to a vote of stockholders. Shares of Class B common stock have voting but no economic rights and were issued in equal proportion to the number of Holdings LP Interests issued in the Reorganization to the Principals. | |||||||||||||||
Holders of Class B common stock do not have any right to receive dividends (other than dividends consisting of shares of Class B common stock or in rights, options, warrants or other securities convertible or exercisable into or exchangeable for shares of Class B common stock paid proportionally with respect to each outstanding share of Class B common stock) or to receive a distribution upon the dissolution, liquidation or sale of all or substantially all of the Company's assets with respect to their Class B common stock other than the par value of the Class B common stock held. | |||||||||||||||
FSAM's amended and restated certificate of incorporation does not provide for any restrictions on transfer of shares of Class B common stock, however, in the event that an outstanding share of Class B common stock ceases to be held by a holder of a corresponding Holdings LP Interest, such share shall automatically be retired and cancelled. In addition, when a Holdings LP Interest is exchanged for a share of Class A common stock by a Principal, the corresponding share of Class B common stock will be retired and cancelled. | |||||||||||||||
Allocation of pre-IPO Earnings | |||||||||||||||
In connection with the IPO, the previous members of FSM agreed to allocate to the limited partners of Fifth Street Holdings, including FSAM, the Company's earnings (excluding the compensation charges related to the Reorganization) from October 1, 2014 through the date of the IPO. | |||||||||||||||
Dividends | |||||||||||||||
On January 15, 2015, the Company's Board of Directors declared an initial quarterly dividend of $0.30 per share on its Class A common stock. The declared dividend was paid on April 15, 2015 to stockholders of record at the close of business on March 31, 2015. | |||||||||||||||
Equity-based Compensation | |||||||||||||||
Prior to the Reorganization, the Company historically had fee sharing arrangements whereby certain employees or members were granted interests to a share of Part I Fees. Upon consummation of the Reorganization such interests were exchanged for Holdings LP Interests. In addition, upon consummation of the IPO, the Company granted certain equity instruments to Holdings limited partners, employees and directors. | |||||||||||||||
Part I Fees | |||||||||||||||
Prior to December 1, 2012, interests in the Company's Part I Fees that were granted and/or sold to members (other than the managing member) were accounted for as liabilities using the intrinsic-value method as these interests are subject to repurchase in the event of the member's termination of employment, at a formula-based price (as defined in the then existing operating agreement) determined by the member's pro rata share of Part I Fees. In addition, the redemption amounts were exclusive of any accumulated undistributed earnings associated with the member's interests, which were also required to be paid to a former member. | |||||||||||||||
Effective December 1, 2012, the Fifth Street operating agreement was amended to include a retirement eligibility vesting clause for then existing members (“equity members”). Members admitted after December 1, 2012, were considered non-equity members as their interests did include the retirement eligibility clause and were accounted for as liabilities using the intrinsic-value method consistent with the above. The amounts paid by the equity members prior to December 1, 2012 for these interests, totaling $2,065,664, which had been accounted for as a liability, were reclassified to members' equity with payments subsequent to December 1, 2012 being accounted for as distributions from equity. The fair value of these awards at that date in the amount of $15,187,787, net of cash paid for the awards, as determined by an independent third party appraisal, was amortized on a straight-line basis over the period to retirement eligibility. | |||||||||||||||
Conversion and Vesting of Member Interests in Predecessor and Fifth Street Holdings L.P. | |||||||||||||||
On November 4, 2014, in connection with the Reorganization, existing interests held by the members of the Predecessor (Part I fee-sharing arrangements discussed above) were exchanged for Holdings LP Interests. As part of this exchange, one of the members' Holdings LP Interests became immediately vested and expensed in full and the other members' vesting was modified and their Holdings LP Interests now vest over a period of eight years from the IPO. There was no change in the fair value of these converted interests as a result of the modification in vesting. | |||||||||||||||
The following table summarizes activity for the three months ended March 31, 2015 and 2014 with respect to the Company's equity classified awards: | |||||||||||||||
Balance at December 31, 2013 | $ | 18,243,398 | |||||||||||||
Amortization of granted and purchased interests | (518,712 | ) | |||||||||||||
Balance at March 31, 2014 | $ | 17,724,686 | |||||||||||||
Balance at December 31, 2014 | $ | 8,043,058 | |||||||||||||
Amortization of Holdings L.P. Interests | (256,693 | ) | |||||||||||||
Balance at March 31, 2015 | $ | 7,786,365 | |||||||||||||
Included in compensation expense for the three months ended March 31, 2015 and 2014 was $256,693 and $518,712, respectively, of amortization relating to the above equity-classified awards. | |||||||||||||||
As of March 31, 2015, unrecognized compensation cost in the amount of $7,786,365 relating to these equity-based awards is expected to be recognized over a period of approximately 7.58 years. | |||||||||||||||
The following table summarizes activity for the three months ended March 31, 2015 and 2014 with respect to the Company's liability classified awards, including stock appreciation rights discussed below: | |||||||||||||||
Balance at December 31, 2013 | $ | 129,001 | |||||||||||||
Cash received for purchased interests | 14,129 | ||||||||||||||
Compensation expense | 68,700 | ||||||||||||||
Payment of liabilities | (68,700 | ) | |||||||||||||
Balance at March 31, 2014 | $ | 143,130 | |||||||||||||
Balance at December 31, 2014 | $ | 3,465 | |||||||||||||
Compensation expense | 5,198 | ||||||||||||||
Balance at March 31, 2015 | $ | 8,663 | |||||||||||||
Fifth Street Asset Management Inc. 2014 Omnibus Incentive Plan | |||||||||||||||
In connection with the IPO, FSAM's Board of Directors adopted the 2014 Omnibus Incentive Plan pursuant to which the Company granted options to acquire 5,658,970 shares of Class A common stock, 1,174,748 restricted stock units to be settled in shares of Class A common stock and 90,500 stock appreciation rights to be settled in cash. | |||||||||||||||
Equity-based compensation expense, net of assumed forfeitures, is as follows: | |||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||
Restricted stock units to be settled in Class A common stock | $ | 647,835 | |||||||||||||
Options to acquire shares of Class A common stock | 575,384 | ||||||||||||||
Stock appreciation rights to be settled in cash | 5,198 | ||||||||||||||
Total | $ | 1,228,417 | |||||||||||||
Restricted Stock Units | |||||||||||||||
Each restricted stock unit represents an unfunded, unsecured right of the holder to receive a Class A common share on the vesting dates. The restricted stock units will not vest for three years and subsequently vest at a rate of one-third per year on the fourth, fifth and sixth anniversary of the grant date. These awards will become saleable at a rate of one-quarter (¼) per year, beginning on the sixth, seventh, eighth and ninth anniversary of the grant date. Upon vesting, shares of Class A common stock will be delivered to the participant. | |||||||||||||||
Additionally, if the Company pays dividends on its outstanding shares of Class A common stock, the holder of the restricted stock units will be credited with dividend equivalents. For stock dividends, the dividend equivalents will be in the form of additional restricted stock units. For cash dividends, the dividend equivalents will be in the form of cash (without interest or earnings). Dividend equivalents are subject to the same terms and conditions as the original restricted stock unit award, and are not paid until the vesting and settlement of the underlying shares of Class A common stock to which such dividend equivalents relate. For the three months ended March 31, 2015, the Company declared a cash dividend of $0.30 per share and accrued dividends in the amount of $275,249 related to unvested restricted stock units which are forfeitable. | |||||||||||||||
The following table presents unvested restricted stock units' activity for the three months ended March 31, 2015: | |||||||||||||||
Restricted Units | Weighted Average Grant Date Fair | ||||||||||||||
Value Per Unit | |||||||||||||||
Balance - December 31, 2014 | 1,174,748 | $ | 17 | ||||||||||||
Granted | 9,944 | 12.57 | |||||||||||||
Vested | — | — | |||||||||||||
Forfeited | — | — | |||||||||||||
Balance - March 31, 2015 | 1,184,692 | $ | 16.96 | ||||||||||||
No previously granted restricted stock units vested during the three months ended March 31, 2015. The total compensation expense expected to be recognized in all future periods associated with the restricted stock units, considering assumed annual forfeitures of 5.0%, is $14,538,207 at March 31, 2015, which is expected to be recognized over the remaining weighted average period of 5.58 years. | |||||||||||||||
Options | |||||||||||||||
Each option entitles the holders to purchase from the Company, upon exercise thereof, one Class A common share at the stated exercise price. Since all of the options granted either restrict saleability upon vesting or have strike prices in excess of the IPO price, the use of standard option pricing models such as Black-Scholes is precluded by ASC 718. As such, the Company has utilized a Monte Carlo pricing simulation, a statistical pricing technique or similar method to measure the fair value of option awards on the date of grant. | |||||||||||||||
A summary of unvested options activity for the three months ended March 31, 2015 is presented below: | |||||||||||||||
Options | Weighted Average Exercise Price | Weighted Average Remaining Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Balance - December 31, 2014 | 5,658,970 | $ | 18.7 | 8.03 | |||||||||||
Granted | — | — | — | ||||||||||||
Vested | — | — | — | ||||||||||||
Forfeited or expired | — | — | — | ||||||||||||
Balance - March 31, 2015 | 5,658,970 | $ | 18.7 | 8.03 | |||||||||||
Exercisable at March 31, 2015 | — | $ | — | — | $ | — | |||||||||
Expected to vest after March 31, 2015 | 4,654,091 | $ | 18.7 | 8.03 | $ | — | |||||||||
Aggregate intrinsic value represents the value of the Company's closing share price on the last trading day of the year in excess of the weighted average exercise price multiplied by the number of options exercisable or expected to vest. As of March 31, 2015, the Company's closing share price was lower than the weighted average exercise price of the options exercisable or expected to vest. As a result, the options are out of the money and have no intrinsic value. | |||||||||||||||
Compensation expense associated with these options is being recognized on a straight-line basis during the service period of the respective grant. As of March 31, 2015, there was $7,142,672 of total unrecognized compensation expense, net of assumed annual forfeitures of 5.00%, that is expected to be recognized over the remaining weighted average period of 4.33 years. | |||||||||||||||
Stock Appreciation Rights (“SARs”) | |||||||||||||||
Each SAR represents an unfunded, unsecured right of the holder to receive an amount in cash equal to the excess of the closing price of a Class A common share over the exercise price. The SARs terms and conditions are substantially similar to the provisions of the ten year option grants discussed above and had a grant date fair value of $1.78 per unit. Upon vesting, they will be settled in cash. The fair value of the SARs are re-measured each reporting period until settlement and changes in fair value are charged to compensation expense as the SARs vest over the remaining service period. The amount of the adjustment has been derived based on a grant date fair value using the IPO price of $17.00 per share, multiplied by the number of unvested shares, and expensed over the six year service period. Additionally, the calculation of the expense assumes a forfeiture rate of 5%. The total compensation expense expected to be recognized in all future periods associated with the SARs, considering assumed forfeitures, is approximately $116,094. No SARs were issued during the three months ended March 31, 2015. | |||||||||||||||
A summary of unvested SARs activity for the three months ended March 31, 2015 is presented below: | |||||||||||||||
SARs | Weighted Average Grant Date Fair Value Per Unit | ||||||||||||||
Balance December 31, 2014 | 90,500 | $ | 1.78 | ||||||||||||
Granted | — | — | |||||||||||||
Vested | — | — | |||||||||||||
Forfeited | — | — | |||||||||||||
Balance March 31, 2015 | 90,500 | $ | 1.78 | ||||||||||||
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
Prior to November 4, 2014, the Company had not been subject to U.S. Federal income taxes as the Predecessor was organized as a limited liability company. As a result of the Reorganization and IPO, the portion of Fifth Street Holdings income attributable to FSAM is now subject to U.S. Federal, state and local income taxes and is taxed at the prevailing corporate tax rates. | |
The Company's effective tax rate includes a rate benefit attributable to the fact that certain of the Company's subsidiaries operate as a series of pass-through entities which are not themselves subject to federal income tax. As a result of the Reorganization, certain subsidiaries were converted from pass-through entities to taxable entities. Accordingly, the portion of the Company's subsidiaries' earnings attributable to non-controlling interests are subject to tax when reported as a component of the non-controlling interests' taxable income on their individual tax returns. | |
The Company’s provision for income taxes consists of Federal, state and local taxes in amounts necessary to align the Company’s year-to-date provision for income taxes with the effective tax rate that the Company expects to achieve for the full year. The estimated annualized income tax provision for 2015 reflects an effective tax rate of 11.3%. The difference between the annual effective rate of 11.3% and the statutory Federal rate of 35% primarily relates to state taxes and pass-through entity income not subject to income taxes. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from current estimates. Actual provision expense may vary from the annual effective rate for discrete items recorded in the period. | |
Deferred tax assets are primarily the result of an increase in the tax basis of certain intangible assets resulting from FSAM's investment in Fifth Street Holdings. Net deferred tax assets are also recorded related to differences between the financial reporting basis and the tax basis of FSAM's proportionate share of the net assets of Fifth Street Holdings. Based on the Company's historical taxable income and its expected future earnings, management evaluates the uncertainty associated with booking tax benefits and determined that the deferred tax assets are more likely than not to be realized, including evaluation of deferred tax liabilities and the expectation of future taxable income. | |
The Company does not believe it has any significant uncertain tax positions. Accordingly, the Company did not record any adjustments or recognize interest expense for uncertain tax positions for the years ended December 31, 2014, 2013 and 2012. In the future, if uncertain tax positions arise, interest and penalties will be accrued and included in the Provision for Income Taxes. |
Earnings_per_Share
Earnings per Share | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Earnings Per Share [Abstract] | |||||
Earnings per Share | Earnings Per Share | ||||
Prior to the Reorganization and the IPO, the Company's businesses were conducted through multiple operating businesses rather than a single holding entity. As such, there was no single capital structure upon which to calculate historical earnings per common share information. Accordingly, earnings per Class A common share information has not been presented for historical periods prior to the IPO. | |||||
Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted earnings per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The treasury stock method is used to determine the dilutive potential of stock options and restricted stock units. | |||||
The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except shares and per share information): | |||||
Three Months Ended March 31, 2015 | |||||
Numerator for basic and diluted net income per share of Class A common stock: | |||||
Net income attributable to Fifth Street Asset Management Inc. | $ | 1,309,330 | |||
Denominator for basic net income per share of Class A common stock: | |||||
Weighted average shares of Class A common stock outstanding | 6,000,033 | ||||
Denominator for diluted net income per share of Class A common stock: | |||||
Weighted average shares of Class A common stock outstanding | 6,000,033 | ||||
Dilutive effects of restricted stock units | 42,744 | ||||
Weighted average shares of Class A common stock outstanding - diluted | 6,042,777 | ||||
Earnings per share of Class A common stock: | |||||
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, basic | $ | 0.22 | |||
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, diluted | $ | 0.22 | |||
Shares of Class B common stock have no impact on the calculation of net income per share of Class A common stock as holders of Class B common stock do not participate in net income or dividends, and thus, are not participating securities. | |||||
The treasury stock method is used to calculate incremental Class A common shares on potentially dilutive Class A common shares resulting from options and unvested restricted units granted in connection with the IPO. Potentially dilutive securities representing an incremental 1,184,692 restricted stock units and 5,658,970 options to acquire Class A common shares for the three months ended March 31, 2015 were excluded from the computation of diluted earnings per Class A common share for the period because their impact would have been anti-dilutive. | |||||
The EPS calculation excludes the assumed conversion of 44,000,000 Fifth Street Holdings limited partnership interest into Class A common shares as the impact would have been anti-dilutive. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events |
The Company's management evaluated subsequent events through the date of issuance of these consolidated financial statements and has determined that the following events require disclosure: | |
On April 2, 2015, FSCO GP contributed a $7.5 million investment into FSOF. This contribution was funded primarily from borrowings under the Company's credit facility. | |
On April 6, 2015, Fifth Street Management repaid all amounts due to its previous members, including the Principals, in satisfaction of undistributed earnings from the Company’s inception through the date of its IPO. The aggregate amount repaid was $9.2 million. These payments were funded primarily from borrowings under the Company's credit facility. | |
On May 11, 2015, FSAM’s Board of Directors declared a quarterly dividend of $0.17 per share on its Class A common stock. The declared dividend is payable on July 15, 2015 to stockholders of record at the close of business on June 30, 2015. | |
On May 11, 2015, the board of directors of the Company authorized a share repurchase program of up to $20.0 million of the Company’s Class A common stock. Under the repurchase program, the Company is authorized to repurchase shares through open market purchases or block trades, as conditions permit and in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The repurchase program will terminate on May 11, 2016, unless earlier terminated or extended by the board of directors of the Company, and may be suspended for periods or discontinued at any time. |
Significant_Accounting_Policie1
Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Basis of Accounting | Basis of Presentation | ||||||||
The unaudited interim consolidated financial statements presented in this quarterly report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All adjustments that, in the opinion of management, are necessary for a fair presentation for the periods presented, have been reflected as required by Regulation S-X, Rule 10-01. Such adjustments are of a normal and recurring nature. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the full year or any other interim period. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||
Principals of Consolidation | Principles of Consolidation | ||||||||
The consolidated financial statements include the accounts of the Company and entities in which it, directly or indirectly, is determined to have a controlling financial interest under ASC 810, as amended by ASU No. 2015-02. Under the variable interest model, the Company determines whether, if by design, an entity has equity investors who lack substantive participating or kick-out rights. If equity investors do not have such rights, the entity is considered a variable interest entity ("VIE") and must be consolidated by its primary beneficiary. An enterprise is determined to be the primary beneficiary if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (a) whether an entity in which the Company holds a variable interest is a VIE and (b) whether the Company's involvement, through holding interests directly or indirectly in the entity, would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. | |||||||||
Under the consolidation guidance, the Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a variable interest entity and reconsiders that conclusion continually. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company and its affiliates or indirectly through employees. The consolidation analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. Investments and redemptions (either by the Company, affiliates of the Company or third parties) or amendments to the governing documents of the respective investment funds could affect an entity's status as a VIE or the determination of the primary beneficiary. At each reporting date, the Company assesses whether it is the primary beneficiary and will consolidate or deconsolidate accordingly. | |||||||||
For equity investments where the Company does not control the investee, and where it is not the primary beneficiary of a VIE, but can exert significant influence over the financial and operating policies of the investee, the Company follows the equity method of accounting. The evaluation of whether the Company exerts control or significant influence over the financial and operational policies of its investees requires significant judgment based on the facts and circumstances surrounding each individual investment. Factors considered in these evaluations may include the type of investment, the legal structure of the investee, the terms and structure of the investment agreement, including investor voting or other rights, the terms of the Company's investment advisory agreement or other agreements with the investee, any influence the Company may have on the governing board of the investee, the legal rights of other investors in the entity pursuant to the fund’s operating documents and the relationship between the Company and other investors in the entity. | |||||||||
Consolidated Variable Interest Entities | |||||||||
FSAM is the sole general partner of Fifth Street Holdings and, as such, it operates and controls all of the business and affairs of Fifth Street Holdings and its wholly-owned subsidiaries, FSM and FSCO GP. Under ASC 810, Fifth Street Holdings meets the definition of a variable interest entity because the limited partners do not hold substantive kick-out or participating rights. Since FSAM has the obligation to absorb expected losses that could be significant to Fifth Street Holdings and is the sole general partner, FSAM is considered to be the primary beneficiary of Fifth Street Holdings. | |||||||||
As a result, the Company consolidates the financial results of Fifth Street Holdings and its wholly-owned subsidiaries and records a non-controlling interest for the economic interest in Fifth Street Holdings held by the limited partners as a separate component of stockholders' equity in its Consolidated Statements of Financial Condition for the remaining economic interests in Fifth Street Holdings. The non-controlling interest in the income of Fifth Street Holdings is included in the Consolidated Statements of Income as a reduction of net income. | |||||||||
As of March 31, 2015 and December 31, 2014, the Company has recorded the following amounts in its Consolidated Statements of Financial Condition relating to Fifth Street Holdings: | |||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 1,295,793 | $ | 3,236,830 | |||||
Management fees receivable | 23,344,726 | 26,861,787 | |||||||
Performance fees receivable | 89,602 | 106,635 | |||||||
Prepaid expenses | 856,405 | 1,150,013 | |||||||
Investments in equity method investees | 112,635 | 4,115,429 | |||||||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | — | |||||||
Beneficial interest in CLO: available-for-sale | 3,443,940 | — | |||||||
Due from affiliates (1) | 5,723,310 | 8,369,501 | |||||||
Fixed assets, net | 9,977,576 | 10,274,263 | |||||||
Deferred tax assets | 2,705,934 | 2,705,934 | |||||||
Deferred financing costs | 2,306,931 | 2,432,764 | |||||||
Other assets | 4,137,943 | 4,197,358 | |||||||
Total assets | $ | 55,037,939 | $ | 63,450,514 | |||||
Liabilities | |||||||||
Accounts payable and accrued expenses | $ | 2,318,452 | $ | 2,830,053 | |||||
Accrued compensation and benefits | 3,241,602 | 11,095,548 | |||||||
Income taxes payable | 1,232,651 | — | |||||||
Loans payable | 4,050,351 | 4,000,000 | |||||||
Credit facility payable | 15,000,000 | 12,000,000 | |||||||
Due to Principal | 9,046,929 | 9,063,791 | |||||||
Due to affiliates (2) | 759,123 | 747,505 | |||||||
Deferred rent liability | 3,217,417 | 3,261,434 | |||||||
Total liabilities | 38,866,525 | 42,998,331 | |||||||
Equity | 16,171,414 | 20,452,183 | |||||||
Total liabilities and equity | $ | 55,037,939 | $ | 63,450,514 | |||||
_____________ | |||||||||
(1) The amounts due from affiliates include $3,355,610 that is eliminated in consolidation. | |||||||||
(2) The amounts due to affiliates include $691,144 that is eliminated in consolidation. | |||||||||
The liabilities recognized as a result of consolidating Fifth Street Holdings do not represent additional claims on FSAM’s general assets; rather, they represent claims against the specific assets of Fifth Street Holdings and its subsidiaries. Conversely, assets recognized as a result of consolidating Fifth Street Holdings do not represent additional assets that could be used to satisfy claims against FSAM's general assets. | |||||||||
Unconsolidated Variable Interest Entities | |||||||||
The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary as of March 31, 2015. The Company's interest in such entities generally is in the form of direct equity interests and fixed fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. | |||||||||
Use of Estimates | Use of Estimates | ||||||||
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions affecting amounts reported in the consolidated financial statements and accompanying notes. The most significant of these estimates are related to: (i) the valuation of equity-based compensation, (ii) the estimate of future taxable income, which impacts the carrying amount of the Company’s deferred income tax assets and (iii) the determination of net tax benefits in connection with the Company's tax receivable agreements. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions. | |||||||||
Concentration of Credit Risk and Other Risks and Uncertainties | Concentration of Credit Risk and Other Risks and Uncertainties | ||||||||
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. | |||||||||
Fair Values of Financial Instruments | Fair Values of Financial Instruments | ||||||||
The carrying amounts of cash and cash equivalents, management and performance fees receivable from affiliates, prepaid expenses, due from/to affiliates, accounts payable and accrued expenses, accrued compensation and benefits and income taxes payable approximate fair value due to the immediate or short-term maturity of these financial instruments. | |||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | ||||||||
Cash equivalents include short-term, highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. The Company places its cash and cash equivalents with U.S. financial institutions and, at times, amounts may exceed federally insured limits. The Company monitors the credit standing of these financial institutions. | |||||||||
Investments in Equity Method Investees | Investments in Equity Method Investees | ||||||||
Investments in equity method investees consists of the Company's interests in unconsolidated VIEs. Entities and investments over which the Company exercises significant influence but which do not meet the requirements for consolidation are accounted for using the equity method of accounting, whereby the Company records its share of the underlying income or losses of these entities. Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest. Equity in losses of equity method investments is not recognized after the carrying value of an investment, including advances and loans, has been reduced to zero, unless guarantees or other funding obligations exist. | |||||||||
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. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment when the loss in value is deemed other than temporary. No impairment charges related to equity method investments were recorded during the three months ended March 31, 2015 and 2014. | |||||||||
The primary equity method investment of the Company is its general partnership interest in FSOF, a credit-oriented hedge fund which was previously consolidated. | |||||||||
Subordinated Debt and Beneficial Interests in CLO | Subordinated Debt and Beneficial Interest in CLO | ||||||||
The Company carries its subordinated debt interest in CLO at amortized cost and records contractually earned interest as interest income. The Company classifies its subordinated debt interest in CLO, which has a contractual maturity of January 20, 2027, as a held-to-maturity security. | |||||||||
There were no unrealized or realized gains or losses on the Company's subordinated debt interest in CLO during the three months ended March 31, 2015. Additionally, there were no sales or transfers of the Company's subordinated debt interest in CLO during the three months ended March 31, 2015. | |||||||||
The beneficial interest in CLO meets the definition of a debt security under ASC 325-40. Accordingly, the Company recognizes the accretable yield as interest income over the life of the beneficial interest using the effective yield method. In order to determine the interest recorded in each period, the Company estimates the timing and amount of future cash flows attributable to the beneficial interests over the estimated life of the CLO. The Company reevaluates the estimated future cash flows periodically to determine whether an adjustment to the accretable yield is required or if an other-than-temporary impairment should be recorded. | |||||||||
Fixed Assets | Fixed Assets | ||||||||
Fixed assets consist of furniture, fixtures and equipment (including automobiles, computer hardware and software) and leasehold improvements, and are recorded at cost, less accumulated depreciation and amortization. Depreciation of furniture, fixtures and equipment is computed using the straight-line method over the estimated useful lives of the respective assets (three to eight years). Amortization of improvements to leased properties is computed using the straight-line method based upon the initial term of the applicable lease or the estimated useful life of the improvements, whichever is shorter, and ranges from five to ten years. Routine expenditures for repairs and maintenance are charged to expense when incurred. Major betterments and improvements are capitalized. Upon retirement or disposition of fixed assets, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the Consolidated Statements of Income. The Company evaluates fixed assets for impairment whenever events or changes in circumstances indicate that an asset's carrying value may not be fully recovered. | |||||||||
Deferred Financing Costs | Deferred Financing Costs | ||||||||
Deferred financing costs consist of fees and expenses paid in connection with the closing of Fifth Street Holdings' credit facility and are capitalized at the time of payment. Deferred financing costs are amortized using the straight line method over the term of the credit facility and are included in interest expense Company's Consolidated Statements of Income. | |||||||||
Deferred Rent | Deferred Rent | ||||||||
The Company recognizes rent expense on a straight-line basis over the expected lease term. Within the provisions of certain leases, there are free rent periods and escalations in payments over the base lease term. The effects of these items have been reflected in rent expense on a straight-line basis over the expected lease term. Landlord contributions and tenant allowances are included in the straight-line calculations and are being deferred over the lease term and are reflected as a reduction in rent expense. | |||||||||
Revenue Recognition | Revenue Recognition | ||||||||
The Company has three principal sources of revenues: management fees, performance fees and other fees. These revenues are derived from the Company's agreements with the funds it manages, primarily the BDCs. The investment advisory agreements on which revenues are based are generally renewable on an annual basis by the general partner or the board of directors of the respective funds. | |||||||||
Management Fees | |||||||||
Management fees are generally based on a defined percentage of fair value of assets, total commitments, invested capital, net asset value, net investment income, total assets or par value of the investment portfolios managed by the Company. All management fees are earned from affiliated funds of the Company. The contractual terms of management fees vary by fund structure and investment strategy and range from 0.40% to 2.00% for base management fees, which are asset or capital-based. | |||||||||
Management fees from affiliates also include quarterly incentive fees on the net investment income from the BDCs ("Part I Fees"). Part I Fees are generally equal to 20.0% of the BDCs' net investment income (before Part I Fees and performance fees payable based on capital gains), subject to fixed "hurdle rates" as defined in the respective investment advisory agreement. No fees are recognized until the BDCs' net investment income exceeds the respective hurdle rate, with a "catch-up" provision that serves to ensure the Company receives 20.0% of the BDCs' net investment income from the first dollar earned. Such fees are classified as management fees as they are paid quarterly, predictable and recurring in nature, not subject to repayment (or clawback) and cash settled each quarter. Management fees from affiliates are recognized as revenue in the period investment advisory services are rendered, subject to the Company's assessment of collectability. | |||||||||
Performance Fees | |||||||||
Performance fees are earned from the funds managed by the Company based on the performance of the respective funds. The contractual terms of performance fees vary by fund structure and investment strategy and are generally 15.0% to 20.0%. | |||||||||
The Company has elected to adopt Method 2 of ASC 605-20, Revenue Recognition for Revenue Based on a Formula. Under this method, the Company records revenue when it is entitled to performance-based fees, subject to certain hurdles or benchmarks. The performance fees for any period are based upon an assumed liquidation of the fund's net assets on the reporting date, and distribution of the net proceeds in accordance with the fund's income allocation provisions. The performance fees may be subject to reversal to the extent that the performance fees recorded exceed the amount due to the general partner or investment manager based on a fund's cumulative investment returns. | |||||||||
Performance fees related to the BDCs ("Part II Fees") are calculated and payable in arrears as of the end of each fiscal year of the BDCs and equal 20.0% of the BDCs' realized capital gains, if any, on a cumulative basis since inception, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. | |||||||||
Other Fees | |||||||||
The Company also provides administrative services to the BDCs and private funds and the fees earned are reported within Revenues — Other fees. These fees generally represent the portion of compensation, overhead and other expenses incurred by the Company directly attributable to the funds, but may also be based on a fund's asset value. The Company selects the vendors, incurs the expenses, and is the primary obligor under the related arrangements. Such reimbursement is at cost with no profit to, or markup by, the Company. The Company is considered the principal under these arrangements and is required to record the expense and related reimbursement revenue on a gross basis. Other fees are recognized in the periods during which the related expenses are incurred and the reimbursements are contractually earned. | |||||||||
Compensation and Benefits | Compensation and Benefits | ||||||||
Compensation generally includes salaries, bonuses and equity-based compensation charges. Bonuses are accrued over the service period to which they relate. All payments made to the Predecessor's managing member since inception and all payments made to the Predecessor's equity members since December 1, 2012 (see Note 11) related to their granted or purchased interests are accounted for as distributions on the equity held by such members. | |||||||||
Equity-Based Compensation | |||||||||
The Company accounts for stock-based compensation in accordance with ASC 718, "Compensation – Stock Compensation." Under the fair value recognition provision of this guidance, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. | |||||||||
The Company recognizes expense related to equity-based compensation transactions in which it receives employee services in exchange for: (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company's equity instruments. Equity-based compensation expense represents expenses associated with the: (i) granting of Part I Fee-sharing arrangements prior to the Reorganization; (ii) conversion of and acceleration in vesting of interests in the Predecessor in connection with the Reorganization; and (iii) the granting of restricted stock units, options to purchase shares of Class A common stock and stock appreciation rights granted in connection with the IPO. | |||||||||
Stock-based compensation expense is based on awards ultimately expected to vest and has been reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The effect of such change in estimated forfeitures is recognized through a cumulative catch-up adjustment that is included in the period of the change in estimate. | |||||||||
The value of the portion of the award that is ultimately expected to vest on a straight-line basis over the requisite service period is included within compensation and benefits (except for grants to non-employees which are included in general, administrative and other expenses) in the Company’s Consolidated Statements of Income. | |||||||||
The Company records deferred tax assets or liabilities for equity compensation plan awards based on deductions for income tax purposes of stock-based compensation recognized at the statutory tax rate in the jurisdiction in which the Company is expected to receive a tax deduction. In addition, differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the Company's income tax returns are recorded as adjustments to additional paid-in capital. If the tax deduction is less than the deferred tax asset, the calculated shortfall reduces the pool of excess tax benefits. If the pool of excess tax benefits is reduced to zero, then subsequent shortfalls would increase the income tax expense. | |||||||||
Reimbursable Expenses | Reimbursable Expenses | ||||||||
In the normal course of business, the Company pays certain expenses on behalf of the BDCs, primarily for professional travel and other costs associated with particular portfolio company holdings of the BDCs, for which it is reimbursed. Such expenses are not an obligation of the Company and are recorded as due from affiliates at the time of disbursement (see Note 10). | |||||||||
Fund Offering and Start-up Expenses | Fund Offering and Start-up Expenses | ||||||||
In certain instances, the Company may bear offering costs related to capital raising activities of the Fifth Street Funds, including underwriting commissions, which are expensed as incurred. In addition, the Company expenses all costs associated with starting new investment funds. | |||||||||
Income Taxes | Income Taxes | ||||||||
Prior to the completion of the IPO, substantially all of the Company's earnings flowed through to the former members of FSM without being subject to entity level income taxes. Accordingly, no provision for income taxes has been recorded in the consolidated financial statements prior to the IPO. | |||||||||
Fifth Street Holdings complies with the requirements of the Internal Revenue Code that are applicable to limited partnerships, which allow for the complete pass-through of taxable income or losses to Fifth Street Holdings limited partners, including FSAM, who are individually responsible for any federal tax consequences. Subsequent to the IPO, the tax provision includes the income tax obligation related to FSAM's allocated portion of Fifth Street Holdings' income, which is net of any tax incurred at Fifth Street Holdings' subsidiaries that are subject to income tax. | |||||||||
Also, as a result of the Reorganization, certain subsidiaries were converted from pass-through entities to taxable entities. Accordingly, the portion of the Company's subsidiaries' earnings attributable to non-controlling interests are subject to tax when reported as a component of the non-controlling interests' taxable income on their individual tax returns. | |||||||||
The Company accounts for income taxes under the asset and liability method prescribed by ASC 740, "Income Taxes." As a result of the Company's acquisition of limited partnership interests in Fifth Street Holdings, the Company expects to benefit from amortization and other tax deductions reflecting the step-up in tax basis in the acquired assets. Those deductions will be used by the Company and will be taken into account in determining the Company's taxable income. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Management periodically assesses the recoverability of its deferred tax assets based upon expected future earnings, future deductibility of the asset and changes in applicable tax laws and other factors. If management determines that it is not probable that the deferred tax asset will be fully recoverable in the future, a valuation allowance may be established for the difference between the asset balance and the amount expected to be recoverable in the future. The allowance will result in a charge to the Company’s Consolidated Statements of Income. Further, the Company records its income taxes receivable and payable based upon its estimated income tax liability. | |||||||||
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. | |||||||||
The Company recognizes interest and penalties associated with tax matters such as franchise tax liabilities, if applicable, as general and administrative and other expenses. | |||||||||
Class A Earnings per Share | Class A Earnings per Share | ||||||||
The Company computes basic earnings per share attributable to FSAM’s Class A common stockholders by dividing income attributable to FSAM by the weighted-average Class A common shares outstanding for the period. Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in the Company's earnings. Potentially dilutive securities include outstanding options to acquire Class A common shares, unvested restricted stock units and Fifth Street Holdings limited partnership interests which are exchangeable for shares of Class A common stock. The dilutive effect of stock options and restricted stock units is reflected in diluted earnings per share of Class A common stock by application of the treasury stock method. | |||||||||
Under the treasury stock method, if the average market price of a share of Class A common stock increases above the option's exercise price, the proceeds that would be assumed to be realized from the exercise of the option would be used to acquire outstanding shares of Class A common stock. The dilutive effect of awards is directly correlated with the fair value of the shares of Class A common stock. However, the awards may be anti-dilutive when the market price of the underlying shares exceeds the option's exercise price. This result is possible because the compensation expense attributed to future services but not yet recognized is included as a component of the assumed proceeds upon exercise. | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements | ||||||||
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The new standard will be effective for the Company on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the requisite service period, which clarifies the recognition of stock-based compensation over the required service period, if it is probable that the performance condition will be achieved. This guidance will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and should be applied prospectively. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In August 2014, the FASB issued ASU 2014-13, Measuring the Financial Assets and Financial Liabilities of a Consolidated Collateralized Financing Entity ("CFE"). This new guidance requires reporting entities to use the more observable of the fair value of the financial assets or the financial liabilities to measure the financial assets and the financial liabilities of a CFE when a CFE is initially consolidated. It permits entities to make an accounting policy election to apply this same measurement approach after initial consolidation or to apply other GAAP to account for the consolidated CFE's financial assets and financial liabilities. It also prohibits all entities from electing to use the fair value option in ASC 825 to measure either the financial assets or financial liabilities of a consolidated CFE that is within the scope of this issue. This guidance is effective for fiscal years beginning after December 15, 2015, and interim periods therein. Early adoption is permitted using a modified retrospective transition approach as described in the pronouncement. The Company is currently evaluating the effect that this guidance will have on its consolidated financial statements and its ongoing financial reporting. | |||||||||
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern, which requires management to evaluate, at each annual and interim reporting period, the company's ability to continue as a going concern within one year of the date the financial statements are issued and provide related disclosures. This accounting guidance is effective for the Company on a prospective basis beginning in the first quarter of fiscal 2016 and is not expected to have a material effect on its consolidated financial statements. | |||||||||
In February 2015, the FASB issued ASU 2015-02, which provides guidance on evaluating whether a reporting entity should consolidate certain legal entities. Specifically, the amendments modify the evaluation of whether limited partnerships and similar legal entities are VIEs. Under this analysis, limited partnerships and other similar entities will be considered a VIE unless the limited partners hold substantive kick-out rights or participating rights. Further, the amendments eliminate the presumption that a general partner should consolidate a limited partnership under the voting interest model, as well as affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. A reporting entity may apply the amendments using a modified retrospective approach or a full retrospective application. As of December 31, 2014, the Company has elected to early adopt such guidance in these consolidated financial statements which resulted in deconsolidation of the Combined Funds. Although total assets and equity significantly decreased as a result of the Combined Funds' deconsolidation, it did not change net income or equity attributable to controlling interests in FSAM. | |||||||||
In April 2015, the FASB issued ASU 2015-03, which changes the presentation of debt issuance costs in a reporting entity's financial statements. Under this new guidance, debt issuance costs will be presented as a direct deduction from the related debt liability instead of an asset. This accounting change is consistent with the current presentation under U.S. GAAP for debt discounts and it also converges the guidance under U.S. GAAP with that in the International Financial Reporting Standards. Debt issuance costs will reduce the proceeds from debt borrowings in the statement of cash flows instead of being presented as a separate caption in the financing section of that statement. Amortization of debt issuance costs will continue to be reported as interest expense in the statement of income. This accounting update does not affect the current accounting guidance for the recognition and measurement of debt issuance costs. This update is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is allowed for all entities for financial statements that have not been previously issued. This guidance is not expected to have a material effect on the consolidated financial statements as it will result in a reclassification on the Consolidated Statements of Financial Condition. Accordingly, there will be no impact on total equity or net income as a result of adoption of this guidance. |
Organization_and_Basis_of_Pres1
Organization and Basis of Presentation (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2015 | |||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||
Impact of Reorganization and Deconsolidation of Combined Funds | The following table shows the impact on the Consolidated Statement of Income for the three months ended March 31, 2014 for the deconsolidation of previously combined funds and the Reorganization: | ||||||||||||
For the three months ended March 31, 2014 | Deconsolidation of Combined Funds and Effects of Reorganization | For the three months ended March 31, 2014, | |||||||||||
as adjusted | |||||||||||||
Revenues | $ | 23,753,029 | $ | 14,336 | $ | 23,767,365 | |||||||
Net income | $ | 14,859,754 | $ | (371,240 | ) | $ | 14,488,514 | ||||||
Net income attributable to redeemable non-controlling interests in Combined Fund | $ | (391,416 | ) | $ | 391,416 | $ | — | ||||||
Net loss attributable to non-controlling interests in | $ | 20,176 | $ | (20,176 | ) | $ | — | ||||||
Combined Fund | |||||||||||||
Net income attributable to Predecessor | $ | — | $ | (14,488,514 | ) | $ | (14,488,514 | ) | |||||
Net income attributable to non-controlling interests in Fifth Street Holdings L.P. | $ | — | $ | — | $ | — | |||||||
Net income attributable to controlling interests in Fifth Street Management Group | $ | 14,488,514 | $ | (14,488,514 | ) | $ | — | ||||||
Net income attributable to Fifth Street Asset | $ | — | $ | — | $ | — | |||||||
Management Inc. |
Significant_Accounting_Policie2
Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Accounting Policies [Abstract] | |||||||||
Schedule of Variable Interest Entity Amounts in Consolidated Balance Sheet | As of March 31, 2015 and December 31, 2014, the Company has recorded the following amounts in its Consolidated Statements of Financial Condition relating to Fifth Street Holdings: | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Assets | |||||||||
Cash and cash equivalents | $ | 1,295,793 | $ | 3,236,830 | |||||
Management fees receivable | 23,344,726 | 26,861,787 | |||||||
Performance fees receivable | 89,602 | 106,635 | |||||||
Prepaid expenses | 856,405 | 1,150,013 | |||||||
Investments in equity method investees | 112,635 | 4,115,429 | |||||||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | — | |||||||
Beneficial interest in CLO: available-for-sale | 3,443,940 | — | |||||||
Due from affiliates (1) | 5,723,310 | 8,369,501 | |||||||
Fixed assets, net | 9,977,576 | 10,274,263 | |||||||
Deferred tax assets | 2,705,934 | 2,705,934 | |||||||
Deferred financing costs | 2,306,931 | 2,432,764 | |||||||
Other assets | 4,137,943 | 4,197,358 | |||||||
Total assets | $ | 55,037,939 | $ | 63,450,514 | |||||
Liabilities | |||||||||
Accounts payable and accrued expenses | $ | 2,318,452 | $ | 2,830,053 | |||||
Accrued compensation and benefits | 3,241,602 | 11,095,548 | |||||||
Income taxes payable | 1,232,651 | — | |||||||
Loans payable | 4,050,351 | 4,000,000 | |||||||
Credit facility payable | 15,000,000 | 12,000,000 | |||||||
Due to Principal | 9,046,929 | 9,063,791 | |||||||
Due to affiliates (2) | 759,123 | 747,505 | |||||||
Deferred rent liability | 3,217,417 | 3,261,434 | |||||||
Total liabilities | 38,866,525 | 42,998,331 | |||||||
Equity | 16,171,414 | 20,452,183 | |||||||
Total liabilities and equity | $ | 55,037,939 | $ | 63,450,514 | |||||
_____________ | |||||||||
(1) The amounts due from affiliates include $3,355,610 that is eliminated in consolidation. | |||||||||
(2) The amounts due to affiliates include $691,144 that is eliminated in consolidation. |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | ||||||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||
Roll-forward in the Changes in Fair Value of All Financial Instruments With Unobservable Inputs | The following tables provide a roll-forward in the changes in fair value for all financial instruments for which the Company determines fair value using unobservable (Level 3) factors for the three months ended March 31, 2015: | ||||||||||||||||||||
Beneficial interest in CLO: available-for-sale | |||||||||||||||||||||
Fair value at December 31, 2014 | $ | — | |||||||||||||||||||
Purchases of investments | 3,443,940 | ||||||||||||||||||||
Fair value at March 31, 2015 | $ | 3,443,940 | |||||||||||||||||||
Quantitative Information Related to Significant Unobservable Inputs for Level 3 Financial Instruments | The following table provides quantitative information related to the significant unobservable inputs for Level 3 financial instruments, which are carried at fair value as of March 31, 2015: | ||||||||||||||||||||
Assets | Fair Value | Valuation Technique | Unobservable Input | Range | Weighted Average | ||||||||||||||||
Beneficial interest in CLO: available-for-sale | $ | 3,443,940 | Recent market transactions | N/A | N/A | N/A | |||||||||||||||
Financial Instruments Disclosed, But Not Carried at Fair Value | The following table presents the carrying value and fair value of the Company's financial assets and liabilities disclosed, but not carried, at fair value as of March 31, 2015 and the level of each financial asset and liability within the fair value hierarchy: | ||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Subordinated debt interest in CLO: held-to-maturity | $ | 1,043,144 | $ | 1,043,144 | $ | — | $ | — | $ | 1,043,144 | |||||||||||
Loans payable | 4,050,351 | 4,047,138 | — | — | 4,047,138 | ||||||||||||||||
Credit facility payable | 15,000,000 | 15,000,000 | — | — | 15,000,000 | ||||||||||||||||
Note payable included in Due to Principal | 5,564,451 | 5,564,451 | — | — | 5,564,451 | ||||||||||||||||
Payables to related parties pursuant to tax receivable agreements | 47,373,245 | 42,352,014 | — | — | 42,352,014 | ||||||||||||||||
Total | $ | 73,031,191 | $ | 68,006,747 | $ | — | $ | — | $ | 68,006,747 | |||||||||||
The following table presents the carrying value and fair value of the Company's financial assets and liabilities disclosed, but not carried, at fair value as of December 31, 2014 and the level of each financial asset and liability within the fair value hierarchy: | |||||||||||||||||||||
Carrying | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||
Value | |||||||||||||||||||||
Loan payable | $ | 4,000,000 | $ | 4,049,110 | $ | — | $ | — | $ | 4,049,110 | |||||||||||
Credit facility payable | 12,000,000 | 12,000,000 | — | — | 12,000,000 | ||||||||||||||||
Note payable included in Due to Principal | 5,564,451 | 5,564,451 | — | — | 5,564,451 | ||||||||||||||||
Payables to related parties pursuant to tax receivable agreements | 47,373,245 | 42,352,014 | — | — | 42,352,014 | ||||||||||||||||
Total | $ | 68,937,696 | $ | 63,965,575 | $ | — | $ | — | $ | 63,965,575 | |||||||||||
Fixed_Assets_Tables
Fixed Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Schedule of Fixed Assets | Fixed assets consist of the following: | ||||||||
31-Mar-15 | December 31, 2014 | ||||||||
Furniture, fixtures and equipment | $ | 3,658,563 | $ | 3,563,172 | |||||
Leasehold improvements | 7,804,659 | 7,864,805 | |||||||
Fixed assets, cost | 11,463,222 | 11,427,977 | |||||||
Less: accumulated depreciation and amortization | (1,485,646 | ) | (1,153,714 | ) | |||||
Fixed assets, net book value | $ | 9,977,576 | $ | 10,274,263 | |||||
Other_Assets_Tables
Other Assets (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||||||||
Schedule of Other Assets | Other assets consist of the following: | ||||||||
31-Mar-15 | 31-Dec-14 | ||||||||
Security deposits | $ | 453,375 | $ | 453,375 | |||||
Fractional interests in aircrafts (a) | 3,514,509 | 3,585,283 | |||||||
Other | 170,059 | 158,700 | |||||||
$ | 4,137,943 | $ | 4,197,358 | ||||||
__________________ | |||||||||
(a) | In November 2013, the Company entered into an agreement that entitled it to the use of a corporate aircraft for five years. The amount paid, less the estimated trade-in value, is being amortized on a straight-line basis over the expected five-year term of the agreement. In December 2014, the Company sold half of this interest and entered into an agreement for a second corporate aircraft for five years. Amortization expense for the three months ended March 31, 2015 and 2014 was $70,774 and $68,268, respectively. |
Debt_Tables
Debt (Tables) | 3 Months Ended | |||
Mar. 31, 2015 | ||||
Debt Disclosure [Abstract] | ||||
Schedule of Debt Maturing Over the Next Five Years | Outstanding principal amounts related to this loan maturing over the next five years are as follows: | |||
2015 | $ | — | ||
2016 | — | |||
2017 | 51,551 | |||
2018 | 627,050 | |||
2019 | 642,908 | |||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Related Party Transactions [Abstract] | |||||||||
Schedule of Amounts Due to and From Affiliates | As of March 31, 2015 and December 31, 2014 amounts due to and from affiliates were comprised of the following: | ||||||||
As of March 31, 2015 | As of December 31, 2014 | ||||||||
Management fees receivable: | |||||||||
Base management fees receivable - BDCs | $ | 14,476,071 | $ | 15,200,933 | |||||
Part I Fees receivable - BDCs | 8,501,254 | 11,307,080 | |||||||
Collateral management fees receivable - SLF I and SLF II | 367,401 | 351,274 | |||||||
Management fees receivable - FSOF | — | 2,500 | |||||||
$ | 23,344,726 | $ | 26,861,787 | ||||||
Performance fees receivable: | |||||||||
Performance fees receivable - FSOF | $ | 89,602 | $ | 106,635 | |||||
$ | 89,602 | $ | 106,635 | ||||||
Due from affiliates: | |||||||||
Reimbursed expenses due from the BDCs | $ | 2,208,917 | $ | 3,596,975 | |||||
Reimbursed expenses due from private funds | 51,696 | 126,185 | |||||||
Due from employees | 30,428 | 59,489 | |||||||
Other amounts due from affiliated entities | 76,659 | 16,893 | |||||||
$ | 2,367,700 | $ | 3,799,542 | ||||||
Due to affiliates: | |||||||||
Distribution payable to former members of Predecessor | $ | 59,316 | $ | 59,316 | |||||
SARs liability | 8,663 | 3,465 | |||||||
$ | 67,979 | $ | 62,781 | ||||||
Equity_and_EquityBased_Compens1
Equity and Equity-Based Compensation (Tables) | 3 Months Ended | ||||||||||||||
Mar. 31, 2015 | |||||||||||||||
Equity [Abstract] | |||||||||||||||
Schedule of Equity Classified Awards | The following table summarizes activity for the three months ended March 31, 2015 and 2014 with respect to the Company's equity classified awards: | ||||||||||||||
Balance at December 31, 2013 | $ | 18,243,398 | |||||||||||||
Amortization of granted and purchased interests | (518,712 | ) | |||||||||||||
Balance at March 31, 2014 | $ | 17,724,686 | |||||||||||||
Balance at December 31, 2014 | $ | 8,043,058 | |||||||||||||
Amortization of Holdings L.P. Interests | (256,693 | ) | |||||||||||||
Balance at March 31, 2015 | $ | 7,786,365 | |||||||||||||
Schedule of Liability Classified Awards | The following table summarizes activity for the three months ended March 31, 2015 and 2014 with respect to the Company's liability classified awards, including stock appreciation rights discussed below: | ||||||||||||||
Balance at December 31, 2013 | $ | 129,001 | |||||||||||||
Cash received for purchased interests | 14,129 | ||||||||||||||
Compensation expense | 68,700 | ||||||||||||||
Payment of liabilities | (68,700 | ) | |||||||||||||
Balance at March 31, 2014 | $ | 143,130 | |||||||||||||
Balance at December 31, 2014 | $ | 3,465 | |||||||||||||
Compensation expense | 5,198 | ||||||||||||||
Balance at March 31, 2015 | $ | 8,663 | |||||||||||||
Schedule of Equity-Based Compensation Expense | Equity-based compensation expense, net of assumed forfeitures, is as follows: | ||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||
Restricted stock units to be settled in Class A common stock | $ | 647,835 | |||||||||||||
Options to acquire shares of Class A common stock | 575,384 | ||||||||||||||
Stock appreciation rights to be settled in cash | 5,198 | ||||||||||||||
Total | $ | 1,228,417 | |||||||||||||
Restricted Stock Units Activity | The following table presents unvested restricted stock units' activity for the three months ended March 31, 2015: | ||||||||||||||
Restricted Units | Weighted Average Grant Date Fair | ||||||||||||||
Value Per Unit | |||||||||||||||
Balance - December 31, 2014 | 1,174,748 | $ | 17 | ||||||||||||
Granted | 9,944 | 12.57 | |||||||||||||
Vested | — | — | |||||||||||||
Forfeited | — | — | |||||||||||||
Balance - March 31, 2015 | 1,184,692 | $ | 16.96 | ||||||||||||
Unvested Option Activity | A summary of unvested options activity for the three months ended March 31, 2015 is presented below: | ||||||||||||||
Options | Weighted Average Exercise Price | Weighted Average Remaining Life (in years) | Aggregate Intrinsic Value | ||||||||||||
Balance - December 31, 2014 | 5,658,970 | $ | 18.7 | 8.03 | |||||||||||
Granted | — | — | — | ||||||||||||
Vested | — | — | — | ||||||||||||
Forfeited or expired | — | — | — | ||||||||||||
Balance - March 31, 2015 | 5,658,970 | $ | 18.7 | 8.03 | |||||||||||
Exercisable at March 31, 2015 | — | $ | — | — | $ | — | |||||||||
Expected to vest after March 31, 2015 | 4,654,091 | $ | 18.7 | 8.03 | $ | — | |||||||||
Unvested SARs Activity | A summary of unvested SARs activity for the three months ended March 31, 2015 is presented below: | ||||||||||||||
SARs | Weighted Average Grant Date Fair Value Per Unit | ||||||||||||||
Balance December 31, 2014 | 90,500 | $ | 1.78 | ||||||||||||
Granted | — | — | |||||||||||||
Vested | — | — | |||||||||||||
Forfeited | — | — | |||||||||||||
Balance March 31, 2015 | 90,500 | $ | 1.78 | ||||||||||||
Earnings_per_Share_Tables
Earnings per Share (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Earnings Per Share [Abstract] | |||||
Earnings per Share | The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations (in thousands, except shares and per share information): | ||||
Three Months Ended March 31, 2015 | |||||
Numerator for basic and diluted net income per share of Class A common stock: | |||||
Net income attributable to Fifth Street Asset Management Inc. | $ | 1,309,330 | |||
Denominator for basic net income per share of Class A common stock: | |||||
Weighted average shares of Class A common stock outstanding | 6,000,033 | ||||
Denominator for diluted net income per share of Class A common stock: | |||||
Weighted average shares of Class A common stock outstanding | 6,000,033 | ||||
Dilutive effects of restricted stock units | 42,744 | ||||
Weighted average shares of Class A common stock outstanding - diluted | 6,042,777 | ||||
Earnings per share of Class A common stock: | |||||
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, basic | $ | 0.22 | |||
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, diluted | $ | 0.22 | |||
Organization_and_Basis_of_Pres2
Organization and Basis of Presentation (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Nov. 04, 2014 | Oct. 13, 2014 | Mar. 31, 2015 | Nov. 03, 2014 | Dec. 31, 2014 |
segment | |||||
Related Party Transaction [Line Items] | |||||
Number of reportable segments | 1 | ||||
Exchange agreement, period before transfers are permitted | 2 years | ||||
Cash savings payable to TRA Recipients under tax receivable agreement, percent | 85.00% | ||||
Stock split ratio | 0.3333 | ||||
Fifth Street Holdings L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Noncontrolling interest, interest held by noncontrolling owners | 88.00% | ||||
Common Class A [Member] | |||||
Related Party Transaction [Line Items] | |||||
Exchange agreement, conversion ratio | 1 | ||||
Shares issued in the IPO (shares) | 6,000,000 | ||||
IPO share price (in dollars per share) | 17 | ||||
Proceeds from sale of Class A common shares in Initial Public Offering | 95.9 | ||||
Underwriting commissions | 6.1 | ||||
Offering expenses of Initial Public Offering | 3.9 | ||||
Common shares outstanding (shares) | 6,000,033 | 6,000,033 | |||
Common Class B [Member] | |||||
Related Party Transaction [Line Items] | |||||
Common shares outstanding (shares) | 42,856,854 | 42,856,854 | |||
Principals of Fifth Street Holdings, L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest exchanged, percent | 100.00% | ||||
Principals of Fifth Street Holdings, L.P. [Member] | Common Class B [Member] | |||||
Related Party Transaction [Line Items] | |||||
Common shares outstanding (shares) | 42,856,854 | ||||
Members of Fifth Street Management LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest exchanged, percent | 100.00% | ||||
Members of FSCO GP LLC [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest exchanged, percent | 100.00% | ||||
Fifth Street Holdings L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Ownership interest in Fifth Street Holdings L.P., percent | 12.00% | ||||
Holdings LP Interests [Member] | |||||
Related Party Transaction [Line Items] | |||||
Holdings LP Interests (shares) | 6,000,000 | ||||
Holdings LP Interests [Member] | Principals of Fifth Street Holdings, L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Holdings LP Interests (shares) | 42,856,854 | ||||
Holdings LP Interests [Member] | Limited Partners of Fifth Street Holdings, L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Holdings LP Interests (shares) | 44,000,000 | ||||
Common Stock [Member] | Principals of Fifth Street Holdings, L.P. [Member] | |||||
Related Party Transaction [Line Items] | |||||
Voting power of FSAM's common stock, percent | 97.30% |
Organization_and_Basis_of_Pres3
Organization and Basis of Presentation - Impact of Deconsolidation of Combined Funds (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Revenues | $24,870,124 | $23,767,365 |
Net income | 10,828,332 | 14,488,514 |
Net income attributable to non-controlling interests | -9,519,002 | 0 |
Net income attributable to Fifth Street Asset Management Inc. | 1,309,330 | 0 |
Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Gain or loss recognized as a result of deconsolidation | 0 | |
Revenues | 23,767,365 | |
Net income | 14,488,514 | |
Net income attributable to redeemable non-controlling interests in Combined Funds | 0 | |
Net loss attributable to non-controlling interests in Combined Fund | 0 | |
Net income attributable to Predecessor | -14,488,514 | |
Net income attributable to Fifth Street Asset Management Inc. | 0 | |
Previously Reported [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Revenues | 23,753,029 | |
Net income | 14,859,754 | |
Net income attributable to redeemable non-controlling interests in Combined Funds | -391,416 | |
Net loss attributable to non-controlling interests in Combined Fund | 20,176 | |
Net income attributable to Predecessor | 0 | |
Net income attributable to Fifth Street Asset Management Inc. | 0 | |
Restatement Adjustment [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Revenues | 14,336 | |
Net income | -371,240 | |
Net income attributable to redeemable non-controlling interests in Combined Funds | 391,416 | |
Net loss attributable to non-controlling interests in Combined Fund | -20,176 | |
Net income attributable to Predecessor | -14,488,514 | |
Net income attributable to Fifth Street Asset Management Inc. | 0 | |
Fifth Street Holdings L.P. [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | 0 | |
Fifth Street Holdings L.P. [Member] | Previously Reported [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | 0 | |
Fifth Street Holdings L.P. [Member] | Restatement Adjustment [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | 0 | |
Fifth Street Management Group [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | 0 | |
Fifth Street Management Group [Member] | Previously Reported [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | 14,488,514 | |
Fifth Street Management Group [Member] | Restatement Adjustment [Member] | Deconsolidation of Variable Interest Entity [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net income attributable to non-controlling interests | ($14,488,514) |
Significant_Accounting_Policie3
Significant Accounting Policies - Variable Interest Entities (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 |
Assets | ||||
Cash and cash equivalents | $1,300,364 | $3,238,008 | $8,835,263 | $4,015,728 |
Prepaid expenses | 856,405 | 1,150,013 | ||
Investments in equity method investees | 112,635 | 4,115,429 | ||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | 0 | ||
Beneficial interest in CLO: available-for-sale | 3,443,940 | 0 | ||
Due from affiliates | 2,367,700 | 3,799,542 | ||
Fixed assets, net | 9,977,576 | 10,274,263 | ||
Deferred tax assets | 57,972,039 | 57,972,039 | ||
Deferred financing costs | 2,306,931 | 2,432,764 | ||
Other assets | 4,137,943 | 4,197,358 | ||
Total assets | 106,953,005 | 114,147,838 | ||
Liabilities | ||||
Accounts payable and accrued expenses | 2,318,452 | 3,045,651 | ||
Accrued compensation and benefits | 3,241,602 | 11,095,548 | ||
Income taxes payable | 1,033,118 | 361,052 | ||
Loans payable | 4,050,351 | 4,000,000 | ||
Credit facility payable | 15,000,000 | 12,000,000 | ||
Due to affiliates | 67,979 | 62,781 | ||
Deferred rent liability | 3,217,417 | 3,261,434 | ||
Total liabilities | 87,424,352 | 90,263,503 | ||
Equity | 7,466,620 | 6,752,637 | ||
Total liabilities and equity | 106,953,005 | 114,147,838 | ||
Variable Interest Entity, Not Primary Beneficiary [Member] | ||||
Liabilities | ||||
Maximum exposure to loss | 4,689,321 | |||
Variable Interest Entity, Primary Beneficiary [Member] | ||||
Assets | ||||
Cash and cash equivalents | 1,295,793 | 3,236,830 | ||
Prepaid expenses | 856,405 | 1,150,013 | ||
Investments in equity method investees | 112,635 | 4,115,429 | ||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | 0 | ||
Beneficial interest in CLO: available-for-sale | 3,443,940 | 0 | ||
Due from affiliates | 5,723,310 | 8,369,501 | ||
Fixed assets, net | 9,977,576 | 10,274,263 | ||
Deferred tax assets | 2,705,934 | 2,705,934 | ||
Deferred financing costs | 2,306,931 | 2,432,764 | ||
Other assets | 4,137,943 | 4,197,358 | ||
Total assets | 55,037,939 | 63,450,514 | ||
Liabilities | ||||
Accounts payable and accrued expenses | 2,318,452 | 2,830,053 | ||
Accrued compensation and benefits | 3,241,602 | 11,095,548 | ||
Income taxes payable | 1,232,651 | 0 | ||
Loans payable | 4,050,351 | 4,000,000 | ||
Credit facility payable | 15,000,000 | 12,000,000 | ||
Due to Principal Affiliates | 9,046,929 | 9,063,791 | ||
Due to affiliates | 759,123 | 747,505 | ||
Deferred rent liability | 3,217,417 | 3,261,434 | ||
Total liabilities | 38,866,525 | 42,998,331 | ||
Equity | 16,171,414 | 20,452,183 | ||
Total liabilities and equity | 55,037,939 | 63,450,514 | ||
Consolidation, Eliminations [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Assets | ||||
Due from affiliates | 3,355,610 | |||
Liabilities | ||||
Due to affiliates | 691,144 | |||
Management Fees Receivable [Member] | ||||
Assets | ||||
Accounts receivable, related parties | 23,344,726 | 26,861,787 | ||
Management Fees Receivable [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Assets | ||||
Accounts receivable, related parties | 23,344,726 | 26,861,787 | ||
Performance Fees Receivable [Member] | ||||
Assets | ||||
Accounts receivable, related parties | 89,602 | 106,635 | ||
Performance Fees Receivable [Member] | Variable Interest Entity, Primary Beneficiary [Member] | ||||
Assets | ||||
Accounts receivable, related parties | $89,602 | $106,635 |
Significant_Accounting_Policie4
Significant Accounting Policies - Additional Disclosures (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Schedule of Accounting Policies [Line Items] | ||
Advisory and administrative services revenue as a percent of total revenue | 100.00% | 100.00% |
Realized gains or losses on subordinated debt interest in CLO | $0 | |
Unrealized gains on subordinated debt interest in CLO | 0 | |
Unrealized losses on subordinated debt interest in CLO | 0 | |
Impairment of fixed assets | 0 | 0 |
Part I fees percentage | 20.00% | |
Catch-up provision, Percentage of BDC revenue | 20.00% | |
BDCC performance fee percentage | 20.00% | |
Fifth Street Finance Corp. [Member] | Follow-on Equity Offering [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Expenses associated with offerings | 146,000 | |
Minimum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Management fee percentage charged to funds | 0.40% | |
Fund performance fee percentage | 15.00% | |
Maximum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Management fee percentage charged to funds | 2.00% | |
Fund performance fee percentage | 20.00% | |
Leasehold Improvements [Member] | Minimum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Useful life | 5 years | |
Leasehold Improvements [Member] | Maximum [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Useful life | 10 years | |
Beneficial Interest in CLO [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Realized gains or losses on beneficial interest in CLO | 0 | |
Unrealized gains or losses on beneficial interest in CLO | 0 | |
Chief Executive Officer [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Percent of voting interest held | 91.20% | |
Equity Method Investments [Member] | ||
Schedule of Accounting Policies [Line Items] | ||
Asset impairment charges | $0 | $0 |
Fair_Value_Measurements_Rollfo
Fair Value Measurements - Rollforward of Fair Value, Assets (Details) (Level 3 [Member], Beneficial Interest in CLO [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Level 3 [Member] | Beneficial Interest in CLO [Member] | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Fair value at December 31, 2014 | $0 |
Purchases of investments | 3,443,940 |
Fair value at March 31, 2015 | $3,443,940 |
Fair_Value_Measurements_Fair_V
Fair Value Measurements - Fair Value, Assets, Quantitative Information (Details) (Beneficial Interest in CLO [Member], Recent Market Transactions [Member], Level 3 [Member], USD $) | Mar. 31, 2015 |
Beneficial Interest in CLO [Member] | Recent Market Transactions [Member] | Level 3 [Member] | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Fair value of assets | $3,443,940 |
Fair_Value_Measurements_Financ
Fair Value Measurements - Financial Instruments Disclosed but not Carried at Fair Value (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Carrying Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Subordinated debt interest in CLO: held-to-maturity | $1,043,144 | |
Loans payable | 4,050,351 | 4,000,000 |
Credit facility payable | 15,000,000 | 12,000,000 |
Note payable included in Due to Principal | 5,564,451 | 5,564,451 |
Payables to related parties pursuant to tax receivable agreements | 47,373,245 | 47,373,245 |
Total | 73,031,191 | 68,937,696 |
Fair Value [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | |
Loans payable | 4,047,138 | 4,049,110 |
Credit facility payable | 15,000,000 | 12,000,000 |
Note payable included in Due to Principal | 5,564,451 | 5,564,451 |
Payables to related parties pursuant to tax receivable agreements | 42,352,014 | 42,352,014 |
Total | 68,006,747 | 63,965,575 |
Fair Value [Member] | Level 1 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Subordinated debt interest in CLO: held-to-maturity | 0 | |
Loans payable | 0 | 0 |
Credit facility payable | 0 | 0 |
Note payable included in Due to Principal | 0 | 0 |
Payables to related parties pursuant to tax receivable agreements | 0 | 0 |
Total | 0 | 0 |
Fair Value [Member] | Level 2 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Subordinated debt interest in CLO: held-to-maturity | 0 | |
Loans payable | 0 | 0 |
Credit facility payable | 0 | 0 |
Note payable included in Due to Principal | 0 | 0 |
Payables to related parties pursuant to tax receivable agreements | 0 | 0 |
Total | 0 | 0 |
Fair Value [Member] | Level 3 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Subordinated debt interest in CLO: held-to-maturity | 1,043,144 | |
Loans payable | 4,047,138 | 4,049,110 |
Credit facility payable | 15,000,000 | 12,000,000 |
Note payable included in Due to Principal | 5,564,451 | 5,564,451 |
Payables to related parties pursuant to tax receivable agreements | 42,352,014 | 42,352,014 |
Total | $68,006,747 | $63,965,575 |
Fixed_Assets_Details
Fixed Assets (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Property, Plant and Equipment [Line Items] | |||
Fixed assets | $11,463,222 | $11,427,977 | |
Less: accumulated depreciation and amortization | -1,485,646 | -1,153,714 | |
Fixed assets, net book value | 9,977,576 | 10,274,263 | |
Depreciation and amortization | 331,932 | 58,406 | |
Furniture, Fixtures and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets | 3,658,563 | 3,563,172 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Fixed assets | $7,804,659 | $7,864,805 |
Other_Assets_Details
Other Assets (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2014 | Nov. 30, 2013 | Mar. 31, 2015 | Mar. 31, 2014 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Security deposits | $453,375 | $453,375 | ||
Fractional interest in aircraft | 3,585,283 | 3,514,509 | ||
Other | 158,700 | 170,059 | ||
Other Assets | 4,197,358 | 4,137,943 | ||
Corporate Aircraft Agreement, Term | 5 years | 5 years | ||
Sale of fractional interest in aircraft, percent of interest sold | 50.00% | |||
Amortization of fractional interests in aircrafts | $70,774 | $68,268 |
Due_to_Former_Members_Details
Due to Former Members (Details) (Former Member [Member], USD $) | 0 Months Ended | 3 Months Ended |
Nov. 05, 2010 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | ||
Repurchase of member's pro rata share of Part I fees, term of agreement | 5 years | |
Maximum allocation by the managing member to the former member of proceeds from the sale | $6,000,000 | |
Compensation Expense [Member] | ||
Related Party Transaction [Line Items] | ||
Fair value adjustment to the liability for compensation expense | $161,217 |
Debt_Debt_Maturities_Details
Debt - Debt Maturities (Details) (Connecticut Department of Economic and Community Development [Member], Loans Payable [Member], Fixed Rate Secured Loan [Member], USD $) | Mar. 31, 2015 |
Connecticut Department of Economic and Community Development [Member] | Loans Payable [Member] | Fixed Rate Secured Loan [Member] | |
Debt Instrument [Line Items] | |
2015 | $0 |
2016 | 0 |
2017 | 51,551 |
2018 | 627,050 |
2019 | $642,908 |
Debt_Loans_Payable_Details
Debt - Loans Payable (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Oct. 07, 2013 | |
Debt Instrument [Line Items] | |||
Interest expense | $371,181 | $24,657 | |
Loans Payable [Member] | Fixed Rate Secured Loan [Member] | Connecticut Department of Economic and Community Development [Member] | |||
Debt Instrument [Line Items] | |||
Long-term debt | 4,000,000 | ||
Stated interest rate, percentage | 2.50% | ||
Maximum amount of conditional forgiveness of debt | 3,000,000 | ||
Penalty, per job, for missed milestones | 78,125 | ||
Interest and Other Income (Expense) [Member] | Loans Payable [Member] | Fixed Rate Secured Loan [Member] | Connecticut Department of Economic and Community Development [Member] | |||
Debt Instrument [Line Items] | |||
Interest expense | $24,657 | $24,657 |
Debt_Credit_Facility_Details
Debt - Credit Facility (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | Nov. 04, 2014 | |
Debt Instrument [Line Items] | |||
Credit facility payable | $15,000,000 | $12,000,000 | |
Fifth Street Holdings L.P. [Member] | Revolving Credit Facility [Member] | Unsecured Revolving Credit Facility Maturing in 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility borrowing capacity | 176,000,000 | ||
Borrowing capacity accordion feature | 100,000,000 | ||
Unused commitment fee, percent | 0.30% | ||
Revolving credit agreement, term | 5 years | ||
Credit facility payable | 15,000,000 | ||
Fair value of amount outstanding | $15,000,000 | ||
Fifth Street Holdings L.P. [Member] | Revolving Credit Facility [Member] | Unsecured Revolving Credit Facility Maturing in 2019 [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on LIBOR, percent | 2.00% |
Commitments_and_Contingencies_
Commitments and Contingencies - Narrative (Details) (USD $) | 1 Months Ended | |
Mar. 31, 2015 | Jul. 31, 2014 | |
Loss Contingencies [Line Items] | ||
Unfunded commitments | $0 | |
Terminated Lease Agreement for White Plains, NY Office [Member] | ||
Loss Contingencies [Line Items] | ||
Early termination fee | 616,852 | |
Additional rent expense representing fair value of remaining lease obligation | 460,658 | |
Reduction in rent expense | $341,044 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||||||
Mar. 31, 2015 | Mar. 31, 2014 | Jul. 22, 2013 | Oct. 11, 2014 | Feb. 24, 2015 | Dec. 22, 2014 | Dec. 31, 2014 | Oct. 29, 2014 | |
renewal_term | ||||||||
Related Party Transaction [Line Items] | ||||||||
Principal amount of convertible promissory note | $50,000 | |||||||
Convertible Debt [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Interest expense | 351 | |||||||
Performance Fees [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue from related parties | 89,602 | 0 | ||||||
Due From Affiliates [Member] | Reimbursable Expenses [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accounts receivable, related parties | 2,260,613 | 3,723,160 | ||||||
Principal Owner [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Accrued undistributed earnings | 3,482,478 | |||||||
Due to related party | 9,046,929 | 9,063,792 | ||||||
Principal Owner [Member] | Notes Payable, Other Payables [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Notes payable | 5,564,451 | |||||||
Interest rate (as a percent) | 1.00% | |||||||
Recipients of Tax Receivable Agreements [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Due to related party | 47,373,245 | 47,373,245 | ||||||
Tax Receivable Agreement Liability, Payable in the Next Twelve Months | 343,621 | |||||||
Tax Receivable Agreement Liability, Due Date | 45 days | |||||||
Business Development Companies [Member] | Management Fees [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Revenue from related parties | 22,977,325 | 22,688,390 | ||||||
Accounts receivable, related parties | 22,977,325 | 26,508,013 | ||||||
Related party transactions, asset management fees waived | 111,240 | 233,800 | ||||||
Business Development Companies [Member] | Revenues - Other Fees [Member] | Administration Agreement Fees [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Related party transaction, other fees | 1,201,124 | 1,064,639 | ||||||
Entity Controlled by Managing Member [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Number of lease renewal periods | 2 | |||||||
Lease renewal term (years) | 5 years | |||||||
Entity Controlled by Managing Member [Member] | Lease Agreements [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Rental payments, per year | 2,000,000 | |||||||
FSM [Member] | MMKT Exchange LLC [Member] | Limited Liability Company Agreement [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Interest rate (as a percent) | 8.00% | |||||||
Total capital contribution | 80,000 | |||||||
Membership interest | 80.00% | |||||||
Convertible promissory note | $800,000 |
Related_Party_Transactions_Amo
Related Party Transactions - Amounts Due and From Affiliates (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Related Party Transaction [Line Items] | ||
Due from affiliates | $2,367,700 | $3,799,542 |
Due to affiliates | 67,979 | 62,781 |
Reimbursed Expenses Due From Business Development Companies [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 2,208,917 | 3,596,975 |
Reimbursed Expenses Due from Private Funds [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 51,696 | 126,185 |
Due From Employees [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 30,428 | 59,489 |
Other Amounts Due From Affiliated Entities [Member] | ||
Related Party Transaction [Line Items] | ||
Due from affiliates | 76,659 | 16,893 |
Distribution Payable to Former Members of Predecessor [Member] | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 59,316 | 59,316 |
SARs Liability [Member] | ||
Related Party Transaction [Line Items] | ||
Due to affiliates | 8,663 | 3,465 |
Management Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 23,344,726 | 26,861,787 |
Performance Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 89,602 | 106,635 |
Business Development Companies [Member] | Base Management Fees Receivable [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 14,476,071 | 15,200,933 |
Business Development Companies [Member] | Part I Fees Receivable [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 8,501,254 | 11,307,080 |
SLF I and SLF II [Member] | Collateral Management Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 367,401 | 351,274 |
FSOF [Member] | Management Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | 0 | 2,500 |
FSOF [Member] | Performance Fees [Member] | ||
Related Party Transaction [Line Items] | ||
Management fees receivable | $89,602 | $106,635 |
Equity_and_EquityBased_Compens2
Equity and Equity-Based Compensation (Details) (USD $) | 3 Months Ended | 0 Months Ended | ||||
Mar. 31, 2015 | Jan. 15, 2015 | Dec. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Nov. 30, 2012 | |
class | ||||||
Class of Stock [Line Items] | ||||||
Number of classes of common stock | 2 | |||||
Dividend declared (in dollars per share) | $0.30 | |||||
Retirement eligibility liability reclassified to member's equity | $2,065,664 | |||||
Fair value of equity classified awards | $7,786,365 | $8,043,058 | $17,724,686 | $18,243,398 | $15,187,787 | |
Common Class A [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of votes | 1 | |||||
Dividend declared (in dollars per share) | $0.30 | |||||
Common Class B [Member] | ||||||
Class of Stock [Line Items] | ||||||
Number of votes | 5 |
Equity_and_EquityBased_Compens3
Equity and Equity-Based Compensation - Equity Classified Awards (Details) (USD $) | 0 Months Ended | 3 Months Ended | ||
Nov. 04, 2014 | Mar. 31, 2015 | Mar. 31, 2014 | Nov. 30, 2012 | |
Equity [Abstract] | ||||
Vesting period of award from the IPO date | 8 years | |||
Compensation charge related to the modification of awards | $0 | |||
Equity Classified Award [Roll Forward] | ||||
Equity classified awards, beginning | 8,043,058 | 18,243,398 | 15,187,787 | |
Amortization of interests | -256,693 | -518,712 | ||
Equity classified awards, ending | 7,786,365 | 17,724,686 | 15,187,787 | |
Unrecognized compensation costs | $7,786,365 | |||
Period for recognition of unrecognized compensation costs | 7 years 6 months 28 days |
Equity_and_EquityBased_Compens4
Equity and Equity-Based Compensation - Liability Classified Awards (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Liability Classified Awards [Roll Forward] | ||
Liability classified awards, beginning | $3,465 | $129,001 |
Cash received for purchased interests | 14,129 | |
Compensation expense | 5,198 | 68,700 |
Payment of liabilities | -68,700 | |
Liability classified awards, ending | $8,663 | $143,130 |
Equity_and_EquityBased_Compens5
Equity and Equity-Based Compensation - 2014 Omnibus Incentive Plan (Details) (USD $) | 0 Months Ended | 3 Months Ended |
Nov. 04, 2014 | Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of options granted | 0 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted | 9,944 | |
Stock Appreciation Rights (SARs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted | 0 | |
Omnibus Incentive Plan 2014 [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of options granted | 5,658,970 | |
Equity-based compensation expense | $1,228,417 | |
Omnibus Incentive Plan 2014 [Member] | Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted | 1,174,748 | |
Equity-based compensation expense | 647,835 | |
Omnibus Incentive Plan 2014 [Member] | Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | 575,384 | |
Omnibus Incentive Plan 2014 [Member] | Stock Appreciation Rights (SARs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of awards granted | 90,500 | |
Equity-based compensation expense | $5,198 |
Equity_and_EquityBased_Compens6
Equity and Equity-Based Compensation - Restricted Stock Units, Narrative (Details) (USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend declared (in dollars per share) | $0.30 |
Accrued dividends related to unvested restricted stock units | $275,249 |
Restricted Stock Units (RSUs) [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvesting period | 3 years |
Assumed forfeiture rate | 5.00% |
Accrued dividends related to unvested restricted stock units | 275,249 |
Total compensation expense expected to be recognized in future periods | $14,538,207 |
Weighted average period for recognition of compensation expense | 5 years 6 months 29 days |
Restricted Stock Units (RSUs) [Member] | Fourth Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.33% |
Restricted Stock Units (RSUs) [Member] | Fifth Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.33% |
Restricted Stock Units (RSUs) [Member] | Sixth Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage | 33.33% |
Salable rate | 25.00% |
Restricted Stock Units (RSUs) [Member] | Seventh Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Salable rate | 25.00% |
Restricted Stock Units (RSUs) [Member] | Eighth Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Salable rate | 25.00% |
Restricted Stock Units (RSUs) [Member] | Ninth Anniversary [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Salable rate | 25.00% |
Equity_and_EquityBased_Compens7
Equity and Equity-Based Compensation - Restricted Stock Units (Details) (Restricted Stock Units (RSUs) [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Restricted Stock Units (RSUs) [Member] | |
Number of Shares | |
Beginning balance | 1,174,748 |
Granted | 9,944 |
Vested | 0 |
Forfeited | 0 |
Ending balance | 1,184,692 |
Weighted Average Grant Date Fair Value Per Unit | |
Beginning balance (in dollars per share) | $17 |
Granted (in dollars per share) | $12.57 |
Vested (in dollars per share) | $0 |
Forfeited (in dollars per share) | $0 |
Ending balance (in dollars per share) | $16.96 |
Equity_and_EquityBased_Compens8
Equity and Equity-Based Compensation - Option Activity (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2015 | Dec. 31, 2014 | |
Number of Shares | ||
Beginning balance | 5,658,970 | |
Granted | 0 | |
Vested | 0 | |
Forfeited or expired | 0 | |
Ending balance | 5,658,970 | 5,658,970 |
Exercisable at end of period | 0 | |
Expected to vest after end of period | 4,654,091 | |
Weighted Average Exercise Price | ||
Beginning balance (in dollars per share) | $18.70 | |
Granted (in dollars per share) | $0 | |
Vested (in dollars per share) | $0 | |
Forfeited or expired (in dollars per share) | $0 | |
Ending balance (in dollars per share) | $18.70 | $18.70 |
Exercisable at end of period (in dollars per share) | $0 | |
Expected to vest after end of period (in dollars per share) | $18.70 | |
Weighted average remaining life, outstanding | 8 years 11 days | 8 years 11 days |
Weighted average remaining life, expected to vest | 8 years 11 days | |
Aggregate intrinsic value, exercisable | $0 | |
Aggregate intrinsic value, expected to vest | $0 |
Equity_and_EquityBased_Compens9
Equity and Equity-Based Compensation - Options, Narrative (Details) (Options [Member], USD $) | 3 Months Ended |
Mar. 31, 2015 | |
Options [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Total unrecognized compensation expense | $7,142,672 |
Assumed forfeiture rate | 5.00% |
Weighted average period for recognition of compensation expense | 4 years 3 months 28 days |
Recovered_Sheet1
Equity and Equity-Based Compensation - Stock Appreciation Rights (Details) (Stock Appreciation Rights (SARs) [Member], USD $) | 3 Months Ended | |
Mar. 31, 2015 | Nov. 04, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Service period | 6 years | |
Assumed forfeiture rate | 5.00% | |
Total compensation expense expected to be recognized in future periods | $116,094 | |
Number of Shares | ||
Beginning balance | 90,500 | |
Granted | 0 | |
Vested | 0 | |
Forfeited | 0 | |
Ending balance | 90,500 | |
Weighted Average Grant Date Fair Value Per Unit | ||
Beginning balance (in dollars per share) | $1.78 | |
Granted (in dollars per share) | $0 | |
Vested (in dollars per share) | $0 | |
Forfeited (in dollars per share) | $0 | |
Ending balance (in dollars per share) | $1.78 | |
IPO [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
IPO share price (in dollars per share) | $17 |
Income_Taxes_Details
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Effective tax rate | 11.30% |
Statutory Federal rate | 35.00% |
Earnings_per_Share_Details
Earnings per Share (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Net income attributable to Fifth Street Asset Management Inc. | $1,309,330 | $0 |
Restricted Stock Units (RSUs) [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 1,184,692 | |
Options [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 5,658,970 | |
Partnership Interests [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 44,000,000 | |
Common Class A [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted average shares of Class A common stock outstanding | 6,000,033 | |
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 42,744 | |
Weighted average shares of Class A common stock outstanding - diluted | 6,042,777 | |
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, basic (in dollars per share) | $0.22 | |
Net income attributable to Fifth Street Asset Management Inc. per share of Class A common stock, diluted (in dollars per share) | $0.22 |
Subsequent_Events_Details
Subsequent Events (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||
Mar. 31, 2015 | Jan. 15, 2015 | Apr. 02, 2015 | Apr. 06, 2015 | 11-May-15 | |
Subsequent Event [Line Items] | |||||
Dividend declared (in dollars per share) | $0.30 | ||||
Common Class A [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividend declared (in dollars per share) | $0.30 | ||||
Subsequent Event [Member] | |||||
Subsequent Event [Line Items] | |||||
Share repurchase program, authorized amount | $20,000,000 | ||||
Subsequent Event [Member] | FSOF [Member] | General Partner [Member] | |||||
Subsequent Event [Line Items] | |||||
Contributions | 7,500,000 | ||||
Subsequent Event [Member] | FSM [Member] | |||||
Subsequent Event [Line Items] | |||||
Repayments of amounts due to previous members | $9,200,000 | ||||
Subsequent Event [Member] | FSAM [Member] | Common Class A [Member] | |||||
Subsequent Event [Line Items] | |||||
Dividend declared (in dollars per share) | $0.17 |