Business Combinations

6 Months Ended

Sep. 30, 2021

Business Combination and Asset Acquisition [Abstract]

Greenspring Acquisition

On September 20, 2021, the Company completed the acquisition of 100% of the equity of Greenspring Associates, Inc. and certain of its affiliates (collectively, “Greenspring”) in exchange for (i) cash consideration of approximately $185 million, net of an agreed upon adjustment based upon Greenspring’s net working capital balance at the closing date, (ii) 12,686,756 shares of Class A common stock and (iii) 3,071,519 newly issued Class C units of the Partnership (the “Greenspring acquisition”). The transaction agreement also included an earn-out of up to $75 million that is payable in 2025 subject to the achievement of certain management fee revenue targets for calendar year 2024. The results of Greenspring’s operations have been included in the condensed consolidated financial statements effective September 20, 2021. Greenspring is a leading venture capital and growth equity platform, and the acquisition of Greenspring is expected to expand the Company’s continued growth of its private markets capabilities across asset classes, geographies and sectors.

The aggregate purchase price for the acquisition of Greenspring and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date were as follows:


Acquisition date fair value of consideration transferred:
Cash consideration	$	186,577
Class A common stock	558,598
Class C units of the Partnership	135,239
Contingent consideration	17,769
Total purchase price	$	898,183

Estimated fair value of assets acquired and liabilities assumed:
Cash and short-term receivables	$	5,723
Legacy Greenspring investments in funds and accrued carried interest allocations(1)	1,213,792
Lease right-of-use assets, net	2,585
Other assets and receivables	2,146
Finite-lived intangible assets—contractual rights: management contracts	310,944
Finite-lived intangible assets—client relationships	96,650
Finite-lived intangible assets—contractual rights: service agreements	9,537
Goodwill	576,181
Deferred income taxes	(98,538)
Accrued expenses and other liabilities	(4,460)
Legacy Greenspring accrued carried interest-related compensation(1)	(992,646)
Lease liabilities	(2,585)
Non-controlling interests in legacy Greenspring entities(1)	(221,146)
Total	$	898,183

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(1)Represents investments in funds and carried interest allocations attributable to consolidated VIEs for which the Company did not acquire any direct economic interests. Such amounts are attributable to employees and therefore have been reflected as non-controlling interests in legacy Greenspring entities and legacy Greenspring accrued carried interest-related compensation, respectively.

For the three and six months ended September 30, 2021, the Company incurred $10.3 million and $13.8 million, respectively, of acquisition-related costs that were expensed as incurred and included in general, administrative and other expenses in the condensed consolidated statements of income.

The Company allocated $320.5 million and $96.7 million of the purchase price to the fair value of contractual rights and client relationships, respectively, which will be amortized over a weighted-average amortization period of 10.0 years. The $576.2 million of goodwill primarily related to Greenspring’s assembled workforce and business synergies expected to be realized from the transaction. This goodwill is not expected to be deductible for tax purposes.

The amount of revenues and net income of Greenspring since the acquisition date was $2.3 million and $1.0 million, respectively.

The following supplemental unaudited pro forma information assumes the Greenspring acquisition, as well as the Reorganization and IPO, had been consummated as of April 1, 2020:


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	552,671	$	338,630	$	1,079,820	$	303,478
Net income attributable to StepStone Group Inc.	40,068		27,907		88,179		4,637

The Company’s fiscal year ends on March 31, and prior to the transaction, Greenspring’s fiscal year ended on December 31. To comply with SEC rules and regulations for companies with different fiscal year ends, the pro forma condensed combined financial information has been prepared utilizing periods that differ by less than 93 days. The unaudited pro forma information for the three and six months ended September 30, 2021 and 2020 combines the Company’s historical unaudited condensed consolidated statements of income for the three and six months ended September 30, 2021 and 2020, and Greenspring’s historical unaudited condensed combined statements of income for the three and six months ended June 30, 2021 and 2020.

The supplemental unaudited pro forma information is based on estimates and assumptions believed reasonable and are not necessarily indicative of the Company’s consolidated results in future periods or the results that actually would have been realized had the Greenspring acquisition been a combined entity during the periods presented. The pro forma amounts have been calculated after reflecting the following adjustments that were directly attributable to the Reorganization, IPO, Greenspring acquisition and the related debt issuance used to fund a portion of the cash consideration, as if the transactions were consummated on April 1, 2020:

Reorganization and IPO

•adjustments to include compensation expense associated with the 2.5 million RSUs issued in connection with the IPO;

•adjustments on interest expense to reflect the repayment of outstanding debt using a portion of the IPO proceeds;

•adjustments to include federal and state income taxes for the Company’s share of taxable income generated by the Partnership; and

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

Debt Financing

•adjustments to include interest expense related to the Revolver used to fund a portion of the cash consideration.

Greenspring Acquisition

•adjustments to include the impact of additional amortization of acquired intangible assets that would have been charged;

•adjustments to include the issuance of Class A common stock of the Company and Class C units of the Partnership as consideration for the transaction;

•adjustments to reflect the pro-rata economic ownership attributable to the Company;

•adjustments to reflect the tax effects of the Greenspring acquisition and including Greenspring in the Company’s results; and•adjustments to include acquisition-related transaction costs in earnings for the six months ended September 30, 2020.