Company: COHN
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007158
Chunk: 1307

Company: Cohen & Co Inc.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 1307
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 member.  Furthermore, the other members of the LLC cannot replace the managing member.  Accordingly, we concluded that the sponsor entities are VIEs and the managing member has the power to direct its most important economic activities.  In all cases where we are the managing member of a sponsor entity, we also have had a significant economic interest in such sponsor entity and therefore consolidate such sponsor entity.  

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     In all cases where we consolidated a sponsor entity, we determined that the sponsor entity's private placement investment in the SPAC that it sponsors should be treated as an equity method investment during the SPAC's pre-business combination period.  Furthermore, due to the difficulty of determining the fair value of such an investment in the SPAC's pre-business combination period, we have chosen to not elect the fair value option.

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     If a SPAC completes its business combination, the sponsor entity's investment in the SPAC will be converted to a combination of unrestricted and restricted shares in the post-business combination SPAC.  At this point (assuming we consolidate the sponsor entity), we will account for the shares received at fair value.  We will reclassify any remaining equity method investment balance to other investments, at fair value and record principal transactions income for the difference.  We will record non-controlling interest expense for the SPAC shares that are distributable to the non-controlling interest holders of the sponsor entity.  The fair value of the unrestricted shares received is equal to the public trading price of the SPAC on the date of the business combination.  The fair value of the restricted shares received is adjusted downwards from the public trading price for certain sale restrictions imposed  (generally, they are restricted for sale for some time period and subject to certain hurdle prices before they become freely tradeable).  We use a Monte Carlo simulation model to determine the appropriate discount to place on shares that are subject to hurdle prices.  In the case of a SPAC business combination where we consolidate the sponsor entity, generally there is also an equity-based compensation entry to be recorded at the date of the business combination.  See the equity-based compensation section above.  We will continue to mark the sponsor entity's investment in the SPAC to market and record principal transactions income or loss and offsetting non-controlling interest income or expense until the sponsor entity itself distributes all of the SPAC shares it owns to its members and liquidates.  At that point, we will hold the SPAC shares directly (rather than through a consolidated subsidiary