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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 001-33217
 GLG PARTNERS, INC.
  Delaware(State or other jurisdiction of
    
    20-5009693incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 399 Park Avenue, 38th Floor
New York, New York 10022
 (212) 224-7200
 þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    our financial performance;
 
    
    market conditions for the funds we manage, which we refer to as the GLG Funds;
 
    
    performance of GLG Funds, the related performance fees and the associated impacts on
revenues, net income, cash flows and fund inflows and outflows;
 
    
    the cost of retaining our key investment and other personnel or the loss of such key
personnel;
 
    
    risks associated with the expansion of our business in size and geographically;
 
    
    operational risk;
 
    
    litigation and regulatory enforcement risks, including the diversion of management time and
attention and the additional costs and demands on our resources; and
 
    
    risks associated with the use of leverage, investment in derivatives, availability of
credit, interest rates and currency fluctuations,




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##### 



GLG PARTNERS, INC.
INDEX
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (unaudited):Condensed Consolidated Balance Sheets  March 31, 2008 and December 31, 2007
    
    2Condensed Consolidated and Combined Statements of Operations  Three Months
Ended March 31, 2008 and March 31, 2007
    
    3Condensed Consolidated and Combined Statements of Stockholders Equity 
Three Months Ended March 31, 2008
    
    4Condensed Consolidated and Combined Statements of Cash Flows  Three Months
Ended March 31, 2008 and March 31, 2007
    
    5Notes to Condensed Consolidated and Combined Financial Statements
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    14Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    31Item 4.
    
    Controls and Procedures
    
    33PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    34Item 1A.
    
    Risk Factors
    
    34Item 2.
    
    Unregistered Sale of Equity Securities and Use of Proceeds
    
    35Item 6.
    
    Exhibits
    
    36Signature
    
    37EX-2.2: AMENDMENT TO PURCHASE AGREEMENTEX-10.1: EMPLOYMENT AGREEMENTEX-10.2.2: SCHEDULE IDENTIFYING DIRECTORS AND EXECUTIVE OFFICERSEX-10.3: LETTER AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-31.3: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-32.3: CERTIFICATION
  1




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PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(US dollars in thousands, except share and per share amounts)
 As of
    
    
    As ofMarch 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent AssetsCash and cash equivalents
    
    $
    294,539
    
    
    $
    429,422Restricted cash
    
    
    24,099
    
    
    
    24,066Fees receivable
    
    
    51,385
    
    
    
    389,777Prepaid expenses and other assets
    
    
    35,333
    
    
    
    35,685Total Current Assets
    
    
    405,356
    
    
    
    878,950Non-Current AssetsInvestments at fair value
    
    
    92,115
    
    
    
    96,108Goodwill
    
    
    587
    
    
    
    Property and equipment
    
    
    9,265
    
    
    
    9,079Total Non-Current Assets
    
    
    101,967
    
    
    
    105,187Total Assets
    
    $
    507,323
    
    
    $
    984,137LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesRebates and sub-administration fees payable
    
    $
    16,626
    
    
    $
    21,207Accrued compensation, benefits and profit share
    
    
    91,324
    
    
    
    467,887Income taxes payable
    
    
    31,717
    
    
    
    37,464Distributions payable
    
    
    111,929
    
    
    
    78,093Accounts payable and other accruals
    
    
    50,137
    
    
    
    37,624Other liabilities
    
    
    29,651
    
    
    
    16,092Total Current Liabilities
    
    
    331,384
    
    
    
    658,367Non-Current LiabilitiesLoan payable
    
    
    570,000
    
    
    
    570,000Minority interest
    
    
    
    
    
    
    1,911Total Non-Current Liabilities
    
    
    570,000
    
    
    
    571,911Commitments and ContingenciesTotal Liabilities
    
    
    901,384
    
    
    
    1,230,278Stockholders EquityStockholders EquityCommon stock, $.0001 par value;
1,000,000,000 authorized, 247,439,127 issued
and outstanding (Dec. 31, 2007: 244,730,988
issued and outstanding), including
25,382,500 (Dec. 31, 2007: 25,382,500)
shares of Treasury stock held by a
subsidiary
    
    
    25
    
    
    
    24Series A voting preferred stock, $.0001 par
value; 150,000,000 authorized, 58,904,993
issued and outstanding (Dec. 31,
2007: 58,904,993 issued and outstanding)
    
    
    6
    
    
    
    6Additional paid in capital
    
    
    784,079
    
    
    
    575,589Treasury stock
    
    
    (347,740
    )
    
    
    (347,740
    )Accumulated other comprehensive income
    
    
    (883
    )
    
    
    3,477Accumulated deficit
    
    
    (829,548
    )
    
    
    (477,497
    )Total Stockholders Equity
    
    
    (394,061
    )
    
    
    (246,141
    )Total Liabilities and Stockholders Equity
    
    $
    507,323
    
    
    $
    984,137
  2




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS
(US dollars in thousands, except per share amounts)
 Three months endedMarch 31,2008
    
    
    2007Net revenues and other incomeManagement fees, net
    
    $
    98,756
    
    
    $
    57,343Performance fees, net
    
    
    4,735
    
    
    
    2,521Administration fees, net
    
    
    22,248
    
    
    
    12,645Other
    
    
    5,641
    
    
    
    498Total net revenues and other income
    
    
    131,380
    
    
    
    73,007ExpensesEmployee compensation and benefits
    
    
    (287,935
    )
    
    
    (25,048
    )Limited partner profit share
    
    
    (25,104
    )
    
    
    (6,453
    )Compensation, benefits and profit share
    
    
    (313,039
    )
    
    
    (31,501
    )General, administrative and other
    
    
    (30,303
    )
    
    
    (25,764
    )Total expenses
    
    
    (343,342
    )
    
    
    (57,265
    )(Loss)/income from operations
    
    
    (211,962
    )
    
    
    15,742Interest (expense)/income, net of interest income of $3,086
(2007: expense of $200)
    
    
    (4,043
    )
    
    
    1,475(Loss)/income before income taxes
    
    
    (216,005
    )
    
    
    17,217Income taxes
    
    
    (6,200
    )
    
    
    (3,255
    )(Loss)/income before minority interests
    
    
    (222,205
    )
    
    
    13,962Minority interests:Share of income
    
    
    
    
    
    
    (210
    )Cumulative dividends
    
    
    (4,129
    )
    
    
    Net (loss)/income attributable to common stockholders
    
    $
    (226,334
    )
    
    $
    13,752Net income per share  basic
    
    $
    (1.07
    )
    
    $
    0.10Weighted average common stock outstanding  basic (in thousands)
    
    
    211,167
    
    
    
    135,712Net income per share  diluted
    
    $
    (1.07
    )
    
    $
    0.07Weighted average common stock outstanding  diluted (in thousands)
    
    
    211,167
    
    
    
    194,617
  3




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
STATEMENTS OF STOCKHOLDERS EQUITY
(US dollars in thousands)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    TotalPreferred
    
    
    Common
    
    
    Treasury
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Accumulated
    
    
    StockholdersStock
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Income/(Loss)
    
    
    Deficit
    
    
    EquityBalance as of January 1, 2008
    
    $
    6
    
    
    $
    24
    
    
    $
    (347,740
    )
    
    $
    575,589
    
    
    $
    3,477
    
    
    $
    (477,497
    )
    
    $
    (246,141
    )Comprehensive income:Net loss attributable to common
stockholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (226,334
    )
    
    
    (226,334
    )Unrealized losses on available for
sale equity investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,948
    )
    
    
    
    
    
    
    (3,948
    )Foreign currency translation (nil tax
applicable)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (412
    )
    
    
    
    
    
    
    (412
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,360
    )
    
    
    (226,334
    )
    
    
    (230,694
    )Recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308
    )
    
    
    
    
    
    
    
    
    
    
    (308
    )Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    247,223
    
    
    
    
    
    
    
    
    
    
    
    247,223Warrant exercises
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2,567
    
    
    
    
    
    
    
    
    
    
    
    2,568Warrants repurchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,582
    )
    
    
    
    
    
    
    
    
    
    
    (37,582
    )Shares repurchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,457
    )
    
    
    
    
    
    
    
    
    
    
    (3,457
    )Capital contributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    47Dividends declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,717
    )
    
    
    (7,717
    )Distributions to principals and trustees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (118,000
    )
    
    
    (118,000
    )Balance as of March 31, 2008
    
    $
    6
    
    
    $
    25
    
    
    $
    (347,740
    )
    
    $
    784,079
    
    
    $
    (883
    )
    
    $
    (829,548
    )
    
    $
    (394,061
    )
  4




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
(US dollars in thousands)
 Three months ended March 31,2008
    
    
    2007Cash Flows From Operating ActivitiesNet (loss)/income attributable to common stockholders
    
    $
    (226,334
    )
    
    $
    13,752Adjustments to reconcile net (loss)/income
attributable to common stockholders to net cash
provided by operating activities:Depreciation
    
    
    536
    
    
    
    517Foreign exchange gains on investments
    
    
    50
    
    
    
    49Share based compensation
    
    
    247,222
    
    
    
    Cash flows due to change in:Fees receivable
    
    
    338,392
    
    
    
    219,886Prepaid expenses and other assets
    
    
    352
    
    
    
    7,220Rebates and sub-administration fees payable
    
    
    (4,581
    )
    
    
    (3,548
    )Accrued compensation, benefits and profit share
    
    
    (376,563
    )
    
    
    (259,740
    )Income taxes payable
    
    
    (5,747
    )
    
    
    (12,807
    )Distributions payable
    
    
    8,119
    
    
    
    51,525Accounts payable and other accruals
    
    
    12,513
    
    
    
    (2,243
    )Other liabilities
    
    
    13,559
    
    
    
    Net cash provided by operating activities
    
    
    7,518
    
    
    
    14,611Cash Flows From Investing ActivitiesInvestment in subsidiary
    
    
    (2,500
    )
    
    
    Transfer to restricted cash
    
    
    (33
    )
    
    
    Purchase of property and equipment
    
    
    (723
    )
    
    
    (1,997
    )Net cash used in investing activities
    
    
    (3,256
    )
    
    
    (1,997
    )Cash Flows From Financing ActivitiesWarrant exercises
    
    
    2,567
    
    
    
    Warrant repurchases
    
    
    (37,582
    )
    
    
    Share repurchases
    
    
    (3,457
    )
    
    
    Capital contributions
    
    
    47
    
    
    
    Acquisition related transaction costs
    
    
    (308
    )
    
    
    Distributions to principals and trustees
    
    
    (100,000
    )
    
    
    (137,623
    )Net cash used in financing activities
    
    
    (138,733
    )
    
    
    (137,623
    )Net decrease in cash and cash equivalents
    
    
    (134,471
    )
    
    
    (125,009
    )Effect of foreign currency translation on cash
    
    
    (412
    )
    
    
    1,053Cash and cash equivalents at beginning of period
    
    
    429,422
    
    
    
    273,148Cash and cash equivalents at end of period
    
    $
    294,539
    
    
    $
    149,192
  5




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GLG PARTNERS, INC. AND SUBSIDIARIES
 
 NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
(US Dollars in thousands, except share and per share amounts)
 1. ORGANIZATION AND BASIS OF PRESENTATION
        2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of combination and consolidation
  Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar
Entity When the Limited Partners Have Certain Rights
 6




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Minority Interests in Consolidated Subsidiaries
  GLG Holdings Inc. and GLG Inc.
     FA Sub 2 Limited Exchangeable Shares
     7




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Revenue Recognition
  Accounting for Management Fees Based on a Formula
  Reporting Revenue Gross as a Principal versus Net as an Agent
    
    
    management fees are charged at the investee fund level.
In addition, management
fees are charged on the following GLG Funds at the investing fund level: (1) GLG Multi
Strategy Fund; and (2) Prime GLG Diversified Fund (in liquidation as at December 31,
2007);
    
    performance fees are charged at the investee fund level.
In addition,
performance fees are charged on the following GLG Funds at the investing fund level:
(1) Prime GLG Diversified Fund (in liquidation as at December 31, 2007); and (2) GLG
Global Aggressive Fund to the extent that the performance fee at the investing fund
level exceeds the performance fee at the investee fund level; and
    
    administration fees are charged at both the investing and investee fund levels.
 
 8




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 
 Employee Compensation and Benefits
  
    
    Base compensation  contractual compensation paid to employees in the form of
base salary, which is expensed as incurred.
    
    Variable compensation  payments that arise from the contractual entitlements
of personnel to a fixed percentage of certain variable fee revenues attributable to
such personnel with respect to GLG Funds and managed accounts. Variable compensation
expense is recognized at the same time as the underlying fee revenue is crystallized,
which may be monthly or semi-annually (on June 30 and December 31), depending on the
fee revenue source.
    
    Discretionary compensation  payments that are determined by the Companys
management in its sole discretion and are generally linked to performance. In
determining such payments, the Companys management considers, among other factors, the
ratio of total discretionary compensation to total revenues; however, this ratio may
vary between periods and, in particular, significant discretionary bonuses may still be
paid in a period of low performance for retention and incentivization purposes. This
discretionary compensation is paid to employees in the form of a discretionary cash
bonus. Discretionary compensation is generally declared and paid following the end of
each calendar year. However, the notional discretionary compensation charge is adjusted
monthly based on the year-to-date profitability and revenues recognized on a
year-to-date basis. As the majority of funds crystallize their performance fees at June
30 and December 31, the majority of discretionary compensation expense crystallizes at
year end and typically paid in January following year end.
 Limited Partner Profit Share
   9




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Recent Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No.
133
 Fair Value Measurements Accounting
for Leases
 Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51
 Net Income per share of Common Stock
 Earnings Per
Share
 10




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Three Months EndedMarch 31,2008
    
    
    2007Net (loss)/income applicable to common stockholders
    
    $
    (226,334
    )
    
    $
    13,752Weighted-average common stock outstanding (in thousands)  basic
    
    
    211,167
    
    
    
    135,712Net (loss)/income per share applicable to common stockholders  basic
    
    $
    (1.07
    )
    
    $
    0.10Weighted-average common stock outstanding (in thousands)  diluted
    
    
    211,167
    
    
    
    194,617Net (loss)/income per share applicable to common stockholders  diluted
    
    $
    (1.07
    )
    
    $
    0.07Reconciliation of weighted-average common stock outstanding  basic to weighted-average

common stock outstanding  diluted:Weighted-average common stock outstanding  basic (in thousands)
    
    
    211,167
    
    
    
    135,712FA Sub 2 Limited Exchangeable Shares
    
    
    
    
    
    
    58,905Weighted-average common stock outstanding  diluted (in thousands)
    
    
    211,167
    
    
    
    194,617
  Three Months EndedMarch 31,2008
    
    
    2007Common stock held in Treasury
    
    
    25,383
    
    
    
    25,383FA Sub 2 Limited Exchangeable Shares
    
    
    58,905
    
    
    
    Common stock awarded in connection with share-based compensation arrangements
    
    
    10,675
    
    
    
    6,397Public stockholders warrants
    
    
    32,985
    
    
    
    Co-investment warrants
    
    
    5,000
    
    
    
    Sponsors warrants
    
    
    4,500
    
    
    
    137,448
    
    
    
    31,780
  3. COMMITMENTS AND CONTINGENCIES
   11




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
   Indemnifications
  4. INCOME TAXES
  5. FAIR VALUES OF FINANCIAL INSTRUMENTS
  
    
    Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for
identical assets or liabilities in active markets. A quoted price in an active market
provides the most reliable evidence of fair value and shall be used to measure fair value
whenever available.
    
    Level 2: Inputs to the valuation methodology include quoted prices for similar assets or
liabilities in active markets; inputs to the valuation methodology include quoted prices
for identical or similar assets or liabilities in markets that are not active; or inputs to
the valuation methodology that are derived principally from or can be corroborated by
observable market data by correlation or other means.
    
    Level 3: Inputs to the valuation methodology are unobservable and significant to the
fair value measurement. Level 3 assets and liabilities include financial instruments whose
value is determined using discounted cash flow methodologies, as well as instruments for
which the determination of fair value requires significant management judgment or
estimation.
   12




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GLG PARTNERS, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS (Continued)
(US Dollars in thousands, except share and per share amounts)
 Fair Value MeasurementsQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableIdentical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    Balance
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsAvailable for sale investments
    
    $
    92,115
    
    
    
    
    
    
    $
    92,115
    
    
    
    
 6. SHAREHOLDERS EQUITY
  Three months endedMarch 31, 2008Number of sharesCommon stock outstanding at December 31, 2007
    
    
    244,730,988Warrants exercised
    
    
    2,147,939Shares repurchased
    
    
    (279,455
    )Stock awarded under LTIP arrangements
    
    
    949,655Stock forfeited under share-based compensation arrangements
    
    
    (110,000
    )Common stock outstanding at March 31, 2008
    
    
    247,439,127
  13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  General
 Our Business
     
    
    $976,107,300 in cash;
    
    $23,892,700 in promissory notes in lieu of all of the cash consideration
payable to electing GLG Shareowners;
    
    230,000,000 shares of our common stock, par value $0.0001 per share which
consists of:
 
    
    138,095,007 shares of our common stock, including 10,000,000 shares of
our common stock issued for the benefit of our employees, service providers and
certain key personnel under our 2007 Restricted Stock Plan (the Restricted Stock
Plan);
    
    33,000,000 shares of our common stock payable by us upon exercise of
certain put or call rights with respect to 33,000,000 ordinary shares issued by FA
Sub 1 Limited to certain GLG Shareowners. Each of the ordinary shares issued by FA
Sub 1 Limited to these GLG Shareowners has been put by the holder to us in exchange
for one share of our common stock; and
    
    58,904,993 shares of our common stock to be issued upon the exchange of
58,904,993 Exchangeable Shares (the Exchangeable Shares) issued by FA Sub 2
Limited to certain GLG Shareowners. Each Exchangeable Share is exchangeable at any
time at the election of the holder for one share of our common stock; and
 
 14




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##### Table of Contents




    
    58,904,993 shares of our Series A preferred stock, par value $0.0001 per share
issued with the corresponding Exchangeable Shares which carry only voting rights and
nominal economic rights and which will automatically be redeemed on a share-for-share
basis as Exchangeable Shares are exchanged for shares of our Common Stock.
    Factors Affecting Our Business
  
    
    Assets under management.Our revenues from management and
administration fees are directly linked to AUM. As a result, our future performance
will depend on, among other things, our ability both to retain AUM and to grow AUM
from existing and new products.
    
    Fund performance.Our revenues from performance fees are linked to the
performance of the GLG Funds and accounts we manage. Performance also affects AUM
because it influences investors decisions to invest assets in, or withdraw assets
from, the GLG Funds and accounts managed by us.
    
    Personnel, systems, controls and infrastructure.We depend on our
ability to attract, retain and motivate leading investment and other professionals.
Our business requires significant investment in our fund management platform,
including infrastructure and back-office personnel. We have in the past paid, and
expect to continue in the future to pay, these professionals significant
compensation and a share of our profits.
    
    Fee rates.Our management and administration fee revenues are linked
to the fee rates we charge the GLG Funds and accounts we manage as a percentage of
their AUM. Our performance fees are linked to the rates we charge the GLG Funds and
accounts we manage as a percentage of their performance-driven asset growth,
subject to high water marks, whereby performance fees are earned by us only to
the extent that the net asset value of a GLG Fund at the end of a measurement
period exceeds the highest net asset value on a preceding measurement period end
for which we earned performance fees, and further subject, in some cases, to
performance hurdles.
   15




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##### Table of Contents



Critical Accounting Policies
    Combination and Consolidation Criteria
    Revenue Recognition
 Performance Fees
   Compensation and Limited Partner Profit Share
  16




---



##### Table of Contents



Equity-Based Compensation
      17




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##### Table of Contents



Income Tax
  e.g
  Net Revenues
   Management Fees
  18




---



##### Table of Contents



Product
    
    General range of gross fee rates (% of AUM)Single-manager alternative strategy funds
    
    1.50%  2.50%*Long-only funds
    
    0.75%  2.25%Internal FoHF
    
    0.25%  1.00% (at the investing fund
level)External FoHF
    
    1.50%  1.95%
 
 *
    
    When one of the single-manager alternative strategy funds or internal
FoHFs managed by us invests in an underlying single-manager
alternative strategy fund managed by us, management fees are charged
at the investee fund level. In addition, management fees are charged
on the following GLG Funds at the investing fund level: (1) GLG Multi
Strategy Fund; and (2) Prime GLG Diversified Fund (in liquidation).   Performance Fees
  Product

    General range of gross fee rates (% of investment gains)Single-manager alternative strategy funds
    
    20%  30%*Long-only funds
    
    20% (may be subject to hurdle)Internal FoHF
    
    0%  20% (at the investing fund level)External FoHF
    
    5%  10% (may be subject to hurdle)
 
 *
    
    When one of the single-manager alternative strategy funds or internal
FoHFs managed by us invests in an underlying single-manager alternative
strategy fund managed by us, performance fees are charged at the
investee fund level. In addition, performance fees are charged on the following GLG Funds at the investing fund level: (1) Prime GLG
Diversified Fund (in liquidation); and (2) GLG Global Aggressive Fund,
to the extent, if any, that the performance fee at the investing fund
level is greater than the performance fee at the investee fund level.  Administration Fees
  19




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##### Table of Contents



Fees on Managed Accounts
  Expenses
 Compensation, Benefits and Limited Partner Profit Share
        
    
    Base compensation contractual compensation paid to employees in the form
of base salary, which is expensed as incurred.
 20




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##### Table of Contents




    
    Variable compensation payments that arise from the contractual
entitlements of personnel to a fixed percentage of certain variable fee revenues
attributable to such personnel with respect to GLG Funds and managed accounts.
Variable compensation expense is recognized at the same time as the underlying fee
revenue is crystallized, which may be monthly or semi-annually (on June 30 and
December 31), depending on the fee revenue source.
    
    Discretionary compensation payments that are determined by the Companys
management in its sole discretion and are generally linked to performance. In
determining such payments, the Companys management considers, among other factors,
the ratio of total discretionary compensation to total revenues; however, this ratio
may vary between periods and, in particular, significant discretionary bonuses may
still be paid in a period of low performance for retention and incentivization
purposes. This discretionary compensation is paid to employees in the form of a
discretionary cash bonus. Discretionary compensation is generally declared and paid
following the end of each calendar year. However, the notional discretionary
compensation charge is adjusted monthly based on the year-to-date profitability and
revenues recognized on a year-to-date basis. As the majority of the GLG Funds
crystallize their performance fees at June 30 and December 31, the majority of
discretionary compensation expense crystallizes at year end and is typically paid in
January following the year end.
    
    Limited partner profit share distributions of limited partner profit share
under the limited partner profit share arrangement described below.
  Allocation of Profit Shares to Individual Members of LLPs
   21




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Acquisition-Related Compensation Expense
    General and Administrative
  Assessing Business Performance
     22




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##### Table of Contents



Assets Under Management
 March 31, 2008 Compared to December 31, 2007 and March 31, 2007
 Change in AUM between March 31, 2008, December 31, 2007 and March 31, 2007
(U.S. Dollars in millions)
 As of Mar 31,
    
    
    As of Dec 31,
    
    
    3-Month
    
    
    As of Mar 31,
    
    
    12-Month2008
    
    
    2007
    
    
    Change
    
    
    2007
    
    
    ChangeAlternative strategy
    
    $
    19,267
    
    
    $
    18,833
    
    
    $
    434
    
    
    $
    11,200
    
    
    $
    8,067Long-only
    
    
    4,254
    
    
    
    4,774
    
    
    
    (520
    )
    
    
    3,882
    
    
    
    372Internal FoHF
    
    
    2,233
    
    
    
    2,318
    
    
    
    (85
    )
    
    
    1,404
    
    
    
    829External FoHF
    
    
    651
    
    
    
    598
    
    
    
    52
    
    
    
    575
    
    
    
    76Gross fund-based AUM
    
    
    26,404
    
    
    
    26,523
    
    
    
    (119
    )
    
    
    17,060
    
    
    
    9,343Managed accounts
    
    
    2,385
    
    
    
    2,357
    
    
    
    28
    
    
    
    1,398
    
    
    
    987Cash and other holdings
    
    
    347
    
    
    
    206
    
    
    
    141
    
    
    
    197
    
    
    
    151Gross AUM
    
    
    29,136
    
    
    
    29,086
    
    
    
    50
    
    
    
    18,655
    
    
    
    10,481Less: internal FoHF investments in GLG funds
    
    
    (2,217
    )
    
    
    (2,331
    )
    
    
    113
    
    
    
    (1,372
    )
    
    
    (846
    )Less: external FoHF investments in GLG funds
    
    
    (51
    )
    
    
    (53
    )
    
    
    2
    
    
    
    (53
    )
    
    
    2Less: external FoHF investments in GLG funds
    
    
    (2,221
    )
    
    
    (2,090
    )
    
    
    (131
    )
    
    
    (1,145
    )
    
    
    (1,076
    )Net AUM
    
    $
    24,646
    
    
    $
    24,612
    
    
    $
    35
    
    
    $
    16,085
    
    
    $
    8,561Quarterly average gross AUM
    
    $
    29,111
    
    
    $
    26,339
    
    
    
    
    
    
    $
    18,126Quarterly average net AUM
    
    
    24,629
    
    
    
    22,539
    
    
    
    
    
    
    
    15,620Opening net AUM
    
    $
    24,612
    
    
    $
    20,466
    
    
    
    
    
    
    $
    15,154Inflows (net of redemptions)
    
    
    767
    
    
    
    2,927
    
    
    
    
    
    
    
    9Net performance ((losses)/gains net of
gains, losses and fees)
    
    
    (1,549
    )
    
    
    986
    
    
    
    
    
    
    
    845Currency translation impact
    
    
    816
    
    
    
    233
    
    
    
    
    
    
    
    77Closing net AUM
    
    $
    24,646
    
    
    $
    24,612
    
    
    
    
    
    
    $
    16,085
 23




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##### Table of Contents




    
    A general increase in demand for our fund and managed account products, which
resulted in inflows (net of redemptions) of $6.8 billion, primarily attributable to:
 
    
    Continued interest in our established investment fund products; and
    
    Investor demand for our new investment funds launched since March 31,
2007;
 
    
    Weakening of the U.S. dollar against other currencies in which our funds and
accounts are denominated, resulting in foreign exchange movements of $1.7 billion,
which were responsible for 20.3% of net AUM growth during the twelve months ended
March 31, 2008.
   
    
    A general increase in demand for our fund and managed account products, which
resulted in inflows (net of redemptions) of $0.8 billion, primarily attributable to:
 
    
    Continued interest in our established investment fund products; and
    
    Investor demand for our new investment funds launched during the
quarter ended March 31, 2008;
 
    
    Weakening of the U.S. dollar against other currencies in which our funds and
accounts are denominated, resulting in foreign exchange movements of $0.8 billion
during the three months ended March 31, 2008.
   24




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##### Table of Contents



Results of Operations
 Combined and Consolidated GAAP Statement of Operations Information
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007Net revenues and other incomeManagement fees, net
    
    $
    98,756
    
    
    $
    57,343Performance fees, net
    
    
    4,735
    
    
    
    2,521Administration fees, net
    
    
    22,248
    
    
    
    12,645Other
    
    
    5,641
    
    
    
    498Total net revenues and other income
    
    
    131,380
    
    
    
    73,007ExpensesEmployee compensation and benefits
    
    
    (287,935
    )
    
    
    (25,048
    )Limited partner profit share
    
    
    (25,104
    )
    
    
    (6,453
    )Compensation, benefits and profit share
    
    
    (313,039
    )
    
    
    (31,501
    )General, administrative and other
    
    
    (30,303
    )
    
    
    (25,764
    )Total expenses
    
    
    (343,342
    )
    
    
    (57,265
    )(Loss) / income from operations
    
    
    (211,962
    )
    
    
    15,742Net interest (expense) / income
    
    
    (4,043
    )
    
    
    1,475(Loss) / Income before income taxes
    
    
    (216,005
    )
    
    
    17,217Income taxes
    
    
    (6,200
    )
    
    
    (3,255
    )(Loss) / Income before minority interests
    
    
    (222,205
    )
    
    
    13,962Minority interests:Share of (losses) / income
    
    
    
    
    
    
    (210
    )Cumulative dividends on Exchangeable Shares
    
    
    (4,129
    )
    
    
    Net (loss) / income attributable to common
stockholders
    
    $
    (226,334
    )
    
    $
    13,752
 25




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##### Table of Contents



Net Revenues and Other Income
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Change
in GAAP Net Revenues and Other Income between Three Months Ended
March 31, 2008 and March 31, 2007
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007
    
    
    ChangeNet revenues and other incomeManagement fees, net
    
    $
    98,756
    
    
    $
    57,343
    
    
    $
    41,413Performance fees, net
    
    
    4,735
    
    
    
    2,521
    
    
    
    2,214Administration fees, net
    
    
    22,248
    
    
    
    12,645
    
    
    
    9,603Other
    
    
    5,641
    
    
    
    498
    
    
    
    5,143Total net revenues and other income
    
    $
    131,380
    
    
    $
    73,007
    
    
    $
    58,373Key ratiosTotal net revenues and other income / average net AUM
    
    
    0.5
    %
    
    
    0.5
    %
    
    
    0.0
    %Management fees / average net AUM
    
    
    0.4
    %
    
    
    0.4
    %
    
    
    0.0
    %
    
    
    a 57.7% higher quarterly average net AUM balance between the periods
which, at constant net management fee yield, resulted in an increase in management
fees of $33.1 million, or 79.9% of the total increase in management fees; and
    
    an increase in the net management fee yield from 0.37% to 0.40%,
reflecting higher management fees per unit of AUM, which, when applied to the
increased net AUM base, resulted in an increase in management fees of $8.3
million, or 20.1% of the total increase in management fees. The higher net
management fee yield was attributable primarily to investors participating in GLG
Funds and managed accounts with higher management fee rates.
   26




---



##### Table of Contents




    
    a 57.7% higher quarterly average net AUM balance between the periods
which, at constant administration fee yield, resulted in an increase in
administration fees of $7.3 million, or 75.9% of the total increase in
administration fees; and
    
    an increase in the net administration fee yield from 0.08% to 0.09%
which, when applied to the increased net AUM base, resulted in an increase in
administration fees of $2.3 million, or 24.1% of the total increase in
administration fees. The higher net administration fee yield was attributable
primarily to investors participating in GLG Funds and managed accounts with higher
net administration fee rates.
  Expenses
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Change
in GAAP Expenses between Three Months Ended March 31, 2008 and March 31, 2007
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007
    
    
    ChangeExpensesEmployee compensation and benefits
    
    $
    (287,935
    )
    
    $
    (25,048
    )
    
    $
    (262,887
    )Limited partner profit share
    
    
    (25,104
    )
    
    
    (6,453
    )
    
    
    (18,651
    )Compensation, benefits and profit share
    
    
    (313,039
    )
    
    
    (31,501
    )
    
    
    (281,538
    )General, administrative and other
    
    
    (30,303
    )
    
    
    (25,764
    )
    
    
    (4,539
    )Total expenses
    
    $
    (343,342
    )
    
    $
    (57,265
    )
    
    $
    (286,077
    )Key ratiosCompensation, benefits and profit share / total
GAAP net revenues and other income
    
    
    238.3
    %
    
    
    43.1
    %
    
    
    195.1
    %General, administrative and other / total GAAP net
revenue and other income
    
    
    23.1
    %
    
    
    35.3
    %
    
    
    (12.2
    %)Total expenses / total GAAP net revenue and other income
    
    
    261.3
    %
    
    
    78.4
    %
    
    
    182.9
    %
  
    
    An increase in compensation attributable to the growth in our
headcount as our operations grew; and
    
    Acquisition-related compensation expense of $260.2 million.
  27




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##### Table of Contents



Non-GAAP Expense Measures
  Change in Non-GAAP Expenses between Three Months Ended March 31, 2008 and March 31, 2007
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007
    
    
    ChangeNon-GAAP expensesGAAP compensation, benefits and profit share
    
    $
    (313,039
    )
    
    $
    (31,501
    )
    
    $
    (281,538
    )Add back: Acquisition-related compensation expense
    
    
    260,155
    
    
    
    
    
    
    
    260,155Non-GAAP CBP
    
    
    (52,884
    )
    
    
    (31,501
    )
    
    
    (21,383
    )GAAP general, administrative and other
    
    
    (30,303
    )
    
    
    (25,764
    )
    
    
    (4,539
    )Non-GAAP total expenses
    
    $
    (83,187
    )
    
    $
    (57,265
    )
    
    $
    (25,922
    )Key ratios (based on non-GAAP measures)Non-GAAP CBP / total GAAP net revenues and other income
    
    
    40.3
    %
    
    
    43.1
    %
    
    
    (2.9
    %)General, administrative and other / total GAAP net
revenues and other income
    
    
    23.1
    %
    
    
    35.3
    %
    
    
    (12.2
    %)Non-GAAP total expenses / total GAAP net revenues and
other income
    
    
    63.3
    %
    
    
    78.4
    %
    
    
    (15.1
    %)
  Net
Interest (Expense)/Income
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Change
in Net Interest (Expense) / Income between Three Months Ended March 31, 2008 and March 31, 2007
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007
    
    
    ChangeInterest income
    
    $
    3,086
    
    
    $
    1,675
    
    
    $
    1,411Interest expense
    
    
    (7,129
    )
    
    
    (200
    )
    
    
    (6,929
    )Net interest (expense) / income
    
    $
    (4,043
    )
    
    $
    1,475
    
    
    $
    (5,518
    )
  Income Tax
  28




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##### Table of Contents



Minority Interests
  Adjusted Net Income
  Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Change
in Non-GAAP Adjusted Net Income between Three Months Ended March 31, 2008 and March 31, 2007
(U.S. Dollars in thousands)
 Three Months Ended March 31,2008
    
    
    2007
    
    
    ChangeDerivation of non-GAAP adjusted net incomeGAAP net (loss)/income before minority interest
    
    $
    (222,205
    )
    
    $
    13,962
    
    
    $
    (236,167
    )Add: Acquisition-related compensation expense
    
    
    260,155
    
    
    
    
    
    
    
    260,155Deduct: cumulative dividends
    
    
    (4,129
    )
    
    
    
    
    
    
    (4,129
    )Non-GAAP adjusted net income
    
    $
    33,821
    
    
    $
    13,962
    
    
    $
    19,859
  Liquidity and Capital Resources
     29




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##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
  Off-Balance Sheet Arrangements
  30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
     Impact on Management Fees
  Impact on Performance Fees
  Impact on Administration Fees
  31




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##### Table of Contents



Market Risk
  Exchange Rate Risk
   Interest Rate Risk
  32




---



##### Table of Contents



Item 4. Controls and Procedures
    33




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 
 
  
 Item 1A. Risk Factors
  34




---



##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 Share and Warrant Repurchases
  MaximumTotal Number
    
    Approx. Dollarof Warrants
    
    Value ofPurchased as
    
    Warrants thatPart of Publicly
    
    may yet beTotal Number of
    
    Average Price
    
    Announced
    
    Purchase UnderWarrants
    
    Paid Per
    
    Plans or
    
    the Plans orPeriod
    
    Repurchased (1)
    
    Warrant (2)
    
    Programs
    
    Programs (3)January 1-31, 2008
    
    
    5,500,000
    
    
    $
    5.73
    
    
    
    5,500,000
    
    
    $
    24,757,832February 1-29, 2008
    
    
    1,500,000
    
    
    
    5.11
    
    
    
    1,500,000
    
    
    
    117,092,832March 1-31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117,092,832Total
    
    
    7,000,000
    
    
    
    
    
    
    
    7,000,000
 
 (1)
    
    All of the warrants purchased during the quarter ended December 31, 2007 were acquired
pursuant to the repurchase program described in (3) below.(2)
    
    Average price per warrant includes brokerage commissions.(3)
    
    On November 2, 2007, we initiated a $100.0 million repurchase program for shares of our common
stock and warrants to purchase common stock approved by our Board of Directors effective through
May 2, 2008. On February 4, 2008, the Board of Directors approved our repurchase of up to $100.0
million additional shares of common stock and warrants through August 31, 2008. Our repurchase
programs allow management to repurchase shares and warrants at its discretion.  35




---



##### Table of Contents



Item 6. ExhibitsExhibit No.
    
    Description2.2
    
    Amendment No. 1, dated as of March 4, 2008, to the
Purchase Agreement, dated as of June 22, 2007, among the
Company, Noam Gottesman (as Sellers Representative) and
Jared Bluestein (as Buyers Representative).10.1
    
    Employment Agreement executed as of January 9, 2008,
effective March 18, 2008, between the Company and Jeffrey
M. Rojek.10.2.1
    
    Form of Indemnification Agreement between the Company and
its directors, officers, employees and agents, filed as
Exhibit 10.1.1 to the Companys Current Report on Form
8-K (File No. 001-33217), is incorporated herein by
reference.10.2.2
    
    Schedule identifying directors and executive officers party to
agreements substantially identical to the Form of
Indemnification Agreement constituting Exhibit 10.2.1 to this
Quarterly Report on Form 10-Q.10.3*
    
    Letter Agreement dated as of
January 29, 2008, between
the Company and Alejandro San Miguel with respect to the
Restricted Stock Award Agreement dated November 5, 2007
between the Company and Mr. San Miguel.31.1
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e)
of the Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Rule 13a-15(e) or 15d-15(e)
of the Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief
Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350.
 
 *
    
    Portions of this exhibit have been omitted and filed separately with the Office of the
Secretary of the Securities and Exchange Commission pursuant to a confidential treatment
request. 36




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##### Table of Contents



SIGNATURE
  GLG PARTNERS, INC.
(Registrant)Date: May 9, 2008
    By:
    /s/ Noam GottesmanName:
    Noam GottesmanTitle:
    Chairman of the Board and Co-Chief
Executive Officer 37




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Description2.2
    
    Amendment No. 1, dated as of March 4, 2008, to the Purchase
Agreement, dated as of June 22, 2007, among the Company, Noam
Gottesman (as Sellers Representative) and Jared Bluestein (as
Buyers Representative).10.1
    
    Employment Agreement executed as of January 9, 2008, effective
March 18, 2008, between the Company and Jeffrey M. Rojek.10.2.1
    
    Form of Indemnification Agreement between the Company and its
directors, officers, and certain of its employees and agents,
filed as Exhibit 10.1.1 to the Companys Current Report on
Form 8-K (File No. 001-33217), is incorporated herein by
reference.10.2.2
    
    Schedule identifying directors and executive officers party to
agreements substantially identical to the Form of
Indemnification Agreement constituting Exhibit 10.2.1 to this
Quarterly Report on Form 10-Q.10.3*
    
    Letter Agreement dated as of
January 29, 2008, between the
Company and Alejandro San Miguel with respect to the
Restricted Stock Award Agreement dated November 5, 2007
between the Company and Mr. San Miguel.31.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.31.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Rule 13a-15(e) or 15d-15(e) of the
Exchange Act.32.1
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Periodic Report by the Co-Chief Executive
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.32.3
    
    Certification of Periodic Report by the Chief Financial
Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, 18 U.S.C. Section 1350.
 
 *
    
    Portions of this exhibit have been omitted and filed separately with the Office of the
Secretary of the Securities and Exchange Commission pursuant to a confidential treatment
request. 38