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United States securities and exchange commission logo
January 19, 2023
Michael Nessim
Chief Executive Officer
Binah Capital Group, Inc.
17 Battery Place, Room 625
New York, New York 10004
Re: Binah Capital
Group, Inc.
Registration
Statement on Form S-4
Filed on December
23, 2022
File No. 333-269004
Dear Michael Nessim:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-4 filed December 23, 2022
What vote is required to approve the Proposals?, page 10
1. Please disclose what
percentage of public shareholders need to vote in favor of the
business combination
for it to be approved.
Do any of KWAC's directors or officers have interests , page 11
2. Please quantify in the
question and answer section the aggregate dollar amount and
describe the nature of
what the sponsor and its affiliates have at risk that depends on the
completion of the
business combination. Include the current value of securities held,
loans extended, fees
due, and out-of-pocket expenses for which the sponsor and its
affiliates are awaiting
reimbursement. Please provide similar disclosure for the company's
officers and directors,
if material.
Michael Nessim
FirstName LastNameMichael Nessim
Binah Capital Group, Inc.
Comapany
January 19,NameBinah
2023 Capital Group, Inc.
January
Page 2 19, 2023 Page 2
FirstName LastName
What are the U.S. federal income tax consequences of the business combination,
page 16
3. We note the disclosure here that the merger is intended to qualify as
a tax-deferred
exchange. However, at page 39 in the risk factor, "There may be tax
consequences," you
say the merger is expected to be tax-free. Please revise for
consistency or advise.
Summary of the Proxy Statement/Prospectus, page 18
4. Please include disclosure in the summary showing the potential impact
of redemptions on
the per share value of the shares owned by non-redeeming shareholders
by including a
sensitivity analysis showing a range of redemption scenarios,
including minimum,
maximum, and interim redemption levels.
Certain Other Benefits in the Business Combination, page 23
5. It appears Oppenheimer's underwriting fees remain constant and not
adjusted based on
redemptions. Please revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis.
6. We note Oppenheimer performed additional services after the IPO and
part of the IPO
underwriting fee was deferred and conditioned on completion of a
business combination.
Please quantify the aggregate fees payable to Oppenheimer that are
contingent on
completion of the merger.
Risk Factors, page 33
7. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
8. Please highlight the risk that the sponsor will benefit from the
completion of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
Since KWAC's Sponsor and KWAC's director, officers and advisors, page 35
9. We note the disclosure here that at any time prior to the Special
Meeting, the Sponsor,
KWAC's directors and officer and advisors, Wentworth and/or its
respective affiliates may
purchase shares and/or warrants from investors. Please provide your
analysis on how
such potential purchases would comply with Rule 14e-5.
10. Please also clarify in this risk factor or elsewhere as appropriate if
the sponsor and its
affiliates can earn a positive rate of return on their investment,
even if other SPAC
shareholders experience a negative rate of return in the post-business
combination
company.
Michael Nessim
FirstName LastNameMichael Nessim
Binah Capital Group, Inc.
Comapany
January 19,NameBinah
2023 Capital Group, Inc.
January
Page 3 19, 2023 Page 3
FirstName LastName
The Proposed Holding Charter will provide that the Court of Chancery, page 56
11. We note your forum selection provision identifies the Court of
Chancery of the State of
Delaware as the exclusive forum for certain litigation, including any
"derivative action."
We note your disclosure that with respect to the Exchange Act, only
claims brought
derivatively under the Exchange Act would be subject to the forum
selection clause
described above. In that regard, we note that Section 27 of the
Exchange Act creates
exclusive federal jurisdiction over all suits brought to enforce any
duty or liability created
by the Exchange Act or the rules and regulations thereunder. Please
similarly revise at
page 98 under "Forum."
Summary Income Statement and Non-GAAP Measures (in millions), page 92
12. In regards to your non-GAAP measures, please address the following:
Clearly disclose which are the non-GAAP measures(e.g., Total
Revenue, Cost of
Revenue, Gross Profit, Adjusted G&A, Adjusted EBITDA) and provide
a discussion
of the reasons by management believe the measures are useful to
investors;
For all of your non-GAAP measures in response to the bullet above,
include
quantitative reconciliations for all periods, including for the
TTM September 2022
period, to the comparable GAAP measures.
Include a description of the gross amounts included in the
Non-recurring expenses
adjustment; and
Include the details of the footnotes to the table you have
presented.
13. In regards to your reconciliation from net earnings to Adjusted
EBITDA, we note an
adjustment for depreciation and amortization in the amount of $5.5
million for 2021.
Please tell us why this amount does not reconcile to the depreciation
and amortization
amount in your pro forma information for 2021 on page 120 or to the
financial statements
on page F-60.
14. We note your presentation of "Pro Forma" financial results for the
periods presented.
Please tell us whether this represents pro forma information
consistent with Article 11 of
Regulation S-X. If so, tell us how it reconciles to the Article 11 Pro
Forma information on
pages 115-124. In addition, tell us how you considered Question 100.05
of the Non-
GAAP Financial Measures C&DI updated on December 13, 2022.
Unaudited Pro Forma Condensed Combined Balance Sheet, page 118
15. Please tell us why the equity line items in the WMS (Historical)
column do not reconcile,
individually, to the September 30, 2022 balances disclosed on page
F-45. For example,
we note that accumulated deficit and additional paid-in capital have
zero balances in the
historical column of the pro forma information.
Michael Nessim
FirstName LastNameMichael Nessim
Binah Capital Group, Inc.
Comapany
January 19,NameBinah
2023 Capital Group, Inc.
January
Page 4 19, 2023 Page 4
FirstName LastName
Unaudited Pro Forma Condensed Combined Statement of Operations, page 119
16. Please tell us why your pro forma financial information does not
reflect any income tax
adjustments for either the nine months ended September 30, 2022 or
year ended
December 31, 2021.
17. We note that the interest, depreciation and amortization line items
for historical WMS for
the year ended December 31, 2021 do not reconcile to the amounts
disclosed on the face
of the financial statements on page F-60. Please tell us why they do
not reconcile or
revise accordingly.
4. Earnings Per Share, page 123
18. Please tell us and revise to disclose how you have considered the
potential dilutive impact
of warrants, or other potential outstanding securities if applicable,
on your pro forma net
income per share attributable to common stockholders.
Redemption of Rights for Holders of Public Shares, page 127
19. We note the sponsor, officers and directors have entered into a letter
agreement to waive
their redemption rights with respect to the Founder Shares and any
Public Shares they
may acquire after the IPO in connection with the completion of the
initial business
combination. Please describe any consideration provided in exchange
for this agreement.
If any consideration was provided in exchange for the agreement,
please also disclose this
under the question and answer section.
Business of Wentworth
Our Company, page 143
20. We note your disclosure that the Company has over 1900 registered
individuals. Please
revise to define the term registered individuals in your disclosure.
Results of Operations, page 149
21. Please include a discussion of any known trends or uncertainties that
have had or that are
reasonably likely to have a material favorable or unfavorable impact
on revenues and
income from continuing operations. We refer you to Item 303(b)(2)(ii)
of Regulation S-
K.
Commissions, page 150
22. We note your disclosures regarding the Company's policies for trailing
commission
revenues, including variable consideration. Please address the
following:
Tell us if these revenues are subject to reversal if there is a
decline in the current
market value of clients investment holdings in trail-eligible
asset.
Disclose the gross amount of trail-eligible assets held at the end
of each period, along
with other qualitative information about the trail-eligible
assets.
Michael Nessim
FirstName LastNameMichael Nessim
Binah Capital Group, Inc.
Comapany
January 19,NameBinah
2023 Capital Group, Inc.
January
Page 5 19, 2023 Page 5
FirstName LastName
Disclose the how the revenue amount is determined, including
hurdle rates if
applicable, and quantify any specific performance information of
the assets.
We note that the constraint is removed once the investment
holdings value can be
determined. Tell us when this typically occurs and how the value
is determined.
23. We note that the increase in sales-based commission revenue for the
nine months ended
September 30, 2022 and full year 2021 compared to their prior
comparable periods was
due to the World Equity Group, Inc acquisition that closed in May 2021
and changes in
sales of annuities and mutual fund products. Please revise to quantify
the individual
impact from each of these items on your revenues. Provide similar
updates to your
discussion of changes in Advisory Fee revenues on page 151.
Revenues, page 150
24. We note your disclosure that revenues are analyzed to determine
whether the Company is
the principal or agent in the contract. Please provide us with your
principal vs. agent
accounting analysis and conclusions. In addition, tell us and revise
your disclosure to
state whether you are the principal or agent and disclose the material
terms of the
arrangements.
Commissions and Fees, page 151
25. Please provide details on the calculation of the payout range and how
it is used to evaluate
your business.
Interest and other income, page 151
26. Please include a discussion of this line item in accordance with Item
303(b)(2) of
Regulation S-K.
Liquidity and capital resources, page 153
27. We note your incomplete reference to the footnotes. Please revise your
disclosure
accordingly.
Critical Accounting Policies and Estimates, page 156
28. Please revise your disclosure to discuss your critical accounting
estimates and the related
information required by Item 303(b)(3) of Regulation S-K. This
information should
include why each critical accounting estimate is subject to
uncertainty and, to the extent
the information is material and reasonably available, how much each
estimate and/or
assumption has changed over a relevant period, and the sensitivity of
the reported amount
to the methods, assumptions and estimates underlying its calculation.
Beneficial Ownership of Securities, page 178
29. Please include disclosure, separate from the beneficial ownership
table, of the sponsor and
Michael Nessim
FirstName LastNameMichael Nessim
Binah Capital Group, Inc.
Comapany
January 19,NameBinah
2023 Capital Group, Inc.
January
Page 6 19, 2023 Page 6
FirstName LastName
its affiliates' total potential ownership interest in the combined
company, assuming
exercise and conversion of all securities.
Condensed Consolidated Statements of Changes in Members' Equity, page F-45
30. We note that the Company had accumulated deficit as of January 1, 2021
and 2022. We
also note that the Company presents adjustments for contribution and
distribution of
capital through Accumulated Deficit during the periods presented.
Please address the
following:
Provide us with your accounting analysis, with reference to
authoritative literature,
supporting your accounting and presentation for these amounts
within accumulated
deficit.
Tell us what the negative contribution of capital during the nine
months ended
September 30, 2021 represents.
In regards to the above bullet, tell us how your presentation in
the interim financial
statements is consistent with your annual financial statement on
page F-61, which
does not show contribution of capital through accumulated
deficit.
Wentworth Management Services, LLC Financial Statements
Audited Financial Statements as of and for the year ended December 31, 2021,
page F-58
31. We note that you have separate audit reports and financial statements
for the fiscal years
ended December 31, 2020 and December 31, 2021. Please tell us why you
are presenting
your financial statements in this manner as opposed to combining the
audit reports and
financial statements. In addition, tell us how this presentation
complies with Article 3 of
Regulation S-X.
Notes to the Condensed Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Basis of Presentation, page F-64
32. We note your disclosure here and in other instances in your filing
(e.g. pages 149, 153 and
F-48) which state that there are conditions that raise substantial
doubt about the
Company s ability to continue as a going concern. However, we do not
note a reference
to this fact or explanatory paragraph in the audit report on page
F-58. Please advise.
Refer to AU Section 341.
3. Business Combinations, page F-67
33. We note your disclosures surround the May 2021 acquisition of WEG.
Related, we also
noted your discussion of changes in revenues and expenses on pages
150-151 that the
acquisition was a primary driver of those changes. Please address the
following:
Tell us how you considered the guidance in Rule 3-05 of Regulation
S-X for the
acquisition. Provide us with your significance calculations.
Revise to disclose information required by ASC 805-10-50-2(h).
Michael Nessim
Binah Capital Group, Inc.
January 19, 2023
Page 7
General
34. Please quantify the value of warrants, based on recent trading prices,
that may be retained
by redeeming stockholders assuming maximum redemptions and indentify
any material
resulting risks.
35. We note the disclosure regarding a potential PIPE investment in
conjunction with the
closing of the merger. Please highlight material differences in the
terms and price of
securities issued at the time of the IPO as compared to private
placements contemplated at
the time of the business combination. Disclose if the SPAC's sponsors,
directors, or
officers will participate in the private placement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Michael Henderson at 202-551-3364 or Robert Klein at
202-551-3847
if you have questions regarding comments on the financial statements and
related
matters. Please contact Susan Block at 202-551-3210 or John Dana Brown at
202-551-3859
with any other questions.
FirstName LastNameMichael Nessim Sincerely,
Comapany NameBinah Capital Group, Inc.
Division of
Corporation Finance
January 19, 2023 Page 7 Office of
Finance
FirstName LastName