UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Schedule 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

 

 

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☒	Definitive Proxy Statement

 

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☐	Soliciting Material under §240.14a-12

BGC Partners, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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CORPORATE CONVERSION PROPOSAL

 

 

Dear BGC Partners, Inc. stockholders:

On November 15, 2022, BGC Partners, Inc., a Delaware corporation (the “Company” or “BGC Partners”), and BGC Holdings, L.P., a Delaware limited partnership (“BGC Holdings”), along with certain other affiliated entities, entered into a Corporate Conversion Agreement, which was amended as of March 29, 2023 (the “corporate conversion agreement”), in order to reorganize and simplify the organizational structure of the BGC entities. Upon completion of the corporate conversion, the stockholders of BGC Partners and the limited partners of BGC Holdings will participate in the economics of the BGC businesses through the same publicly traded corporate entity, BGC Group, Inc., a Delaware corporation (“BGC Group”). By simplifying the organizational structure, the corporate conversion is intended to improve transparency and reduce operational complexity.

Under the existing structure, the Company and BGC Holdings – which is currently a consolidated subsidiary of the Company for accounting purposes – currently hold, directly or indirectly and on a combined basis, 100% of the limited partnership interests in BGC Partners, L.P., a Delaware limited partnership (“BGC U.S. Opco”), and in BGC Global Holdings, L.P., a Cayman Islands limited partnership (together with BGC U.S. Opco, the “BGC Opcos”), which are the two operating partnerships of the BGC entities. The limited partners of BGC Holdings, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Holdings, and the stockholders of BGC Partners, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Partners. This structure is sometimes referred to as an Umbrella Partnership/C-Corporation (or “Up-C structure”).

When the corporate conversion is completed, the limited partners of BGC Holdings will cease participating in the economics of the BGC Opcos indirectly through BGC Holdings and instead will participate in the economics of the BGC Opcos indirectly through BGC Group. The stockholders of the Company will also participate in the economics of the BGC Opcos indirectly through BGC Group. BGC Group will have Class A common stock and Class B common stock with terms that are substantially similar to the existing Class A common stock of BGC Partners and Class B common stock of BGC Partners, respectively, and the BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the symbol “BGC.” The corporate conversion will therefore have the effect of transforming the organizational structure of the BGC entities from an Up-C structure to a simplified “Full C-Corporation” structure.

We believe that the simplified corporate structure will be more comprehensible to the marketplace, which may, in turn, increase demand for shares of BGC Group and assist in the goal of maximizing long-term stockholder value. By simplifying the organizational structure, the corporate conversion is also intended to improve stockholder value by reducing administrative costs and increasing the efficiency of BGC Partners’ regulated businesses and associated capital requirements.

The corporate conversion is being effected pursuant to a series of mergers (the “mergers”), as a result of which the Company and BGC Holdings (or its successor) will become wholly owned subsidiaries of BGC Group. As a result of the mergers:

 

•

each share of BGC Partners Class A common stock and each share of BGC Partners Class B common stock outstanding as of immediately prior to the mergers will be converted into the right to receive one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively;

•

each exchangeable unit of BGC Holdings that is held by Cantor Fitzgerald, L.P. (“Cantor”) (including its general partner) outstanding as of immediately prior to the mergers will be converted into the right to receive one share of BGC Group Class B common stock provided that a portion of the shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger;

 

•

each exchangeable unit of BGC Holdings not held by Cantor (including its general partner) outstanding as of immediately prior to the mergers will be converted into the right to receive one share of BGC Group Class A common stock; and

 

•

each non-exchangeable unit of BGC Holdings outstanding as of immediately prior to the mergers will generally be converted into the right to receive an equity award denominated in cash and/or equity of BGC Group.

It is expected that up to approximately 360 million shares of BGC Group Class A common stock and approximately 110 million shares of BGC Group Class B common stock will be issued in the corporate conversion, based on the number of shares of BGC Partners common stock, the number of exchangeable limited partnership units of BGC Holdings and the number of shares of BGC Partners common stock that may be issuable pursuant to outstanding equity-based incentive awards currently outstanding.

BGC Partners is sending this document to BGC Partners stockholders to request that they consent to the following proposals:

 

•

a proposal to adopt the corporate conversion agreement (the “corporate conversion agreement proposal”);

 

•

a proposal to approve the assumption by BGC Group of the Eighth Amended and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long-Term Incentive Plan (the “BGC Group Equity Plan proposal”); and

 

•

four separate proposals to approve certain provisions in the amended and restated certificate of incorporation of BGC Group that will be in effect as of the closing that are different from the provisions in the current amended and restated certificate of incorporation of BGC Partners (collectively, the “BGC Group certificate of incorporation proposals”).

The BGC Partners board of directors has carefully considered the terms of the corporate conversion agreement. Following the unanimous determination by the independent Audit Committee and the Compensation Committee of the BGC Partners board of directors, sitting jointly (the “Independent Joint Committee”), that the corporate conversion agreement and the transactions contemplated thereby are fair to and in the best interests of BGC Partners stockholders (other than Cantor and its affiliates) and the unanimous recommendation of the Independent Joint Committee, the BGC Partners board of directors has determined that the corporate conversion agreement and the transactions contemplated thereby are fair to, and in the best interests of, BGC Partners and its stockholders, and hereby recommends that the BGC Partners stockholders provide their consent for the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and each BGC Group certificate of incorporation proposal.

Immediately following the execution of the corporate conversion agreement, Cantor entered into a support agreement (the “support agreement”) under which it agreed, within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the U.S. Securities Act of 1933, as amended (“Securities Act”), to execute and deliver a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals (the “Cantor written consent”), with the Cantor written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this

consent solicitation statement/prospectus to the stockholders of BGC Partners. Because each of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals requires the approval of at least a majority of the outstanding voting power of BGC Partners common stock, and Cantor is the holder of BGC Partners common stock with a majority of the outstanding voting power of BGC Partners common stock outstanding as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the required approvals to pass the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

We encourage you to read the entire document carefully, including the information incorporated herein by reference. In particular, see the section titled “Risk Factors” beginning on page 21 of this document.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this consent solicitation statement/prospectus or has determined if this consent solicitation statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This consent solicitation statement/prospectus is dated May 26, 2023, and is being first mailed to BGC Partners stockholders on or about May 26, 2023.

BGC PARTNERS, INC.

499 Park Avenue

New York, New York 10022

NOTICE OF SOLICITATION OF WRITTEN CONSENT

To BGC Partners, Inc. stockholders:

On November 15, 2022, BGC Partners, Inc. (the “Company” or “BGC Partners”) entered into a Corporate Conversion Agreement, which was amended as of March 29, 2023 (the “corporate conversion agreement”), by and among the Company, BGC Holdings, L.P. (“BGC Holdings”), BGC Group, Inc. (“BGC Group”), BGC Partners GP, LLC, the general partner of BGC Holdings (“BGC Holdings GP”), BGC Partners II, Inc. (“Merger Sub 1”), BGC Partners II, LLC (“Merger Sub 2”), BGC Holdings Merger Sub, LLC (“Holdings Merger Sub”) and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P. (“Cantor”). The corporate conversion agreement provides for a corporate conversion of the BGC businesses through a series of mergers (the “mergers”), pursuant to which the Company and BGC Holdings will become wholly owned subsidiaries of BGC Group. If the corporate conversion is completed, it will have the effect of transforming the organizational structure of the BGC businesses from an Up-C structure to a simplified “Full C-Corporation” structure.

This document is being delivered to you on behalf of the BGC Partners board of directors to request that BGC Partners stockholders as of the record date of May 19, 2023 execute and return written consents to the following proposals:

 

•

to adopt the corporate conversion agreement (the “corporate conversion agreement proposal”);

 

•

to approve the assumption by BGC Group of the Eighth Amended and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long-Term Incentive Plan (the “BGC Group Equity Plan proposal”); and

 

•

to approve the following four separate proposals (collectively, the “BGC Group certificate of incorporation proposals”) to approve the following provisions in the amended and restated certificate of incorporation of BGC Group to be in effect as of the closing that are different from the current provisions in the amended and restated certificate of incorporation of BGC Partners:

 

•

BGC Group certificate of incorporation proposal A: to approve a provision that the number of authorized shares of BGC Group Class A common stock shall be 1,500,000,000;

 

•

BGC Group certificate of incorporation proposal B: to approve a provision that the number of authorized shares of BGC Group Class B common stock shall be 300,000,000;

 

•

BGC Group certificate of incorporation proposal C: to approve a provision providing for exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law; and

 

•

BGC Group certificate of incorporation proposal D: to approve a provision providing that Delaware courts shall be the exclusive forum for certain matters.

The BGC Partners board of directors, upon the unanimous recommendation of the Audit Committee and the Compensation Committee of the BGC Partners board of directors, sitting jointly (the “Independent Joint Committee”), recommends that BGC Partners stockholders provide their consent for the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and each BGC Group certificate of incorporation proposal.

Please complete, date and sign the written consent furnished with the accompanying consent solicitation statement/prospectus and return it promptly to BGC Partners by one of the means described in the section titled “Written Consents of BGC Partners Stockholders” beginning on page 35 of this consent solicitation statement/prospectus.

 

May 26, 2023

IMPORTANT NOTE ABOUT THIS CONSENT SOLICITATION STATEMENT/PROSPECTUS

This consent solicitation statement/prospectus incorporates important business and financial information about BGC Partners from other documents that BGC Partners has filed with the U.S. Securities and Exchange Commission (the “SEC”) and that are contained in or incorporated by reference herein. For a listing of documents incorporated by reference herein, please read the section titled “Documents Incorporated by Reference” beginning on page 122 of this consent solicitation statement/prospectus.

You may request copies of this consent solicitation statement/prospectus and any of the documents incorporated by reference herein or other information concerning BGC Partners, without charge, upon written or oral request to the Company’s principal executive offices. The address and telephone numbers of such principal executive offices are listed below.

Investor Relations

BGC Partners, Inc.

499 Park Avenue

New York, New York 10022

(212) 610-2426

General information about BGC Partners, including BGC Partners’ annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to those reports, are available free of charge through BGC Partners’ website at www.bgcpartners.com as soon as reasonably practicable after BGC Partners files them with, or furnishes them to, the SEC. Information on BGC Partners’ website is not incorporated into this consent solicitation statement/prospectus and is not a part of this consent solicitation statement/prospectus.

To ensure timely delivery, any request for documents should be made no later than June 20, 2023.

We have not authorized anyone to give any information or make any representation about the corporate conversion agreement and the matters and parties contemplated thereby, including the transactions effecting the proposed corporate conversion, that is different from, or in addition to, the information contained in this consent solicitation statement/prospectus or in any of the materials that have been incorporated by reference into this consent solicitation statement/prospectus. Therefore, if anyone distributes any such information, you should not rely on it. If you are in a jurisdiction where offers to exchange or sell or solicitations of offers to exchange or purchase the securities offered by this consent solicitation statement/prospectus or the solicitation of consents or proxies is unlawful, or if you are a person to whom it is unlawful to direct these types of activities, then the offer presented in this consent solicitation statement/prospectus does not extend to you. The information contained in this consent solicitation statement/prospectus speaks only as of the date of this consent solicitation statement/prospectus or, in the case of information in a document incorporated by reference, as of the date of such document, unless the information specifically indicates that another date applies.

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS			1
SUMMARY			7
Overview			7
Information about the Companies			8
Written Consents of BGC Partners Stockholders			10
Corporate Conversion Agreement and the Corporate Conversion			10
Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee			16
Regulatory Matters			16
Security Ownership of Certain Beneficial Owners and Management/Directors of BGC Partners			16
Treatment of BGC Partners Equity Incentive Plans and Outstanding Awards in Connection with the Corporate Conversion			17
Termination			17
Board of Directors and Executive Officers of BGC Group Following the Corporate Conversion			18
Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion			18
Comparison of Rights of BGC Partners Stockholders and BGC Group Stockholders			19
BGC Partners Class  A Common Stock Market Prices and Implied Value of BGC Group Class A Common Stock			19
Material U.S. Federal Income Tax Consequences			20
No Dissenters’ or Appraisal Rights			20
Risk Factors			20
RISK FACTORS			21
Risks Related to the Transaction			21
Risks Related to BGC Group Common Stock			25
Risks Relating to the Businesses of BGC Partners			28
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS			29
WRITTEN CONSENTS OF BGC PARTNERS STOCKHOLDERS			35
Purpose of the Consent Solicitation; Recommendation of the BGC Partners Board			35
BGC Partners Stockholders Entitled to Consent			35
Required Written Consents			36
Submission of Consents			36
Executing Written Consents; Revocation of Written Consents			37
Expenses; Solicitation of Written Consents			37
INFORMATION ABOUT THE COMPANIES			38
THE CORPORATE CONVERSION			40
Transaction Structure			40
Consideration to BGC Partners Stockholders and Holders of BGC Holdings Limited Partnership Units			44
Treatment of BGC Partners Equity Incentive Plans and Outstanding Awards in Connection with the Corporate Conversion			45
Background of the Corporate Conversion			45
BGC Partners’ Reasons for the Corporate Conversion; Recommendation of the Independent Joint Committee; Approval of the BGC Partners Board			56
Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee			60
Certain Estimated Incremental Financial Impacts of the Corporate Conversion			66
Regulatory Matters			68

 

-i-

Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion			68
Board of Directors and Executive Officers of BGC Group Following the Corporate Conversion			72
Listing of BGC Group Class  A Common Stock; Delisting and Deregistration of BGC Partners Class A Common Shares			72
No Dissenters’ or Appraisal Rights			72
Accounting Treatment of the Corporate Conversion			72
THE CORPORATE CONVERSION AGREEMENT			73
Explanatory Note Regarding the Corporate Conversion Agreement			73
Structure of the Corporate Conversion			73
Closing			79
Effective Time			80
Consideration Received by BGC Partners Stockholders			80
Consideration Received by BGC Holdings Limited Partners			80
Treatment of Outstanding BGC Partners Awards in the Corporate Conversion			81
Certain Cantor Purchase Rights			81
Conversion of Shares; Exchange of Certificates; No Fractional Shares			81
Representations and Warranties			83
Covenants and Agreements			84
Conditions to the Corporate Conversion			86
Termination			88
Expenses			89
Amendment and Waiver			89
Specific Performance and Third-Party Beneficiaries			90
THE SUPPORT AGREEMENT			91
THE BGC GROUP, INC. LONG TERM INCENTIVE PLAN			92
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR BGC GROUP			100
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION			102
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS			103
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION			105
DESCRIPTION OF BGC GROUP CAPITAL STOCK			109
BGC Group Capital Stock			109
Anti-Takeover Effects of Delaware Law, BGC Group Certificate of Incorporation and BGC Group Bylaws			110
Corporate Opportunity			111
Limitations on Liability, Indemnification of Officers and Directors and Insurance			112
Exclusive Forum			113
Transfer Agent and Registrar			113
Listing			113
COMPARISON OF RIGHTS OF BGC PARTNERS STOCKHOLDERS AND BGC GROUP STOCKHOLDERS			114
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES			118
NO DISSENTERS’ OR APPRAISAL RIGHTS			121

 

-ii-

VALIDITY OF COMMON STOCK			121
LEGAL MATTERS			121
EXPERTS			121
WHERE YOU CAN FIND MORE INFORMATION			122
DOCUMENTS INCORPORATED BY REFERENCE			122
ANNEX A CORPORATE CONVERSION AGREEMENT			A-1
ANNEX B SUPPORT AGREEMENT			B-1
ANNEX C OPINION OF HOULIHAN LOKEY			C-1
ANNEX D FORM OF BGC GROUP LONG-TERM INCENTIVE PLAN			D-1
ANNEX E FORM OF BGC GROUP AMENDED AND RESTATED CERTIFICATE OF INCORPORATION			E-1
ANNEX F FORM OF BGC GROUP AMENDED AND RESTATED BYLAWS			F-1

 

-iii-

QUESTIONS AND ANSWERS

The following are answers to certain questions that you may have regarding the proposed transaction. You should read and consider carefully the remainder of this document because the information in this section does not provide all of the information that might be important to you. Additional important information and risk factors are also contained in the documents incorporated by reference into this consent solicitation statement/prospectus. Please read the sections titled “Where You Can Find More Information” and “Documents Incorporated by Reference.”

 

Q:	What is the proposed transaction?

 

A:

On November 15, 2022, BGC Partners, Inc., a Delaware corporation (the “Company” or “BGC Partners”), and BGC Holdings, L.P., a Delaware limited partnership (“BGC Holdings”), along with certain other entities set forth below, entered into a Corporate Conversion Agreement, which was amended as of March 29, 2023 (the “corporate conversion agreement”), in order to convert and simplify the organizational structure of the BGC entities. Upon completion of the corporate conversion, the stockholders of BGC Partners and the limited partners of BGC Holdings will participate in the economics of the BGC businesses through the same publicly traded corporate entity, BGC Group, Inc., a Delaware corporation (“BGC Group”). By simplifying the organizational structure, the corporate conversion is intended to improve transparency and reduce operational complexity.

Under the existing structure, the Company and BGC Holdings – which is currently a consolidated subsidiary of the Company for accounting purposes – currently hold, directly or indirectly and on a combined basis, 100% of the limited partnership interests in BGC Partners, L.P., a Delaware limited partnership (“BGC U.S. Opco”), and in BGC Global Holdings, L.P., a Cayman Islands limited partnership (together with BGC U.S. Opco, the “BGC Opcos”), which are the two operating partnerships of BGC. The limited partners of BGC Holdings, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Holdings, and the stockholders of BGC Partners, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Partners. This structure is sometimes referred to as an Umbrella Partnership/C-Corporation (or “Up-C structure”).

When the corporate conversion is completed, the limited partners of BGC Holdings will cease participating in the economics of the BGC Opcos indirectly through BGC Holdings and instead will participate in the economics of the BGC Opcos indirectly through BGC Group. The stockholders of the Company will also participate in the economics of the BGC Opcos indirectly through BGC Group. BGC Group will have Class A common stock and Class B common stock with terms that are substantially similar to the existing Class A common stock of BGC Partners and Class B common stock of BGC Partners, respectively, and the BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the symbol “BGC.” The corporate conversion will therefore have the effect of transforming the organizational structure of the BGC entities from an Up-C structure to a simplified “Full C-Corporation” structure.

The corporate conversion is being effected pursuant to the terms of the corporate conversion agreement by and among the Company, BGC Holdings, BGC Group, BGC Partners GP, LLC, the general partner of BGC Holdings (“BGC Holdings GP”), BGC Partners II, Inc. (“Merger Sub 1”), BGC Partners II, LLC (“Merger Sub 2”), BGC Holdings Merger Sub, LLC (“Holdings Merger Sub”) and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P. (“Cantor”). The corporate conversion agreement provides that, on the terms and subject to the conditions set forth in the corporate conversion agreement:

 

•

BGC Holdings will effectively reorganize from a Delaware limited partnership into a Delaware limited liability company through the merger of BGC Holdings with and into Holdings Merger Sub (the “Holdings Reorganization merger”), with Holdings Merger Sub surviving the Holdings Reorganization merger. In the Holdings Reorganization merger, each unit of BGC Holdings outstanding as of immediately prior to the Holdings Reorganization merger will be converted into a substantially equivalent equity interest in Holdings Merger Sub.

 

-1-

•

Thereafter, Merger Sub 1 will merge with and into BGC Partners (the “Corporate merger”), with BGC Partners surviving the Corporate merger as a wholly owned subsidiary of BGC Group. In the Corporate merger, each share of BGC Partners Class A common stock and each share of BGC Partners Class B common stock outstanding at the effective time of the Corporate merger will be converted into one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively.

 

•

Concurrently with the Corporate merger, Merger Sub 2 will merge with and into Holdings Merger Sub (the “Holdings merger,” and together with the Holdings Reorganization merger and the Corporate merger, the “mergers”), with Holdings Merger Sub surviving as a wholly owned subsidiary of BGC Group. In the Holdings merger:

 

•

each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is held by Cantor or its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into one share of BGC Group Class B common stock, subject to the terms and conditions of the corporate conversion agreement, provided that a portion of the shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger;

 

•

each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is not held by Cantor or any of its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into one share of BGC Group Class A common stock; and

 

•

each non-exchangeable share of Holdings Merger Sub (which was issued in respect of each non-exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is outstanding at the effective time of the Holdings merger will, subject to certain limited exceptions, be converted into equity awards denominated in cash, restricted stock and/or RSUs of BGC Group, each as further set forth in the corporate conversion agreement.

 

Q:	Why am I receiving these materials?

 

A:	This document is being delivered to you on behalf of the BGC Partners board of directors to request that BGC Partners stockholders as of the record date of May 19, 2023 execute and return written consents to the following proposals:

 

•

to adopt the corporate conversion agreement (the “corporate conversion agreement proposal”);

 

•

to approve the assumption by BGC Group of the Eighth Amended and Restated BGC Partners, Inc. Long-Term Incentive Plan, as amended and restated as the BGC Group, Inc. Long-Term Incentive Plan (the “BGC Group Equity Plan proposal”); and

 

•

to approve the following four separate proposals (collectively, the “BGC Group certificate of incorporation proposals”) to approve the following provisions in the amended and restated certificate of incorporation of BGC Group to be in effect as of the closing that are different from the current provisions in the amended and restated certificate of incorporation of BGC Partners:

 

•

BGC Group certificate of incorporation proposal A: to approve a provision that the number of authorized shares of BGC Group Class A common stock shall be 1,500,000,000;

 

•

BGC Group certificate of incorporation proposal B: to approve a provision that the number of authorized shares of BGC Group Class B common stock shall be 300,000,000;

 

-2-

•

BGC Group certificate of incorporation proposal C: to approve a provision providing for exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law; and

 

•

BGC Group certificate of incorporation proposal D: to approve a provision providing that Delaware courts shall be the exclusive forum for certain matters.

 

Q:	Who is entitled to give a written consent?

The BGC Partners board of directors has set May 19, 2023 as the record date for determining holders of BGC Partners common stock entitled to execute and deliver written consents with respect to this consent solicitation statement/prospectus. If you are a record holder of outstanding BGC Partners common stock as of the record date, you may complete, date and sign the enclosed written consent and promptly return it to BGC Partners. Please read the section titled “Written Consents of BGC Partners Stockholders” beginning on page 35 of this consent solicitation statement/prospectus.

 

Q:	Why are you pursuing this corporate conversion?

 

A:

BGC Partners believes that the simplified corporate structure following the corporate conversion will be more comprehensible to the marketplace, which may, in turn, increase demand for shares of BGC Group and assist in the goal of maximizing long-term stockholder value. By simplifying the organizational structure, the corporate conversion is also intended to have a positive long-term impact on stockholder value by reducing administrative costs, increasing the efficiency of BGC Partners’ regulated businesses and associated capital requirements and other benefits. For more information, see the section titled “The Corporate Conversion—BGC Partners’ Reasons for the Corporate Conversion; Recommendation of the Independent Joint Committee; Approval of the BGC Partners Board” beginning on page 56.

 

Q:	What will happen to the Company and BGC Holdings as a result of the corporate conversion?

 

A:	As a result of the corporate conversion, the Company and BGC Holdings (or its successor) will become wholly owned subsidiaries of BGC Group.

 

Q:	What will BGC Partners stockholders receive in the corporate conversion?

 

A:

When the corporate conversion is completed, each outstanding share of BGC Partners Class A common stock and each outstanding share of BGC Partners Class B common stock will be converted into the right to receive one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively. The rights of the BGC Group Class A common stock and BGC Group Class B common stock will be substantially equivalent to the rights of the BGC Partners Class A common stock and BGC Partners Class B common stock, respectively, with such differences as described under the section titled “Comparison of Rights of BGC Partners Stockholders and BGC Group Stockholders.”

 

Q:	Where will shares of BGC Partners Class A common stock be listed after the corporate conversion?

 

A:

When the corporate conversion is completed, shares of BGC Partners Class A common stock will no longer be publicly traded or listed on any securities exchange. Instead, in the corporate conversion, holders of BGC Partners Class A common stock will receive an equal number of shares of BGC Group Class A common stock, which is expected to be listed on the NASDAQ Global Select Market under the ticker symbol “BGC.”

 

Q:	What BGC Partners stockholder approval is required to complete the corporate conversion?

 

A:

Approval of each of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals requires the approval of the holders of at least a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to consent to such matter.

 

-3-

Approval of the corporate conversion agreement proposal is required in order to complete the corporate conversion. Approval of neither the BGC Group Equity Plan proposal nor any of the BGC Group certificate of incorporation proposals is required in order to complete the corporate conversion.

Immediately following the execution of the corporate conversion agreement, Cantor entered into a support agreement (which we refer to as the “support agreement”) under which it agreed, within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act, to execute and deliver a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals (the “Cantor written consent”), with the Cantor written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this consent solicitation statement/prospectus to the stockholders of BGC Partners. Because each of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals requires the approval of at least a majority of the outstanding voting power of BGC Partners common stock, and Cantor is the holder of BGC Partners common stock with a majority of the outstanding voting power of BGC Partners common stock outstanding as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the required approvals to pass the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

 

Q:	Given that the delivery of the Cantor written consent will constitute the required BGC Partners stockholder approval for the transaction, why is BGC Partners seeking consents from all BGC Partners stockholders?

 

A:

Under applicable SEC guidance, one may seek a commitment from principal security holders of a company to vote in favor of a business combination transaction and register the securities to be offered and sold in the transaction if, among other things, votes will also be solicited from company stockholders who have not entered such commitments. BGC Partners is therefore soliciting consents from all of its stockholders pursuant to this document in accordance with SEC guidance so that the BGC Group securities to be offered and sold in the transaction may be registered under the Securities Act.

 

Q:	When do you expect the corporate conversion to be completed?

 

A:

The parties to the corporate conversion agreement are working to complete the corporate conversion as soon as possible. A number of conditions must be satisfied before the parties may complete the corporate conversion. For more information about these conditions, see the section titled “The Corporate Conversion Agreement—Conditions to the Corporate Conversion” beginning on page 86. Although the parties cannot be sure when all of the conditions to the corporate conversion will be satisfied, the parties expect to complete the corporate conversion as soon as practicable following the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part.

 

Q:	Does the BGC Partners board of directors recommend that BGC Partners stockholders approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals?

 

A:

Yes. The BGC Partners board of directors has carefully considered the terms of the corporate conversion agreement. Following the unanimous determination by the Independent Joint Committee that the corporate conversion agreement and the transactions contemplated thereby are fair to and in the best interests of BGC Partners stockholders (other than Cantor and its affiliates) and the unanimous recommendation of the Independent Joint Committee, the BGC Partners board of directors has determined that the corporate

 

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conversion agreement and the transactions contemplated thereby are fair to, and in the best interests of, BGC Partners and its stockholders, and hereby recommends that the BGC Partners stockholders provide their consent for the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and each BGC Group certificate of incorporation proposal.

 

Q:	How can BGC Partners stockholders return their written consents?

 

A:

If you hold shares of BGC Partners Class A common stock or BGC Partners Class B common stock as of the close of business on the record date and you wish to submit your consent with respect to the corporate conversion agreement, you must fill out the enclosed written consent, date and sign it, and promptly return it to BGC Partners. Once you have completed, dated and signed your written consent, deliver it to BGC Partners by one of the means described in the section titled “Written Consents of BGC Partners Stockholders—Submission of Consents” beginning on page 36. BGC Partners does not intend to hold a meeting of BGC Partners Stockholders to consider the corporate conversion agreement proposal, the BGC Group Equity Plan proposal or the BGC Group certificate of incorporation proposals.

 

Q:	What is the deadline for returning my written consent?

 

A:	BGC Partners has set June 27, 2023 as the targeted final date for receipt of written consents. BGC Partners reserves the right to extend the consent deadline beyond June 27, 2023. Any such extension may be made without notice to BGC Partners stockholders.

 

Q:	Can BGC Partners stockholders change or revoke their written consents?

 

A:

Yes. If you are a record holder of BGC Partners common stock on the record date, at any time before the consent deadline, you may revoke your consent or, if you have previously revoked your consent, submit a new written consent. If you wish to change or revoke your consent before that time, you may do so by sending in a new written consent with a later date by one of the means described in the section titled “Written Consents of BGC Partners Stockholders—Submission of Consents” beginning on page 36, or delivering a notice of revocation to the Corporate Secretary of BGC Partners.

 

Q:	If my BGC Partners common stock is held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically consent for me?

 

A:	No. If you hold your BGC Partners common stock in “street name” with a bank, brokerage firm or other nominee, you should follow the instructions provided by your bank, brokerage firm or other nominee.

 

Q:	Should BGC Partners stockholders tender their shares of BGC Partners common stock now?

 

A:

No. After the corporate conversion is completed, BGC Partners stockholders who hold their BGC Partners common stock in certificated or book-entry form will receive written instructions for exchanging their BGC Partners common stock for shares of BGC Group common stock. The shares of BGC Partners common stock will be cancelled and each holder will receive the number of full shares of the applicable class of BGC Group common stock to which that holder is entitled.

 

Q:	What happens if I sell my BGC Partners common stock before the consent process concludes?

 

A:

If you transfer your BGC Partners common stock after the record date, but before the consent process concludes, you will, unless special arrangements are made, retain your right to consent with respect to the corporate conversion agreement, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals. However, if you transfer your BGC Partners common stock before the consent process concludes, you will not receive the corresponding shares of BGC Group common stock for the BGC Partners common stock you have transferred.

 

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Q:	What are the expected U.S. federal income tax consequences to U.S. holders of BGC Partners Class A common stock as a result of the Corporate merger?

 

A:

For U.S. federal income tax purposes, the Corporate merger is intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code (the “Code”) and the Corporate merger and the Holdings merger, taken together, are intended to be treated as a transaction described in Section 351 of the Code. It is a condition to BGC Partners’ obligation to complete the corporate conversion that BGC Partners receive an opinion of Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) or another nationally recognized counsel reasonably acceptable to the Independent Joint Committee and Cantor (Wachtell Lipton or such other counsel, “tax counsel”), to the effect that the Corporate merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Code and/or the Corporate merger and the Holdings merger, taken together, will be treated as a transaction described in Section 351 of the Code, and it is a condition to Cantor’s obligation to complete the corporate conversion that Cantor receive an opinion of tax counsel to the effect that the Corporate merger and the Holdings merger, taken together, will be treated as a transaction described in Section 351 of the Code. Accordingly, on the basis of such opinions, U.S. holders (as defined in the section titled “Material U.S. Federal Income Tax Consequences” beginning on page 118) generally will not recognize gain or loss for U.S. federal income tax purposes as a result of the exchange of BGC Partners Class A common stock for BGC Group Class A common stock pursuant to the Corporate merger.

For additional information, please read the section titled “Material U.S. Federal Income Tax Consequences” beginning on page 118. Tax matters can be complicated, and the tax consequences of the transactions to a particular holder will depend on such holder’s particular facts and circumstances. All holders should consult with their own tax advisors to determine the specific U.S. federal, state or local or foreign income or other tax consequences of the transactions to them.

 

Q:	Are BGC Partners stockholders entitled to appraisal rights?

 

A:

No. Under applicable law, BGC Partners stockholders do not have any right to receive an appraisal of the value of their shares of BGC Partners common stock in connection with the mergers. For a further description of appraisal rights, please read the section titled “The Corporate Conversion—No Dissenters’ or Appraisal Rights” beginning on page 72.

 

Q:	What do I need to do now?

 

A:

BGC Partners urges you to read carefully and consider the information contained in this consent solicitation statement/prospectus, including the Annexes, and to consider how the transaction will affect you as a stockholder of BGC Partners. Once the registration statement of which this consent solicitation statement/prospectus forms a part has been declared effective by the SEC, BGC Partners will solicit your written consent.

 

Q:	Whom do I call if I have further questions about the corporate conversion?

 

A:	BGC Partners stockholders who have questions about the procedures for delivering a written consent, or those who desire additional copies of this consent solicitation statement/prospectus, should contact:

Investor Relations

BGC Partners, Inc.

499 Park Avenue

New York, New York 10022

(212) 610-2426

 

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RISK FACTORS

An investment in BGC Group common stock involves risks. You should consider carefully the following risk factors, together with all of the other information included in, or incorporated by reference into, this consent solicitation statement/prospectus before deciding whether to consent. In addition, you should read and consider the risks associated with the businesses of BGC Partners, including those identified in BGC Partners’ Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those risk factors or new risk factors contained in BGC Partners’ subsequent filings with the SEC incorporated by reference herein. This consent solicitation statement/prospectus also contains forward-looking statements that involve risks and uncertainties. Please read the section titled “Special Note Regarding Forward-Looking Statements” beginning on page 29.

Risks Related to the Transaction

The expected benefits of the corporate conversion may not be obtained.

The corporate conversion is being undertaken in order to simplify the corporate structure of the BGC businesses. BGC Partners believes that, following the corporate conversion transactions, the organizational structure of the BGC businesses will be more comprehensible to the marketplace, which may, in turn, increase demand for shares of BGC Group and assist in the goal of maximizing long-term stockholder value. By simplifying the organizational structure, the corporate conversion is also intended to improve stockholder value by reducing administrative costs and increasing the efficiency of BGC Partners’ regulated businesses and associated capital requirements. However, it is possible that these expected benefits are not achieved. There can be no assurance that (i) BGC Partners’ brokers and other employees, the rating agencies, BGC Partners’ lenders, bondholders, investors, counterparties, clients, or others will view the new structure favorably, (ii) that the new structure will have the expected retentive effect on said employees or (iii) that the new structure will have the expected impact on our GAAP or non-GAAP results, cash position, cash or non-cash accounting charges, tax rate, or other facts. Furthermore, the corporate conversion transactions will involve significant time, expense and management attention. Any of these factors or others could negatively affect our business, financial condition, results of operations and prospects.

BGC Partners’ equity-based compensation structure will be different following the corporate conversion because all of BGC Partners’ equity-based compensation will be issued by BGC Group. This change in equity-based compensation structure could adversely affect BGC Partners’ ability to recruit, retain, compensate and motivate some of its employees.

Currently, certain BGC Partners employees receive equity-based compensation at BGC Holdings, which is taxed as a partnership for U.S. federal income tax purposes and provides for distributions of income from the operations of BGC Partners’ businesses. Following the closing of the corporate conversion transactions, BGC Partners employees will receive equity-based compensation at BGC Group, the new public entity. Some of BGC Partners’ employees may be more attracted to the benefits of being compensated at a privately controlled partnership, and the change in structure could adversely affect BGC Partners’ ability to recruit, retain, compensate and motivate these persons. In addition, the equity-based compensation structure following the corporate conversion will no longer have certain other benefits of BGC Holding’s partnership structure, including certain duties owed by, and post-employment restrictive covenants applicable to, the limited partners in BGC Holdings.

BGC Partners is currently controlled by Cantor, but the corporate conversion will have the effect of increasing the percentage of voting power held by Cantor as a result of the issuance of BGC Group Class B common stock in exchange for the BGC Holdings exchangeable units held by Cantor. The increase in voting power held by Cantor could result in Cantor exercising control over BGC Group for a longer period of time than it would over BGC Partners absent the corporate conversion.

As of May 19, 2023, Cantor (including its general partner) owned 45.9 million shares of BGC Partners Class B common stock, representing approximately 57.7% of the total voting power of BGC Partners common stock. In

 

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addition, as of May 19, 2023, Cantor (including its general partner) owned 58.2 million units of exchangeable limited partnership interests in BGC Holdings. If Cantor (including its general partner) were to exchange all of such units into BGC Partners common stock absent the corporate conversion, it would receive 23.6 million shares of BGC Class B common stock and 34.6 million shares of BGC Class A common stock. These shares, when taken together with Cantor’s existing BGC Partners Class B common stock, would represent approximately 68.4% of the total voting power of BGC Partners common stock as of May 19, 2023 following such exchange. As a result of the corporate conversion, each share of BGC Partners Class B common stock held by Cantor (including its general partner) will be converted into one share of BGC Group Class B common stock, and each unit of exchangeable limited partnership interests in BGC Holdings held by Cantor (including its general partner) will also be converted into one share of BGC Group Class B common stock. In addition, in connection with the corporate conversion transactions, it is expected that Cantor will exercise certain purchase rights set forth in the BGC Holdings limited partnership agreement and as contemplated in the corporate conversion agreement, resulting in the acquisition by Cantor of an additional aggregate of approximately 5.7 million exchangeable limited partnership units that will be converted in the corporate conversion transactions as set forth in the corporate conversion agreement, as further discussed in the section titled “The Corporate Conversion Agreement—Certain Cantor Purchase Rights.” Therefore, following the corporate conversion, Cantor (including its general partner) is expected to own approximately 110 million shares of BGC Group Class B common stock, which is expected to represent approximately 75.6% of the total voting power of BGC Group common stock. Cantor’s voting power over BGC Group as of immediately following the corporate conversion will therefore be approximately 7.2 percentage points higher than its voting power over BGC Partners would be if Cantor had exchanged its exchangeable limited partnership interests in BGC Holdings for BGC Partners common stock absent the corporate conversion. This increase in percentage voting power could result in Cantor exercising control over BGC Group for a longer period of time than it would over BGC Partners absent the corporate conversion. Pursuant to the corporate conversion agreement, a portion of the shares of BGC Group Class B common stock issued to Cantor in the corporate conversion will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger.

The ability of Cantor and Howard W. Lutnick (indirectly through his control of Cantor) to exercise control over BGC Group could create or appear to create potential conflicts of interest. Conflicts of interest may arise between BGC Group and Cantor in a number of areas relating to past and ongoing relationships, including:

 

•

potential acquisitions and dispositions of businesses;

 

•

the issuance, acquisition or disposition of securities by BGC Group;

 

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the election of new or additional directors to the BGC Group board of directors;

 

•

the payment of dividends by BGC Group (if any) and repurchases of shares of BGC Group Class A common stock;

 

•

any loans to or from BGC Group or Cantor;

 

•

business operations or business opportunities of BGC Group and Cantor that would compete with the other party’s business opportunities, including Cantor’s and BGC Partners’ brokerage and financial services;

 

•

intellectual property matters;

 

•

business combinations involving BGC Group; and

 

•

competition between BGC Group’s and Cantor’s other businesses.

Under the terms of the corporate conversion agreement, a portion of the BGC Group Class B common stock that will be received by Cantor in the corporate conversion is subject to potential conversion into BGC Group Class A common stock if BGC Group does not issue shares of BGC Group common stock with an aggregate value of at least $75,000,000 (with the value of each issuance calculated based on the closing market price

 

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of BGC Group common stock on the date of issuance), after the closing of the corporate conversion and on or prior to the seventh anniversary of the closing of the corporate conversion, in connection with mergers, acquisitions and business combinations undertaken by BGC Group or any of its subsidiaries. If BGC Group does not issue at least such amount of shares in such circumstances during such seven-year period, then approximately 40.4 million shares of BGC Group Class B common stock held by Cantor will be converted into an equivalent number of BGC Group Class A common stock at the end of such seven-year period (provided that such number will be decreased to the extent that Cantor has sold or transferred any BGC Group Class B common stock to a third party and converted such shares into BGC Group Class A common stock during such seven-year period).

Delay in completing the corporate conversion transactions could negatively impact the market price of shares of BGC Partners Class A common stock and financial results of the BGC businesses.

The completion of the corporate conversion is subject to certain closing conditions, including (i) the adoption of the corporate conversion agreement by the requisite approval of BGC Partners stockholders, (ii) the absence of any governmental injunction or order prohibiting the consummation of any merger or the other transactions contemplated by the corporate conversion agreement, (iii) the BGC Group Class A common stock issuable in connection with the mergers having been approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance, (iv) the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part, (v) the accuracy of each party’s respective representations and warranties, generally subject to a material adverse effect qualification, (vi) the performance by the parties of their respective obligations under the corporate conversion agreement in all material respects, (vii) BGC Partners’ receipt of a legal opinion as to the tax treatment of the Corporate merger and/or the Corporate merger and the Holdings merger, taken together, and (viii) Cantor’s receipt of a legal opinion as to the tax treatment of the Corporate merger and the Holdings merger, taken together. In addition, each of Cantor and BGC Partners have the right to terminate the corporate conversion agreement if certain tax legislation is proposed or enacted that, if implemented, could materially increase the taxes directly or indirectly borne by the partners of Cantor or BGC Holdings or the stockholders of BGC Partners (including, without limitation, as a result of an increase in the corporate income tax rate or as a result of an increase in the dividend tax rate) if the mergers were completed versus if they were not.

Any of these factors or others could delay the completion of the corporate conversion which may in turn negatively affect the BGC businesses and impact the market price of shares of BGC Partners Class A common stock if such delay is not promptly remedied.

The opinion of Houlihan Lokey to the Independent Joint Committee was based on Houlihan Lokey’s financial analyses and considered factors such as market and other conditions then in effect, and financial forecasts and other information made available to Houlihan Lokey, as of the date of the opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. The Independent Joint Committee has not requested, and does not expect to request, an updated opinion from Houlihan Lokey reflecting changes in circumstances that may have occurred since the signing of the corporate conversion agreement.

The opinion rendered to the Independent Joint Committee by Houlihan Lokey on November 14, 2022 was provided in connection with, and at the time of, the evaluation of the corporate conversion agreement and the transactions contemplated thereby by the Independent Joint Committee. The opinion was based on the financial analyses performed, which considered market and other conditions then in effect, and financial forecasts and other information made available to Houlihan Lokey, as of the date of the opinion, which may have changed, or may change, after the date of the opinion.

The Independent Joint Committee has not requested an updated opinion as of the date of this consent solicitation statement/prospectus from Houlihan Lokey and does not expect to request an updated opinion prior to completion of the corporate conversion. Changes in the operations and prospects of BGC Partners, general market and economic conditions and other factors that may be beyond the control of BGC Partners or other

 

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parties to the corporate conversion agreement, and on which the opinion was based, may have altered the value of BGC Partners or the prices of shares of BGC Partners Class A common stock since the date of such opinion, or may alter such values and prices by the time the corporate conversion are completed. The opinion does not speak as of any date other than the date of the opinion. For a description of the opinion that Houlihan Lokey rendered to the Independent Joint Committee, please read the section titled “The Corporate Conversion—Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee” beginning on page 60.

BGC Partners and its directors and officers may have interests that differ from your interests, and these interests may have influenced their decision to propose and to approve the corporate conversion agreement and the transactions contemplated thereby, including the corporate conversion.

In considering the recommendation of the BGC Partners board of directors with respect to the adoption of the corporate conversion agreement, BGC Partners stockholders should be aware that certain of the directors and executive officers of BGC Partners have interests in the transaction that may differ from, or are in addition to, the interests of BGC Partners stockholders, generally. These interests may present such directors and executive officers with actual or potential conflicts of interests, and these interests, to the extent they may be substantial, are described below. The members of the Independent Joint Committee and the BGC Partners board of directors were aware of and considered these interests and relationships, among other matters, when they approved the corporate conversion agreement and when the BGC Partners board of directors recommended that BGC Partners stockholders approve the corporate conversion agreement proposal.

As described below, the interests of BGC Partners’ non-employee directors and executive officers include the following:

 

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accelerated exercisability and monetization of certain non-exchangeable HDUs, PSUs and PPSUs held by Messrs. Lutnick and Merkel;

 

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the exercise and facilitation of certain purchase rights by Cantor with respect to certain BGC Group limited partnership units, as discussed in the section titled “The Corporate Conversion Agreement—Certain Cantor Purchase Rights”; and

 

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the right to indemnification and liability insurance coverage that will survive the closing of the corporate conversion.

Certain Company directors and executive officers, including the named executive officers, own equity interests in BGC Holdings, BGC Partners Class B common stock (which is held by Cantor and its general partner) and BGC Partners Class A common stock, as well as hold certain equity awards, all of which will receive the same treatment as all other such interests and awards, as discussed in the section titled “The Corporate Conversion—Consideration to BGC Partners Stockholders and Holders of BGC Holdings Limited Partnership Units.” The members of the Independent Joint Committee and the BGC Partners board of directors were aware of and considered these interests, among other matters, when they approved the corporate conversion agreement and when the BGC Partners board of directors recommended that BGC Partners stockholders adopt the corporate conversion agreement. These interests are described in more detail in the section titled “The Corporate Conversion—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion” beginning on page 68.

Cantor has executed a support agreement that requires Cantor to deliver a written consent in favor of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals, which will be sufficient to approve such proposals.

Immediately following the execution of the corporate conversion agreement, Cantor entered into a support agreement under which it agreed, within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act, to execute and deliver a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the

 

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BGC Group certificate of incorporation proposals, with such written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this consent solicitation statement/prospectus to the stockholders of BGC Partners. Because each of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals requires the approval of at least a majority of the outstanding voting power of BGC Partners common stock, and Cantor is the holder of BGC Partners common stock with a majority of the outstanding voting power of BGC Partners common stock outstanding as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the required approvals to pass the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

Risks Related to BGC Group Common Stock

No assurance can be given as to the market price of BGC Group common stock.

There is currently no public trading market for BGC Group common stock, although BGC Group intends to apply to list its common shares on the NASDAQ Global Select Market in connection with the transactions, and receipt of approval for such listing is a condition to the closing of the transactions. No assurance can be provided as to the value at which shares of BGC Group common stock will trade following the closing of the transactions. The trading price of shares of BGC Group common stock will depend on a number of conditions, including changes in the businesses, operations, results of BGC Group, general market and economic conditions, governmental actions, regulatory considerations, legal proceedings and developments or other factors. A number of these factors and conditions are beyond the control of BGC Partners and BGC Group.

In addition, because BGC Partners currently owns approximately 74.6% of the BGC Opcos, and BGC Group will indirectly own 100% of the BGC Opcos after the closing of the corporate conversion, the market price of BGC Group common stock after the corporate conversion may be affected by factors different from those currently affecting the market price of BGC Partners common stock.

Sales of BGC Group common stock, or perceptions that such sales may occur, may negatively affect the market price of BGC Group common stock.

The shares of BGC Group common stock to be issued in the corporate conversion will generally be eligible for immediate resale. The market price of BGC Group common stock could decline as a result of sales of a large number of shares of BGC Group common stock in the market, or even the perception that these sales could occur. Sales of BGC Group common stock could occur for a variety of reasons. For example, some limited partners of BGC Holdings who receive BGC Group common stock in the corporate conversion may decide to sell some or all the BGC Group common stock that they receive in the corporate conversion. These sales, or the possibility that these sales may occur, may result in a decline in the price of BGC Group common stock. A decline in BGC Group’s stock price may also make it more difficult for BGC Group to obtain additional capital by selling equity securities in the future on favorable terms when desired.

There may be future dilution of BGC Group common stock, which could adversely affect the market price of shares of BGC Group common stock.

In the future, BGC Group may issue shares of BGC Group common stock to raise cash for projects, operations, acquisitions or other purposes. BGC Group may also acquire interests in other companies by using a combination of cash and shares of BGC Group common stock or just shares of BGC Group common stock. BGC Group may issue securities convertible into, or exchangeable for, or that represent the right to receive, shares of BGC Group common stock. Any of these or other events may dilute the ownership interests of BGC Group stockholders, reduce BGC Group’s earnings per share and have an adverse effect on the price of shares of BGC Group common stock.

 

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Because BGC Group’s voting power will be concentrated among the holders of BGC Group Class B common stock, the market price of BGC Group Class A common stock may be materially adversely affected by its disparate voting rights.

As of May 19, 2023, Cantor (including its general partner) owned 45.9 million shares of BGC Partners Class B common stock, representing approximately 57.7% of the total voting power of BGC Partners common stock. In addition, as of May 19, 2023, Cantor (including its general partner) owned 58.2 million units of exchangeable limited partnership interests in BGC Holdings. If Cantor (including its general partner) were to exchange all of such units into BGC Partners common stock absent the corporate conversion, it would receive 23.6 million shares of BGC Class B common stock and 34.6 million shares of BGC Class A common stock. These shares, when taken together with Cantor’s existing BGC Partners Class B common stock, would represent approximately 68.4% of the total voting power of BGC Partners common stock as of May 19, 2023 following such exchange. As a result of the corporate conversion, each share of BGC Partners Class B common stock held by Cantor (including its general partner) will be converted into one share of BGC Group Class B common stock, and each unit of exchangeable limited partnership interests in BGC Holdings held by Cantor (including its general partner) will also be converted into one share of BGC Group Class B common stock. In addition, in connection with the corporate conversion transaction, it is expected that Cantor will exercise certain purchase rights set forth in the BGC Holdings limited partnership agreement and as contemplated in the corporate conversion agreement, resulting in the acquisition by Cantor of an additional aggregate of approximately 5.7 million exchangeable limited partnership units that will be converted in the corporate conversion transaction as set forth in the corporate conversion agreement, as further discussed in the section titled “The Corporate Conversion Agreement—Certain Cantor Purchase Rights.” Therefore, following the corporate conversion, Cantor (including its general partner) is expected to own approximately 110 million shares of BGC Group Class B common stock, which is expected to represent approximately 75.6% of the total voting power of BGC Group common stock. Cantor’s voting power over BGC Group as of immediately following the corporate conversion will therefore be approximately 7.2 percentage points higher than its voting power over BGC Partners would be if Cantor had exchanged its exchangeable limited partnership interests in BGC Holdings for BGC Partners common stock absent the corporate conversion. This increase in percentage voting power could result in Cantor exercising control over BGC Group for a longer period of time than it would over BGC Partners absent the corporate conversion. Pursuant to the corporate conversion agreement, a portion of the shares of BGC Group Class B common stock issued to Cantor in the corporate conversion will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger.

As long as Cantor owns a majority of BGC Group’s total voting power, it will have the ability, without the consent of the public holders of BGC Group Class A common stock, to elect all of the members of the BGC Group board of directors and to control BGC Group’s management and affairs. In addition, it will be able to determine the outcome of matters submitted to a vote of BGC Group stockholders for approval and will be able to cause or prevent a change of control of BGC Group. In certain circumstances, such as when transferred to an entity controlled by Cantor or Mr. Lutnick, the shares of BGC Group Class B common stock issued to Cantor may be transferred without conversion to BGC Group Class A common stock.

The holders of BGC Group Class A common stock and BGC Group Class B common stock will have substantially identical rights, except that holders of BGC Group Class A common stock will be entitled to one vote per share, while holders of BGC Group Class B common stock will be entitled to 10 votes per share on all matters to be voted on by stockholders in general. BGC Group Class B common stock will be controlled by Cantor and is not subject to conversion or termination by the BGC Group board of directors or any committee thereof, or any other stockholder or third party. This differential in the voting rights of BGC Group Class B common stock could adversely affect the market price of BGC Group Class A common stock.

 

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The shares of BGC Group common stock will entitle its holder to different rights from those provided by BGC Partners common stock.

In the corporate conversion, holders of BGC Partners common stock will receive BGC Group common stock, and their rights as shareholders will be governed by Delaware law and BGC Group’s governing documents. The rights associated with BGC Group common stock are different from the rights associated with BGC Partners common stock. Unlike the BGC Partners certificate of incorporation, the BGC Group certificate of incorporation will designate state courts located within the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by BGC Group’s stockholders. Moreover, pursuant to recent amendments to the DGCL, the BGC Group certificate of incorporation will exculpate officers of BGC Group for monetary damages for breaches of fiduciary duty, except to the extent such exemption from liability or limitation thereof is not permitted under the DGCL. See “Comparison of Rights of BGC Partners Stockholders and BGC Group Stockholders.”

The BGC Group certificate of incorporation will designate a state court of the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by BGC Group’s stockholders, which could discourage lawsuits against BGC Group and its directors and officers.

The BGC Group certificate of incorporation that will be in effect following the closing of the corporate conversion will provide that, unless BGC Group, through approval of the BGC Group board of directors, otherwise consents in writing, a state court located within the State of Delaware (or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware), will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of BGC Group, (ii) any action asserting a claim for or based on a breach of a duty or obligation owed by any current or former director, officer, employee or agent of BGC Group to BGC Group or its stockholders, including any claim alleging aiding and abetting of such a breach, (iii) any action asserting a claim against BGC Group or any current or former director, officer, employee or agent of BGC Group arising pursuant to any provision of the DGCL or the BGC Group certificate of incorporation or the BGC Group bylaws (as either may be amended from time to time), (iv) any action asserting a claim related to or involving BGC Group that is governed by the internal affairs doctrine, or (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the DGCL.

To the fullest extent permitted by law, this exclusive forum provision will apply to state and federal law claims, including claims under the federal securities laws, including the Securities Act and the Exchange Act. However, BGC Group stockholders will not be deemed to have waived BGC Group’s compliance with the federal securities laws and the rules and regulations thereunder. The enforceability of similar choice of forum provisions in other companies’ amended and restated certificates of incorporation and amended and restated bylaws has been challenged in legal proceedings, and it is possible that, in connection with claims arising under federal securities laws or otherwise, a court could find the exclusive forum provision contained in the BGC Group amended and restated certificate of incorporation to be inapplicable or unenforceable.

This exclusive forum provision may limit the ability of BGC Group’s stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with BGC Group or its directors or officers, which may discourage such lawsuits against BGC Group or its directors or officers. Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, BGC Group may incur additional costs associated with resolving such matters in other jurisdictions or forums, which could materially and adversely affect BGC Group’s business, financial condition or results of operations.

 

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Risks Relating to the Businesses of BGC Partners

You should read and consider risk factors specific to the businesses of BGC Partners and BGC Holdings that will also affect BGC Group after the corporate conversion. These risks are described in the sections titled “Risk Factors” in BGC Partners’ Annual Report on Form 10-K for the year ended December 31, 2022 and in other documents incorporated by reference into this consent solicitation statement/prospectus. Please see the section titled “Documents Incorporated by Reference” beginning on page 122 of this consent solicitation statement/prospectus for the location of information incorporated by reference into this consent solicitation statement/prospectus.

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This consent solicitation statement/prospectus and the documents incorporated by reference contain forward-looking statements. Such statements are based upon current expectations that involve risks and uncertainties. Any statements contained herein or in documents incorporated by reference that are not statements of historical fact may be deemed to be forward-looking statements. For example, words such as “may,” “will,” “should,” “estimates,” “predicts,” “possible,” “potential,” “continue,” “strategy,” “believes,” “anticipates,” “plans,” “expects,” “intends” and similar expressions are intended to identify forward-looking statements.

These forward-looking statements (including statements regarding the transactions contemplated by the corporate conversion agreement, including the transactions effecting the proposed corporate conversion, and its effects, benefits and costs, savings, opinions, forecasts, projections, expected timetable for completion, expected dividends or distributions, and any other statements regarding BGC Partners’, BGC Holdings’ and BGC Group’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not statements of historical fact) may differ from actual results, outcomes and timings of certain events. Factors that may cause or contribute to such a discrepancy include, but are not limited to, the factors set forth below and may impact its operating segments:

 

•

the possibility that the corporate conversion transactions are not consummated in a timely manner or at all;

 

•

the timing, receipt and terms and conditions of any required governmental or regulatory approvals of the corporate conversion transactions that could reduce the anticipated benefits of or cause the parties to abandon the transactions contemplated by the corporate conversion agreement;

 

•

risks related to the satisfaction of the conditions to the closing of the corporate conversion transactions, in the anticipated timeframe or at all;

 

•

the occurrence of any event, change or other circumstances that could give rise to the termination of the corporate conversion agreement or of the transactions contemplated thereby;

 

•

significant transaction costs;

 

•

the risk of litigation and/or regulatory actions related to the corporate conversion transactions or unfavorable results from currently pending litigation and proceedings or litigation and proceedings that could arise in the future;

 

•

the possibility that the corporate conversion transactions are more expensive to complete than anticipated, including as a result of unexpected factors or events;

 

•

diversion of management’s attention from ongoing business operations and opportunities as a result of the corporate conversion transactions or otherwise;

 

•

macroeconomic and other challenges and uncertainties resulting from Russia’s invasion of Ukraine, rising global interest rates, inflation and the U.S. Federal Reserve’s responses thereto, including increasing interest rates, fluctuations in the U.S. dollar, liquidity concerns regarding banking and financial institutions, changes in the U.S. and global economies and financial markets, including economic activity, employment levels, supply chain issues and market liquidity, and increasing energy costs, as well as the various actions taken in response to the challenges and uncertainties by governments, central banks and others, including consumer and corporate clients and customers;

 

•

the impact of the COVID-19 pandemic, including possible successive waves or variants of the virus, the emergence of new viruses, the continued distribution of effective vaccines and governmental and public reactions thereto, the combined impact of the flu and other seasonal illnesses, and the impact of a return to office for BGC Partners’ or BGC Group’s employees on BGC Partners’ or BGC Group’s operations;

 

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•

market conditions, including rising interest rates, fluctuations in the U.S. dollar, trading volume, turmoil across regional banks and certain global investment banks, currency fluctuations and volatility in the demand for the products and services BGC Partners and BGC Group provide, possible disruptions in trading, potential deterioration of equity and debt capital markets and cryptocurrency markets, the impact of significant changes in interest rates generally and on BGC Partners’ or BGC Group’s ability to access the capital markets as needed or on reasonable terms and conditions;

 

•

pricing, commissions and fees, and market position with respect to any of BGC Partners’ or BGC Group’s products and services and those of BGC Partners’ or BGC Group’s competitors;

 

•

the effect of industry concentration and reorganization, reduction of customers, and consolidation;

 

•

liquidity, regulatory, cash and clearing capital requirements and the impact of credit market events, rising interest rates, fluctuations in the U.S. dollar, and market uncertainty and political events and conflicts and actions taken by governments and businesses in response thereto on the credit markets and interest rates;

 

•

the relationships and transactions of BGC Partners and BGC Group with Cantor and its affiliates, including CF&Co, and CCRE, the structure of BGC Partners and BGC Group, including BGC Holdings, which is owned by BGC Partners, Cantor, the employee partners and other partners of BGC Partners and BGC Group, and the BGC Opcos, which are owned jointly by BGC Partners and BGC Holdings, the timing and impact of any possible changes to the structure of BGC Partners, including the corporate conversion, any related transactions, conflicts of interest or litigation, including with respect to executive compensation matters, any impact of Cantor’s results on BGC Partners or BGC Group’s credit ratings and associated outlooks, any loans to or from BGC Partners, BGC Group or Cantor, BGC Holdings, or the BGC Opcos, including the balances and interest rates thereof from time to time and any convertible or equity features of any such loans, CF&Co’s acting as BGC Partners or BFC Group’s sales agent or underwriter under BGC Partner’s CEO Program or other offerings, Cantor’s holdings of the Company’s Debt Securities, CF&Co’s acting as a market maker in the Company’s Debt Securities, CF&Co’s acting as BGC Partners’ or BGC Group’s financial advisor in connection with potential acquisitions, dispositions, or other transactions, and BGC Partners’ or BGC Group’s participation in various investments, stock loans or cash management vehicles placed by or recommended by CF&Co;

 

•

the structural, financial, tax, employee retention and other impacts of the expected corporate conversion;

 

•

the integration of acquired businesses and their operations and back-office functions with BGC Partners’ or BGC Group’s other businesses;

 

•

the rebranding of BGC Partners’ or BGC Group’s current businesses or risks related to any potential dispositions of all or any portion of BGC Partners’ or BGC Group’s existing or acquired businesses;

 

•

market volatility as a result of the effects of rising interest rates, fluctuations in the U.S. dollar, global inflation rates, potential economic downturns, including recessions, and similar effects, which may not be predictable in future periods;

 

•

economic or geopolitical conditions or uncertainties, the actions of governments or central banks, including the pursuit of trade, border control or other related policies by the U.S. and/or other countries (including U.S. China trade relations), recent economic and political volatility in the U.K., rising political and other tensions between the U.S. and China, political and labor unrest, conflict in the Middle East, Russia, Ukraine or other jurisdictions, the impact of U.S. government shutdowns, elections, political unrest, boycotts, stalemates or other social and political developments, and the impact of terrorist acts, acts of war or other violence or political unrest, as well as natural disasters or weather-related or similar events, including hurricanes and heat waves, as well as power failures, communication and transportation disruptions, and other interruptions of utilities or other essential services and the impacts of pandemics and other international health emergencies;

 

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•

risks inherent in doing business in international markets, and any failure to identify and manage those risks, as well as the impact of Russia’s ongoing Invasion of Ukraine and additional sanctions and regulations imposed by governments and related counter-sanctions, including any related reserves;

 

•

the effect on BGC Partners’ or BGC Group’s businesses, BGC Partners’ or BGC Group’s clients, the markets in which BGC Partners and BGC Group operate, the corporate conversion, and the economy in general of changes in U.S. and foreign tax and other laws, including changes in tax rates, repatriation rules, and deductibility of interest, potential policy and regulatory changes in other countries, sequestrations, uncertainties regarding the debt ceiling and the federal budget, responses to rising global inflation rates and other potential political policies;

 

•

BGC Partners’ or BGC Group’s dependence upon the key employees, their ability to build out successful succession plans, the impact of absence due to illness or leave of certain key executive officers or employees and their ability to attract, retain, motivate and integrate new employees, as well as the competing demands on the time of certain of their executive officers who also provide services to Cantor, Newmark and various other ventures and investments sponsored by Cantor;

 

•

the effect on BGC Partners’ or BGC Group’s businesses changes in interest rates, changes in benchmarks, including the transition away from LIBOR, the transition to alternative benchmarks such as SOFR, the effect on BGC Partners’ or BGC Group’s business and revenues of the fluctuating U.S. dollar, rising interest rates and market uncertainty, the level of worldwide governmental debt issuances, austerity programs, government stimulus packages, increases and decreases in the federal funds interest rate and other actions to moderate inflation, increases or decreases in deficits and the impact of changing government tax rates, and other changes to monetary policy, and potential political impasses or regulatory requirements, including increased capital requirements for banks and other institutions or changes in legislation, regulations and priorities;

 

•

extensive regulation of BGC Partners’ or BGC Group’s businesses and customers, changes in regulations relating to financial services companies and other industries, and risks relating to compliance matters, including regulatory examinations, inspections, investigations and enforcement actions, and any resulting costs, increased financial and capital requirements, enhanced oversight, remediation, fines, penalties, sanctions, and changes to or restrictions or limitations on specific activities, including potential delays in accessing markets, including due to BGC Partners’ or BGC Group’s regulatory status and actions, operations, and compensatory arrangements, and growth opportunities, including acquisitions, hiring, and new businesses, products, or services;

 

•

factors related to specific transactions or series of transactions, including credit, performance, and principal risk, trade failures, counterparty failures, and the impact of fraud and unauthorized trading;

 

•

costs and expenses of developing, maintaining, and protecting BGC Partners’ or BGC Group’s intellectual property, as well as employment, regulatory, and other litigation and proceedings, and their related costs, including judgments, indemnities, fines, or settlements paid and the impact thereof on BGC Partners’ or BGC Group’s financial results and cash flows in any given period;

 

•

certain financial risks, including the possibility of future losses, indemnification obligations, assumed liabilities, reduced cash flows from operations, increased leverage, reduced availability under BGC Partners’ or BGC Group’s credit agreements, and the need for short- or long-term borrowings, including from Cantor, BGC Partners’ or BGC Group’s ability to refinance their indebtedness, and changes to interest rates and liquidity or BGC Partners’ or BGC Group’s access to other sources of cash relating to acquisitions, dispositions, or other matters, potential liquidity and other risks relating to BGC Partners’ or BGC Group’s ability to maintain continued access to credit and availability of financing necessary to support its ongoing business needs, on terms acceptable to BGC Partners or BGC Group, respectively, if at all, and risks associated with the resulting leverage, including potentially causing a reduction in BGC Partners’ or BGC Group’s credit ratings and the associated outlooks and increased borrowing costs, as well as interest rate and foreign currency exchange rate fluctuations;

 

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•

risks associated with the temporary or longer-term investment of BGC Partners’ or BGC Group’s available cash, including in the BGC Opcos, defaults or impairments on BGC Partners’ or BGC Group’s investments, joint venture interests, stock loans or cash management vehicles and collectability of loan balances owed to BGC Partners or BGC Group by partners, employees, the BGC Opcos or others;

 

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BGC Partners’ or BGC Group’s ability to enter new markets or develop new products, offerings, trading desks, marketplaces, or services for existing or new clients, including BGC Partners’ and BGC Group’s ability to develop new Fenics platforms and products, to successfully launch its FMX initiative and to attract investors thereto, the risks inherent in operating BGC Partners’ and BGC Group’s cryptocurrency business and in safekeeping cryptocurrency assets, and efforts to convert certain existing products to a Fully Electronic trade execution, and to induce such clients to use these products, trading desks, marketplaces, or services and to secure and maintain market share;

 

•

the impact of any restructuring or similar transactions, including the corporate conversion, on BGC Partners’ or BGC Group’s ability to enter into marketing and strategic alliances and business combinations, attract investors or partners or engage in other transactions in the financial services and other industries, including acquisitions, tender offers, dispositions, reorganizations, partnering opportunities and joint ventures, the failure to realize the anticipated benefits of any such transactions, relationships or growth and the future impact of any such transactions, relationships or growth on BGC Partners’ or BGC Group’s other businesses and its financial results for current or future periods, the integration of any completed acquisitions and the use of proceeds of any completed dispositions, the impact of amendments and/or terminations of strategic arrangements, and the value of any hedging entered into in connection with consideration received or to be received in connection with such dispositions and any transfers thereof;

 

•

BGC Partners’ or BGC Group’s estimates or determinations of potential value with respect to various assets or portions of its businesses, such as Fenics, including with respect to the accuracy of the assumptions or the valuation models or multiples used;

 

•

BGC Partners’ or BGC Group’s ability to manage turnover and hire, train, integrate and retain personnel, including brokers, salespeople, managers, and technology professionals and other front-office personnel, back-office and support services, and departures of senior personnel;

 

•

BGC Partners’ or BGC Group’s ability to expand the use of technology and maintain access to the intellectual property of others for Hybrid and Fully Electronic trade execution in its product and service offerings, and otherwise;

 

•

BGC Partners’ or BGC Group’s ability to effectively manage any growth that may be achieved, including outside the U.S., while ensuring compliance with all applicable financial reporting, internal control, legal compliance, and regulatory requirements;

 

•

BGC Partners’ or BGC Group’s ability to identify and remediate any material weaknesses or significant deficiencies in its internal controls which could affect its ability to properly maintain books and records, prepare financial statements and reports in a timely manner, control its policies, practices and procedures, operations and assets, assess and manage its operational, regulatory and financial risks, and integrate its acquired businesses and brokers, salespeople, managers, technology professionals and other front-office personnel;

 

•

the impact of unexpected market moves and similar events;

 

•

information technology risks, including capacity constraints, failures, or disruptions in BGC Partners’ or BGC Group’s systems or those of the clients, counterparties, exchanges, clearing facilities, or other parties with which BGC Partners or BGC Group interact, including increased demands on such systems and on the telecommunications infrastructure from remote working, cyber-security risks and incidents, compliance with regulations requiring data minimization and protection and preservation of records of access and transfers of data, privacy risk and exposure to potential liability and regulatory focus;

 

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•

the effectiveness of BGC Partners’ or BGC Group’s governance, risk management, and oversight procedures and impact of any potential transactions or relationships with related parties;

 

•

the impact of BGC Partners’ or BGC Group’s ESG or “sustainability” ratings on the decisions by clients, investors, ratings agencies, potential clients and other parties with respect to BGC Partners’ or BGC Group’s businesses, investments in BGC Partners or BGC Group, BGC Partners’ or BGC Group’s borrowing opportunities or the market for and trading price of BGC Partners Class A common stock, BGC Group Class A common stock or debt securities of BGC Partners or BGC Group, or other matters;

 

•

the fact that the prices at which shares of BGC Partners Class A common stock or BGC Group Class A common stock are or may be sold in offerings, acquisitions, or other transactions may vary significantly, and purchasers of shares in such offerings or other transactions, as well as existing stockholders, may suffer significant dilution if the price they paid for their shares is higher than the price paid by other purchasers in such offerings or transactions;

 

•

the impact of reductions to BGC Partners’ or BGC Group’s dividends and distributions and the timing and amounts of any future dividends or distributions, including BGC Partners’ or BGC Group’s ability to meet expectations with respect to payments of dividends and distributions and repurchases of shares of BGC Partners Class A common stock or BGC Group Class A common stock and purchases or redemptions of limited partnership interests in BGC Holdings, or other equity interests in BGC Partners or BGC Group or any of BGC Partners’ or BGC Group’s other subsidiaries, including the BGC Opcos, including from Cantor, its executive officers, other employees, partners, and others, and the net proceeds to be realized by BGC Partners or BGC Group from offerings of shares of BGC Partners Class A common stock, BGC Group Class A common stock and debt securities of BGC Partners or BGC Group, and BGC Partners’ ability to pay any excise tax that may be imposed on the repurchase of shares; and

 

•

the effect on the markets for and trading prices of BGC Partners Class A common stock, BGC Group Class A common stock and debt securities of BGC Partners or BGC Group of various offerings and other transactions, including offerings of BGC Partners Class A common stock, BGC Group Class A common stock and convertible or exchangeable debt or other securities, BGC Partners’ repurchases of shares of BGC Partners Class A common stock or BGC Group Class A common stock and purchases or redemptions of BGC Holdings limited partnership interests or other equity interests in BGC Partners or BGC Group or their respective subsidiaries, any exchanges by Cantor of shares of BGC Partners Class A common stock for shares of BGC Partners Class B common stock, any exchanges or redemptions of limited partnership units and issuances of shares of BGC Partners Class A common stock in connection therewith, including in corporate or partnership restructurings, payment of dividends on BGC Partners Class A common stock or BGC Group Class A common stock and distributions on limited partnership interests in BGC Holdings and the BGC Opcos, convertible arbitrage, hedging, and other transactions engaged in by BGC Partners, BGC Group or holders of their respective outstanding shares, debt securities of BGC Partners or BGC Group or other securities, share sales and stock pledges, stock loans, and other financing transactions by holders of BGC Partners’ or BGC Group’s shares (including by Cantor or others), including of shares acquired pursuant to BGC Partners’ or BGC Group’s employee benefit plans, unit exchanges and redemptions, corporate or partnership restructurings, acquisitions, conversions of shares of BGC Partners Class B common stock or BGC Group Class B common stock and other convertible securities into shares of BGC Partners Class A common stock or BGC Group Class A common stock, and distributions of BGC Partners Class A common stock or BGC Group Class A common stock by Cantor to its partners, including the April 2008 and February 2012 distribution rights shares.

 

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The foregoing risks and uncertainties, as well as those risks and uncertainties set forth in this consent solicitation statement/prospectus, may cause actual results and events to differ materially from the forward-looking statements. The information included herein is given as of the filing date of this consent solicitation statement/prospectus, and future results or events could differ significantly from these forward-looking statements. BGC Partners and BGC Group do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

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WRITTEN CONSENTS OF BGC PARTNERS STOCKHOLDERS

Purpose of the Consent Solicitation; Recommendation of the BGC Partners Board

The BGC Partners board of directors is providing this consent solicitation statement/prospectus to holders of BGC Partners common stock. BGC Partners stockholders are being asked to approve the following proposals by executing and returning the written consent furnished with this consent solicitation statement/prospectus:

 

•

to adopt the corporate conversion agreement proposal;

 

•

to approve the BGC Group Equity Plan proposal; and

 

•

to approve the following four separate BGC Group certificate of incorporation proposals, including the approval of the following provisions in the amended and restated certificate of incorporation of BGC Group to be in effect as of the closing:

 

•

BGC Group certificate of incorporation proposal A: to approve the number of authorized shares of BGC Group Class A common stock of 1,500,000,000;

 

•

BGC Group certificate of incorporation proposal B: to approve the number of authorized shares of BGC Group Class B common stock of 300,000,000;

 

•

BGC Group certificate of incorporation proposal C: to approve a provision providing for exculpation to officers of BGC Group pursuant to Section 102(b)(7) of the Delaware General Corporation Law; and

 

•

BGC Group certificate of incorporation proposal D: to approve a provision providing for an exclusive forum in Delaware courts for certain matters.

The BGC Partners board of directors, upon the unanimous recommendation of the Independent Joint Committee, determined that it is in the best interests of BGC Partners and the stockholders of BGC Partners, and declared it advisable, to enter into the corporate conversion agreement and approved the execution, delivery and performance by BGC Partners of the corporate conversion agreement and the consummation of the transactions contemplated thereby, including the corporate conversion. The BGC Partners board of directors, upon the unanimous recommendation of the Independent Joint Committee, recommends that BGC Partners stockholders approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and each BGC Group certificate of incorporation proposal.

BGC Partners Stockholders Entitled to Consent

Only BGC Partners stockholders of record at the close of business on the record date will be notified of and be entitled to execute and deliver a written consent with respect to the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

As of the close of business on the record date, there were 336,489,823 shares of BGC Partners Class A common stock and 45,884,380 shares of BGC Partners Class B common stock outstanding and entitled to execute and deliver written consents with respect to the adoption of the corporate conversion agreement. As of the close of business on the record date, BGC Partners’ directors, executive officers and their respective affiliates held 10,697,296 shares of BGC Partners Class A common stock and 45,884,380 shares of BGC Partners Class B common stock. This represents approximately 14.8% of the shares (and approximately 59.0% of the total voting power) of BGC Partners common stock outstanding and entitled to consent as of the record date, when voting together as a single class. These amounts do not reflect the shares issued pursuant to the transactions on May 18, 2023 described in the section titled “The Corporate Conversion—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion—Standing Policy for Mr. Lutnick and Recent Redemptions and Exchanges for Messrs. Merkel and Lutnick” on page 69, which shares were not outstanding at the close of business on the record date.

Cantor holds a controlling ownership interest in BGC Partners. As of the close of business on the record date, Cantor and its affiliates owned 45,884,380 shares of BGC Partners Class B common stock, representing

 

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approximately 57.7% of the total voting power of BGC Partners common stock outstanding and entitled to consent as of the record date, when voting together as a single class.

Each holder of BGC Partners Class A common stock is entitled to one vote for each share of BGC Partners Class A common stock held as of the written consent record date, and each holder of BGC Partners Class B common stock is entitled to 10 votes for each share of BGC Partners Class B common stock held as of the written consent record date.

Required Written Consents

The approval of each of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals requires the affirmative consent of holders of at least a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to approve such matter.

Approval of the corporate conversion agreement proposal is required in order to complete the corporate conversion. Approval of neither the BGC Group Equity Plan proposal nor any of the BGC Group certificate of incorporation proposals is required in order to complete the corporate conversion.

Pursuant to the support agreement, Cantor has agreed to execute and deliver a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act, with such written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this consent solicitation statement/prospectus to the stockholders of BGC Partners. Because Cantor is the holder of a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals, regardless of the delivery or withholding of consent by any other BGC Partners stockholder. Therefore, BGC Partners expects to receive a number of consents sufficient to constitute the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

The Holdings merger requires the consent of the general partner of BGC Holdings. BGC Partners stockholders have no right to consent to the Holdings merger by virtue of their ownership of BGC Partners common stock.

Submission of Consents

A holder of shares of BGC Partners common stock as of the written consent record date may consent to the approval of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals with respect to such shares by completing, dating and signing the written consent enclosed with this consent solicitation statement/prospectus and returning it to BGC Partners by the consent deadline.

If you hold shares of BGC Partners common stock as of the close of business on the written consent record date and you wish to give your written consent, you must promptly submit your written consent either online by logging onto www.proxyvote.com using the control number provided on your written consent form or by mailing your filled, signed and dated written consent to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY, 11717.

 

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BGC Partners has set June 27, 2023 as the consent deadline. BGC Partners reserves the right to extend the consent deadline beyond June 27, 2023. Any such extension may be made without notice to BGC Partners stockholders.

BGC Partners stockholders should not send stock certificates with their written consents. After the transaction is completed, a letter of transmittal and written instructions for the surrender of BGC Partners stock certificates will be mailed to BGC Partners stockholders. Do not send in your certificates now.

Executing Written Consents; Revocation of Written Consents

You may execute a written consent to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and/or each of the BGC Group certificate of incorporation proposals (which is equivalent to a vote in favor of such adoption), or disapprove, or abstain from consenting with respect to, the approval of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and/or each of the BGC Group certificate of incorporation proposals (which is equivalent to a vote against such adoption). If you do not return your written consent, it will have the same effect as a vote against the adoption of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals. If you are a record holder of shares of BGC Partners common stock and you return a signed written consent without indicating your decision on the approval of any of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal or any of the BGC Group certificate of incorporation proposals, you will have given your consent to approve such proposal.

Your consent to the approval of the corporate conversion agreement proposal, the BGC Group Equity Plan proposal or any of the BGC Group certificate of incorporation proposals may be changed or revoked at any time before the consent deadline. If you wish to change or revoke your consent before the consent deadline, you may do so by sending a new written consent with a later date or by delivering a notice of revocation, in either case by logging onto www.proxyvote.com using the control number provided on your written consent form or by mailing your filled, signed and dated written consent to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY, 11717.

Expenses; Solicitation of Written Consents

The expense of preparing, printing and mailing these consent materials is being borne by the BGC Group. Officers and employees of BGC Partners may solicit consents by telephone and personally, in addition to solicitation by mail. These persons will receive their regular compensation but no special compensation for soliciting consents.

 

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INFORMATION ABOUT THE COMPANIES

BGC Partners, Inc.

BGC Partners is a leading global financial brokerage and technology company servicing the global financial markets. Through brands including BGC®, Fenics®, GFI®, Sunrise Brokers^™, Poten & Partners®, and RP Martin^®, among others, BGC Partners’ businesses specialize in the brokerage of a broad range of products, including fixed income such as government bonds, corporate bonds, and other debt instruments, as well as related interest rate derivatives and credit derivatives. Additionally, BGC Partners provides brokerage products across FX, Equities, Energy and Commodities, Shipping and Futures and Options. BGC Partners’ businesses also provide a wide variety of services, including trade execution, connectivity solutions, brokerage services, clearing, trade compression and other post-trade services, information, and other back-office services to a broad assortment of financial and non-financial institutions.

BGC Partners’ integrated platform is designed to provide flexibility to customers with regard to price discovery, execution and processing of transactions, and enables them to use BGC Partners’ Voice, Hybrid, or in many markets, Fully Electronic brokerage services in connection with transactions executed either OTC or through an exchange. Through BGC Partners’ Fenics® group of electronic brands, BGC Partners offers a number of market infrastructure and connectivity services, including BGC Partners’ Fully Electronic marketplaces, and the Fully Electronic brokerage of certain products that also may trade via BGC Partners’ Voice and Hybrid execution platforms. The full suite of Fenics® offerings includes BGC Partners’ Fully Electronic and Hybrid brokerage, market data and related information services, trade compression and other post-trade services, analytics related to financial instruments and markets, and other financial technology solutions. Fenics® brands also operate under the names Fenics®, FMX^™, FMX Futures Exchange^™, Fenics Markets Xchange^™, Fenics Futures Exchange^™, Fenics UST^™, Fenics FX^™, Fenics Repo^™, Fenics Direct^™, Fenics MID^™, Fenics Market Data^™, Fenics GO^™, Fenics PortfolioMatch^™, kACE2®, and Lucera®.

BGC, BGC Partners, BGC Trader, GFI, GFI Ginga, CreditMatch, Fenics, Fenics.com, FMX, Sunrise Brokers, Poten & Partners, RP Martin, kACE2, Capitalab, Swaptioniser, CBID, and Lucera are trademarks/service marks, and/or registered trademarks/service marks of BGC Partners, Inc. and/or its affiliates.

BGC Partners’ customers include many of the world’s largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, and investment firms. BGC Partners has dozens of offices globally in major markets including New York and London, as well as in Bahrain, Beijing, Bogotá, Brisbane, Cape Town, Chicago, Copenhagen, Dubai, Dublin, Frankfurt, Geneva, Hong Kong, Houston, Johannesburg, Madrid, Manila, Melbourne, Mexico City, Miami, Milan, Monaco, Nyon, Paris, Perth, Rio de Janeiro, Santiago, São Paulo, Seoul, Shanghai, Singapore, Sydney, Tel Aviv, Tokyo, Toronto, Wellington and Zurich.

As of March 31, 2023, BGC Partners had 2,012 brokers, salespeople, managers, technology professionals and other front-office personnel across our businesses. BGC Partners’ principal executive offices are located at 499 Park Avenue, New York, New York 10022.

BGC Partners Class A common stock is listed on the NASDAQ Global Select Market under the ticker symbol “BGCP.”

BGC Holdings, L.P.

BGC Holdings is a consolidated subsidiary of BGC Partners for which BGC Holdings GP, a wholly owned subsidiary of BGC Partners, is the general partner. BGC Partners and BGC Holdings jointly own BGC Partners, L.P. and BGC Partners Global Holdings, L.P., the two operating partnerships of the BGC Partners’ business. BGC Holdings’ principal executive offices are located at 499 Park Avenue, New York, New York 10022.

 

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BGC Group, Inc.

BGC Group is a Delaware corporation and is currently a wholly owned subsidiary of BGC Partners. BGC Group was incorporated on April 19, 2021, solely for the purpose of effecting the corporate conversion and to serve as the new publicly traded holding company for the BGC businesses. Immediately following the corporate conversion, BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the ticker symbol “BGC.” BGC Group has not carried on any activities other than in connection with the corporate conversion. BGC Group’s principal executive offices are located at 499 Park Avenue, New York, New York 10022.

BGC Partners II, Inc.

Merger Sub 1 is a Delaware corporation and is currently a wholly owned subsidiary of BGC Group. Merger Sub 1 was incorporated on September 6, 2022, solely for the purpose of effecting the Corporate merger. Merger Sub 1 has not carried on any activities other than in connection with the Corporate merger. Merger Sub 1’s principal executive offices are located at 499 Park Avenue, New York, New York 10022.

BGC Partners II, LLC

Merger Sub 2 is a Delaware corporation and is currently a wholly owned subsidiary of BGC Group. Merger Sub 2 was incorporated on September 6, 2022, solely for the purpose of effecting the Holdings merger. Merger Sub 2 has not carried on any activities other than in connection with the Holdings merger. Merger Sub 2’s principal executive offices are located at 499 Park Avenue, New York, New York 10022.

BGC Holdings Merger Sub, LLC

Holdings Merger Sub is a Delaware corporation and is currently a wholly owned subsidiary of BGC Holdings. Holdings Merger Sub was incorporated on September 20, 2022, solely for the purpose of effecting the Holdings Reorganization merger. Holdings Merger Sub has not carried on any activities other than in connection with the Holdings Reorganization merger. Holdings Merger Sub’s principal executive offices are located at 499 Park Avenue, New York, New York 10022.

 

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THE CORPORATE CONVERSION

This discussion of the corporate conversion is qualified in its entirety by reference to the corporate conversion agreement, which is attached to this consent solicitation statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire corporate conversion agreement carefully as it is the legal document that governs the corporate conversion.

Transaction Structure

On November 15, 2022, BGC Partners and BGC Holdings, along with certain other affiliated entities, entered into the corporate conversion agreement which was amended as of March 29, 2023, in order to rerorganize and simplify the organizational structure of the BGC entities. Upon completion of the corporate conversion, the stockholders of BGC Partners and the limited partners of BGC Holdings will participate in the economics of the BGC businesses through BGC Group. By simplifying the organizational structure, the corporate conversion is intended to improve transparency and reduce operational complexity.

Under the existing structure, BGC Partners and BGC Holdings – which is currently a consolidated subsidiary of BGC Partners for accounting purposes – currently hold, directly or indirectly and on a combined basis, 100% of the limited partnership interests in the BGC Opcos, which are the two operating partnerships of BGC. The limited partners of BGC Holdings, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Holdings, and the stockholders of BGC Partners, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Partners. This structure is sometimes referred to as an Up-C structure.

When the corporate conversion is completed, the limited partners of BGC Holdings will cease participating in the economics of the BGC Opcos indirectly through BGC Holdings and instead will participate in the economics of the BGC Opcos indirectly through BGC Group. The stockholders of BGC Partners will also participate in the economics of the BGC Opcos indirectly through BGC Group. BGC Group will have Class A common stock and Class B common stock with terms that are substantially similar to the existing Class A common stock of BGC Partners and Class B common stock of BGC Partners, respectively. The corporate conversion will therefore have the effect of transforming the organizational structure of the BGC entities from an Up-C structure to a simplified “Full C-Corporation” structure.

BGC Partners, BGC Holdings, BGC Group and other parties have agreed that Holdings Merger Sub, a wholly owned subsidiary of BGC Group, will merge with and into BGC Holdings in the Holdings Reorganization merger, with Holdings Merger Sub surviving, that Merger Sub 1, a wholly owned subsidiary of BGC Group, will merge with and into BGC Partners in the Corporate merger, with BGC Partners surviving, and that Merger Sub 2, a wholly owned subsidiary of BGC Group, will merge with and into Holdings Merger Sub in the Holdings merger, with Holdings Merger Sub surviving, under the terms of the corporate conversion agreement described in this consent solicitation statement/prospectus and attached as Annex A to this consent solicitation statement/prospectus.

Immediately following the corporate conversion, the BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the ticker symbol “BGC.”

 

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Pre-Corporate Conversion Structure

 

 

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Holdings Reorganization Merger

 

 

 

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Corporate Merger and Holdings Merger

 

 

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Post-Corporate Conversion Structure

 

 

Consideration to BGC Partners Stockholders and Holders of BGC Holdings Limited Partnership Units

As a result of the Holdings Reorganization merger, each equity interest in BGC Holdings outstanding as of immediately prior to the Holdings Reorganization merger will be converted into a substantially equivalent equity interest in Holdings Merger Sub.

As a result of the Corporate merger, each share of BGC Partners Class A common stock and each share of BGC Partners Class B common stock outstanding at the effective time of the Corporate merger will be converted into the right to receive one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively, with such differences as described under the section titled “Comparison of Rights of BGC Partners Stockholders and BGC Group Stockholders.”

As a result of the Holdings merger:

 

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each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is held by Cantor or its subsidiaries and is outstanding at the effective time of the Holdings merger will be

 

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converted into one share of BGC Group Class B common stock, subject to the terms and conditions of the corporate conversion agreement, provided that a portion of the shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger;

 

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each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is not held by Cantor or any of its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into one share of BGC Group Class A common stock; and

 

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each non-exchangeable share of Holdings Merger Sub (which was issued in respect of each non-exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is outstanding at the effective time of the Holdings Merger will, subject to certain limited exceptions, be converted into equity awards denominated in cash, restricted stock and/or RSUs of BGC Group, each as further set forth in the corporate conversion agreement.

The total number of shares of BGC Group Class A common stock and BGC Group Class B common stock to be issued in the corporate conversion is expected to be up to approximately 360 million shares of BGC Group Class A common stock based on the number of shares of BGC Partners Class A common stock currently outstanding and the number of exchangeable limited partnership units of BGC Holdings (other than exchangeable limited partnership units held by Cantor or its affiliates) currently outstanding and the number of shares of BGC Partners Class A common stock that may be issuable pursuant to outstanding equity-based incentive awards of BGC Partners prior to the completion of the corporate conversion, and up to approximately 110 million shares of BGC Group Class B common stock based on the number of shares of BGC Partners Class B common stock currently outstanding and the exchangeable limited partnership units of BGC Holdings held by Cantor or its affiliates currently outstanding.

Treatment of BGC Partners Equity Incentive Plans and Outstanding Awards in Connection with the Corporate Conversion

At the effective time, BGC Group will assume the BGC Partners Equity Plan, which will be amended and restated immediately prior to the effective time as the BGC Group Equity Plan. The BGC Group Equity Plan will have 600 million shares of BGC Group Class A common stock reserved for awards under the plan subject to adjustment as set forth in the BGC Group Equity Plan which share reserve includes the shares for awards assumed or substituted in connection with the corporate conversion. All equity-based and cash incentive awards (including awards under the BGC Partners Equity Plan issued in connection with BGC Holdings limited partnership units awarded under the Participation Plan) that are then outstanding under the BGC Partners Equity Plan and the Participation Plan, will be converted into or substituted with awards under the BGC Group Equity Plan, with terms and conditions as set forth in the corporate conversion agreement. See the section titled “The BGC Group Long-Term Incentive Plan.” It is also expected that, at the effective time, BGC Group will assume the BGC Partners Incentive Bonus Plan, as appropriately amended and restated, and renamed the “BGC Group, Inc. Incentive Bonus Compensation Plan.” There will no longer be any need for the Participation Plan following the corporate conversion.

Background of the Corporate Conversion

The BGC Partners board of directors and management regularly review and discuss BGC Partners’ performance, business strategy and competitive position in the industries in which BGC Partners operates. In addition, the BGC Partners board of directors and management regularly review and evaluate BGC Partners’ capital structure, capital allocation and compensation policies and practices, as well as potential strategic alternatives, as part of ongoing efforts to strengthen the overall business of BGC Partners and enhance stockholder value. In evaluating these matters, BGC Partners regularly considers input from its public stockholders, bondholders, employees, partners and other interested parties, including Cantor. These efforts have

 

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from time to time included evaluations and discussions regarding the organizational structure of the BGC businesses, including whether a conversion from its current umbrella partnership/corporation structure (or “Up-C structure”) to a simplified corporation structure would be beneficial to BGC Partners and its stockholders.

As part of these ongoing efforts, in June 2019, in light of feedback from stockholders requesting BGC Partners to simplify its corporate structure, members of BGC Partners management began evaluating a potential conversion of BGC Partners’ Up-C structure into a simplified corporation structure, where equityholders would participate in the economics of the BGC Opcos through equity in a single publicly traded corporation. BGC Partners management evaluated potential transaction structures to accomplish the corporate conversion, the tax implications of such corporate conversion and the corporate and governmental approvals and filings that would be required to complete the transaction. Members of BGC Partners management also held conversations with representatives of Cantor to determine the basis on which Cantor would be willing to consent to BGC Partners’ conversion from an Up-C structure to a simplified corporation structure, given that Cantor’s consent to such a conversion would be required under the terms of the existing BGC Holdings partnership agreement. BGC Partners and Cantor engaged Wachtell, Lipton, Rosen & Katz (“Wachtell Lipton”) as legal counsel to assist them in connection with the potential transaction.

On July 25, 2019, BGC Partners publicly announced that it continued to study simplifying the organizational structure of the BGC businesses and anticipated that BGC Partners would provide an update before year-end.

BGC Partners management continued to explore the potential transaction periodically through the remainder of 2019 with the support of the BGC Partners board of directors. On November 6, 2019, the BGC Partners board of directors formed a committee consisting solely of all of the independent directors of BGC Partners to assist the board in evaluating, exploring and negotiating any potential transaction.

On December 18, 2019, BGC Partners publicly announced that it was exploring a potential conversion of the Up-C structure of the BGC businesses into a simplified corporation structure, and anticipated that BGC Partners management would submit a proposal for such conversion in the near future. Any corporate conversion would be subject to the approval of the BGC Partners board of directors and relevant committees of the board.

In early 2020, the committee of independent directors began to review candidates for independent legal counsel to advise them on the potential transaction, and in March 2020, the committee of independent directors engaged Debevoise & Plimpton LLP (“Debevoise”) as legal counsel to assist them in connection with their evaluation of any potential corporate conversion transaction. Throughout 2020, BGC Partners management continued to explore the potential corporate conversion transaction, including evaluating potential transaction structures and potential terms that would be included in any agreement that would govern the potential transaction. During this period, BGC Partners management kept the BGC Partners board of directors and the committee of independent directors informed regularly regarding its evaluation and progress, and BGC Partners continued to disclose in its quarterly earnings releases and periodic SEC filings during this period that it was exploring a potential conversion of its partnership structure to a corporation and that an important factor would be any significant changes or potential changes in taxation policy in any of the major jurisdictions in which BGC Partners operates, particularly the United States whose tax policies could be affected by the outcome of the November 2020 elections. BGC Partners also publicly disclosed that it would begin to work with regulators, lenders, rating agencies and other parties regarding any possible conversion.

Throughout 2020, members of BGC Partners management held conversations with representatives of Cantor to determine the basis on which Cantor would be willing to consent to BGC Partners’ conversion from an Up-C structure to a simplified corporation structure. In connection with the 2008 merger of BGC Partners and eSpeed, Inc., BGC, Cantor and certain other parties entered into a separation agreement, dated as of March 31, 2008 (the “Existing Separation Agreement”), which set forth the transactions that created the Up-C structure of the BGC businesses. The Existing Separation Agreement provides that Cantor has a one-time right to cause BGC Partners to effect a holding company merger in order to facilitate the tax-free exchange of Cantor’s exchangeable limited

 

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partnership interest in BGC Holdings into BGC Partners common stock. Representatives of Cantor expressed that Cantor did not want to be obligated to provide its consent to BGC Partners’ conversion from an Up-C structure to a simplified corporation structure, but would be amenable to amending the Existing Separation Agreement so that, if Cantor were to exercise its right to effect a holding company merger, the transaction would result in the other partners of BGC Holdings (as opposed to just Cantor) having their respective equity converted into equity of the new holding company, thereby converting the Up-C structure of the BGC businesses into a simplified corporation structure. Representatives of Cantor also expressed that it was Cantor’s position that, as part of any holding company merger, all of the exchangeable limited partnership interests in BGC Holdings held by Cantor should convert into shares of Class B common stock of the new holding company, as contemplated by the BGC Holdings limited partnership agreement. Any issuance of shares of BGC Partners Class B common stock in excess of 23.6 million required approval of the audit committee of the BGC Partners board of directors (the “Audit Committee”). Members of BGC Partners management continued to have informal discussions regarding the terms of any corporate conversion, but determined at that time that it would be best to wait to discuss any material transaction terms or concrete proposals until there was further insight into future U.S. federal tax policies, which remained uncertain after the results of the November 2020 U.S. elections.

On April 16, 2021, following further discussion between members of BGC Partners management and representatives of Cantor, and following the public announcement of certain proposed U.S. federal tax law changes, representatives of Cantor sent to the BGC Partners board of directors, including the Audit Committee and the compensation committee of the BGC Partners board of directors (the “Compensation Committee”), a preliminary non-binding term sheet (the “Initial Term Sheet”) outlining the terms on which Cantor would consent to a conversion of the BGC businesses into a simplified corporation structure. The Initial Term Sheet contemplated that the parties to the Existing Separation Agreement amend the Existing Separation Agreement so that, if Cantor were to exercise its one-time right as set forth in the Existing Separation Agreement to effect the holding company merger, BGC Partners and its subsidiaries would effect a corporate conversion to eliminate the Up-C structure through a series of mergers so that all equityholders would hold their interests in a newly formed Delaware corporation. Under the Initial Term Sheet, the new holding company would have a dual-class common stock capital structure that is substantially the same as the existing capital structure of BGC Partners. In the potential mergers, (i) shares of BGC Partners Class A common stock and Class B common stock would be converted into an equivalent number of shares of Class A common stock and Class B common stock of the holding company, respectively, (ii) exchangeable limited partnership units of BGC Holdings held by Cantor or its subsidiaries would be converted into shares of Class B common stock of the holding company, (iii) other exchangeable limited partnership units of BGC Holdings would be converted into shares of Class A common stock of the holding company and (iv) non-exchangeable limited partnership units of BGC Holdings would be converted into equity awards of the holding company or the right to receive cash. Representatives of Cantor subsequently clarified that, under the Initial Term Sheet, any limited partnership units of BGC Holdings held by Mr. Lutnick were intended to be converted into Class B common stock of the holding company.

On April 28, 2021, BGC Partners management held a discussion with the independent directors of BGC Partners and Debevoise. BGC Partners management reviewed the existing Up-C structure of the BGC businesses and discussed potential benefits of a simplified corporation structure, including making the structure of the BGC businesses more comprehensible to the marketplace, which could, in turn, increase demand for shares of BGC Partners and assist in the goal of maximizing long-term stockholder value. BGC Partners management also discussed how the simplification could reduce administrative costs and increase the efficiency of BGC Partners’ regulated businesses and associated capital requirements. BGC Partners management answered preliminary questions from the independent directors and their counsel, including with respect to expectations regarding approval of compensation matters for executives and non-executives in connection with any transaction.

On June 24, 2021, in light of the fact that an amendment to the Existing Separation Agreement and any corporate conversion transaction would involve Cantor and Howard Lutnick and that the treatment of limited partnership interests in BGC Holdings could have an effect on the compensation payable to executive officers of BGC Partners, the BGC Partners board of directors, including all of the independent directors of BGC Partners,

 

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discussed the delegation to the Audit Committee and the Compensation Committee, acting together in a joint capacity (the “Independent Joint Committee”), the authority to review, consider, evaluate and negotiate the potential corporate conversion transaction, and to determine whether to recommend, approve or reject the potential corporate conversion transaction. The independent directors considered the proposed resolutions, but tabled any approval of such resolutions until they had an opportunity to review the resolutions with Debevoise.

On June 28, 2021, the BGC Partners board of directors, including all of the independent directors of BGC Partners, provided its unanimous written consent to delegate to the Independent Joint Committee the authority to review, consider, evaluate and negotiate the potential corporate conversion transaction, and to determine whether to recommend, approve or reject the potential corporate conversion transaction.

On July 1, 2021, after having interviewed several financial advisor candidates, the Independent Joint Committee engaged Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to serve as its financial advisor and Aon to serve as its compensation consultant in connection with the potential corporate conversion transaction.

On July 23, 2021, a virtual data room was opened by BGC Partners to the Independent Joint Committee and its advisors in connection with facilitating due diligence in the transaction.

On July 6, 2021, August 11, 2021 and August 17, 2021 Houlihan Lokey and Aon met to discuss the treatment of equity securities held by executive officers and employees of BGC Partners and BGC Holdings in the potential corporate conversion transaction, with representatives of Debevoise also in attendance.

On August 3, 2021, BGC Partners management updated the BGC Partners board of directors with regard to progress with respect to evaluating the potential corporate conversion transaction.

In addition, on August 3, 2021, Houlihan Lokey provided information to the Independent Joint Committee regarding its relationships with Cantor, Mr. Lutnick, BGC Holdings, BGC Partners, BGC Partners LP and BGC Global Holdings LP. The Independent Joint Committee considered the relationship information provided by Houlihan Lokey and concluded that the relationships disclosed therein did not present a material conflict of interest with respect to Houlihan Lokey’s engagement in connection with the potential corporate conversion transaction.

On August 6, 2021, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss certain substantive points raised in the Initial Term Sheet, including (i) the incremental conversion rights sought by Cantor with respect to its limited partnership units, (ii) Cantor’s position with respect to indemnity and expense reimbursement, and (iii) whether Cantor’s right to consummate the potential transaction would be exercisable only within a specified period following entry into the amendment to the Existing Separation Agreement.

On August 6, 2021, on behalf of the Independent Joint Committee, Debevoise sent to Cantor and BGC Partners management a preliminary issues list (the “August 6 Response”) in response to the Initial Term Sheet and a list of discussion topics for a call between Houlihan Lokey and BGC Partners management. The August 6 Response contemplated that Cantor would not have a unilateral right to cause the holding company merger at any time, as contemplated by the Existing Separation Agreement. Instead, the August 6 Response provided that in the event that an agreement was reached, the approval of the Independent Joint Committee of a holding company merger would not be indefinite and if the potential transaction was not consummated within a certain period of time following entry into an amendment of the Existing Separation Agreement, Cantor would need to approach the Independent Joint Committee again. In addition, the August 6 Response provided that, if Cantor exercised its right to cause the holding company merger, no incremental exchangeability of BGC Holdings limited partnership units would be provided in the corporate conversion transaction, and therefore only BGC Holdings limited partnership interests that were exchangeable at the closing of the potential transaction would convert into common stock of the new holding company, with non-exchangeable BGC Holdings units being converted into unvested equity awards of the new holding company or the right to receive cash. Furthermore, the August 6 Response provided that, in any holding company merger, all of the exchangeable BGC Holdings limited partnership units held by Mr. Lutnick would convert into Class A common stock of the new holding company,

 

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and the exchangeable BGC Holdings limited partnership units held by Cantor would convert into Class B common stock of the new holding company only up to the maximum amount of Class B common stock currently authorized by the Audit Committee (i.e., 23.6 million shares), with the remainder of BGC Holdings units held by Cantor converting into Class A common stock. The August 6 Response also provided that Cantor would indemnify BGC Partners to the extent that BGC Partners incurs any material income taxes as a result of the potential transaction. The August 6 Response also provided that the expenses of the potential transaction would be borne by BGC Holdings and that the Independent Joint Committee would have to approve of any change in the form of corporate conversion agreement.

On August 26, 2021, representatives of Cantor held a call with the Independent Joint Committee. On this call, Cantor stated that it was willing to accept several of the terms proposed by the Independent Joint Committee, including that Cantor would agree that the Independent Joint Committee’s approval was not indefinite and there would be additional parameters (including time parameters) as to when Cantor could exercise its right to cause the corporate conversion transaction to occur without further consent from the Independent Joint Committee. In addition, Cantor conveyed that it accepted the Independent Joint Committee’s proposal that, if Cantor were to exercise its right to cause the corporate conversion transaction, (a) only BGC Holdings limited partnership interests that were exchangeable at the closing of the transaction would convert into common stock of the new holding company, with non-exchangeable BGC Holdings units being converted into unvested equity awards of the new holding company or the right to receive cash; and (b) Mr. Lutnick’s exchangeable BGC Holdings partnership units would be converted into Class A common stock (instead of Class B common stock). However, Cantor explained that its willingness to proceed with the potential corporate conversion transaction was contingent on its ability to convert all of its exchangeable BGC Holdings limited partnership units into BGC Group Class B common stock in the potential transaction, as contemplated by the BGC Holdings limited partnership agreement, as opposed to only up to 23.6 million units into Class B common stock with the rest being converted into Class A common stock.

Later that day on August 26, 2021, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the call with representatives of Cantor. Following discussion, the Independent Joint Committee directed Houlihan Lokey to analyze and quantify the incremental amount of voting control that Cantor would gain if all of the BGC Holdings partnership units held by Cantor and its affiliated entities (other than Mr. Lutnick) converted into Class B common stock (relative to the 23.6 million shares of Class B common stock currently authorized by the Audit Committee to be issued). Members of the Independent Joint Committee also directed Debevoise to request a written response from Cantor setting forth Cantor’s response to the issues raised by the Independent Joint Committee in its August 6 Response.

On August 27, 2021, the Independent Joint Committee asked Cantor to submit a written response to the issues raised by the Independent Joint Committee in its August 6 Response, including an explanation of why Cantor believed all of the exchangeable BGC Holdings limited partnership units held by Cantor should be converted into BGC Group Class B common stock in the potential corporate conversion transaction.

On August 31, 2021, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the August 26 call with representatives of Cantor. Representatives of Houlihan Lokey noted that, assuming conversion of the 23.6 million units of exchangeable limited partnership interests in BGC Holdings into shares of Class B common stock with the rest of the units being converted into Class A common stock, Cantor would hold approximately 68% of the total voting power of BGC Group common stock. Under Cantor’s proposal, Cantor would hold approximately 74% of the total voting power of BGC Group common stock, representing an incremental increase of approximately 7 percentage points. Representatives of Houlihan Lokey observed that Cantor would continue to retain a margin of control over BGC Group under either scenario even if BGC Group issued substantial amounts of equity in the future, but that the incremental conversion rights Cantor proposed provided an additional cushion that would allow Cantor to maintain a majority of the voting power of BGC Group even if BGC Group issued significant amounts of equity in the future.

 

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On September 1, 2021, Cantor sent to the Independent Joint Committee and Debevoise its written response (the “September 1 Response”) to the issues raised by the Independent Joint Committee in its August 6 Response. The September 1 Response noted that the BGC Holdings limited partnership agreement provides that all exchangeable BGC Holdings limited partnership units held by Cantor would convert into shares of BGC Partners Class B common stock, up to the maximum amount of authorized BGC Partners Class B common stock, and that there was a sufficient number of authorized shares of BGC Partners Class B common stock under the BGC certificate of incorporation to permit the conversion of all of the exchangeable BGC Holdings limited partnership units held by Cantor. The BGC Partners board of directors had previously provided, however, that any issuance of BGC Partners Class B common stock in excess of 23.6 million would require Audit Committee approval. Cantor explained in the September 1 Response that it believed that it was appropriate for the Audit Committee to approve the issuance of shares of Class B common stock in excess of 23.6 million because, otherwise, Cantor would not be willing to consent to the corporate conversion transaction. The corporate conversion transaction would result in converting all of Cantor’s equity in BGC Holdings into stock of a new corporate holding company. Cantor subsequently noted that this could have several adverse consequences to Cantor with respect to such equity stake, including that (1) Cantor could bear additional taxes because this equity stake would be in a corporation that pays taxes (and where dividends are subject to a separate tax) as opposed to a partnership with pass-through taxation; and (2) distributions from BGC Holdings to its limited partners are mandatory whereas distributions from the holding company to its stockholders would be subject to board approval. Cantor further noted that although it currently controls a majority of the voting power of BGC Partners, future issuances, including as a result of acquisitions or equity compensation, could dilute this voting power; therefore, Cantor believed that it was important to receive solely Class B common stock for its exchangeable BGC Holdings limited partnership interests, if it were exchanging all of its BGC Holdings limited partnership units to common stock as part of a corporate conversion transaction, as it would align the incentives of Cantor and the Class A common stockholders to vote in favor of future acquisitions that would be accretive to BGC Partners Class A common stockholders but could dilute Cantor’s voting power.

On September 15, 2021, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the September 1 Response. The members of the Independent Joint Committee discussed with their advisors a number of potential responses to the September 1 Response, including with respect to the conditionality and timing of a potential transaction. Following discussion, the Independent Joint Committee determined that it had further questions about Cantor’s position following the September 1 Response and directed Debevoise to prepare a list of questions to be shared with Cantor.

On September 19, 2021, the Independent Joint Committee sent to Cantor a written response dated September 17, 2021 (the “September 17 Response”). The September 17 Response asked Cantor to provide additional details regarding certain statements it made in the September 1 Response. In particular, it asked Cantor to elaborate on its statement that it would not be willing to consent to a transaction in which all of its exchangeable BGC Holdings limited partnership units did not convert into shares of BGC Group Class B stock given that, in the Independent Joint Committee’s view, reasonably foreseeable equity issuances would not result in Cantor dropping near 50% in combined voting power of BGC Group.

On September 21, 2021, Cantor sent to the Independent Joint Committee and Debevoise a written response (the “September 21 Response”). In the September 21 Response, Cantor stated that it desired to have as much cushion as possible above 50% to account for potential future dilutive issuances by the holding company, and that such dilutive issuances could occur for a variety of reasons, including employee compensation activity, capital markets transactions and acquisitions over a long period of time. In addition, Cantor acknowledged that BGC Partners management had received feedback that the potential transaction could have significant benefits to the public stockholders of BGC Partners and that, because Cantor would be giving up the benefits associated with holding its equity stake in BGC Holdings in a corporate conversion transaction for the benefit of the BGC Partners stockholders, the Independent Joint Committee should authorize the conversion of all of its BGC Holdings units into shares of Class B common stock, as contemplated by the BGC Holdings limited partnership agreement.

 

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On October 1, 2021, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the September 21 Response. Representatives of Debevoise updated the Independent Joint Committee on the conversation they had had with representatives of Wachtell Lipton at the Independent Joint Committee’s request. During those conversations, representatives of Debevoise proposed a number of alternatives to the positions outlined in Cantor’s last responses, including (i) a sunset provision whereby BGC Group Class B common stock would, after some agreed upon time or after a specified triggering event, automatically convert into BGC Group Class A common stock, (ii) a transaction where fewer BGC Holdings units would be convertible into shares of BGC Group Class B common stock than Cantor had proposed, and (iii) a legally binding merger agreement that would effect the corporate conversion transaction instead of an amendment to the Existing Separation Agreement that would provide Cantor with a unilateral option, but not an obligation, to effect the corporate conversion transaction.    Wachtell Lipton conveyed this feedback to representatives of Cantor. Cantor subsequently conveyed that it may agree to (iii), but not (i) or (ii).

On October 1, 2021, the Independent Joint Committee sent to Cantor a written response (the “October 1 Response”). The October 1 Response provided that the Independent Joint Committee would be willing to approve a holding company merger in which all of Cantor’s exchangeable BGC Holdings limited partnership units convert to shares of BGC Group Class B common stock on certain conditions. The Independent Joint Committee required that Cantor provide its consent to the proposed corporate conversion transaction pursuant to a legally binding agreement, rather than have a unilateral option to effect the transaction if Cantor so desired. The October 1 Response further provided that the corporate conversion agreement could include a provision entitling Cantor or BGC Partners to terminate the corporate conversion agreement prior to consummation of the transaction in the event that tax legislation is enacted that is materially adverse to Cantor or BGC Partners, specifically as it relates to the consummation of the transaction and the resulting structure, relative to the tax legislation approved by the Ways and Means Committee of the U.S. House of Representatives on September 15, 2021. The October 1 Response also provided that the incremental exchangeable BGC Holdings limited partnership units held by Cantor above 23.6 million units would convert into BGC Group Class A common stock at the closing of the transaction, but such shares would convert into shares of BGC Group Class B common stock if BGC Partners were to achieve a stock price performance hurdle, to be mutually agreed, within the 12 months after the closing. The October 1 Response also provided that Cantor would indemnify BGC Partners to the extent that BGC Partners incurs any material income taxes as a result of the transaction, and that the expenses of the transaction would be borne by BGC Holdings.

On October 4, 2021, Cantor sent to the Independent Joint Committee and Debevoise its written response to the October 1 Response (the “October 4 Response”). First, Cantor stated that it would be willing to provide its consent for the corporate conversion pursuant to a legally binding agreement, rather than having a unilateral option to effect the holding company merger as currently contemplated by the Existing Separation Agreement, but only if the other material outstanding issues are agreed. Cantor stated that it would not accept the Independent Joint Committee’s proposal for a performance hurdle applicable to the conversion of Cantor’s exchangeable BGC Holdings limited partnership units in the transaction as the future stock price could be affected by a variety of factors besides the corporate conversion transaction, and Cantor did not therefore believe that it was an appropriate condition to the full conversion of its BGC Holdings limited partnership units into Class B common stock. Cantor also stated that it did not believe either the tax indemnity or expense allocation provisions requested by the Independent Joint Committee in its October 1 Response were appropriate given that the potential transaction was intended to benefit all of the equityholders of BGC Partners, including the public stockholders of BGC Partners.

On November 9, 2021, at the request of the Independent Joint Committee, Mr. Lutnick joined a meeting of the Independent Joint Committee as a guest (the “November 9 Meeting”). At the November 9 Meeting, Mr. Lutnick shared his views regarding the potential corporate conversion transaction and the conditions upon which the Independent Joint Committee had said it would be willing to approve a holding company merger. During the meeting, Mr. Lutnick explained that, although the corporate conversion transaction was expected to benefit the public stockholders of BGC Partners, it could result in several adverse consequences to Cantor with

 

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respect to its equity stake in BGC Holdings, including that (1) Cantor could bear additional taxes because this equity stake would be in a corporation that pays taxes (and where dividends are subject to a separate tax) as opposed to a partnership with pass-through taxation; and (2) distributions from BGC Holdings to its limited partners are mandatory whereas distributions from the holding company to its stockholders would be subject to board approval. Mr. Lutnick noted that, by converting its BGC Holdings units into BGC Group common stock in the transaction, Cantor would be bearing additional tax with respect to such equity stake following the transaction, as well as giving up its right to mandatory distributions from BGC Holdings reflecting the profits of the BGC Opcos with respect to such equity stake.

From November 2021 until April 2022, BGC management engaged in tax and financial reviews of the potential corporate conversion transaction, conducted due diligence and formulated proposals with respect to the treatment of BGC Holdings units in the corporate conversion transaction. BGC management also provided introductory filings and supporting materials with respect to the potential transaction to regulators in various global jurisdictions. The Independent Joint Committee reviewed the proposals with its new member and evaluated diligence and background information with the Independent Joint Committee’s advisors. During this time, Mr. Lutnick completed chemotherapy treatments as previously disclosed, and BGC management regularly updated the BGC Partners board of directors regarding the status of the potential transaction.

On May 13, 2022, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the Independent Joint Committee’s views regarding the potential corporate conversion transaction and the conditions on which the Independent Joint Committee would be willing to approve such a transaction. The Independent Joint Committee discussed the advantages of such a transaction, including the potential favorable impact on BGC Partners’ trading price.    Among other things, members of the Independent Joint Committee noted that the simplified corporation structure would be easier for analysts and stockholders to understand than the existing Up-C structure. The Independent Joint Committee agreed that it would be in the best interests of the Class A stockholders of BGC Partners to proceed with the corporate conversion transaction, provided that acceptable terms could be agreed with Cantor.

On May 25, 2022, Mr. Lutnick and Stephen Merkel, on behalf of Cantor, held discussions with Mr. Arthur Mbanefo, chair of the Independent Joint Committee, to resume discussions regarding the potential corporate conversion transaction. During those discussions, they reviewed the open issues from the October 4 Response, including the conditions on which all of Cantor’s exchangeable BGC Holdings limited partnership units would convert into shares of BGC Group Class B common stock and whether Cantor would be required to provide a tax indemnity with respect to the transaction. Mr. Mbanefo communicated that the Independent Joint Committee would send a written document outlining its view on these matters.

On June 6, 2022, the Independent Joint Committee sent to Cantor a written proposal (the “June 6 Proposal”) summarizing the Independent Joint Committee’s position with respect to certain outstanding issues in connection with the potential corporate conversion transaction. The June 6 Proposal provided that Cantor would be required to consent to the corporate conversion transaction pursuant to a legally binding agreement, rather than having a unilateral option to proceed with the transaction if Cantor so desired. The June 6 Proposal further provided that, at the closing of the transaction, 23.6 million of the exchangeable BGC Holdings limited partnership units held by Cantor would be converted into Class B common stock, with the remainder of the exchangeable BGC Holdings limited partnership units held by Cantor converted into Class A shares; however, such Class A shares would convert into Class B shares if BGC Partners were to issue a material amount of new equity to fund an acquisition that is approved by the Audit Committee within seven years following the closing of the merger. The June 6 Proposal also provided that Cantor would indemnify BGC Partners to the extent that BGC Partners incurs any material income taxes as a result of the corporate conversion transaction and that the expenses of the potential transaction would be borne 50% by the holders of BGC Partners Class A common stock and 50% by the holders of BGC Partners Class B common stock.

 

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On June 9, 2022, Mr. Lutnick and Mr. Merkel, on behalf of Cantor, held discussions with Mr. Mbanefo, on behalf of the Independent Joint Committee, regarding the June 6 Proposal. During those discussions, Mr. Lutnick and Mr. Merkel conveyed that Cantor would be willing to consent to the corporate conversion transaction pursuant to a legally binding agreement, rather than having a unilateral option to proceed with the transaction if Cantor so desired; however, Cantor would do so only if all of the exchangeable BGC Holdings limited partnership units held by Cantor would be converted into Class B common stock at the closing of the transaction. Mr. Mbanefo suggested that, in order for Cantor to receive Class B shares in excess of the 23.6 million currently approved by the Audit Committee, BGC Partners would have to issue a minimum number of shares to fund acquisitions within seven years following the closing of the merger. Mr. Lutnick and Mr. Merkel noted that Cantor would be willing to accept a minimum of 10 million shares of new equity to fund acquisitions. The parties discussed the minimum of 10 million shares as a potential path to moving forward, which was generally acceptable.

On June 10, 2022, the Independent Joint Committee sent to Cantor a revised written proposal intended to capture the discussions that had taken place on June 9 (the “June 10 Proposal”). The June 10 Proposal was consistent with the June 6 Proposal, and included the June 9 discussion that all of the exchangeable BGC Holdings limited partnership units held by Cantor would be converted into Class B common stock at the closing of the transaction; however, the number of Class B shares issued above 23.6 million currently approved by the Audit Committee would convert into shares of Class A common stock of BGC Group if a minimum of 10 million shares of new equity to fund acquisitions was not issued within seven years following the closing of the transaction.

On June 17, 2022, BGC Partners sent to the Independent Joint Committee a revised non-binding term sheet (the “June 17 Term Sheet”) intended to reflect the conversations that had taken place since the Initial Term Sheet and BGC management’s understanding of the terms of a potential transaction. Consistent with the Initial Term Sheet and the discussions among the parties and their advisors since the Initial Term Sheet, the June 17 Term Sheet provided for a binding agreement in which the potential corporate conversion transaction would occur, and in which Cantor would be obligated to vote in favor of such corporate conversion transaction. The June 17 Term Sheet provided that in the mergers undertaken to effect the corporate conversion transaction, (i) shares of BGC Partners Class A common stock and BGC Partners Class B common stock would be converted into an equivalent number of shares of BGC Group Class A common stock and BGC Group Class B common stock, respectively, (ii) exchangeable limited partnership units of BGC Holdings held by Cantor or its subsidiaries would be converted into shares of BGC Group Class B common stock, provided that the shares of BGC Group Class B common stock issued in respect of incremental exchangeable BGC Holdings limited partnership units held by Cantor above the 23.6 million currently approved by the Audit Committee would convert into shares of BGC Group Class A common stock if BGC Group failed to issue a minimum of 10 million shares of new equity to fund an acquisition transaction within seven years following the closing, as reduced by any shares of Class B common stock that Cantor converts into shares of Class A common stock following the closing, (iii) other exchangeable limited partnership units of BGC Holdings would be converted into shares of BGC Group Class A common stock and (iv) non-exchangeable limited partnership units of BGC Holdings would be converted into BGC Group equity awards or cash. The June 17 Term Sheet provided that, among other customary conditions, the obligation to consummate the corporate conversion would be conditioned on receipt by BGC Partners and Cantor of legal opinions with respect to certain tax matters in connection with the transaction, and the corporate conversion agreement would be terminable by Cantor or BGC Partners, if tax legislation is proposed or enacted that, if implemented, could materially increase the taxes directly or indirectly borne by the partners of Cantor or BGC Holdings or the stockholders of BGC Partners if the mergers were completed as compared to if the mergers were not completed, provided that the enactment of the tax legislation approved by the Ways and Means Committee of the U.S. House of Representatives on September 15, 2021 would not be deemed to result in such adverse tax consequences. The June 17 Term Sheet also provided that BGC Group would bear the costs and expenses of the parties in connection with the transaction and that Cantor would indemnify BGC Partners to the extent that BGC Partners incurs any material income taxes as a result of the transaction failing to qualify for the treatment set forth in the tax opinion delivered to BGC Partners in connection with the transaction.

 

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On June 27, 2022, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the June 17 Term Sheet. Among other topics, the Independent Joint Committee discussed an alternative proposal by Houlihan Lokey that would provide voting dilution protection to Cantor in connection with future stock issuances related to mergers and acquisitions activity undertaken by BGC Group. After discussion, it was agreed that Mr. Mbanefo would discuss with Mr. Lutnick the June 17 Term Sheet and Houlihan Lokey’s alternative proposal.

On July 1, 2022, Mr. Mbanefo, on behalf of the Independent Joint Committee, had a discussion with Mr. Lutnick and Mr. Merkel, on behalf of Cantor, regarding the June 17 Term Sheet. Mr. Mbanefo noted that the Independent Joint Committee had further discussions regarding the conditions on which the BGC Group Class B shares issued to Cantor in excess of the 23.6 million currently approved by the Audit Committee would convert into shares of Class A common stock, and was contemplating that the 10 million share threshold reflected in the June 10 Proposal was still being considered. Mr. Mbanefo communicated that the Independent Joint Committee would send a written document outlining its view on these matters.

On August 1, 2022, BGC Partners management sent to the Independent Joint Committee and Debevoise a (i) a non-binding term sheet identical to the June 17 Term Sheet (the “August 1 Term Sheet”) and (ii) a written table setting forth the potential treatment of non-exchangeable BGC Holdings limited partnership units in the potential transaction.

On August 28, 2022, BGC Partners management sent to the Independent Joint Committee and Debevoise a draft corporate conversion agreement, which reflected the terms set forth in the June 17 Term Sheet and the table setting forth the treatment of non-exchangeable BGC Holdings limited partnership units that was sent to the Independent Joint Committee and Debevoise on August 1, 2022.

On September 1, 2022, the Independent Joint Committee met with Debevoise and Houlihan Lokey to discuss the terms of the draft corporate conversion agreement. Mr. Mbanefo noted that he informed Mr. Lutnick and Mr. Merkel on July 1, 2022 that the 10 million share threshold in the June 10 Proposal had not yet been finally agreed. Following discussion, the Independent Joint Committee determined that Mr. Mbanefo would request a meeting between members of the Independent Joint Committee and Cantor.

On September 8, 2022, the Independent Joint Committee met with Debevoise and Houlihan Lokey. Mr. Mbanefo relayed to the other members of the Independent Joint Committee his discussion with Mr. Lutnick. Following discussion, the Independent Joint Committee determined to propose to Cantor that the shares of BGC Group Class B common stock issued to Cantor in the transaction in respect of incremental exchangeable BGC Holdings limited partnership units held by Cantor above the 23.6 million currently approved by the Audit Committee would convert into shares of BGC Group Class A common stock if BGC Group failed to issue a minimum of the greater of (1) $100 million of shares of new equity and (2) 25 million shares of new equity to fund acquisitions in the aggregate within seven years following the closing.

On September 8, 2022, on behalf of the Independent Joint Committee, Debevoise sent to BGC Partners management, Cantor and Wachtell Lipton a revised non-binding term sheet (the “September 8 Term Sheet”). The September 8 Term Sheet provided that the shares of BGC Group Class B common stock issued to Cantor in the transaction in respect of incremental exchangeable BGC Holdings limited partnership units held by Cantor above the 23.6 million currently approved by the Audit Committee would convert into shares of BGC Group Class A common stock if BGC Group failed to issue a minimum of the greater of (1) $100 million of shares of new equity and (2) 25 million shares of new equity to fund acquisitions in the aggregate within seven years following the closing. The September 8 Term Sheet also provided that this amount of shares of BGC Group Class B common stock that would need to be converted into shares of BGC Group Class A common stock would not be reduced by shares converted by Cantor into BGC Group Class A common stock after the closing. The September 8 Term Sheet also provided that the expenses of the potential transaction would be borne by BGC Holdings and that Cantor would indemnify BGC Partners and BGC Group to the extent that either company incurs material income taxes in connection with the transaction.

 

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On September 9, 2022, the Independent Joint Committee met with representatives of Cantor and BGC Partners, with Debevoise, Houlihan Lokey and Wachtell Lipton present, to discuss the September 8 Term Sheet and negotiate the terms upon which Cantor would be willing to support the potential corporate conversion transaction if BGC Partners determined to move forward with the potential transaction. In this discussion, Cantor, BGC Partners and the Independent Joint Committee agreed that the shares of BGC Group Class B common stock issued to Cantor in the transaction in respect of incremental exchangeable BGC Holdings limited partnership units held by Cantor above the 23.6 million currently approved by the Audit Committee would convert into shares of BGC Group Class A common stock if BGC Group failed to issue a minimum of $75 million of shares of new equity to fund acquisitions in the aggregate within seven years following the closing.

On September 14, 2022, the Independent Joint Committee met again with representatives of Cantor and BGC Partners, with representatives of Debevoise, Houlihan Lokey and Wachtell Lipton present, to discuss the tax indemnity provision in the September 8 Term Sheet. The parties agreed that Cantor would indemnify BGC Partners to the extent BGC Partners incurs any income taxes as a result of the transaction, up to a maximum of $10 million, and that the expenses of the transaction would be borne by the party incurring such expenses. Following this discussion, on September 14, 2022, the Independent Joint Committee and Debevoise sent to Cantor, BGC Partners and Wachtell Lipton a revised draft of the corporate conversion agreement reflecting this discussion.

On September 19, 2022, Wachtell Lipton sent to the Independent Joint Committee and Debevoise a revised draft of the corporate conversion agreement.

On September 26, 2022, Debevoise sent to Cantor, BGC Partners and Wachtell Lipton a further revised draft of the corporate conversion agreement.

Over the course of the next seven weeks, BGC Partners management provided certain financial information including historical and pro forma income statement and balance sheet financials, financial projections of incremental cash flow consequences from the transaction, details relating to existing BGC Holdings and pro forma BGC Group equity awards and assumptions relating to Cantor’s and Mr. Lutnick’s exercise of certain purchase, redemption and exchange rights on a status quo basis and in connection with the transaction to representatives of Houlihan Lokey for purposes of Houlihan Lokey’s financial analysis.

On October 25, 2022, Wachtell Lipton sent to the Independent Joint Committee and Debevoise a revised draft of the corporate conversion agreement, along with a draft of the support agreement pursuant to which Cantor would agree to deliver its written consent to the transaction following the effectiveness of BGC Group’s registration statement to be filed in connection with the potential transaction.

On November 14, 2022, Debevoise and Wachtell Lipton finalized the corporate conversion agreement and the support agreement.

On November 14, 2022, the Independent Joint Committee met, with representatives from Houlihan Lokey and Debevoise participating. The Independent Joint Committee discussed the strategic rationale for the potential transaction. Representatives of Houlihan Lokey reviewed with the Independent Joint Committee Houlihan Lokey’s financial analysis summarized below under “—Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee.” Thereafter, at the request of the Independent Joint Committee, Houlihan Lokey verbally rendered its opinion to the Independent Joint Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Independent Joint Committee dated November 14, 2022) as to the fairness, from a financial point of view, to the Class A Holders of the Corporate Merger Class A Exchange Ratio provided for in the Corporate merger (after giving effect to the Transaction and Concurrent Transactions). The Independent Joint Committee discussed the terms of the corporate conversion agreement and the transactions contemplated thereby with the Independent Joint Committee’s legal and financial advisors. Following these presentations and discussions, the Independent Joint Committee unanimously

 

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(i) determined that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declared it advisable, to enter into the corporate conversion agreement, (ii) approved the execution, delivery and performance by BGC Partners of the corporate conversion agreement and the consummation of the transactions contemplated by the corporate conversion agreement, including the Corporate merger, and (iii) recommended that the BGC Partners board (a) determine that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declare it advisable, to enter into the corporate conversion agreement, (b) approve the execution, delivery and performance by BGC Partners of the corporate conversion agreement and the consummation of the transactions contemplated by the corporate conversion agreement, including the Corporate merger, and (c) upon the terms and subject to the conditions of the corporate conversion agreement, recommend that the stockholders of BGC Partners adopt the corporate conversion agreement and submit the corporate conversion agreement to the stockholders of BGC Partners for adoption.

On November 15, 2022, the BGC Partners board of directors held a meeting, with members of BGC Partners management and representatives of Wachtell Lipton, Houlihan Lokey and Debevoise present. At the meeting, members of the Independent Joint Committee presented their unanimous recommendation in support of the potential transaction. After receipt of the recommendation, the BGC Partners board (i) determined that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declared it advisable, to enter into the corporate conversion agreement, (ii) approved the execution, delivery and performance by BGC Partners of the corporate conversion agreement and the consummation of the transactions contemplated by the corporate conversion agreement and (iii) upon the terms and subject to the conditions of the corporate conversion agreement, resolved to recommend that the stockholders of BGC Partners adopt the corporate conversion agreement and to submit the corporate conversion agreement to the stockholders of BGC Partners for adoption.

Following such meeting, on November 15, 2022, the parties executed and delivered the corporate conversion agreement, and following execution of the corporate conversion agreement, Cantor entered into the support agreement.

Following execution of the corporate conversion agreement, BGC Partners issued a press release publicly announcing the execution of the corporate conversion agreement.

On March 29, 2023, BGC Partners and BGC Holdings entered into an amendment to the corporate conversion agreement that changed the Termination Date of the agreement to September 30, 2023 (subject to extension to December 31, 2023 as described in the section titled “The Corporate Conversion Agreement—Termination”).

BGC Partners’ Reasons for the Corporate Conversion; Recommendation of the Independent Joint Committee; Approval of the BGC Partners Board

At a meeting held on November 14, 2022, the Independent Joint Committee, acting with the advice of its own legal and financial advisors, unanimously (i) determined that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declared it advisable, to enter into the corporate conversion agreement, (ii) approved the execution, delivery and performance by BGC Partners of the corporate conversion agreement and the consummation of the transactions contemplated thereby, and (iii) unanimously recommended that the BGC Partners board of directors determine that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declare it advisable, to enter into the corporate conversion agreement, approve and adopt the corporate conversion agreement and the transactions contemplated thereby and recommend that BGC Partners stockholders adopt the corporate conversion agreement and submit the corporate conversion agreement to the BGC Partners stockholders for adoption. The independent Compensation Committee also approved separately the proposed executive compensation contained in the corporate conversion plan.

 

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As described above in the section entitled “—Background of the Corporate Conversion” of this document, in reaching its determination and recommendation, the Independent Joint Committee held a number of meetings, consulted with BGC Partners’ senior management, received advice from its legal and financial advisors, reviewed a significant amount of information and considered a number of factors. The following are some of the significant factors that the Independent Joint Committee considered that supported its decision to recommend that the BGC Partners board of directors approve the corporate conversion agreement:

Benefits of Simplified Organizational Structure

 

•

the corporate conversion transaction will simplify the organizational structure of the BGC businesses, and this simplified corporate structure may be more comprehensible to the marketplace and may therefore increase demand for shares of BGC Group and assist in the goal of maximizing long-term stockholder value;

 

•

the corporate conversion transaction is expected to reduce administrative costs and increase the efficiency of BGC Partners’ regulated businesses and associated capital requirements;

 

•

the corporate conversion transaction will strongly align the interests of employee and partner equityholders and the public stockholders of the BGC businesses, and will strongly align the economic interests of Cantor and the public stockholders of the BGC businesses, because, following the transaction, all equityholders of the BGC businesses will hold equity in the same entity with the same distribution and reinvestment policy;

Value of Consideration

 

•

in the corporate conversion transaction, (a) BGC Partners stockholders will receive one share of BGC Group common stock for each share of BGC Partners common stock, (b) holders of BGC Holdings exchangeable units will receive one share of BGC Group common stock for each BGC Holdings exchangeable unit, and (c) no incremental exchangeability of BGC Holdings units would be provided in the corporate conversion transaction;

 

•

the expectation that the transaction will generally be tax-free for U.S. federal income tax purposes to BGC Partners stockholders if certain conditions are met, as more fully described in and subject to the section entitled “Material U.S. Federal Income Tax Consequences”;

Other

 

•

the terms of the corporate conversion agreement were the result of a substantial work, analysis and negotiation by the Independent Joint Committee and the Independent Joint Committee’s advisors over a multi-year period;

 

•

the Independent Joint Committee’s view that the terms of the corporate conversion agreement, taken as a whole, were the best terms for the BGC Partners stockholders (other than Cantor and its affiliates) upon which Cantor would be willing to consent to the corporate conversion transaction;

 

•

the Independent Joint Committee’s view that the corporate conversion transaction would likely be completed because, among other things, BGC Partners could terminate the corporate conversion agreement if Cantor failed to execute and deliver the support agreement within one business day following the execution of the corporate conversion agreement;

 

•

the fact that Houlihan Lokey rendered a verbal opinion to the Independent Joint Committee on November 14, 2022 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Independent Joint Committee dated November 14, 2022) as to the fairness, from a financial point of view, to the Class A Holders of the Corporate Merger Class A Exchange Ratio provided for in the Corporate merger (after giving effect to the Transaction and the Concurrent Transactions), as more fully described in the section entitled “—Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee”; and

 

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•

the procedural safeguards and process implemented to enable the Independent Joint Committee to determine the fairness of the transaction, including the independence of its members, its delegated power and responsibilities, the retention and advice of legal and financial advisors it had retained, and its extensive and confidential deliberations, access to information and participation in connection with its consideration, evaluation and negotiation of the proposed transaction.

In connection with the Independent Joint Committee’s determination to recommend that the BGC Partners board of directors approve the corporate conversion agreement, the Independent Joint Committee considered a number of uncertainties, risks and potentially negative factors relevant to the corporate conversion transaction, including the following:

 

•

the risk that the potential transaction may divert management focus and resources from operating BGC Partners’ business, as well as other strategic opportunities;

 

•

the risk that, if BGC Partners were to fail to complete the corporate conversion transaction after announcement of the corporate conversion agreement, such failure could result in negative perceptions of BGC Partners among investors, clients, employees, partners and other stakeholders;

 

•

Cantor and its affiliates may have interests with respect to the transaction that are in addition to, or different from, the interests of other BGC Partners stockholders;

 

•

certain of BGC Partners’ directors and named executive officers may have interests with respect to the transaction that are in addition to, or different from, the interests of other BGC Partners stockholders, as described under the section entitled “—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion”;

 

•

the risk that Cantor’s voting power over BGC Group as of immediately following the corporate conversion will be approximately 5.5 percentage points higher than its voting power over BGC Group would otherwise be if Cantor had exchanged its exchangeable limited partnership interests in BGC Holdings for BGC Partners common stock absent the corporate conversion, which could result in Cantor exercising control over BGC Group for a longer period of time than it would over BGC Partners absent the corporate conversion;

 

•

the transaction costs and expenses associated with completing the corporate conversion transaction;

 

•

the risks of the type and nature described under the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements.”

The Independent Joint Committee concluded that the uncertainties, risks and potentially negative factors relevant to the corporate conversion transaction were outweighed by the benefits that it expected BGC Partners stockholders would achieve as a result of the corporate conversion.

At a meeting held on November 15, 2022, the BGC Partners board of directors, acting upon the unanimous recommendation of the Independent Joint Committee, unanimously (i) determined that it is in the best interests of BGC Partners and the stockholders of BGC Partners (other than Cantor and its affiliates), and declared it advisable, to enter into the corporate conversion agreement, (ii) approved and adopted the corporate conversion agreement and the transactions contemplated thereby and (iii) resolved to recommend that BGC Partners stockholders adopt the corporate conversion agreement and submit the corporate conversion agreement to the BGC Partners stockholders for adoption.

In connection with such determination, approval and recommendation, the BGC Partners board of directors considered, among other factors, the factors considered by the Independent Joint Committee summarized above, including the following:

 

•

the Independent Joint Committee’s analyses, conclusions and unanimous determination that the corporate conversion agreement and the transactions contemplated by the corporate conversion agreement are in the best interests of BGC Partners and the stockholders of BGC Partners (other than

 

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Cantor and its affiliates), and the Independent Joint Committee’s unanimous recommendation that the BGC Partners board of directors approve and adopt the corporate conversion agreement and the transactions contemplated thereby;

 

•

the fact that Houlihan Lokey rendered a verbal opinion to the Independent Joint Committee on November 14, 2022 (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Independent Joint Committee dated November 14, 2022) as to the fairness, from a financial point of view, to the Class A Holders of the Corporate Merger Class A Exchange Ratio provided for in the Corporate merger (after giving effect to the Transaction and the Concurrent Transactions), as more fully described in the section entitled “—Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee”; and

 

•

the fact that the Independent Joint Committee is comprised only of independent and disinterested directors unaffiliated with Cantor or its affiliates, and, other than their interests described under “—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion,” the members of the Independent Joint Committee do not have material interests in the corporate conversion different from, or in addition to, those of BGC Partners and its public stockholders generally.

Accordingly, the BGC Partners board of directors unanimously recommends that BGC Partners stockholders vote “FOR” the approval of the corporate conversion agreement proposal, “FOR” the BGC Group Plan proposal and “FOR” each BGC Group certificate of incorporation proposal.

This discussion of the information and factors considered by the Independent Joint Committee and the BGC Partners board of directors includes the principal positive and negative factors but is not intended to be exhaustive and may not include all of the factors considered by the Independent Joint Committee and the BGC Partners board of directors. In view of the wide variety of factors considered in connection with their evaluation of the transaction, and the complexity of these matters, the Independent Joint Committee and the BGC Partners board of directors did not find it useful and did not attempt to rank, quantify or assign any relative or specific weights to the various factors that each considered in reaching its determination to approve the corporate conversion agreement and the transactions contemplated by the corporate conversion agreement and to make the recommendation to BGC Partners stockholders contained in this consent solicitation statement/prospectus. Rather, the Independent Joint Committee and the BGC Partners board of directors viewed their respective decisions as being based on the totality of the information presented to them and the factors they considered. In addition, individual members of the Independent Joint Committee and the BGC Partners board of directors may have given differing weights to different factors.

In considering the recommendation of the Independent Joint Committee and the BGC Partners board of directors, BGC Partners stockholders should be aware that certain directors and executive officers of BGC Partners may have interests in the transaction that are different from, or in addition to, any interests they might have solely as stockholders. The Independent Joint Committee and the BGC Partners board of directors were aware of these interests and considered them when evaluating and negotiating, as applicable, the corporate conversion agreement, the mergers and the other transactions contemplated by the corporate conversion agreement, and in making the recommendation to BGC Partners stockholders contained in this consent solicitation statement/prospectus. See “—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion.”

It should be noted that this explanation of the reasoning of the Independent Joint Committee and the BGC Partners board of directors and certain information presented in this section is forward-looking in nature and, therefore, that information should be read in light of the factors discussed in the section entitled “Special Note Regarding Forward-Looking Statements.”

 

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Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee

On November 14, 2022, Houlihan Lokey verbally rendered its opinion to the Independent Joint Committee (which was subsequently confirmed in writing by delivery of Houlihan Lokey’s written opinion addressed to the Independent Joint Committee dated November 14, 2022) as to the fairness, from a financial point of view, to the Class A Holders of the Corporate Merger Class A Exchange Ratio provided for in the Corporate merger (after giving effect to the Transaction and the Concurrent Transactions).

Houlihan Lokey’s opinion was directed to the Independent Joint Committee (in its capacity as such) and only addressed the Corporate Merger Class A Exchange Ratio from a financial point of view and did not address any other aspect or implication of the Transaction, the Concurrent Transactions, or any other agreement, arrangement or understanding. The summary of Houlihan Lokey’s opinion in this consent solicitation statement/prospectus is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this consent solicitation statement/prospectus and describes certain of the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Houlihan Lokey in connection with the preparation of its opinion. However, neither Houlihan Lokey’s opinion nor the summary of its opinion and the related analyses set forth in this consent solicitation statement/prospectus are intended to be, and do not constitute, advice or a recommendation to the Independent Joint Committee, the Company’s board of directors, any security holder of the Company or any other person as to how to act or vote with respect to any matter relating to the Transaction.

In arriving at its opinion, Houlihan Lokey, among other things:

 

•

reviewed a draft dated November 14, 2022 of the corporate conversion agreement;

 

•

reviewed certain publicly available business and financial information relating to the Company that Houlihan Lokey deemed to be relevant;

 

•

reviewed certain information relating to the historical, current and future operations, financial condition and prospects of the Company on a status quo basis and BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions, made available to Houlihan Lokey by the Company, including (a) financial projections of the incremental cash flow consequences to BGC Group of the Transaction and the Concurrent Transactions reflecting, among other things, Transaction fees and expenses and recurring administrative cost savings following consummation of the Transaction (the “Projections”), (b) historical and pro forma income statement and balance sheet financials of the Company and BGC Group as to the changes in the income statement and balance sheet arising from the Transaction and Concurrent Transactions (the “Historical and Pro Forma Financials”), (c) assumptions regarding the exchange, redemption, conversion and vesting of BGC Holdings limited partnership units and BGC Holdings limited partnership interests held by holders other than Cantor on a status quo basis and corresponding BGC Group restricted stock awards, restricted stock unit awards and other interests held by holders other than Cantor pro forma for the consummation of the Transaction and the Concurrent Transactions (the “Equity Award Assumptions”), and (d) assumptions regarding Cantor’s and Howard Lutnick’s exercise of certain purchase, redemption and exchange rights on a Company status quo basis and BGC Group pro forma for the consummation of the Transaction and the Concurrent Transactions (the “Exercise Assumptions”).

 

•

spoke with certain members of the management of the Company regarding the business, operations, financial condition and prospects of the Company on a status quo basis and BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions, the Transaction, the Concurrent Transactions, the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions, the Exercise Assumptions and related matters;

 

•

spoke with certain members of the management of the Company regarding certain potential benefits associated with the Transaction not susceptible to direct quantification that the management of the Company believes may be realized by BGC Group pro forma for consummation of the Transaction and the Concurrent

 

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Transactions including, among others, (a) potential expansion of the investor base, (b) simplified accounting and (c) enhanced alignment of employee interests and those of Class A Holders through ownership of the same class of securities;

 

•

analyzed certain potential pro forma financial effects of the Transaction and the Concurrent Transactions on earnings per share and cash flows of the Company on a status quo basis as compared to BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions;

 

•

compared the financial and operating performance of the Company on a status quo basis and BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions with that of other public companies that Houlihan Lokey deemed to be relevant;

 

•

reviewed a confirmation addressed to Houlihan Lokey from senior management of the Company and approved by the Independent Joint Committee regarding the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions, the Exercise Assumptions and other information, data and other materials (financial or otherwise) provided to, or discussed with, Houlihan Lokey by or on behalf of the Company; and

 

•

conducted such other financial studies, analyses and inquiries and considered such other information and factors as Houlihan Lokey deemed appropriate.

Houlihan Lokey relied upon and assumed, without independent verification, the accuracy and completeness of all data, material and other information furnished, or otherwise made available, to Houlihan Lokey, discussed with or reviewed by Houlihan Lokey, or publicly available, and does not assume any responsibility with respect to such data, material and other information. In addition, management of the Company and the Independent Joint Committee have advised Houlihan Lokey, and Houlihan Lokey assumed, at the direction of the management of the Company and the Independent Joint Committee, that the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions, and the Exercise Assumptions reviewed by Houlihan Lokey have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of the management of the Company and the Independent Joint Committee as to the future financial results and condition of the Company on a status quo basis and BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions and the other matters covered thereby, and Houlihan Lokey expresses no opinion with respect to the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions, the Exercise Assumptions or the assumptions on which they are based. Houlihan Lokey relied upon and assumed, without independent verification, that there had been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company, BGC Holdings or the BGC Opcos since the respective dates of the most recent financial statements and other information, financial or otherwise, provided to Houlihan Lokey that would be material to Houlihan Lokey’s analyses or its opinion, and that there is no information or any facts that would make any of the information reviewed by Houlihan Lokey incomplete or misleading.

Houlihan Lokey relied upon and assumed, without independent verification, that (a) the representations and warranties of all parties to the corporate conversion agreement and all other related documents and instruments that are referred to therein are true and correct, (b) each party to the corporate conversion agreement and other related documents and instruments will fully and timely perform all of the covenants and agreements required to be performed by such party, (c) all conditions to the consummation of the Transaction and the Concurrent Transactions will be satisfied without waiver thereof, and (d) the Transaction and the Concurrent Transactions will be consummated in a timely manner in accordance with the terms described in the corporate conversion agreement and other related documents and instruments, without any amendments or modifications thereto. Houlihan Lokey also assumed that, with the consent of the management of the Company and the Independent Joint Committee, the Transaction will qualify as a tax-free transaction. Houlihan Lokey relied upon and assumed, without independent verification, that (i) the Transaction and the Concurrent Transactions will be consummated in a manner that complies in all respects with all applicable federal and state statutes, rules and regulations, and will not result in any violation or breach of any agreement to which the Company, BGC Holdings, the BGC

 

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Opcos or BGC Group is a party, and (ii) all governmental, regulatory, and other consents and approvals necessary for the consummation of the Transaction and the Concurrent Transactions will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made that would have an effect on the Transaction, the Concurrent Transactions, the Company on a status quo basis, BGC Group pro forma for consummation of the Transaction and the Concurrent Transactions or any expected benefits of the Transaction that would be material to Houlihan Lokey’s analyses or its opinion.

Furthermore, in connection with its opinion, Houlihan Lokey was not requested to make, and has not made, any physical inspection or independent appraisal or evaluation of any of the assets, properties or liabilities (fixed, contingent, derivative, off-balance-sheet or otherwise) of the Company or any other party, nor was Houlihan Lokey provided with any such appraisal or evaluation. Houlihan Lokey did not estimate, and expresses no opinion regarding, the liquidation value of any entity or business. Houlihan Lokey has undertaken no independent analysis of any potential or actual litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which the Company, BGC Holdings, the BGC Opcos or BGC Group is or may be a party or is or may be subject, or of any governmental investigation of any possible unasserted claims or other contingent liabilities to which the Company, BGC Holdings, the BGC Opcos or BGC Group is or may be a party or is or may be subject.

Houlihan Lokey was not requested to, and did not, (a) solicit any indications of interest from third parties with respect to the securities, assets, business or operations of the Company, BGC Holdings, the BGC Opcos, BGC Group or any other party, or any alternatives to the Transaction or the Concurrent Transactions, or (b) advise the Independent Joint Committee, the Company’s board of directors or any other party with respect to alternatives to the Transaction or the Concurrent Transactions. Representatives of the Company and the Independent Joint Committee have advised Houlihan Lokey, and it relied upon and assumed, without independent verification, that the terms of the Transaction and the Concurrent Transaction, have been negotiated on an arms-length basis. In addition, Houlihan Lokey relied upon and assumed, without independent verification, that the final form of the corporate conversion agreement would not differ in any respect from the draft of the corporate conversion agreement identified above. Houlihan Lokey’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to Houlihan Lokey as of, the date thereof. Houlihan Lokey did not undertake, and is under no obligation, to update, revise, reaffirm or withdraw its opinion, or otherwise comment on or consider events occurring or coming to Houlihan Lokey’s attention after the date thereof. Houlihan Lokey did not undertake any independent analysis of and was not expressing any opinion as to the Preferred Exchange, what the value of the BGC Group common stock actually will be when exchanged pursuant to the Transaction or the price or range of prices at which the BGC Partners common stock or BGC Group common stock may be purchased or sold, or otherwise be transferable, at any time. Houlihan Lokey assumed that the BGC Group Class A common stock to be issued in the Transaction to the Class A Holders will be listed on the NASDAQ Global Select Market.

Houlihan Lokey’s opinion was furnished for the use of the Independent Joint Committee (in its capacity as such) in connection with its evaluation of the Mergers and may not be used for any other purpose without Houlihan Lokey’s prior written consent. Houlihan Lokey’s opinion was not intended to be, and does not constitute, a recommendation to the Independent Joint Committee, the Company’s board of directors, any security holder or any other party as to how to act or vote with respect to any matter relating to the Transaction, the Concurrent Transactions or otherwise.

Houlihan Lokey was not requested to opine as to, and its opinion does not express an opinion as to or otherwise address, among other things: (i) the underlying business decision of the Independent Joint Committee, the Company’s board of directors, the Company, its security holders or any other party to proceed with or effect the Transaction or the Concurrent Transactions, (ii) the terms of any arrangements, understandings, agreements or documents related to, or the form, structure or any other portion or aspect of, the Transaction or the Concurrent Transactions or otherwise, including the increase in the voting power of Cantor, Howard Lutnick and their affiliates resulting from the Transaction and the Concurrent Transactions, except if and only to the extent

 

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expressly addressed in its opinion, (iii) the fairness of any portion or aspect of the Transaction or the Concurrent Transactions to the holders of any class of securities, creditors or other constituencies of the Company, BGC Holdings, the BGC Opcos, or BGC Group or to any other party, except if and only to the extent expressly set forth in its opinion, (iv) the relative merits of the Transaction or the Concurrent Transactions as compared to any alternative business strategies or transactions that might be available for the Company, BGC Holdings, the BGC Opcos, BGC Group or any other party, (v) the fairness of any portion or aspect of the Transaction or the Concurrent Transactions to any one class or group of the Company’s, BGC Holdings’, the BGC Opcos’, BGC Group’s or any other party’s security holders or other constituents vis-à-vis any other class or group of the Company’s, BGC Holdings’, the BGC Opcos’, BGC Group’s or such other party’s security holders or other constituents (including, without limitation, the fairness of the potential dilutive or other effects of the Transaction or the Concurrent Transactions on existing security holders of the Company, BGC Holdings, the BGC Opcos or BGC Group, the fairness of the Corporate Merger Class A Exchange Ratio relative to any of the Other Exchange Ratios or vice versa, the fairness of the Corporate Merger Class A Exchange Ratio to the Company, BGC Group, the BGC Opcos, Cantor, Howard Lutnick or any other party (other than the Class A Holders), or the fairness of any of the Other Exchange Ratios to the Class A Holders or any other party), (vi) how the Independent Joint Committee, the Company’s board of directors, the Company, any security holder or any other party should act or vote with respect to the Transaction or the Concurrent Transactions, (vii) the solvency, creditworthiness or fair value of the Company, BGC Holdings, the BGC Opcos, BGC Group or any other participant in the Transaction or the Concurrent Transactions, or any of their respective assets, under any applicable laws relating to bankruptcy, insolvency, fraudulent conveyance or similar matters, or (viii) any amendments to the Separation Agreement, dated as of March 31, 2008, by and among Cantor, the Company, the BGC Opcos and BGC Holdings or any amendments to, or any terms of, any governing instruments of the Company, BGC Holdings, the BGC Opcos, BGC Group or any other participant in the Transaction or the Concurrent Transactions, including the fairness of any such amendment to any party. Furthermore, no opinion, counsel or interpretation is intended in matters that require legal, regulatory, accounting, insurance, tax or other similar professional advice. It is assumed that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, Houlihan Lokey relied, with the consent of the Independent Joint Committee, on the assessments by the Independent Joint Committee, the Company’s board of directors, the Company and their respective advisors, as to all legal, regulatory, accounting, insurance, tax and other similar matters with respect to the Company, BGC Holdings, the BGC Opcos, BGC Group, the Transaction, the Concurrent Transactions or otherwise.

In performing its analyses, Houlihan Lokey considered general business, economic, industry and market conditions, financial and otherwise, and other matters as they existed on, and could be evaluated as of, the date of its opinion. No company, transaction or business used in Houlihan Lokey’s analyses for comparative purposes is identical to the Company or the proposed Transaction and an evaluation of the results of those analyses is not entirely mathematical. The estimates contained in the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions and the Exercise Assumptions prepared by the management of the Company and the implied reference range values indicated by Houlihan Lokey’s analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, any analyses relating to the value of assets, businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold, which may depend on a variety of factors, many of which are beyond the control of the Company. Much of the information used in, and accordingly the results of, Houlihan Lokey’s analyses are inherently subject to substantial uncertainty.

Houlihan Lokey’s opinion was only one of many factors considered by the Independent Joint Committee in evaluating the proposed Transaction. Neither Houlihan Lokey’s opinion nor its analyses were determinative of the Corporate Merger Class A Exchange Ratio or of the views of the Independent Joint Committee or management of the Company with respect to the Transaction or the Corporate Merger Class A Exchange Ratio. The type and amount of consideration payable in the Transaction were determined through negotiation between the Company, the Independent Joint Committee and Cantor, and the decision to enter into the corporate conversion agreement was solely that of the Independent Joint Committee and the Company’s board of directors.

 

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Financial Analyses

In preparing its opinion to the Independent Joint Committee, Houlihan Lokey performed a variety of analyses, including those described below. The summary of Houlihan Lokey’s analyses is not a complete description of the analyses underlying Houlihan Lokey’s opinion. The preparation of such an opinion is a complex process involving various quantitative and qualitative judgments and determinations with respect to the financial, comparative and other analytical methods employed and the adaptation and application of these methods to the unique facts and circumstances presented. As a consequence, neither Houlihan Lokey’s opinion nor its underlying analyses are readily susceptible to summary description. Houlihan Lokey arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole and did not draw, in isolation, conclusions from or with regard to any individual analysis, methodology or factor. While the results of each analysis were taken into account in reaching Houlihan Lokey’s overall conclusion with respect to fairness, Houlihan Lokey did not make separate or quantifiable judgments regarding individual analyses. Accordingly, Houlihan Lokey believes that its analyses and the following summary must be considered as a whole and that selecting portions of its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying Houlihan Lokey’s analyses and opinion.

The following is a summary of the material financial analyses performed by Houlihan Lokey in connection with the preparation of its opinion and reviewed with the Independent Joint Committee on November 14, 2022. The order of the analyses does not represent relative importance or weight given to those analyses by Houlihan Lokey. The analyses summarized below include information presented in tabular format. The tables alone do not constitute a complete description of the analyses. Considering the data in the tables below without considering the full narrative description of the analyses, as well as the methodologies underlying, and the assumptions, qualifications and limitations affecting, each analysis, could create a misleading or incomplete view of Houlihan Lokey’s analyses.

For purposes of its analyses, Houlihan Lokey reviewed a number of financial and operating metrics, including:

 

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Equity Value — generally, the value as of a specified date of the relevant company’s outstanding equity securities (taking into account outstanding options and other securities convertible, exercisable or exchangeable into or for equity securities of the company to the extent in-the-money).

 

•

Pre-Tax Income — generally, the amount of the relevant company’s income after all operating and financing expenses, including interest and depreciation, have been deducted from total sales or revenues, but before income taxes have been subtracted.

 

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Net Income — generally, the amount of the relevant company’s income after all operating and financing expenses, including interest and depreciation, have been deducted from total sales or revenues, and after income taxes have been subtracted.

Unless the context indicates otherwise, equity values used in the selected companies analysis described below were calculated using the closing price of the common stock of the selected companies listed below as of November 10, 2022. For the avoidance of doubt, the Pre-Tax Income and Net Income figures for the Company on a status quo basis and for BGC Group pro forma for the consummation of the Transaction and the Concurrent Transactions were based in each case on income attributable to all stockholders (including adjustments to account for pro rata portions of income attributable to certain BGC Holdings limited partnership units and certain non-controlling interests) and provided by management of the Company in the Historical and Pro Forma Financials. Other estimates of the financial and operating performance of the Company on a status quo basis and of BGC Group pro forma for the consummation of the Transaction and the Concurrent Transactions relied upon for the financial analyses described below were based on the Projections, the Equity Award Assumptions, and the Exercise Assumptions.

 

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Selected Companies Analysis. Houlihan Lokey reviewed certain data for selected companies, with publicly traded equity securities, that Houlihan Lokey deemed relevant.

The financial data reviewed included:

 

•

Equity market value as a multiple of last twelve month (“LTM”) Pre-Tax Income; and

 

•

Equity market value as a multiple of LTM Net Income.

The selected companies included the following:

 

•

Compagnie Financière Tradition SA

 

•

TP ICAP Group PLC

Taking into account the results of the selected companies analysis, Houlihan Lokey applied selected multiple ranges of 8.5x to 11.5x to the Company’s LTM Pre-Tax Income and 11.5x to 14.5x to the Company’s LTM Net Income. The selected companies analysis, taking into account the Projections, the Equity Award Assumptions and the Exercise Assumptions, indicated implied per share value reference ranges of $3.46 to $4.68 per share of BGC Partners common stock based on the selected range of multiples of LTM Pre-Tax Income and $3.48 to $4.39 per share of BGC Partners common stock based on the selected range of multiples of LTM Net Income.

Has / Gets Analysis

Houlihan Lokey compared, (a) the implied per share value reference ranges of the BGC Partners common stock on a status quo basis (“Has”) to (b) the implied per share value reference ranges of BGC Group common stock pro forma for the consummation of the Transaction and the Concurrent Transactions (“Gets”).

Houlihan Lokey calculated the “Has” using the Selected Companies Analysis described above.

Houlihan Lokey calculated the “Gets” by applying selected multiple ranges of 8.5x to 11.5x to BGC Group’s pro forma LTM Pre-Tax Income and 11.5x to 14.5x to BGC Group’s pro forma LTM Net Income and made certain adjustments to reflect, among other things, Transaction fees and expenses, recurring administrative cost savings following consummation of the Transaction, and the financial impact of accelerating certain payroll taxes and other payments by and financial obligations of the Company, in each case based on, among other things, the Projections, the Historical and Pro Forma Financials, the Equity Award Assumptions and the Exercise Assumptions. The results of this analysis are as follows:

 

		“Has” (Status Quo)		“Gets” (Pro Forma)
Pre-Tax Income		$3.46 – 4.68		$3.46 – 4.70
Net Income		$3.48 – 4.39		$3.48 – 4.41

The financial analysis summarized above did not take into account certain potential benefits to BGC Group pro forma for the Transaction and the Concurrent Transactions identified by Company management that were not susceptible to direct quantification.

Miscellaneous

Houlihan Lokey was engaged by the Independent Joint Committee to act as its financial advisor in connection with the Transaction and provide financial advisory services, including an opinion to the Independent Joint Committee as to the fairness, from a financial point of view, to the Class A Holders of the Corporate Merger Class A Exchange Ratio provided for in the Corporate merger (after giving effect to the Transaction and the Concurrent Transactions). Houlihan Lokey was engaged by the Independent Joint Committee based on

 

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Houlihan Lokey’s experience and reputation. Houlihan Lokey is regularly engaged to provide financial advisory services, including to independent committees of boards of directors, in connection with mergers and acquisitions, financings, and financial restructurings. Pursuant to its engagement by the Independent Joint Committee, Houlihan Lokey is entitled to an aggregate fee of $1.7 million for its services, $100,000 of which became payable upon the execution of Houlihan Lokey’s engagement letter, an additional portion of which became payable on a monthly installment basis following the execution of Houlihan Lokey’s engagement letter, an additional $600,000 of which became payable upon the delivery of Houlihan Lokey’s opinion, and the balance of which became payable upon execution of the corporate conversion agreement. In addition, at the sole discretion of the Independent Joint Committee, the Independent Joint Committee may elect for the Company to pay an additional fee to Houlihan Lokey of up to $300,000 upon the closing of the Transaction. The Company also agreed to reimburse Houlihan Lokey for certain expenses and to indemnify Houlihan Lokey, its affiliates and certain related parties against certain liabilities and expenses, including certain liabilities under the federal securities laws, arising out of or related to Houlihan Lokey’s engagement.

In the ordinary course of business, certain of Houlihan Lokey’s employees and affiliates, as well as investment funds in which they may have financial interests or with which they may co-invest, may acquire, hold or sell, long or short positions, or trade, in debt, equity, and other securities and financial instruments (including loans and other obligations) of, or investments in, the Company, BGC Holdings, the BGC Opcos, BGC Group, Cantor, Howard Lutnick or any other party that may be involved in the Transaction or the Concurrent Transactions and their respective affiliates or security holders or any currency or commodity that may be involved in the Transaction or the Concurrent Transactions.

Houlihan Lokey and certain of its affiliates may provide investment banking, financial advisory and/or other financial or consulting services to the Company, BGC Holdings, the BGC Opcos, BGC Group, Cantor, Howard Lutnick, other participants in the Transaction or the Concurrent Transactions or certain of their respective affiliates or security holders in the future, for which Houlihan Lokey and its affiliates may receive compensation. In addition, Houlihan Lokey and certain of its affiliates and certain of Houlihan Lokey’s and their respective employees may have committed to invest in private equity or other investment funds managed or advised by Cantor, other participants in the Transaction or the Concurrent Transactions or certain of their respective affiliates or security holders, and in portfolio companies of such funds, and may have co-invested with Cantor, other participants in the Transaction or the Concurrent Transactions or certain of their respective affiliates or security holders, and may do so in the future. Furthermore, in connection with bankruptcies, restructurings, distressed situations and similar matters, Houlihan Lokey and certain of its affiliates may have in the past acted, may currently be acting and may in the future act as financial advisor to debtors, creditors, equity holders, trustees, agents and other interested parties (including, without limitation, formal and informal committees or groups of creditors) that may have included or represented and may include or represent, directly or indirectly, or may be or have been adverse to, the Company, BGC Holdings, the BGC Opcos, BGC Group, Cantor, Howard Lutnick, other participants in the Transaction or the Concurrent Transactions or certain of their respective affiliates or security holders, for which advice and services Houlihan Lokey and its affiliates have received and may receive compensation.

Certain Estimated Incremental Financial Impacts of the Corporate Conversion

BGC Partners does not as a matter of course make public projections or estimates as to future performance, earnings or other results beyond the current fiscal year given the unpredictability of underlying assumptions and estimates. However, BGC Partners management provided estimates of recurring administrative cost savings expected to result from the corporate conversion to the Independent Joint Committee, the BGC Partners board of directors and Houlihan Lokey in connection with the Independent Joint Committee’s evaluation of the corporate conversion, as described in the sections entitled “—Background of the Corporate Conversion” and “—Opinion of Houlihan Lokey, Financial Advisor to the Independent Joint Committee.” We refer to these internal, non-public estimates as the “estimated incremental financial impacts.”

 

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The estimated incremental financial impacts were prepared by and are the responsibility of BGC Partners management. The estimated incremental financial impacts were not prepared with a view toward public disclosure but rather for the purpose of evaluation of the corporate conversion. Accordingly, the estimated incremental financial impacts do not comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. Ernst & Young LLP, BGC Partners’ independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to the estimated incremental financial impacts and does not express an opinion on or any form of assurance related to the estimated incremental financial impacts. BGC Partners included a summary of the estimated incremental financial impacts in this section of the consent solicitation statement/prospectus for the benefit of the BGC Partners stockholders in their evaluation of the corporate conversion because BGC Partners provided such non-public information to the Independent Joint Committee, the BGC Partners board of directors and Houlihan Lokey. However, the summary of the estimated incremental financial impacts included in this consent solicitation statement/prospectus is not intended to influence any BGC Partners stockholder’s decision of whether to consent to the approval of any proposal.

The estimated incremental financial impacts were based on numerous variables and assumptions that are inherently uncertain and many of which are beyond the control of BGC Partners. Additionally, the estimated incremental financial impacts are inherently forward looking and span multiple years. Consequently, the estimated incremental financial impacts, as with all forward-looking information, become subject to greater unpredictability and uncertainty with each successive year. The assumptions upon which the estimated incremental financial impacts were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions, all of which are difficult or impossible to predict or estimate and most of which are beyond BGC Partners’ control. The estimated incremental financial impacts also reflect assumptions regarding the continuing nature of certain business decisions that, in reality, would be subject to change. Important factors that may affect actual results or the achievability of the estimated incremental financial impacts include, but are not limited to the ability of BGC Partners to implement its business strategy or its plans, to meet its forecasts and other expectations with respect to its businesses after the completion of the corporate conversion transaction and to realize anticipated synergies or realize anticipated synergies within the expected timeframe, industry performance, general business and economic conditions and other factors described in the sections entitled “Special Note Regarding Forward-Looking Statements” and “Risk Factors”, as well as in BGC Partners’ Annual Report on Form 10-K for the year ended December 31, 2022, its subsequent quarterly reports on Form 10-Q, and current reports on Form 8-K. This information constitutes “forward-looking statements” and actual results may differ materially and adversely from those projected. See the section entitled “Special Note Regarding Forward-Looking Statements.”

Accordingly, there can be no assurance that the estimated incremental financial impacts will be realized and actual results may vary materially from those estimated. The inclusion of a summary of the estimated incremental financial impacts in this consent statement/prospectus should not be regarded as an indication that BGC Partners or any of its affiliates, officers, directors, advisors or other representatives considered or consider the estimated incremental financial impacts to be necessarily predictive of actual future events or results of BGC Partners’ operations, and, consequently, the estimated incremental financial impacts should not be relied on in such a manner. Neither BGC Partners nor any of its affiliates, officers, directors, advisors or other representatives can give any assurance that actual results will not differ from the estimated incremental financial impacts, and neither BGC Partners nor any of its affiliates undertakes any obligation to update or otherwise revise or reconcile the estimated incremental financial impacts to reflect circumstances existing or developments and events occurring after the date on which the estimated incremental financial impacts were estimated or that may occur in the future, even in the event that any or all of the assumptions underlying the estimated incremental financial impacts are not realized. BGC Partners does not intend to make available publicly any update or other revision to the estimated incremental financial impacts, except as otherwise required by law. None of BGC Partners or any of its officers, directors, advisors or other representatives has made or makes any representation to any BGC Partners stockholder or other person regarding the ultimate performance of BGC Partners following the corporate conversion compared to the information contained in the estimated incremental financial impacts or that the estimated incremental financial

 

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impacts will be achieved. BGC Partners has not made any representations in the corporate conversion agreement or otherwise concerning the estimated incremental financial impacts. In light of the foregoing factors and the uncertainties inherent in the estimated incremental financial impacts, BGC Partners stockholders are cautioned not to place undue reliance on the information presented in the summary of the estimated incremental financial impacts.

Summary of Estimated Incremental Financial Impacts

The estimated incremental financial impacts consisted of estimated annual administrative cost savings of $5.5 million by 2025, including: (i) $1.8 million in annual savings expected to be achieved in 2023, (ii) $3.2 million in annual savings expected to be achieved in 2024 and (iii) $5.5 million in annual savings expected to be achieved in 2025.

Regulatory Matters

In connection with the corporate conversion, BGC Partners and BGC Group intend to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with NASDAQ. Additionally, BGC Partners and BGC Group intend to make all required filings to domestic and international self-regulatory organizations and securities industry regulators, including the Financial Industry Regulatory Authority, National Futures Association, Ontario Securities Commission, Financial Conduct Authority, Autorité de Contrôle Prudentiel et de Résolution, Securities and Futures Commission, Monetary Authority of Singapore and Swiss Financial Market Supervisory Authority.

The corporate conversion is not reportable under the HSR Act, and therefore no filings with respect to the corporate conversion are required with the FTC or the DOJ.

Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion

In considering the recommendation of the BGC Partners board of directors with respect to the adoption of the corporate conversion agreement, BGC Partners stockholders should be aware that certain of the directors and executive officers of BGC Partners, including Howard W. Lutnick, Stephen M. Merkel, Sean A. Windeatt and Jason W. Hauf, have interests in the transaction that may differ from, or are in addition to, the interests of BGC Partners stockholders, generally. These interests may present such directors and executive officers with actual or potential conflicts of interests, and these interests, to the extent they may be substantial, are described below. The members of the Independent Joint Committee and the BGC Partners board of directors were aware of and considered these interests and relationships, among other matters, when they approved the corporate conversion agreement and when the BGC Partners board of directors recommended that BGC Partners stockholders approve the corporate conversion agreement proposal.

As described below, the interests of BGC Partners’ non-employee directors and executive officers include the following:

 

•

accelerated exercisability and monetization of certain non-exchangeable HDUs, PSUs and PPSUs held by Messrs. Lutnick and Merkel;

 

•

the exercise and facilitation of certain purchase rights by Cantor with respect to certain BGC Group limited partnership units, as discussed in the section titled “The Corporate Conversion Agreement—Certain Cantor Purchase Rights”; and

 

•

the right to indemnification and liability insurance coverage that will survive the closing of the corporate conversion.

Certain Company directors and executive officers own equity interests in BGC Holdings, BGC Partners Class B common stock (which are held by Cantor and its general partner) and BGC Partners Class A common stock, as well as hold certain equity awards, all of which will receive the same treatment as all other such interests and awards, as discussed in the sections titled “The Corporate Conversion—Consideration to BGC

 

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Partners Stockholders and Holders of BGC Holdings Limited Partnership Units” and “The Corporate Conversion—Consideration to BGC Partners Stockholders and Holders of BGC Holdings Limited Partnership Units.”

Treatment of BGC Partners Equity Incentive Plans and Outstanding Awards in Connection with the Corporate Conversion

At the effective time, BGC Group will assume the BGC Partners Equity Plan, which will be amended and restated immediately prior to the effective time as the BGC Group Equity Plan. The BGC Group Equity Plan will have 600 million shares of BGC Group Class A common stock reserved for awards under the plan subject to adjustment as set forth in the BGC Group Equity Plan which share reserve includes the shares for awards assumed or substituted in connection with the corporate conversion. All equity-based and cash incentive awards (including awards under the BGC Partners Equity Plan issued in connection with BGC Holdings limited partnership units awarded under the Participation Plan) that are then outstanding under the BGC Partners Equity Plan and the Participation Plan, will be converted into or substituted with awards under the BGC Group Equity Plan, with terms and conditions as set forth in the corporate conversion agreement. See the section titled “The BGC Group Long-Term Incentive Plan.” It is also expected that, at the effective time, BGC Group will assume the BGC Partners Incentive Bonus Plan, as appropriately amended and restated, and renamed the “BGC Group, Inc. Incentive Bonus Compensation Plan.” There will no longer be any need for the Participation Plan following the corporate conversion.

Standing Policy for Mr. Lutnick and Recent Redemptions and Exchanges for Messrs. Merkel and Lutnick

In December 2010, as amended in 2013, the Audit Committee and the Compensation Committee approved a standing policy that gave Mr. Lutnick the same right, subject to certain conditions, to accept or waive opportunities that have previously been offered, or that may be offered in the future, to other executive officers to monetize or otherwise provide liquidity with respect to some or all of their non-exchangeable limited partnership units of BGC Holdings or to accelerate the lapse of or eliminate any restrictions on transferability with respect to shares of restricted stock. In January 2017, the policy was further amended to include recent executive awards such as transactions that monetize and/or provide liquidity of partnership or equity awards granted to BGC Partners executive officers, including the right to exchange non-distribution earning units such as NPSUs into distribution earning units such as PSUs, or convert preferred units such as PPSUs into regular, non-preferred units such as PSUs. Thus, the policy provides generally that Mr. Lutnick shall be treated no less favorably than, and in proportion to, any other executive officer with respect to the change, right or modification of partnership or equity awards. As previously disclosed by BGC Partners, Mr. Lutnick historically has elected to waive his right to participate in most such opportunities under the standing policy. Therefore, such rights, when exercised by Mr. Lutnick, represent the application of such rights to cumulative units and awards granted over a multi-year period, during which Mr. Lutnick had waived the exercise of his rights. Effective as of the effective time of the Corporate Conversion, Mr. Lutnick’s standing policy will be assumed by BGC Group and amended to apply to all equity-related awards that may be granted to Mr. Lutnick by BGC Group in the future under the BGC Group Equity Plan.

In connection with the corporate conversion, on May 18, 2023 the Compensation Committee approved the redemption of all of the non-exchangeable BGC Holdings units held by Mr. Merkel at that time. On May 18, 2023, Mr. Merkel’s 148,146 NPSU-CVs, 33,585 PSU-CVs, and 74,896 PSUs were redeemed for zero and an aggregate of 256,627 shares of BGC Partners Class A common stock were granted to Mr. Merkel, and 148,146 NPPSU-CVs with a total determination amount of $681,250 and 33,585 PPSU-CVs with a total determination amount of $162,500 were redeemed for an aggregate cash payment of $843,750. After deduction of applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Merkel received 196,525 net shares of BGC Partners Class A common stock.

Since Mr. Lutnick had previously repeatedly waived his rights under the BGC Partners standing policy, as of May 18, 2023 his rights had accumulated for 7,879,736 non-exchangeable PSUs, and 103,763 non-exchangeable PPSUs with a determination amount of $474,195. Due to the May 18, 2023 monetization of all of

 

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Mr. Merkel’s then-remaining non-exchangeable BGC Holdings units, on such date Mr. Lutnick received additional incremental monetization rights for his then-remaining 3,452,991 non-exchangeable PSUs, and 1,348,042 non-exchangeable PPSUs with a determination amount of $6,175,805.

In connection with the corporate conversion and, as a result of the monetization event for Mr. Merkel, on May 18, 2023, Mr. Lutnick elected to exercise in full his monetization rights under the standing policy, which he had previously waived in prior years. All of the non-exchangeable BGC Holdings units that Mr. Lutnick held at that time were monetized as follows: 11,332,727 PSUs were redeemed for zero and 11,332,727 shares of BGC Partners Class A common stock were granted to Mr. Lutnick, and 1,451,805 PPSUs with an aggregate determination amount of $6,650,000 were redeemed for an aggregate cash payment of $6,650,000. After deduction of shares of BGC Partners Class A common stock to satisfy applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Lutnick received 5,710,534 net shares of BGC Partners Class A common stock.

On May 18, 2023, Mr. Lutnick also exchanged his then-remaining 520,380 exchangeable PSUs for 520,380 shares of BGC Partners Class A common stock. After deduction of applicable tax withholding through the surrender of shares of BGC Partners Class A common stock valued at $4.61 per share, Mr. Lutnick received 232,610 net shares of BGC Partners Class A common stock. In addition, on May 18, 2023, Mr. Lutnick’s then-remaining 1,474,930 non-exchangeable HDUs were redeemed for a cash capital account payment of $9,148,000, $2.1 million of which was paid by BGC Partners with the remainder paid by Newmark Group, Inc.

As a result of the various transactions on May 18, 2023 described above, Mr. Lutnick no longer holds any BGC Holdings units. Mr. Lutnick does not have any current intention to sell any shares that he received from the transactions on May 18, 2023, although they may be gifted or donated to charitable organizations from time to time.

Other Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion

 

•

The BGC Partners directors as of the effective time will continue to be directors of BGC Group (other than Martin Laguerre, who we do not expect to serve on the board of directors of BGC Group following the corporate conversion), and the BGC Partners executive officers as of the effective time will continue to be employed as BGC Group’s executive officers.

 

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In connection with the corporate conversion, the amended and restated change in control agreements, dated as of August 3, 2011, between BGC Partners and each of Messrs. Lutnick and Merkel will be assumed by BGC Group, with such modifications thereto as are necessary to reflect the corporate conversion (but not with any changes to the benefits provided thereunder).

 

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In connection with the corporate conversion, the BGC Partners Incentive Bonus Plan, in which the executive officers are participating for 2023, will be assumed and adopted by BGC Group as the “BGC Group, Inc. Incentive Bonus Compensation Plan,” with certain modifications thereto to reflect the corporate conversion and to update and clarify certain matters, including removing the references to the Participation Plan; removing the provisions previously related to Section 162(m) of the Code; broadening and modernizing the scope of performance goals under the plan; clarifying that the plan is unfunded; and clarifying that awards under the plan will be binding on successors of BGC Group.

 

•

As of May 19, 2023, there were 104,327 Founding Partner units in BGC Holdings that BGC Holdings had the right to redeem or exchange. An additional 5,645,105 Founding Partner units will be redeemed in connection with the corporate conversion. The BGC Holdings limited partnership agreement provides certain purchase rights to Cantor upon the redemption or exchange of Founding Partner units by BGC Holdings. In connection with the corporate conversion, BGC Holdings will redeem or exchange all of such units, and Cantor will exercise its purchase rights to acquire an aggregate of 5,749,432 exchangeable limited partnership units that will be converted in the corporate conversion into shares of BGC Group Class B common stock, as further discussed in the section titled “The Corporate Conversion Agreement —Certain Cantor Purchase Rights.”

 

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•

Mr. Lutnick will, indirectly through his control of Cantor, continue to exercise control over BGC Group as discussed in the section titled “Risk Factors—Risks Related to BGC Group Common Stock—Because BGC Group’s voting power will be concentrated among the holders of BGC Group Class B common stock, the market price of BGC Group Class A common stock may be materially adversely affected by its disparate voting rights.”

As of May 19, 2023, Cantor (including its general partner) owned 45.9 million shares of BGC Partners Class B common stock, representing approximately 57.7% of the total voting power of BGC Partners common stock. In addition, as of May 19, 2023, Cantor (including its general partner) owned 58.2 million units of exchangeable limited partnership interests in BGC Holdings. If Cantor (including its general partner) were to exchange all of such units into BGC Partners common stock absent the corporate conversion, it would receive 23.6 million shares of BGC Class B common stock and 34.6 million shares of BGC Class A common stock. These shares, when taken together with Cantor’s existing BGC Partners Class B common stock, would represent approximately 68.4% of the total voting power of BGC Partners common stock as of May 19, 2023 following such exchange. As a result of the corporate conversion, each share of BGC Partners Class B common stock held by Cantor (including its general partner) will be converted into one share of BGC Group Class B common stock, and each unit of exchangeable limited partnership interests in BGC Holdings held by Cantor (including its general partner) will also be converted into one share of BGC Group Class B common stock. In addition, in connection with the corporate conversion transaction, it is expected that Cantor will exercise certain purchase rights set forth in the BGC Holdings limited partnership agreement and as contemplated in the corporate conversion agreement, resulting in the acquisition by Cantor of an additional aggregate of approximately 5.7 million exchangeable limited partnership units that will be converted in the corporate conversion transaction as set forth in the corporate conversion agreement, as further discussed in the section titled “The Corporate Conversion Agreement—Certain Cantor Purchase Rights.” Therefore, following the corporate conversion, Cantor (including its general partner) is expected to own approximately 110 million shares of BGC Group Class B common stock, which is expected to represent approximately 75.6% of the total voting power of BGC Group common stock. Cantor’s voting power over BGC Group as of immediately following the corporate conversion will therefore be approximately 7.2 percentage points higher than its voting power over BGC Partners would be if Cantor had exchanged its exchangeable limited partnership interests in BGC Holdings for BGC Partners common stock absent the corporate conversion. This increase in percentage voting power could result in Cantor exercising control over BGC Group for a longer period of time than it would over BGC Partners absent the corporate conversion. Pursuant to the corporate conversion agreement, a portion of the shares of BGC Group Class B common stock issued to Cantor in the corporate conversion will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger.

Indemnification and Insurance

The parties to the corporate conversion agreement have agreed that, from and after the effective time, BGC Group will indemnify (subject to certain conditions and applicable law) any person who is now, or has been at any time prior to the effective time, an officer or director of BGC Partners or any of its subsidiaries or serving at the request of BGC Partners as an officer or director of or in any similar capacity with another entity in connection with any claim, demand, action, suit, proceeding, subpoena, litigation or investigation based directly or indirectly (in whole or in part) on, or arising directly or indirectly (in whole or in part) out of, the fact that such indemnified person is or was an officer or director of BGC Partners or any of its subsidiaries, or is or was serving at the request of BGC Partners as an officer or director of or in any similar capacity with another entity, whether pertaining to any matter arising before or after the effective time.

Additionally, the parties have agreed that Cantor will indemnify BGC Partners to the extent that BGC Partners incurs any income taxes as a result of (and that would not have been incurred but for) the mergers up to a maximum of $10,000,000.

 

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In addition, the corporate conversion agreement contains certain obligations related to the purchase of directors’ and officers’ liability insurance “tail” policies with respect to matters existing or occurring at or prior to the effective time for persons who are covered under BGC Partners existing policies. For additional information, please read the section titled “The Corporate Conversion Agreement—Covenants and Agreements—Indemnification and Insurance” beginning on page 85.

Quantification of Payments and Benefits to Company’s Named Executive Officers

Item 402(t) of the SEC’s Regulation S-K requires disclosure of information about the compensation that is payable or that may become payable to each named executive officer of BGC Partners that is based on, or otherwise relates to, the corporate conversion (the “Golden Parachute Compensation”). While, as noted above, BGC Partners’ named executive officers have interests in the corporate conversion transaction in their capacities as equityholders of BGC Partners and/or BGC Holdings, no named executive officer of BGC Partners is entitled to any Golden Parachute Compensation in connection with the corporate conversion transaction. For additional information on the Standing Policy for Mr. Lutnick and recent redemptions and exchanges for Messrs. Merkel and Lutnick, please read the sections titled “The Corporate Conversion—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion—Standing Policy for Mr. Lutnick and Recent Redemptions and Exchanges for Messrs. Merkel and Lutnick” on page 69 and “—Other Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion” beginning on page 70.

Board of Directors and Executive Officers of BGC Group Following the Corporate Conversion

We expect that the directors and executive officers of BGC Group following the corporate conversion will be the same as those of BGC Partners immediately prior to the corporate conversion (other than Martin Laguerre, who we do not expect to serve on the board of directors of BGC Group following the corporate conversion).

Listing of BGC Group Class A Common Stock; Delisting and Deregistration of BGC Partners Class A Common Shares

BGC Group expects to obtain approval to list the shares of BGC Group Class A common stock to be issued pursuant to the corporate conversion agreement on the NASDAQ Global Select Market, which approval is a condition to the closing of the corporate conversion. Assuming that such approval is sought and obtained, BGC Group expects the shares of BGC Group Class A common stock to be issued pursuant to the corporate conversion agreement to be listed on the NASDAQ Global Select Market under the symbol “BGC.”

No Dissenters’ or Appraisal Rights

BGC Partners stockholders do not have dissenters’ or appraisal rights under applicable law with respect to the mergers.

Accounting Treatment of the Corporate Conversion

For accounting purposes, the corporate conversion will be treated as an exchange of equity interests between entities under common control in accordance with ASC 805, Business Combinations, under U.S. GAAP. In connection with the corporate conversion, equity interests between BGC Holdings and BGC Partners will be exchanged, eliminating the Up-C structure, and forming a simplified Full C-Corporation structure under the newly formed BGC Group. Accordingly, the consolidated statements of financial position and results of operations of BGC Partners will be included in the consolidated financial statements of BGC Group on the same basis as currently presented, except will no longer reflect Net income/loss attributable to noncontrolling interest in subsidiaries related to BGC Holdings, and upon completion of the corporate conversion, Noncontrolling interest related to BGC Holdings will be reclassified to shareholders’ equity.

 

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THE CORPORATE CONVERSION AGREEMENT

This section describes the material terms of the corporate conversion agreement, which was executed on November 15, 2022 and amended as of March 29, 2023. The description of the corporate conversion agreement in this section and elsewhere in this consent solicitation statement/prospectus is qualified in its entirety by reference to the complete text of the corporate conversion agreement, a copy of which is attached as Annex A to this consent solicitation statement/prospectus and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the corporate conversion agreement that is important to you. You are encouraged to read the corporate conversion agreement carefully and in its entirety, because it is the legal document that governs the corporate conversion.

Explanatory Note Regarding the Corporate Conversion Agreement

The corporate conversion agreement is included to provide you with information regarding its terms. Neither the corporate conversion agreement nor the summary of its material terms included in this section is intended to provide any factual information about BGC Partners, BGC Holdings, BGC Group, Merger Sub 1, Merger Sub 2 or Holdings Merger Sub. Factual disclosures about BGC Partners, BGC Holdings, BGC Group, Merger Sub 1, Merger Sub 2 and Holdings Merger Sub contained in this consent solicitation statement/prospectus and/or in the public reports of BGC Partners filed with the SEC (as described in the section titled “Where You Can Find More Information” beginning on page 122) may supplement, update or modify the disclosures about BGC Partners, BGC Holdings, BGC Group, Merger Sub 1, Merger Sub 2 and Holdings Merger Sub contained in the corporate conversion agreement. The corporate conversion agreement contains representations and warranties and covenants of the parties customary for transactions of this nature. The representations and warranties contained in the corporate conversion agreement were made only for purposes of the corporate conversion agreement as of the specific dates therein; were made solely for the benefit of the parties to the corporate conversion agreement; may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties to the corporate conversion agreement instead of establishing these matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the corporate conversion agreement and should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of representations and warranties may change after the date of the corporate conversion agreement, which subsequent information may or may not be fully reflected in BGC Partners’ public disclosures. Accordingly, the representations and warranties in the corporate conversion agreement should not be relied on by any person as characterizations of the actual state of facts about BGC Partners, BGC Holdings, BGC Group, Merger Sub 1, Merger Sub 2 or Holdings Merger Sub at the time they were made or otherwise.

Structure of the Corporate Conversion

Under the terms of the corporate conversion agreement:

 

•

BGC Holdings will effectively reorganize from a Delaware limited partnership into a Delaware limited liability company, with Holdings Merger Sub surviving the Holdings Reorganization merger. In the Holdings Reorganization merger, each unit of BGC Holdings outstanding as of immediately prior to the Holdings Reorganization merger will be converted into a substantially equivalent equity interest in Holdings Merger Sub.

 

•

Thereafter, Merger Sub 1 will merge with and into BGC Partners, with BGC Partners surviving the Corporate merger as a wholly owned subsidiary of BGC Group. In the Corporate merger, each share of BGC Partners Class A common stock and each share of BGC Partners Class B common stock outstanding at the effective time of the Corporate merger will be converted into one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively.

 

 

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•

Concurrently with the Corporate merger, Merger Sub 2 will merge with and into Holdings Merger Sub, with Holdings Merger Sub surviving as a wholly owned subsidiary of BGC Group. In the Holdings merger:

 

•

each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is held by Cantor or its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into one share of BGC Group Class B common stock, subject to the terms and conditions of the corporate conversion agreement, provided that a portion of the shares of BGC Group Class B common stock issued to Cantor will exchange into BGC Group Class A common stock in the event that BGC Group does not issue at least $75,000,000 in BGC Group common stock in connection with certain acquisition transactions prior to the seventh anniversary of the closing of the Holdings merger;

 

•

each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is not held by Cantor or any of its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into one share of BGC Group Class A common stock; and

 

•

each non-exchangeable share of Holdings Merger Sub (which was issued in respect of each non-exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is outstanding at the effective time of the Holdings merger will, subject to certain limited exceptions, be converted into equity awards denominated in cash, restricted stock and/or RSUs of BGC Group, each as further set forth below:

BGC Group RSU Award Terms

Pursuant to the corporate conversion agreement, the following units will be converted into BGC Group RSU awards in the corporate conversion with the following terms:

 

Type of BGC Holdings Unit		Terms of BGC Group RSU Award
Grant Unit		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will convert and settle into BGC Group Class A common stock ratably over four years following the termination of employment of the holder of such BGC Group RSU award, subject to the holder’s compliance with post-termination obligations set forth in the applicable award agreement.
HD-Unit (Founding Partner Unit)		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will convert and settle into BGC Group Class A common stock ratably over four years following the termination of employment of the holder of such BGC Group RSU award, subject to the holder’s compliance with post-termination obligations set forth in the applicable award agreement.
HD-Unit (Working Partner Unit)		•  HD-Units that are Working Partner Units will be redeemed prior to the Holdings Merger into an amount of cash equal to the Capital Account associated with such HD-Units and, therefore, no such Units are expected to be outstanding at the effective time.
Vested REU/RPU		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will convert and settle into BGC Group Class A common stock ratably over four years following the termination of employment of the holder of such BGC Group RSU award, subject to the holder’s compliance with post-termination obligations set forth in the applicable award agreement.

 

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Type of BGC Holdings Unit		Terms of BGC Group RSU Award
Unvested REU/RPU		•  Unvested and will continue to vest on the original vesting schedule applicable to the unvested REU or RPU, as applicable.   •  To the extent that such BGC Group RSU award vests, then (1) it will have a dividend equivalent right when common dividends are paid, so long as the holder of such BGC Group RSU award is employed at the time of payment and (2) it will convert and settle into BGC Group Class A common stock ratably over four years following the termination of employment of the holder of such BGC Group RSU award, subject to the holder’s compliance with post-termination obligations set forth in the applicable award agreement.
PSU		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the effective time; provided that BGC Group may agree to a shorter vesting schedule based upon contractual arrangements or as approved by BGC Group management.
PSI/PSE		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the effective time; provided that BGC Group may agree to a shorter vesting schedule based upon contractual arrangements or as approved by BGC Group management.
NPSU-CV		•  Dividend equivalent right when common dividends are paid only to the extent the original NPSU-CV would have been distribution-earning (e.g., 20% per year over five years until 100% is achieved, so long as the holder of the NPSU-CV is employed and BGC Group and its affiliates generate at least $5 million in revenues for the quarter in which such payment is made), so long as the holder of the BGC Group RSU award is employed at the time of payment.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.
NPSU (other than NPSU-CV)		•  No dividend equivalent right.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.

 

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BGC Group RSU Tax Account Terms

Pursuant to the corporate conversion agreement, the following units will be converted into BGC Group RSU tax accounts in the corporate conversion with the following terms:

 

Type of BGC Holdings Unit		Terms of BGC Group RSU Tax Account
PPSU/PPSIs/PPSEs		•  Exchangeable Units: It is expected that these units will be redeemed by BGC Holdings immediately prior to the closing of the corporate conversion and settled in cash (generally paid to taxing authorities).   •  Non-exchangeable Units: BGC Group RSU tax account (paid in cash) with Preferred Return (as defined below), paid upon vesting provided that the holder remains employed at time of payment; vests subject to continued employment through the 10th anniversary of effective time.
PREU/PRPU		•  Exchangeable Units: It is expected that these units will be redeemed by BGC Holdings immediately prior to the closing of the corporate conversion and settled in cash (generally paid to taxing authorities).   •  Non-exchangeable Units: RSU tax account (paid in cash) with Preferred Return, paid upon vesting provided that the holder remains employed at time of payment:   •  If PREU/PRPU was fully vested as of the effective time, the vested BGC Group RSU tax account is settled for cash paid ratably over four years post-employment termination, subject to compliance with post-termination obligations.   •  If PREU/PRPU was not fully vested as of the effective time, such unit would receive the same treatment as vested PREU/PRPU described above if such unit would have vested at time of employment termination (and if not, such unit is forfeited).
NPPSU-CV		•  BGC Group RSU tax account (paid in cash), with Preferred Return only to the extent the original NPPSU-CV would have received a Preferred Return (e.g., 20% per year over five years until 100% is achieved, so long as the holder of the NPPSU-CV is employed and BGC Group and its affiliates obtain at least $5 million in revenues for the quarter in which such payment is made), vests subject to continued employment through the 10th anniversary of the effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.
NPPSU (other than NPPSU-CV)		•  BGC Group RSU tax account (paid in cash), no Preferred Return, paid upon vesting provided that the holder remains employed at time of payment; vests subject to continued employment through the 10th anniversary of effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.

 

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BGC Group RSA Terms

Pursuant to the corporate conversion agreement, the following units will be converted into awards of BGC Group restricted stock (“BGC Group RSAs”) in the corporate conversion with the following terms:

 

Type of BGC Holdings Unit		Terms of BGC Group Restricted Stock Award
LPU-NEW		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSA is employed at the time of payment.   •  Will convert and settle into BGC Group Class A common stock at the two-year anniversary of the effective time, subject to the holder’s continued service and other obligations set forth in the applicable award agreement.
LPU (other than LPU-NEW)		•  Dividend equivalent right when common dividends are paid, so long as the holder of the BGC Group RSA is employed at the time of payment.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the Effective Time; provided that BGC Group may agree to a shorter vesting schedule based upon contractual arrangements or as approved by BGC Group management.
NLPU-CV		•  Dividend equivalent right when common dividends are paid only to the extent the original NLPU-CV would have been distribution-earning (e.g., 20% per year over five years until 100% is achieved, so long as the holder of the NLPU-CV is employed and BGC Group and its affiliates generate at least $5 million in revenues for the quarter in which such payment is made), so long as the holder of the BGC Group RSA is employed at the time of payment.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the Effective Time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.
NLPU-NEW		•  No dividend equivalent right.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the second anniversary of the effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.
NLPU (other than NLPU-CV or NPLPU-NEW)		•  No dividend equivalent right.   •  Will vest and settle into BGC Group Class A common stock only if the holder remains employed through the 10th anniversary of the effective time and only if BGC Group generates at least $5 million in revenue for the quarter in which the vesting occurs.
PLPUs		•  Exchangeable Units: It is expected that these units will be redeemed by BGC Holdings immediately prior to the closing of the corporate conversion and settled in cash (generally paid to taxing authorities).   •  Non-exchangeable Units: BGC Group RSA with the same or similar contingencies as the underlying PLPU award and vesting terms and revenue contingencies as may be determined by management.
NPLPU		•  BGC Group RSA with the same or similar contingencies as the underlying NPLPU award and vesting terms and revenue contingencies as may be determined by management.

 

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Pursuant to the corporate conversion agreement, the following obligations and units will be treated as described below and as further set forth in the corporate conversion agreement:

Former Partner Obligations

 

Type of BGC Holdings Unit		Treatment in the Corporate Conversion
Obligations in respect of BGC Holdings Non-Preferred Units previously held by Terminated Partners		•  Potential obligation to deliver BGC Partners Class A common stock to terminated partners will be assumed by BGC Group and become a potential obligation to deliver an equivalent number of shares of BGC Group Class A common stock on the same terms and subject to the same conditions set forth in the underlying separation agreement with the terminated partner.
Obligations in respect of BGC Holdings Preferred Units previously held by Terminated Partners		•  Potential obligation to deliver cash to terminated partners will be assumed by BGC Group and become a potential obligation to deliver an equivalent amount of cash on the same terms and subject to the same conditions set forth in the underlying separation agreement with the terminated partner.

Other Units

 

Type of BGC Holdings Unit		Treatment in the Corporate Conversion
General Partnership Interest (Non-Participating Unit)		•  Remains outstanding. The general partnership interest is currently held by BGC GP, LLC, a wholly owned subsidiary of BGC Partners.
Special Voting Limited Partnership Interest (Non-Participating Unit)		•  Remains outstanding. The special voting limited partnership interest is currently held by a wholly owned subsidiary of BGC Partners.
NREUs (all are non-exchangeable)		•  It is expected that these units will be redeemed by BGC Holdings prior to the corporate conversion and, therefore, no conversion will be required.
APSUs		•  It is expected that non-exchangeable APSUs will be redeemed by BGC Holdings prior to the corporate conversion and, therefore, no conversion will be required.
AREUs & ARPUs		•  It is expected that non-exchangeable AREUs and ARPUs will be redeemed by BGC Holdings prior to the corporate conversion and, therefore, no conversion will be required.
APREUs		•  No units exist, and therefore no conversion is necessary.
NPREUs		•  No units exist, and therefore no conversion is necessary.
PPSU-H		•  No units exist, and therefore no conversion is necessary

 

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•

The “-C” and “-CV” and “-NEW” designations used for a number of units above are internal record-keeping designations used to delineate certain of their award attributes and are not separate unit types under the BGC Holdings limited partnership agreement.

 

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Unless explicit vesting conditions are set forth otherwise in the applicable BGC Group RSU Award or BGC Group RSA notification, it is a condition of vesting that, as of the applicable vesting date: (i) the participant is still employed by, or providing services to, BGC Group or any of its parents or subsidiaries as a current employee, director or independent contractor of BGC Group or such parent or subsidiary; (ii) the participant has not been notified, or given notice, of employment/service termination; and (iii) the participant has not breached any of his/her/its obligations to BGC Group or any of its parents or subsidiaries.

 

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Vesting may be accelerated at the discretion of BGC Group management (subject, in the case of executive officers, to approval by the Compensation Committee of the BGC Group board of directors) for units with vesting terms other than where management discretion is not permitted under the award structure (e.g., LPU-NEW units), or awards may set forth shorter vesting terms or other contingencies, such as:

 

•

to the extent a BGC Group RSU Award or BGC Group RSA holder has underlying contractual terms that vary from the 10-year cliff vest, those contractual terms shall be replicated as determined appropriate by management; and

 

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with respect to any BGC Group RSU Award, BGC Group RSA or BGC Group RSU tax account issued in conversion of a “-C” unit, management may shorten the vesting schedule of such BGC Group RSU Awards or BGC Group RSU tax account, likely to between 18 months and 10 years, in accordance with its practices for “-C” units. The proceeds from the monetization of such BGC Group RSU Awards, BGC Group RSA and BGC Group RSU tax account generally will repay existing loans.

 

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The BGC Group RSU Awards, BGC Group RSA and BGC Group RSU tax account as converted from “N” Units may include additional conditions, such that they only vest if, as of the vesting date: (i) BGC Group, inclusive of its parents and affiliates, earns, in aggregate, at least $5,000,000 in gross revenues in the calendar quarter in which the applicable BGC Group RSU Awards, BGC Group RSAs or BGC Group RSU tax accounts would otherwise vest; and (ii) the holder of the BGC Group RSU Award, BGC Group RSA or BGC Group RSU tax account is still performing substantial services exclusively for an affiliated entity of BGC Group, has not given notice of termination of such holder’s services and has not breached any agreement with BGC Group or an affiliated entity of BGC Group.

 

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“Preferred Return” above refers to the lesser of the two-year treasury bond rate or 2.75% annually, as calculated on the determination amount applicable to the award, as may be adjusted or otherwise determined by management from time to time.

 

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Any units to which a U.S. taxpaying holder currently has any legally binding right, which Unit redemption price is greater than zero, that are not fully vested/exchangeable and settled in fully vested BGC Group Class A common stock at the Effective Time, may be subject to limitations on change in time of vesting/settlement/payment/release of shares under IRC Section 409A.

Immediately following the corporate conversion, BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the ticker symbol “BGC.”

Closing

Unless the corporate conversion agreement is terminated, as described in the section titled “—Termination” beginning on page 88, the closing will occur on the second business day after the satisfaction or waiver (to the extent permitted by law) of the closing conditions described in the section titled “—Conditions to the Corporate Conversion” beginning on page 86 (other than those conditions that by their nature are to be satisfied at the

 

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closing but subject to the satisfaction or, to the extent permitted by applicable law, waiver of all conditions as of the closing), or at such other time and date as agreed to in writing by the parties to the corporate conversion agreement.

Effective Time

Subject to the terms and conditions of the corporate conversion agreement, on the closing date, the parties will file (1) a certificate of merger relating to the Holdings Reorganization merger as contemplated by the Delaware Limited Liability Company Act (the “DLLCA”) and the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”), (2) a certificate of merger relating to the Corporate merger as contemplated by the DGCL and (3) a certificate of merger relating to the Holdings merger as contemplated by the DLLCA, in each case with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the DGCL, the DLLCA and the DRULPA (the “effective time”). The Holdings Reorganization merger will become effective immediately prior to the Corporate merger and the Holdings merger, which will become effective concurrently at the effective time.

Consideration Received by BGC Partners Stockholders

At the effective time, by virtue of the Corporate merger, each share of BGC Partners Class A common stock and each share of BGC Partners Class B common stock outstanding at the effective time of the Corporate merger will be converted into the right to receive one share of BGC Group Class A common stock and one share of BGC Group Class B common stock, respectively, with such differences as described under the section titled “Comparison of Rights of BGC Partners Stockholders and BGC Group Stockholders.”

Consideration Received by BGC Holdings Limited Partners

At the effective time, by virtue of the Holdings merger:

 

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each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is held by Cantor (including its general partner) and is outstanding at the effective time of the Holdings merger will be converted into the right to receive one share of BGC Group Class B common stock;

 

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each exchangeable share of Holdings Merger Sub (which was issued in respect of each exchangeable limited partnership unit of BGC Holdings in the Holdings Reorganization merger) that is not held by Cantor or one of its subsidiaries and is outstanding at the effective time of the Holdings merger will be converted into the right to receive one share of BGC Group Class A common stock; and

 

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each non-exchangeable share of Holdings Merger Sub (which was issued in respect of limited partnership units of BGC Holdings in the Holdings Reorganization Share) that is outstanding at the effective time of the Holdings merger will, subject to certain limited exceptions, be converted into the right to receive an equity award denominated in cash and/or equity of BGC Group, each as further set forth in the corporate conversion agreement.

No Fractional Shares of BGC Group

BGC Holdings limited partners will not receive any fractional shares of BGC Group common stock in the Holdings merger. Any such fractional share interest will not entitle the holder of such interest to any rights of a stockholder of BGC Group. Each BGC Holdings limited partner that otherwise would have been entitled to receive a fraction of a share of BGC Group common stock will receive, in lieu thereof, cash, without interest, and subject to applicable withholding taxes, in an amount equal to such fractional amount multiplied by the volume weighted average of the trading prices of BGC Partners Class A common stock on the NASDAQ Global Select Market on each of the five consecutive trading days ending on (and including) the trading day that is three trading days prior to the date of the effective time, rounded down to the nearest penny.

 

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Treatment of Outstanding BGC Partners Awards in the Corporate Conversion

At the effective time, BGC Group will assume the BGC Partners Equity Plan, which will be amended and restated immediately prior to the effective time as the BGC Group Equity Plan. The BGC Group Equity Plan will have 600 million shares of BGC Group Class A common stock reserved for awards under the plan subject to adjustment as set forth in the BGC Group Equity Plan which share reserve is in addition to the shares for awards assumed or substituted in connection with the corporate conversion. All equity-based and cash incentive awards (including awards under the BGC Partners Equity Plan issued in connection with BGC Holdings limited partnership units awarded under Participation Plan) that are then outstanding under the BGC Partners Equity Plan and the Participation Plan, will be converted into or substituted with awards under the BGC Group Equity Plan, with terms and conditions as set forth in the corporate conversion agreement. See the section titled “The BGC Group Long-Term Incentive Plan.” It is also expected that, at the effective time, BGC Group will assume the BGC Partners Incentive Bonus Plan, as appropriately amended and restated, and renamed the “BGC Group, Inc. Incentive Bonus Compensation Plan.” There will no longer be any need for the Participation Plan following the corporate conversion.

Certain Cantor Purchase Rights

In light of the fact that the Founding Partners (as defined in the BGC Holdings limited partnership agreement) will be “Terminated” under the BGC Holdings limited partnership agreement once such Founding Partners cease to be partners of BGC Holdings for any reason, and that the Founding Partners will cease to be partners of BGC Holdings as a result of the Holdings Reorganization merger and the Holdings merger, the corporate conversion agreement provides that, unless otherwise consented by Cantor, BGC Holdings GP will take such actions prior to the closing as is necessary so that the Founding Partners shall be treated as “Terminated” under the BGC Holdings limited partnership agreement, so that Cantor may exercise its purchase rights pursuant to Section 12.02(a)(i)(B) and Section 8.08 of the BGC Holdings limited partnership agreement prior to the closing as a result of such Termination and with respect to all such Terminated Founding Partners. Unless otherwise consented to by BGC Holdings GP and Cantor, in connection with such Termination, BGC Holdings will pay to such Founding Partners, as consideration for the redemption of the non-exchangeable Founding Partner units held by such Founding Partners contemplated by Section 12.02(a)(i)(A) of the BGC Holdings limited partnership agreement, a number of non-exchangeable HD-Units (as defined in the BGC Holdings limited partnership agreement) equal to the number of non-exchangeable Founding Partner units that are so redeemed; provided, however, that the foregoing will not be deemed to change the amount that BGC Holdings is required to pay to redeem or purchase Founding Partner units for purposes of Section 12.02(a)(i)(B) and Section  8.08 of the BGC Holdings limited partnership agreement.

Conversion of Shares; Exchange of Certificates; No Fractional Shares

Prior to or substantially concurrently with the effective time, BGC Group will deposit with a nationally recognized bank or trust company to act as exchange agent designated by BGC Partners, which bank or trust company shall be reasonably satisfactory to BGC Holdings, uncertificated, book-entry shares or certificates representing the number of shares of BGC Group Class A common stock and BGC Group Class B common stock sufficient to deliver the aggregate stock consideration payable to holders of BGC Partners common stock and BGC Holdings limited partnership units in the mergers. BGC Group will make available to the exchange agent cash sufficient to pay the cash in lieu of any fraction of a share of BGC Group common stock to which any holder of BGC Holdings limited partnership units converted in the Holdings merger will be entitled as described in the section titled “—Consideration Received by BGC Holdings Limited Partners—No Fractional Shares of BGC Group” beginning on page 80 and any dividends and other distributions with respect to unexchanged BGC Holdings limited partnership units as described in the section titled “—Distributions with Respect to Unexchanged Units” beginning on page 82. No interest will be paid or will accrue on any cash payable pursuant to the corporate conversion agreement provisions described in the section titled “—Consideration Received by BGC Holdings Limited Partners—No Fractional Shares of BGC Group” beginning on page 80 or the section titled “—Distributions with Respect to Unexchanged Units” beginning on page 82.

 

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Conversion and Exchange of BGC Holdings Limited Partnership Units

As promptly as practicable after the effective time, the exchange agent will send to each holder of record of BGC Holdings limited partnership units whose BGC Holdings limited partnership units were converted into shares of BGC Group common stock (1) a letter of transmittal and (2) instructions for use in effecting the surrender of certificates that immediately prior to the effective time represented BGC Holdings limited partnership units (“BGC Holdings certificates”) or non-certificated BGC Holdings limited partnership units held by book entry.

Upon surrender of BGC Holdings certificates or uncertificated BGC Holdings limited partnership units to the exchange agent together with a duly completed and validly executed letter of transmittal and such other documents as may reasonably be required by the exchange agent, the exchange agent will, as promptly as practicable, (1) credit in the stock ledger and other appropriate books and records of BGC Group the number of shares of the applicable class of BGC Group common stock into which the BGC Holdings limited partnership units represented by such BGC Holdings certificates or uncertificated BGC Holdings limited partnership units have been converted in the Holdings merger, and (2) pay and deliver a check in the amount of the cash in lieu of fractional shares of BGC Group common stock together with any dividends or other distributions to which such BGC Holdings certificates or uncertificated BGC Holdings limited partnership units become entitled in accordance with the corporate conversion agreement provisions described in the section titled “—Consideration Received by BGC Holdings Limited Partners—No Fractional Shares of BGC Group” beginning on page 80 and the section titled “—Distributions with Respect to Unexchanged Units” beginning on page 82.

In the event of a transfer of ownership of BGC Holdings limited partnership units that is not registered in the transfer records of BGC Holdings, BGC Group may cause the exchange agent to credit or pay, as applicable, shares of BGC Group common stock or cash to the transferee in such a transfer only if the BGC Holdings certificates or uncertificated BGC Holdings limited partnership units formerly representing such BGC Holdings limited partnership units is presented to the exchange agent, accompanied by all documents required to evidence and effect such transfer and to evidence to the satisfaction of the exchange agent that any applicable stock transfer or similar taxes have been paid or are not applicable.

Until surrendered as contemplated by the corporate conversion agreement provisions described in this section, each BGC Holdings certificates and uncertificated BGC Holdings limited partnership units will after the effective time represent, upon such surrender, the shares of BGC Group common stock into which the BGC Holdings limited partnership units represented by such BGC Holdings certificates or uncertificated BGC Holdings limited partnership units have been converted in the Holdings merger, together with any cash in lieu of fractional shares of BGC Group common stock and any dividends or other distributions to which such BGC Holdings certificates or uncertificated BGC Holdings limited partnership units become entitled in accordance with the corporate conversion agreement provisions described in the section titled “—Consideration Received by BGC Holdings Limited Partners—No Fractional Shares of BGC Group” beginning on page 80 and the section titled “—Distributions with Respect to Unexchanged Units” beginning on page 82.

Distributions with Respect to Unexchanged Units

No dividends or other distributions declared or made with respect to shares of BGC Group common stock with a record date after the effective time will be paid to the holder of any unsurrendered BGC Holdings limited partnership unit until such holder has surrendered such BGC Holdings limited partnership unit in accordance with the corporate conversion agreement provisions described in the section titled “—Conversion and Exchange of BGC Holdings Limited Partnership Units” beginning on page 82. Subject to escheat, tax or other applicable law, following surrender of any such BGC Holdings limited partnership unit, such holder will be entitled to receive any such dividends or other distributions, without interest, which prior to such surrender had become payable with respect to the BGC Group common stock represented by such BGC Holdings limited partnership unit. Such holder will be entitled to vote after the effective time at any meeting of BGC Group stockholders with

 

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a record date at or after the effective time the number of whole shares of BGC Group common stock represented by such BGC Holdings limited partnership unit, regardless of whether such holder has exchanged its BGC Holdings limited partnership unit.

Conversion of BGC Partners Common Stock

Each certificate representing shares of BGC Partners common stock prior to the effective time (a “BGC Partners certificate”) will, from and after the effective time and as a result of the Corporate merger, represent an equivalent number of shares of the applicable class of BGC Group common stock. At the effective time, BGC Group will cause the exchange agent to credit in the stock ledger and other appropriate books and records of BGC Group an equivalent number of shares of the applicable class of BGC Group common stock for any uncertificated shares of BGC Partners common stock; provided, however, that if an exchange of BGC Partners certificates for new certificates is required by law, or is desired at any time by BGC Group, in its sole discretion, BGC Group will arrange for such exchange on a one-for-one-share basis. From and after the effective time, the former holders of BGC Partners common stock, which will have been converted into BGC Group common stock at the effective time, will be entitled to receive any dividends and other distributions that may be made with respect to such shares of BGC Group common stock.

Representations and Warranties

Each of BGC Partners and BGC Holdings has made representations and warranties in the corporate conversion agreement regarding, among other things:

 

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corporate organization and power;

 

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qualification to do business;

 

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capitalization and related matters;

 

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absence of conflicts or violations;

 

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consents and approvals;

 

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absence of material misstatements or omissions in the information supplied to be supplied for inclusion in this consent solicitation statement/prospectus;

 

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tax matters;

 

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absence of brokers or similar intermediaries;

 

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opinion of financial advisor;

 

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state takeover statutes; and

 

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accuracy of information supplied for inclusion in this consent solicitation statement/prospectus.

The corporate conversion agreement also contains certain representations and warranties of BGC Partners with respect to its wholly owned subsidiaries BGC Group, Merger Sub 1 and Merger Sub 2, including with respect to corporate organization, qualification to do business, absence of conflicts or violations, authorization and enforceability of the corporate conversion agreement and capitalization.

Certain of the representations and warranties made by the parties are qualified as to “materiality” or “material adverse effect.” For purposes of the corporate conversion agreement, “material adverse effect” means any event, change, effect or development that, individually or in the aggregate, would or would reasonably be expected to prevent the ability of such Person to consummate the transactions contemplated by the corporate conversion agreement.

 

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Covenants and Agreements

Conduct of Business by BGC Holdings

BGC Holdings has agreed that, during the period from November 15, 2022 to the earlier of the termination of the corporate conversion agreement in accordance with its terms and the effective time (except as otherwise specifically contemplated by the terms of the corporate conversion agreement or as may be required by law), unless BGC Holdings GP (on behalf of BGC Holdings) otherwise consents in writing (such consent not to be unreasonably withheld, conditioned or delayed), BGC Holdings will use commercially reasonable efforts to conduct its business in all material respects in the ordinary course of business.

Conduct of Business by BGC Partners

BGC Partners has agreed that, during the period from November 15, 2022 to the earlier of the termination of the corporate conversion agreement in accordance with its terms and the effective time (except as otherwise specifically contemplated by the terms of the corporate conversion agreement or as may be required by law), unless the Independent Joint Committee (on behalf of BGC Partners) otherwise consents in writing (such consent not to be unreasonably withheld, conditioned or delayed), BGC Partners will use commercially reasonable efforts to conduct its business in all material respects in the ordinary course of business.

Written Consent

BGC Partners has agreed to include the recommendation of the BGC Partners board of directors that the BGC Partners stockholders approve the adoption of the corporate conversion agreement in this consent solicitation statement/prospectus and the registration statement of which this consent solicitation statement/prospectus forms a part, subject to the fiduciary duties of the BGC Partners board of directors under applicable law; provided that, notwithstanding anything to the contrary in the corporate conversion agreement, prior to obtaining the requisite approval of the BGC Partners stockholders, (i) nothing in the corporate conversion agreement will prohibit BGC Partners or the BGC Partners board of directors, following the approval of the Independent Joint Committee, from (A) disclosing to the stockholders of BGC Partners a position contemplated by Rules 14d-9 and 14e-2(a) under the Exchange Act or issuing a “stop, look and listen” statement to the stockholders of BGC Partners pursuant to Rule 14d-9(f) under the Exchange Act or (B) making any disclosure to the stockholders of BGC Partners and (ii) the BGC Partners board of directors, following the approval of the Independent Joint Committee, will be permitted to change or withdraw the recommendation of the BGC Partners board of directors that the BGC Partners stockholders approve the adoption of the corporate conversion agreement, but, in the case of clause (i)(B) or (ii), solely to the extent any such disclosure, change or withdrawal is required for the BGC Partners board of directors to carry out its fiduciary duties under applicable law; provided, further, however, that in no event shall any such disclosure, change or withdrawal (I) affect the validity and enforceability of the corporate conversion agreement, including the parties’ obligations to consummate the transactions contemplated by the corporate conversion agreement, including the mergers or (II) cause any state takeover law to be applicable to the mergers or the other transactions contemplated by the corporate conversion agreement.

Pursuant to the support agreement, Cantor has agreed to execute and deliver to BGC Partners a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act, with the Cantor written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this consent solicitation statement/prospectus to the stockholders of BGC Partners. Because Cantor is the holder of a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to approve the corporate conversion agreement

 

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proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals regardless of the delivery or withholding of consent by any other BGC Partners stockholder. Therefore, BGC Partners expects to receive a number of consents sufficient to constitute the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

Reasonable Best Efforts

BGC Partners, BGC Group, Merger Sub 1 and Merger Sub 2, on the one hand, and each of BGC Holdings and BGC Holdings GP, on the other hand, have agreed to cooperate with the other and use, and to cause their respective subsidiaries to use, its reasonable best efforts to (i) take, or cause to be taken, all actions, and do, or cause to be done, all things, necessary, proper or advisable to cause the conditions to the closing to be satisfied as promptly as practicable (and in any event no later than the Termination Date), and to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by the corporate conversion agreement, including preparing and filing as promptly as practicable all documentation to effect all necessary filings, notifications, notices, petitions, statements, registrations, submissions of information, applications and other documents (including any required or recommended filings under applicable regulatory laws), (ii) obtain promptly all approvals, consents, clearances, expirations or terminations of waiting periods, registrations, permits, authorizations and other confirmations from any governmental entity or third party necessary, proper or advisable to consummate the transactions contemplated by the corporate conversion agreement and (iii) defend any proceedings challenging the corporate conversion agreement or the consummation of the transactions contemplated by the corporate conversion agreement.

Notwithstanding anything to the contrary contained in the corporate conversion agreement, none of BGC Partners, BGC Group, Merger Sub 1, Merger Sub 2 or their respective subsidiaries will be required to, and none of BGC Holdings, BGC Holdings GP and their respective subsidiaries will, without the prior written consent of BGC Partners, take any action, or commit to take any action, or agree to any condition or limitation, in each case contemplated by this section that is not conditioned on the consummation of the corporate conversion or that would result in, or would be reasonably likely to result in, individually or in the aggregate, a material adverse effect on BGC Holdings, BGC Partners and their respective subsidiaries, taken as a whole, after giving effect to the corporate conversion.

The parties are not aware of any material governmental approvals or actions that are required for completion of the corporate conversion. It is presently contemplated that if any such additional governmental approvals or actions are required, those approvals or actions will be sought.

Indemnification and Insurance

The corporate conversion agreement requires, from and after the effective time, BGC Group to indemnify, and provide advancement of expenses to, to the fullest extent permitted by law, any person who is now, or has been at any time prior to the effective time, (1) an officer or director of BGC Partners or any of its subsidiaries (other than BGC Holdings and its subsidiaries) or (2) serving at the request of BGC Partners as an officer or director of or in any similar capacity with another corporation, joint venture or other enterprise or general partner of any partnership or a trustee of any trust, which we refer to as an indemnified person, in connection with any claim, demand, action, suit, proceeding, subpoena or investigation based directly or indirectly (in whole or in part) on, or arising directly or indirectly (in whole or in part) out of, the fact that such indemnified person is or was an officer or director of BGC Partners or any of its subsidiaries, or is or was serving at the request of BGC Partners as an officer or director of or in any similar capacity with another corporation, joint venture or other enterprise or general partner of any partnership or a trustee of any trust, whether pertaining to any matter arising before or after the effective time.

 

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Pursuant to the corporate conversion agreement, Cantor will indemnify BGC Partners to the extent that BGC Partners incurs any income taxes as a result of (and that would not have been incurred but for) the mergers up to a limit of $10,000,000.

Board of Directors and Executive Officers of BGC Group Following the Corporate Conversion

We expect that the directors and executive officers of BGC Group following the corporate conversion will be the same as those of BGC Partners immediately prior to the corporate conversion (other than Martin Laguerre, who we do not expect to serve on the board of directors of BGC Group following the corporate conversion).

Potential Cantor Class B Exchange After Seven Years

If BGC Group does not issue shares of BGC Group common stock with an aggregate value of at least $75,000,000 (with the value of each issuance calculated based on the closing market price of BGC Group common stock on the date of issuance), after the effective time and on or prior to the seventh anniversary of the effective time, in connection with mergers, acquisitions and business combinations (including pursuant to equity grants to employees in connection therewith) undertaken by BGC Group or any of its subsidiaries, then Cantor will promptly convert a number of shares of BGC Group Class B common stock equal to the lesser of (i) the Specified Share Number (as defined below) of shares of BGC Group Class B common stock and (ii) the excess of the aggregate amount of shares of BGC Group Class B common stock held by Cantor or any of its subsidiaries as of such time over the Existing Maximum Class B Amount (as defined below), into shares of BGC Group Class A common stock on a one-for-one basis.

“Specified Share Number” means (i) the number of shares of BGC Group Class B common stock issued to Cantor (including its general partner) in the Holdings merger pursuant to the corporate conversion agreement that is in excess of the Existing Class B Amount less (b) the aggregate number of shares of BGC Group Class B common stock, if any, sold or transferred by Cantor or any of its subsidiaries to a third party and converted into shares of BGC Group Class A common stock after the effective time and on or prior to the seventh anniversary of the effective time.

“Existing Maximum Class B Amount” means 23.6 million shares of BGC Partners Class B common stock.

The Specified Share Number and the Existing Maximum Class B Amount will be equitably adjusted to reflect any stock split, stock dividend, reverse stock split or similar recapitalization with respect to the BGC Group common stock that occurs after the effective time and on or prior to the seventh anniversary of the effective time.

Conditions to the Corporate Conversion

Each party’s obligation to effect the corporate conversion is subject to the satisfaction or (to the extent permitted by law) waiver by BGC Holdings and BGC Partners (acting at the direction of the Independent Joint Committee) at or prior to the effective time of the following conditions:

 

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BGC Partners Stockholder Approval. BGC Partners having obtained the affirmative vote of, or the execution and delivery to BGC Partners of a written consent by, the holders of shares of BGC Partners common stock representing at least a majority of the aggregate voting power of the outstanding shares of BGC Partners common stock entitled to vote thereon in favor of the adoption of the corporate conversion agreement and approval of the transactions contemplated by the corporate conversion agreement.

 

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Absence of Legal Restraint. No law having been adopted or promulgated, or being in effect, and no temporary, preliminary or permanent injunction or order issued by one or more specified governmental entities of competent jurisdiction being in effect, in each case having the effect of making any merger illegal or otherwise prohibiting consummation of any merger.

 

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NASDAQ Listing. The shares of BGC Group Class A common stock to be issued in the mergers having been approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance.

 

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Effectiveness of Registration Statement. The registration statement on Form S-4 of which this consent solicitation statement/prospectus forms a part having been declared effective by the SEC under the Securities Act, and no stop order suspending the effectiveness of the registration statement having been issued by the SEC and no proceedings for that purpose having been initiated or threatened by the SEC.

The obligations of BGC Partners, BGC Group, Merger Sub 1 and Merger Sub 2 to effect the corporate conversion are subject to the satisfaction, or waiver by BGC Partners (acting at the direction of the Independent Joint Committee), at or prior to the effective time of the following additional conditions:

 

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Representations and Warranties.    The representations and warranties of BGC Holdings and BGC Holdings GP contained in the corporate conversion agreement shall be true and correct, generally as of the date on which the corporate conversion agreement was entered into and as of the closing date, subject to the materiality standards provided in the corporate conversion agreement (and the receipt by BGC Partners of a certificate of an authorized officer of BGC Holdings GP to such effect, dated the closing date).

 

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Covenants. Each of BGC Holdings and BGC Holdings GP having performed in all material respects and complied in all material respects with all agreements and covenants required to be performed or complied with by it under the corporate conversion agreement at or prior to the effective time (and the receipt by BGC Partners of a certificate of an authorized officer of BGC Holdings GP to such effect, dated the closing date).

 

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Tax Opinion. BGC Partners having received an opinion from tax counsel, reasonably satisfactory to the Independent Joint Committee, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, (i) the Corporate merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and/or (ii) the Corporate merger and the Holdings merger, taken together, will be treated as a transaction described in Section 351 of the Code.

The obligations of BGC Holdings and Holdings Merger Sub to effect the corporate conversion are subject to the satisfaction, or waiver by BGC Holdings, at or prior to the effective time of the following additional conditions:

 

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Representations and Warranties. The representations and warranties of BGC Partners, BGC Group, Merger Sub 1 and Merger Sub 2 contained in the corporate conversion agreement shall be true and correct, generally as of the date on which the corporate conversion agreement was entered into and as of the closing date, subject to the materiality standards provided in the corporate conversion agreement (and the receipt by BGC Holdings of a certificate of an authorized officer of BGC Partners to such effect, dated the closing date).

 

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Covenants. Each of BGC Partners, BGC Group, Merger Sub 1 and Merger Sub 2 having performed in all material respects and complied in all material respects with all agreements and covenants required to be performed or complied with by it under the corporate conversion agreement at or prior to the effective time (and the receipt by BGC Holdings of a certificate of an authorized officer of BGC Partners to such effect, dated the closing date).

The obligations of Cantor to effect the corporate conversion are subject to the satisfaction, or waiver by Cantor, at or prior to the effective time of the following additional conditions:

 

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Tax Opinion. Cantor having received an opinion from tax counsel, reasonably satisfactory to Cantor, to the effect that, on the basis of the facts, representations and assumptions set forth or referred to in such opinion, the Corporate merger and the Holdings merger, taken together, will be treated as a transaction described in Section 351 of the Code.

 

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Termination

The corporate conversion agreement may be terminated and the corporate conversion abandoned at any time prior to the effective time (except as provided below, whether before or after the adoption of the corporate conversion agreement and approval of the transactions contemplated by the corporate conversion agreement by BGC Partners stockholders) by mutual written consent of BGC Partners and BGC Holdings or as follows:

 

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By either BGC Partners or BGC Holdings:

 

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if the effective time has not occurred on or before the Termination Date of September 30, 2023 (provided that the Termination Date will automatically be extended to December 31, 2023 if, on September 30, 2023, any of the conditions relating to (i) the adoption of the corporate conversion agreement by the requisite approval of BGC Partners stockholders, (ii) the absence of any governmental injunction or order prohibiting the consummation of any merger or the other transactions contemplated by the corporate conversion agreement, (iii) the BGC Group Class A common stock issuable in connection with the mergers having been approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance or (iv) the effectiveness of the registration statement of which this consent solicitation statement/prospectus forms a part have not been satisfied), provided that this right to terminate the corporate conversion agreement will not be available to any party whose material breach of any obligation under the corporate conversion agreement has been the primary cause of the failure of the effective time to occur on or before the Termination Date; or

 

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if any legal restraint permanently restraining, enjoining or otherwise prohibiting or making illegal any merger has become final and non-appealable, provided that this right to terminate the corporate conversion agreement will not be available to any party whose material breach of any obligation under the corporate conversion agreement has been the primary cause of the imposition of such legal restraint or the failure of such legal restraint to be resisted, resolved or lifted.

 

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By BGC Holdings, if BGC Partners, BGC Group, Merger Sub 1 or Merger Sub 2 has breached or failed to perform any representation, warranty, covenant or agreement contained in the corporate conversion agreement, or if any representation or warranty of BGC Partners, BGC Group, Merger Sub 1 or Merger Sub 2 has become untrue, in either case such that the applicable closing condition would not be satisfied, and (1) such breach is not reasonably capable of being cured prior to the Termination Date or (2) if such breach is reasonably capable of being cured prior to the Termination Date, such breach has not been cured prior to the earlier of (a) 30 days following written notice of such breach from BGC Holdings to BGC Partners and (b) the Termination Date (provided that this right to terminate the corporate conversion agreement will not be available to BGC Holdings if it is then in material breach of any of its representations, warranties, covenants or agreements contained in the corporate conversion agreement or if any representation or warranty of BGC Holdings or BGC Holdings GP has become untrue, in either case so as to result in the applicable closing condition not being satisfied).

 

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By BGC Partners, if BGC Holdings or BGC Holdings GP has breached or failed to perform any representation, warranty, covenant or agreement contained in the corporate conversion agreement, or if any representation or warranty of BGC Holdings or BGC Holdings GP has become untrue, in either case such that the applicable closing condition would not be satisfied, and (1) such breach is not reasonably capable of being cured prior to the Termination Date or (2) if such breach is reasonably capable of being cured prior to the Termination Date, such breach has not been cured prior to the earlier of (a) 30 days following written notice of such breach from BGC Partners to BGC Holdings and (b) the Termination Date (provided that this right to terminate the corporate conversion agreement will not be available to BGC Partners if BGC Partners, BGC Group, Merger Sub 1 or Merger Sub 2 is then in material breach of any of its representations, warranties, covenants or agreements contained in the corporate conversion agreement or if any representation or warranty of BGC Partners, BGC Group, Merger Sub 1 or Merger Sub 2 has become untrue, in either case so as to result in the applicable closing condition not being satisfied).

 

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By Cantor or BGC Partners, if certain tax legislation is proposed or enacted that, if implemented, could materially increase the taxes directly or indirectly borne by the partners of Cantor or BGC Holdings or the stockholders of BGC Partners (including, without limitation, as a result of an increase in the corporate income tax rate or as a result of an increase in the dividend tax rate) if the mergers were completed as compared to if the mergers were not completed.

 

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By BGC Partners, if Cantor fails to execute and deliver the support agreement within one business day following the execution of the corporate conversion agreement.

Effect of Termination

In the event of termination of the corporate conversion agreement, there will be no liability or obligation on the part of any party to the other party under the corporate conversion agreement, except that certain provisions of the corporate conversion agreement will survive the termination, including the corporate conversion agreement provisions described in the section titled “—Expenses” beginning on page 89 and this section; provided that termination of the corporate conversion agreement will not relieve any party from any liability or damages (including with respect to breaches of the corporate conversion agreement pursuant to which the reverse termination fee becomes payable) incurred or suffered by a party to the extent such liability or damages were the result of or arise out of fraud or any intentional breach of any covenant or agreement in the corporate conversion agreement occurring prior to the termination (in which case the aggrieved party will be entitled to all rights and remedies available at law or in equity).

Expenses

All fees and expenses incurred in connection with the corporate conversion will be borne by the respective party incurring such fees and expenses.

Amendment and Waiver

Amendment

The corporate conversion agreement may be amended by BGC Holdings and BGC Partners, at any time before or after approval of the matters presented in connection with the corporate conversion by BGC Partners stockholders, but, (i) after any such approval, no amendment will be made which by law requires further approval by such stockholders, without approval by such stockholders, (ii) no amendment to the corporate conversion agreement will be made without approval of the Independent Joint Committee and (iii) any amendment to certain provisions of the corporate conversion agreement will require the prior written consent of Cantor.

Waiver

Any agreement on the part of the parties to the corporate conversion agreement to any waiver will be valid only if set forth in a written instrument signed on behalf of such party (including, in the case of BGC Partners, the Independent Joint Committee). The failure or delay of any party to the corporate conversion agreement to assert any of its rights under the corporate conversion agreement or otherwise will not constitute a waiver of those rights, nor will any single or partial exercise thereof preclude any other or further exercise of any other right under the corporate conversion agreement.

 

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Specific Performance and Third-Party Beneficiaries

Specific Performance

The parties agreed in the corporate conversion agreement that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of the corporate conversion agreement were not performed, or were threatened not to be performed, in accordance with their specific terms or were otherwise breached and that any defense in any action for specific performance that a remedy at law would be adequate is waived. The parties agreed that they would be entitled to an injunction or injunctions to prevent breaches or threatened breaches of the corporate conversion agreement and to enforce specifically the terms and provisions of the corporate conversion agreement.

Third-Party Beneficiaries

The corporate conversion agreement is not intended to confer, and does not confer, any rights or remedies under or by reason of the corporate conversion agreement on any persons other than the parties and their respective successors and permitted assigns, other than as described in the section titled “—Covenants and Agreements—Indemnification and Insurance” beginning on page 85.

 

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THE SUPPORT AGREEMENT

This section describes the material terms of the support agreement, which was executed on November 15, 2022. The description of the support agreement in this section and elsewhere in this consent solicitation statement/prospectus is qualified in its entirety by reference to the complete text of the support agreement, a copy of which is attached as Annex B to this consent solicitation statement/prospectus and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the support agreement that is important to you. You are encouraged to read the support agreement carefully and in its entirety.

Immediately following the execution of the corporate conversion agreement, Cantor entered into the support agreement under which it agreed to execute and deliver to BGC Partners a written consent with respect to all of the outstanding shares of BGC Partners common stock held by Cantor, representing approximately 57.7% of the voting power of BGC Partners common stock as of the record date, approving the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals within two business days following the date that the registration statement of which this consent solicitation statement/prospectus forms a part is declared effective under the Securities Act, with the Cantor written consent to be effective on the 20th business day following the date on which BGC Partners has commenced mailing this consent solicitation statement/prospectus to the stockholders of BGC Partners. Cantor also agreed that from November 15, 2022 until the earlier of (i) the effective time and (ii) the valid termination of the corporate conversion agreement in accordance with its terms, Cantor will not transfer (including entering into any hedging or derivative transactions) any shares of BGC Partners common stock if such transfer would prohibit or prevent Cantor from delivering the Cantor written consent. Because Cantor is the holder of a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals as of the record date, the delivery of the Cantor written consent will constitute receipt by BGC Partners of the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals regardless of the delivery or withholding of consent by any other BGC Partners stockholder. Therefore, BGC Partners expects to receive a number of consents sufficient to constitute the requisite BGC Partners stockholder approval to approve the corporate conversion agreement proposal, the BGC Group Equity Plan proposal and the BGC Group certificate of incorporation proposals.

 

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THE BGC GROUP, INC. LONG TERM INCENTIVE PLAN

In connection with the corporate conversion, BGC Group will assume and adopt the Eighth Amended and Restated BGC Partners Equity Plan, as amended and restated as the BGC Group, Inc. Equity Plan, effective at the closing of the corporate conversion and subject to the approval of the BGC Partners stockholders as further described in this consent solicitation statement/prospectus. BGC Group is assuming and adopting the BGC Partners Equity Plan to effectuate the assumption of or substitution for certain outstanding awards in the corporate conversion, as well as to grant equity-based and cash compensation following the corporate conversion to advance the interests of BGC Group and its stockholders by providing a means to attract, retain, motivate and reward directors, officers, employees, consultants and other service providers of BGC Group. The BGC Partners board of directors and the Compensation Committee of BGC Partners approved the BGC Group Equity Plan and recommend that BGC Partners stockholders approve the BGC Group Equity Plan proposal. Prior to the closing of the corporate conversion, it is expected that the BGC Group board of directors and the sole stockholder of BGC Group will approve the BGC Group Equity Plan, effective at the closing of the corporate conversion.

Share Reserves

The BGC Partners Equity Plan

Current Share Reserve as of May 19, 2023

The BGC Partners Equity Plan was initially adopted in 1999 as the “eSpeed, Inc. 1999 Long Term Incentive Plan,” and was most recently amended and restated as the “Eighth Amended and Restated BGC Partners, Inc. Long Term Incentive Plan” in 2021, with the approval of the stockholders of BGC Partners, to increase the number of shares of BGC Partners Class A common stock issuable from inception of the Plan to 500 million shares. As of May 19, 2023, an aggregate of 393,871,188 shares of BGC Partners Class A common stock have been issued pursuant to awards granted under the BGC Partners Equity Plan since its inception, including shares issued in connection with the exchange or settlement of limited partnership units awarded under the BGC Holdings, L.P. Participation Plan (the “Participation Plan”) and compensatory founding partner units. In the aggregate, as of such date, 15,764,118 shares were subject to outstanding awards under the BGC Partners Equity Plan, and there was an aggregate of 77,625,443 outstanding non-exchangeable limited partnership units that could be granted exchange rights under the BGC Partners Equity Plan. As of May 19, 2023, absent the corporate conversion, the BGC Partners Equity Plan would allow for the grant of future awards relating to 90,364,694 additional shares.

As of May 19, 2023, approximately 5,485 individuals were eligible to receive awards under the BGC Partners Equity Plan, including our four non-employee directors and four executive officers.

Following the corporate conversion, the Participation Plan will be terminated as it is intended that the BGC Group Equity Plan will be the sole vehicle for granting equity-based incentive compensation. Accordingly, after the corporate conversion, BGC Group will no longer have available to it partnership units in BGC Holdings to compensate its employees and other service providers, and all of its equity-based compensation awards will be granted under the BGC Group Equity Plan, including those awarded in payment of bonuses under the BGC Group, Inc. Incentive Bonus Compensation Plan.

The BGC Group Equity Plan

The BGC Group Equity Plan will have an initial share reserve of 600 million shares of BGC Group Class A common stock, which will be subject to adjustment as set forth in the BGC Group Equity Plan and described below. This share reserve is inclusive of shares reserved in respect of equity-based awards (other than exchange rights) granted prior to the corporate conversion under the BGC Partners Equity Plan and non-exchangeable partnership units that are to be assumed or replaced by substitute awards under the BGC Group Equity Plan in the corporate conversion in accordance with the corporate conversion agreement. The aggregate of 108,238,220 shares of BGC

 

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Group Class A common stock relating to the assumed and substitute equity-based awards described below will be issued out of the 600 million share BGC Group Equity Plan reserve, leaving a total of 491,761,780 shares available for the grant of future equity-based awards under the BGC Group Equity Plan.

 

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As of May 19, 2023, there were 12,675,266 restricted stock units (“RSUs”) outstanding under the BGC Partners Equity Plan. Any such RSUs outstanding immediately prior to the closing of the corporate conversion will become assumed RSUs, with the same terms and conditions as were applicable to the BGC Partners RSUs, under the BGC Group Equity Plan in the corporate conversion. Based on the BGC Partners RSUs outstanding as of May 19, 2023, an aggregate of 12,675,266 shares of BGC Group Class A common stock would be reserved for issuance under the BGC Group Equity Plan pursuant to these assumed BGC Group RSUs.

 

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As of May 19, 2023, there were 8,285,375 restricted stock awards (“RSAs”) outstanding under the BGC Partners Equity Plan. Any such RSAs outstanding immediately prior to the closing of the corporate conversion will become assumed RSAs, with the same terms and conditions as were applicable to the BGC Partners RSAs, under the BGC Group Equity Plan in the corporate conversion. Based on the BGC Partners RSAs outstanding as of May 19, 2023, an aggregate of 8,285,375 shares of BGC Group Class A common stock would be reserved for issuance under the BGC Group Equity Plan pursuant to these assumed BGC Group RSAs.

 

•

As of May 19, 2023, there were 48,548,193 non-exchangeable partnership units outstanding not held by certain UK persons that were eligible to be made exchangeable, but had not been granted exchange rights for shares of BGC Partners Class A common stock under the BGC Partners Equity Plan. Any such awards outstanding immediately prior to the closing of the corporate conversion will be replaced by substitute RSUs under the BGC Group Equity Plan in the corporate conversion. The terms of such substitute BGC Group RSUs are described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSU Award Terms” on page 74. Based on the non-exchangeable partnership units not held by certain UK persons outstanding as of May 19, 2023, an aggregate of 48,548,193 shares of BGC Group Class A common stock would be reserved for issuance under the BGC Group Equity Plan pursuant to these substitute BGC Group RSUs.

 

•

As of May 19, 2023, there were 29,077,250 non-exchangeable partnership units outstanding held by certain UK persons that were eligible to be made exchangeable, but had not been granted exchange rights for shares of BGC Partners Class A common stock under the BGC Partners Equity Plan. Any such awards outstanding immediately prior to the closing of the corporate conversion will be replaced by substitute RSAs under the BGC Group Equity Plan in the corporate conversion, along with any associated preferred partnership units. The terms of such substitute BGC Group RSAs are described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSA Terms” on page 77. Based on such non-exchangeable partnership units held by such UK persons outstanding as of May 19, 2023, and including substitute RSAs that will be granted in satisfaction of associated preferred partnership units, an aggregate of 38,729,386 shares of BGC Group Class A common stock would be reserved for issuance under the BGC Group Equity Plan pursuant to these substitute BGC Group RSAs.

 

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As of May 19, 2023, there were 27,441,884 preferred partnership units outstanding (exclusive of those described in the bullet immediately above), which were awarded to holders of, or contemporaneously with, grants of other partnership unit awards (other than exchangeable partnership unit awards), and were generally associated with the payment of taxes related to such other awards. Any such preferred partnership unit awards outstanding immediately prior to the closing of the corporate conversion will be replaced by substitute cash tax account awards under the BGC Group Equity Plan in the corporate conversion. Such substitute cash tax account awards can only be exchanged for a specified amount of cash to be used for the payment of taxes in connection with other BGC Group Equity Plan awards. The terms of such BGC Group cash tax account substitute awards are described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSU Tax Account

 

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Terms” on page 76. Such substitute cash tax account awards are not valued by reference to BGC Group Class A common stock and will not be counted against the share reserve of the BGC Group Equity Plan.

BGC Group Equity Plan Benefits

As of May 19, 2023, certain of the following executive officers, the executive officers as a group, the non-executive directors as a group, and the non-executive officer employees and service providers as a group of BGC Partners held outstanding awards (other than exchangeable rights) under the BGC Partners Equity Plan or non-exchangeable partnership unit awards under the Participation Plan that will be assumed or replaced by substitute awards under the BGC Group Equity Plan in the corporate conversion. As noted above, any shares that may be issued with respect to these assumed and substitute awards denominated below in shares of BGC Group Class A common stock will reduce the number of shares available for issuance pursuant to future equity-based awards under the BGC Group Equity Plan.

 

Name and Position		Assumed RSUs (BGC Group Class A common stock)(2)				Assumed RSAs (BGC Group Class A common stock)(2)				Substitute RSUs (BGC Group Class A common stock)(3)				Substitute RSAs (BGC Group Class A common stock)(4)				Substitute Tax Account Awards (Cash) ($)(5)
Mr. Lutnick, Chief Executive Officer and Chairman(1)			—				—				—				—			$	—
Mr. Merkel, Executive Vice President and General Counsel(1)			—				—				—				—			$	—
Mr. Windeatt, Chief Operating Officer			—				—				930,547				392,077			$	1,292,575
Mr. Hauf, Chief Financial Officer			—				—				43,900				—			$	156,249
Executive Group			—				—				974,447				392,077			$	1,448,824
Non-Executive Director Group			78,548				—				—				—			$	—
Non-Executive Officer Employee and Service Provider Group			12,596,718				8,285,375				47,573,746				38,337,309			$	124,053,409
Total			12,675,266				8,285,375				48,548,193				38,729,386			$	125,502,233

 

(1)

As a result of the May 18, 2023 redemption and exchange transactions described under “The Corporate Conversion—Interests of Directors and Executive Officers of BGC Partners in the Corporate Conversion—Standing Policy for Mr. Lutnick and Recent Redemptions and Exchanges for Messrs. Merkel and Lutnick” on page 66, Messrs. Lutnick and Merkel no longer held any outstanding partnership units or any awards under the BGC Partners Equity Plan as of May 19, 2023.

 

(2)	Assumed RSUs and RSAs consist of BGC Group Equity Plan awards relating to currently outstanding BGC Partners RSUs and RSAs, as described above.

 

(3)	Substitute RSUs consist of BGC Group Equity Plan awards described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSU Award Terms.”

 

(4)

Substitute RSAs consist of BGC Group Equity Plan awards that will have the terms described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSA Terms,” including an aggregate of 9,652,136 RSAs granted in satisfaction of associated preferred partnership units at BGC Partners, calculated for the purposes of this table using an assumed stock price of $4.64, the closing price of a share of BGC Partners Class A common stock on May 19, 2023.

 

(5)

Substitute cash tax account awards consist of BGC Group Equity Plan awards that will have the terms described under “The Corporate Conversion Agreement—Structure of the Corporate Conversion—BGC Group RSU Tax Account Terms.” Substitute cash tax account awards in the table above do not include the value of any substitute RSAs granted in satisfaction of BGC Partners preferred partnership units associated

 

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with BGC Partners RSAs as discussed in note (4), or the replacement of any preferred partnership unit awards related to exchangeable partnership units, which preferred partnership unit awards will be redeemed and settled in cash in the corporate conversion.

Description of the BGC Group Equity Plan

The BGC Group Equity Plan is attached as Annex D to this consent solicitation statement/prospectus, and the following description of the BGC Group Equity Plan is only intended to be a summary of its key provisions. Such summary is qualified in its entirety by reference to the BGC Group Equity Plan, which is incorporated by reference herein in its entirety.

Purpose. The purpose of the BGC Group Equity Plan is to provide a means for BGC Group to attract, retain, motivate and reward directors, officers, employees, consultants and other service providers.

Types of Awards. Under the BGC Group Equity Plan, individual awards may take the form of: (i) stock options, including incentive stock options, which we refer to as “ISOs”; (ii) stock appreciation rights (“SARs”); (iii) restricted stock, consisting of shares of our Class A common stock that are subject to restrictions on transferability and other possible restrictions, including forfeiture based upon the failure to satisfy employment-related or other restrictions; (iv) deferred stock, representing the right to receive shares of our stock in the future, such as RSUs; (v) bonus stock and awards in lieu of cash compensation, including in payment of bonuses under any incentive plan of BGC Partners or any successor plan; (vi) dividend equivalents, consisting of a right to receive cash, other awards or other property equal in value to dividends paid with respect to a specified number of shares of our stock; (vii) other stock-based awards, consisting of awards denominated or payable in, or the value of which is based in whole or in part upon the market or book value of, BGC Group Class A common stock; or (viii) cash awards, whether or not the value of which is based, in whole or in part, by reference to the market or book value of BGC Group Class A common stock. The grant price at which shares of BGC Group Class A common stock may be acquired pursuant to the exercise of stock options and SARs under the BGC Group Equity Plan may not be less than 100% of the fair market value of the shares of stock covered by such grant on the date of grant, measured at the closing market price of BGC Group Class A common stock on such date.

Dividend Equivalents/Payments; Limits on Transfer. Dividend equivalents may be paid, distributed or accrued in connection with any award issued under the BGC Group Equity Plan, including RSUs, whether or not vested, and under the BGC Group Equity Plan, an RSA agreement may provide that a participant waives any right to dividends. Awards granted under the BGC Group Equity Plan are generally not assignable or transferable, except by the laws of descent and distribution, unless permitted by the Compensation Committee of BGC Group or its designee.

Administration. The BGC Group Equity Plan generally will be administered by the Compensation Committee of the BGC Group board of directors, except that the BGC Group board of directors will perform the committee’s functions under the BGC Group Equity Plan for purposes of grants of awards to members of the committee and, to the extent permitted under applicable law and regulation, may perform any other function of the committee as well. The Compensation Committee of BGC Group will have the authority, among other things, to: (i) select the directors, officers, employees, consultants and other service providers entitled to be granted awards under the BGC Group Equity Plan; (ii) determine the types of awards, or combinations thereof, and whether such awards are to operate on a tandem basis or in conjunction with other awards; (iii) determine the number of shares of BGC Group Class A common stock or units or rights covered by an award; and (iv) determine the other terms and conditions of any award, including, without limitation, any restrictions or conditions, any schedule for lapse of restrictions or conditions relating to transferability, any vesting schedules or the acceleration thereof and any forfeiture provisions or waivers thereof, including forfeiture of awards, or of the cash, shares, other awards or other property received in payment or settlement of awards, in the event of termination of employment or service of the participant or his or her violation of BGC Group’s policies, restrictions, or other requirements. The authority of the Compensation Committee of BGC Group with respect to

 

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awards to employees who are not directors or executive officers may be delegated to BGC Group’s officers or managers, including its chief executive officer. This delegation may be revoked at any time.

Eligibility. Directors, officers and employees of the BGC Group, any parent or any subsidiary, and persons who provide consulting or other services to BGC Group, any parent or any subsidiary are eligible to be granted awards under the BGC Group Equity Plan. In addition, persons who have been offered employment by, or agreed to become a director of, BGC Group, any parent or any subsidiary, and persons employed by an entity that the Compensation Committee of BGC Group reasonably expects to become a subsidiary of BGC Group, are eligible to be granted an award under the BGC Group Equity Plan.

Other Terms. The flexible terms of the BGC Group Equity Plan are intended to, among other things, permit the Compensation Committee of BGC Group to impose performance conditions with respect to any award, thereby requiring forfeiture of all or part of an award if performance objectives are not met, or linking the grant, exercisability or settlement of an award to the achievement of performance conditions. The performance goals may be based on one or more of the following measures or such other measures as the committee may determine: (i) pre-tax or after-tax net income; (ii) pre-tax or after-tax operating income; (iii) total or gross revenue or similar items; (iv) profit, earnings or other margins; (v) stock price, dividends and/or total stockholder return; (vi) EBITDA measures; (vii) cash flow(s); (viii) market share; (ix) pre-tax or after-tax earnings per share; (x) pre-tax or after-tax operating earnings per share; (xi) expenses; (xii) return on investment or equity; (xiii) environmental, social, sustainability and governance or similar criteria; or (xiv) strategic business criteria, consisting of one or more objectives based upon meeting specified revenue, market penetration or geographic business expansion goals, cost targets, goals relating to acquisitions or dispositions or divestitures or any combination thereof or similar objectives or criteria as determined by the Committee.

Share Reserve. As noted above, the maximum aggregate number of shares of BGC Group Class A common stock that may be delivered or cash settled pursuant to the exercise or settlement of awards granted under the BGC Group Equity Plan on or after the closing of the corporate conversion is proposed to be 600 million shares of BGC Group Class A common stock, which share reserve is inclusive of the shares of BGC Group Class A common stock issuable with respect to the assumed or substitute awards granted under the BGC Group Equity Plan in the corporate conversion, or 491,761,780 shares exclusive of such awards, subject in each case to adjustment as described below. Any cash awards that are valued by reference to a share of BGC Group Class A common stock will be counted against the share reserve under the BGC Group Equity Plan. While BGC Group Class A common stock is not currently publicly traded, each share of BGC Partners Class A common stock outstanding immediately prior to the corporate conversion will be converted into the right to receive one share of BGC Group Class A common stock, and the closing price of BGC Partners Class A common stock on May 19, 2023 on the Nasdaq Global Select Market was $4.64 per share.

Adjustments. In the event that the Compensation Committee of BGC Group board of directors determines that any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or exchange of shares of BGC Group Class A common stock or other securities, stock dividend or other special, large and non-recurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event affects BGC Group’s shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of participants under the BGC Group Equity Plan, then the Compensation Committee of BGC Group shall, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares of stock reserved and available for awards under the BGC Group Equity Plan; (ii) the number and kind of shares of outstanding restricted stock or other outstanding awards in connection with which shares have been issued; (iii) the number and kind of shares that may be issued in respect of other outstanding awards; and (iv) the exercise price, grant price or purchase price relating to any award (or, if deemed appropriate, the Compensation Committee of BGC Group may cancel the outstanding awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such awards, as determined by the Compensation Committee of BGC Group in its sole discretion). In addition, the Compensation Committee of BGC Group will make appropriate adjustments in

 

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the terms and conditions of, and the criteria included in, awards (including, without limitation, cancellation of unexercised or outstanding awards, with or without the payment of any consideration therefor or substitution of awards using stock of a successor or other entity) in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence and events constituting a change in control) affecting BGC Group or its affiliates or the financial statements of BGC Group or its affiliates, or in response to changes in applicable law, regulation, or accounting principles.

Change in Control. Except as otherwise provided in any award agreement, consistent with the terms of the BGC Partners Equity Plan under which the assumed awards were originally granted, the conditions and restrictions relating to the continued performance of services and/or the achievement of performance objectives with respect to the exercisability or full enjoyment of an assumed award will accelerate or otherwise lapse immediately prior to a “change in control” of BGC Group (as defined in the BGC Group Plan). With respect to all other awards, including substitute awards, except as otherwise provided in any award agreement, or as provided by the BGC Group board of directors, such conditions and restrictions will not accelerate or otherwise lapse at such time.

No Repricing. As to any award granted as a stock option or SAR, the BGC Group Equity Plan includes a restriction providing that the Compensation Committee of BGC Group may not, without prior stockholder approval to the extent required under applicable law, regulation, or exchange rule, subsequently reduce the exercise price or grant price relating to such award, or take such other actions as may be considered a “repricing” of such award under U.S. GAAP. Adjustments to the exercise or grant price or number of shares of Class A common stock of BGC Group subject to an option or SAR to reflect the effects of a stock split or other extraordinary corporate transaction will not constitute a “repricing.”

Loans in Connection with Awards. BGC Group may not, in connection with any award, extend, maintain, renew, guarantee or arrange for credit in the form of a personal loan to any participant who is a director or executive officer of BGC Group. With the consent of the Compensation Committee of BGC Group board of directors, and subject at all times to, and only to the extent, if any, permitted under, applicable law and regulation and other binding obligations or provisions applicable to BGC Group, BGC Group may extend, maintain, renew, guarantee or arrange for credit in the form of a personal loan to a participant who is not a director or executive officer of BGC Group in connection with any award, including, without limitation, the payment by such participant of any or all federal, state or local income or other taxes due in connection with any award.

Amendment; Termination. The BGC Group Equity Plan is non-exclusive, and the BGC Group Equity Plan creates no limitations on the BGC Group board of directors or the Compensation Committee of BGC Group from adopting other compensatory arrangements. The BGC Group Equity Plan may be amended, altered, suspended, discontinued or terminated by the BGC Group board of directors without stockholder approval unless such approval is required by law or regulation, including, without limitation, under the applicable rules of any stock exchange. The Compensation Committee of BGC Group may waive any conditions or rights, or amend, alter, suspend, discontinue or terminate any award, under the BGC Group Equity Plan. No such change to the BGC Group Equity Plan or any award may, without the participant’s consent, materially impair the rights of the participant under an outstanding award, except as provided in the BGC Group Equity Plan or applicable award agreement.

Material Federal Income Tax Consequences

The following is a brief description of the federal income tax consequences generally arising with respect to awards that may be granted under the BGC Group Equity Plan. This discussion is intended for the information of BGC Partners stockholders considering whether to consent to the BGC Group Equity Plan proposal and not as tax guidance to individuals who may participate in the BGC Group Equity Plan. The summary does not address the effects of other federal taxes or taxes imposed under state, local or foreign laws.

 

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The grant of a stock option or SAR will create no tax consequences for the participant or BGC Group. A participant will not have taxable income upon exercising an ISO (except that the alternative minimum tax may apply), and BGC Group will receive no tax deduction at that time. Upon exercising an option other than an ISO, the participant must generally recognize ordinary income equal to the difference between the exercise price and the fair market value of the freely transferable and non-forfeitable stock received. In each case, BGC Group will generally be entitled to a tax deduction equal to the amount recognized as ordinary income by the participant.

A participant’s disposition of stock acquired upon the exercise of a stock option or SAR generally will result in capital gain or loss measured by the difference between the sale price and the participant’s tax basis in such stock (or the exercise price of the option in the case of stock acquired by exercise of an ISO and held for the applicable ISO holding periods). Generally, there will be no tax consequences to BGC Group in connection with a disposition of stock acquired upon the exercise of an option or other award, except that BGC Group will generally be entitled to a tax deduction (and the participant will recognize ordinary taxable income) if stock acquired upon exercise of an ISO is disposed of before the applicable ISO holding periods have been satisfied.

With respect to RSUs, the participant will not recognize taxable income at the time of grant of the RSUs, and BGC Group will not be entitled to a tax deduction at such time. When the participant receives cash or shares upon the settlement of vested RSUs, the participant generally must recognize ordinary income equal to the cash or fair market value of any stock delivered and BGC Group will be entitled to a corresponding deduction.

With respect to awards granted under the BGC Group Equity Plan that may be settled either in stock or other property that is either not restricted as to transferability or not subject to a substantial risk of forfeiture, the participant generally must recognize ordinary income equal to the fair market value of stock or other property received. BGC Group will generally be entitled to a tax deduction for the same amount. With respect to awards involving stock or other property that is restricted as to transferability and subject to a substantial risk of forfeiture, the participant generally must recognize ordinary income equal to the fair market value of the stock or other property received at the first time the stock or other property becomes transferable or not subject to a substantial risk of forfeiture, whichever occurs earlier. BGC Group will generally be entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant. A participant may elect to be taxed at the time of receipt of the stock or other property rather than upon the lapse of restrictions on transferability or substantial risk of forfeiture, but if the participant subsequently forfeits such stock or property, the participant would not be entitled to any tax deduction, including a capital loss, for the value of the stock or property on which the participant previously paid tax. Such election must be made and filed with the Internal Revenue Service within 30 days after the receipt of the stock or other property.

Section 162(m) of the Code denies an income tax deduction to an employer for certain compensation in excess of $1,000,000 per year paid by a publicly traded corporation to certain “covered employees” as defined in Section 162(m) of the Code. This may result in all or a portion of the awards granted under the BGC Group Equity Plan to “covered employees” failing to be deductible by BGC Group for federal income tax purposes.

Under Section 409A of the Code, an award under the BGC Group Equity Plan may be taxable to the participant at 20 percentage points above ordinary federal income tax rates at the time the award becomes vested, plus interest and penalties, even if that is prior to the delivery of cash or stock in settlement of the award, if the award constitutes “deferred compensation” under Section 409A of the Code and the requirements of Section 409A of the Code are not satisfied.

The BGC Group Equity Plan provides that BGC Group has the right to require participants under the BGC Group Equity Plan to pay it an amount necessary for us to satisfy our federal, state, local and foreign tax withholding obligations with respect to such awards. BGC Group may withhold from other amounts payable to such individual an amount necessary to satisfy these obligations. Unless the Compensation Committee of BGC Group board of directors or its designee determines otherwise, a participant may satisfy this withholding obligation by having shares acquired pursuant to the award withheld, or by transferring to BGC Group previously acquired shares of BGC Group Class A common stock.

 

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Equity Compensation Plan Information as of December 31, 2022

The table below provides information, as of December 31, 2022, regarding the shares of BGC Partners Class A common stock available for issuance under the BGC Partners Equity Plan. The following table does not reflect the potential approval of the BGC Group Equity Plan proposal or the assumed or substitute awards granted under the BGC Group Equity Plan in the corporate conversion. As of such date, BGC Group did not maintain any equity compensation plans.

 

		Number of securities to be issued upon exercise of outstanding restricted stock units,  options, warrants and rights (a)				Weighted-average exercise price of outstanding options, warrants and rights (b)				Number of securities remaining available for future issuance under equity compensation  plans (excluding securities reflected in column (a)) (c)
Equity Plan (approved by security holders)			13,828,831			$	4.06				128,009,534
Equity compensation plans not approved by security holders			—				—				—
Total			13,828,831			$	4.06				128,009,534

CONSENT REQUIRED FOR APPROVAL

The approval of the BGC Group Equity Plan proposal requires the affirmative consent of holders of at least a majority of the aggregate voting power of all outstanding shares of BGC Partners common stock entitled to approve such matter.

RECOMMENDATION OF THE BGC PARTNERS BOARD OF DIRECTORS

The BGC Partners board of directors, upon the unanimous recommendation of the Independent Joint Committee, including the Compensation Committee of BGC Partners, recommends that BGC Partners stockholders approve the BGC Group Equity Plan proposal.

 

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UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOR BGC GROUP

BGC Partners, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Information

On November 15, 2022, BGC Partners, Inc., a Delaware corporation (the “Company” or “BGC”), and BGC Holdings, L.P., a Delaware limited partnership (“BGC Holdings”), along with certain other affiliated entities, entered into a Corporate Conversion Agreement, which was amended as of March 29, 2023 (the “Corporate Conversion Agreement”), in order to reorganize and simplify the organizational structure of the BGC entities (the “Corporate Conversion”). Upon completion of the Corporate Conversion, the stockholders of BGC and the limited partners of BGC Holdings will participate in the economics of the BGC businesses through the same publicly traded corporate entity, BGC Group, Inc., a Delaware corporation (“BGC Group”).

Under the existing structure, the Company and BGC Holdings – which is currently a consolidated subsidiary of the Company for accounting purposes – currently hold, directly or indirectly and on a combined basis, 100% of the limited partnership interests in BGC Partners, L.P. and BGC Global Holdings, L.P. (together, the “BGC Opcos”), which are the two operating partnerships of the BGC entities. The limited partners of BGC Holdings, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC Holdings, and the stockholders of BGC, in their capacities as such, currently participate in the economics of the BGC Opcos indirectly through BGC. This structure is sometimes referred to as an Umbrella Partnership/C-Corporation (or “Up-C structure”).

When the Corporate Conversion is completed, the limited partners of BGC Holdings will cease participating in the economics of the BGC Opcos indirectly through BGC Holdings and instead will participate in the economics of the BGC Opcos indirectly through BGC Group. The stockholders of the Company will also participate in the economics of the BGC Opcos indirectly through BGC Group. BGC Group will have Class A common stock and Class B common stock with terms that are substantially similar to the existing BGC Class A common stock and Class B common stock, respectively, and the BGC Group Class A common stock is expected to be listed on the NASDAQ Global Select Market under the symbol “BGC”. The Corporate Conversion will, therefore, have the effect of transforming the organizational structure of the BGC entities from an Up-C structure to a simplified “Full C-Corporation” structure.

The Corporate Conversion is being effected pursuant to the terms of the Corporate Conversion Agreement by and among the Company, BGC Holdings, BGC Group, BGC GP, LLC, general partner of BGC Holdings, BGC Partners II, Inc., a wholly owned subsidiary of BGC Group, BGC Partners II, LLC, a wholly owned subsidiary of BGC Group, BGC Holdings Merger Sub, LLC, a wholly owned subsidiary of BGC Holdings, and, solely for the purposes of certain provisions therein, Cantor Fitzgerald, L.P. (“Cantor”). The Corporate Conversion Agreement has been approved by the Board of Directors of the Company, at the recommendation of the independent Audit Committee and the independent Compensation Committee of the Board of Directors of the Company, sitting jointly (the “Independent Joint Committee”). The Independent Joint Committee has been advised by independent financial and legal advisors selected by the Independent Joint Committee.

Following the execution of the Corporate Conversion Agreement, Cantor entered into a Support Agreement with the Company (the “Support Agreement”), pursuant to which, among other things, and subject to the terms and conditions of the Support Agreement, Cantor agreed to deliver to the Company a written consent approving and adopting the Corporate Conversion Agreement and the transactions contemplated thereby (the “Corporate Conversion Transactions”) within two business days following the date on which BGC Group’s Registration Statement on Form S-4 filed in connection with the Corporate Conversion Transactions is declared effective by the U.S. Securities and Exchange Commission (the “SEC”), with such consent to be effective on the 20th business day following the date on which the Company has commenced mailing of the related consent solicitation statement/prospectus to the Company’s stockholders. The Support Agreement terminates upon certain events, including the termination of the Corporate Conversion Agreement in accordance with its terms.

 

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The following unaudited pro forma condensed consolidated financial information is presented in accordance with the rules specified by Article 11 of Regulation S-X promulgated by the SEC and has been prepared subject to the assumptions and adjustments as described in the notes thereto. Specifically, the unaudited pro forma condensed consolidated financial information set forth below reflects the effects of the Corporate Conversion on (i) BGC’s statement of financial condition as of March 31, 2023, as if the Corporate Conversion had occurred on that date, and (ii) BGC’s statements of operations for the three months ended March 31, 2023 and the year ended December 31, 2022, as if the Corporate Conversion had occurred on January 1, 2022. Management believes that the assumptions used and adjustments made are reasonable under the circumstances and given the information available.

The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not necessarily indicative of the financial condition or results of operations of the Company that would have occurred if the Corporate Conversion had occurred on the dates indicated, nor is it indicative of the future financial condition or results of operations of the Company. The unaudited pro forma condensed consolidated financial information does not reflect the potential effects of the reduction in operational complexity due to the Corporate Conversion.

The unaudited pro forma condensed consolidated financial information should be read in conjunction with:

 

•

The accompanying notes to the unaudited pro forma condensed consolidated financial statements;

 

•

BGC’s unaudited condensed consolidated financial statements included in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2023;

 

•

BGC’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022; and

 

•

The risks described under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in this consent solicitation statement/prospectus and under “Special Note on Forward-Looking Information” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and any updates to those risks or new risks contained in the Company’s subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC.

Capitalized terms used and not defined in BGC’s unaudited pro forma condensed consolidated statement of financial condition as of March 31, 2023 and the accompanying notes thereto, and in BGC’s unaudited pro forma condensed consolidated statement of operations for the three months ended March 31, 2023 and the accompanying notes thereto, have the meanings ascribed to them in BGC’s Quarterly Report on Form 10-Q for the period ended March 31, 2023 filed with the SEC. Capitalized terms used and not defined in BGC’s unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 and the accompanying notes thereto have the meanings ascribed to them in BGC’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

 

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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

As of March 31, 2023

(in thousands, except per share data)

(unaudited)

 

		BGC Partners, Inc. Historical (a)				Adjustments (b)								BGC Partners, Inc. Pro Forma
Assets
Cash and cash equivalents		$	493,496			$	11,539				(1)			$	505,035
Cash segregated under regulatory requirements			16,424				—								16,424
Financial instruments owned, at fair value			41,302				—								41,302
Receivables from broker-dealers, clearing organizations, customers and related broker-dealers			1,852,062				—								1,852,062
Accrued commissions and other receivables, net			330,544				—								330,544
Loans, forgivable loans and other receivables from employees and partners, net			352,719				—								352,719
Fixed assets, net			181,059				—								181,059
Investments			38,810				—								38,810
Goodwill			502,017				—								502,017
Other intangible assets, net			204,553				—								204,553
Receivables from related parties			4,135				—								4,135
Other assets			467,150				7,407				(2)(7)				474,557
Total assets		$	4,484,271			$	18,946							$	4,503,217
Liabilities, Redeemable Partnership Interest, and Equity
Short-term borrowings		$	1,968			$	—							$	1,968
Accrued compensation			176,629				—								176,629
Payables to broker-dealers, clearing organizations, customers and related broker-dealers			1,675,926				—								1,675,926
Payables to related parties			2,918				—								2,918
Accounts payable, accrued and other liabilities			688,801				27,994				(3)(4)(7)(8)(9)				716,795
Notes payable and other borrowings			1,121,588				—								1,121,588
Total liabilities			3,667,830				27,994								3,695,824
Redeemable partnership interest			15,423				(15,423	)			(5)				—
Equity
Stockholders’ equity:
Class A common stock, par value $0.01 per share			4,878				108				(4)(7)				4,986
Class B common stock, par value $0.01 per share			459				640				(1)(6)				1,099
Additional paid-in capital			2,604,259				113,225				(1)(4)(5)(6)(7)				2,717,484
Treasury stock, at cost			(715,081	)			—								(715,081	)
Retained earnings (deficit)			(1,122,827	)			(44,553	)			(2)(3)(7)(8)(9)				(1,167,380	)
Accumulated other comprehensive income (loss)			(43,522	)			—								(43,522	)
Total stockholders’ equity			728,166				69,420								797,586
Noncontrolling interest in subsidiaries			72,852				(63,045	)			(6)				9,807
Total equity			801,018				6,375								807,393
Total liabilities, redeemable partnership interest, and equity		$	4,484,271			$	18,946							$	4,503,217

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

 

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PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2023

(in thousands, except per share data)

(unaudited)

 

		BGC Partners, Inc. Historical (c)				Adjustments (d)						BGC Partners, Inc. Pro Forma
Revenues:
Commissions		$	377,288			$	—					$	377,288
Principal transactions			114,929				—						114,929
Fees from related parties			3,957				—						3,957
Data, software and post-trade			27,122				—						27,122
Interest and dividend income			5,315				—						5,315
Other revenues			4,256				—						4,256
Total revenues			532,867				—						532,867
Expenses:
Compensation and employee benefits			267,214				—						267,214
Equity-based compensation and allocations of net income to limited partnership units and FPUs			81,373				(1,709	)		(1)			79,664
Total compensation and employee benefits			348,587				(1,709	)					346,878
Occupancy and equipment			41,165				—						41,165
Fees to related parties			8,440				—						8,440
Professional and consulting fees			15,701				—						15,701
Communications			27,939				—						27,939
Selling and promotion			14,616				—						14,616
Commissions and floor brokerage			15,265				—						15,265
Interest expense			15,742				—						15,742
Other expenses			12,508				—						12,508
Total expenses			499,963				(1,709	)					498,254
Other income (losses), net:
Gains (losses) on equity method investments			2,062				—						2,062
Other income (loss)			(1,735	)			—						(1,735	)
Total other income (losses), net			327				—						327
Income (loss) from operations before income taxes			33,231				1,709						34,940
Provision (benefit) for income taxes			12,061				(825	)		(2)			11,236
Consolidated net income (loss)		$	21,170			$	2,534					$	23,704
Less: Net income (loss) attributable to noncontrolling interest in subsidiaries			2,192				(2,299	)		(3)			(107	)
Net income (loss) available to common stockholders		$	18,978			$	4,833					$	23,811
Per share data:
Basic earnings (loss) per share
Net income (loss) available to common stockholders		$	18,978									$	21,918
Basic earnings (loss) per share		$	0.05									$	0.05
Basic weighted-average shares of common stock outstanding			375,220										450,016
Fully diluted earnings (loss) per share
Net income (loss) for fully diluted shares		$	24,155									$	21,954
Fully diluted earnings (loss) per share		$	0.05									$	0.05
Fully diluted weighted-average shares of common stock outstanding			501,067										461,166

The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.

 

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