What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-14 compared with 2024-02-09 · 537 added, 486 removed, 1675 unchanged (38% of the section changed)

28 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

AllianceBernstein

2024 Annual Report 57

Critical Audit Matters

1 unchanged sentence

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Measurement of Equity in Net Income Attributable to AB Unitholders - Performance Based Fees

As described in Notes 1 and 2 to the financial statements, the Company’s principal source of income and cash flow is attributable to its investment in AllianceBernstein L.P.

(AB) limited partnership interests.

The equity in net income attributable to AB unitholders was $299.8 million for the year ended December 31, 2023, of which a portion relates to performance-based fees which are earned based on the value of the investors’ assets under management (AUM).

The Company records its investment in AB using the equity method of accounting.

The Company’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its unitholders.

In addition, the Company’s investment is adjusted to reflect its proportionate share of certain capital transactions of AB.

As disclosed by management, the Company’s proportionate share of income of AB includes performance-based fees recognized by AB.

The transaction price for the asset management performance obligation for certain investment advisory contracts, including those associated with hedge funds and alternative investments, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time.

The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized.

Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the AUM market value, and the level at which the AUM value exceeds the contractual threshold required to earn such a fee.

Management calculates AUM using established market-based valuation methods and fair valuation (non-observable market) methods.

Fair valuation methods, which include discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The principal considerations for our determination that performing procedures relating to measurement of equity in net income attributable to AB unitholders – performance-based fees is a critical audit matter are (i) a high degree of auditor effort in performing procedures and evaluating audit evidence related to these fees, including evaluating audit evidence related to the assessment of the constraining factors impacting the amount of variable consideration and the calculation of AUM and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Measurement of Equity Method Investment in AB - Valuation of the Initial Investment in the Unconsolidated JVs

As described in Note 2 to the financial statements, management records the Company’s investment in AllianceBernstein L.P.

(AB) using the equity method of accounting.

The Company’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB.

As disclosed by management, AB and Societe Generale completed the transaction to form a global joint venture with two joint venture holding companies, one outside of North America and one within North America ("NA JV", and together the "JVs").

AB maintains an equity investment in each of the JVs and recorded an initial investment in the JVs at fair value as of April 1, 2024 of $283.9 million.

The valuation methodology used for the initial investment in the joint ventures is known as a dividend discount model whereby a forecast of net income attributable to each of the JVs was discounted using an estimated cost of capital to determine the present value of expected future dividends.

The joint venture dividend discount model includes significant assumptions such as expected future distributable earnings, discount rate and a long term growth rate.

The principal considerations for our determination that performing procedures relating to the measurement of equity method investment in AB - valuation of the initial investment in the unconsolidated JVs is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the initial investment in the unconsolidated JVs;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to expected future distributable earnings, discount rate and a long term growth rate;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included testing the effectiveness of controls relating to equity in net income attributable to AB unitholders, including controls relating to management’s revenue recognition process for performance-based fees, including controls over the assessment of the constraining factors and the calculation of AUM.

These procedures also included, among others (i) testing management’s process for determining performance-based fees, including evaluating the appropriateness of the fair valuation methods used to calculate AUM;

(ii) evaluating, on a sample basis, the reasonableness of the constraining factors related to (a) contractual claw-back provisions to which variable consideration is subject, (b) the length of time to which the uncertainty of the consideration is subject, (c) the number and range of possible consideration amounts, (d) the probability of significant fluctuations in the AUM market value, and (e) the level at which the AUM value exceeded the contractual threshold required to earn such fees, as applicable.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the AUM by (i) developing an independent range of prices for a sample of securities in the underlying products where fair valuation methods were used and (ii) comparing the independent range of prices to management’s estimate.

Developing the independent range of prices involved testing the completeness and accuracy of data provided by management and independently developing the inputs for the sampled securities.

These procedures included testing the effectiveness of controls relating to the dividend discount model, including controls over the valuation of the initial investment in the unconsolidated JVs.

These procedures also included, among others (i) reading the joint venture agreement;

(ii) testing management’s process for developing the fair value estimate of the initial investment in the unconsolidated JVs;

(iii) evaluating the appropriateness of the dividend discount model;

(iv) testing the completeness and accuracy of underlying data used in the dividend discount model;

and (v) evaluating the reasonableness of the significant assumptions used by management related to expected future distributable earnings, discount rate and a long term growth rate.

Evaluating management’s assumptions related to expected future distributable earnings involved considering (i) the historical performance of the contributed businesses;

(ii) the consistency with external market and industry data;

and (iii) the consistency with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the dividend discount model and the reasonableness of the assumptions related to the discount rate and long term growth rate.

/s/PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 2006.

2023 Annual Report 61

AllianceBernstein

AllianceBernstein Holding L.P.

20 unchanged sentences

See Accompanying Notes to Financial Statements.

AllianceBernstein

2024 Annual Report 59

AllianceBernstein Holding L.P.

10 unchanged sentences

See Accompanying Notes to Financial Statements.

2023 Annual Report 63

AllianceBernstein

AllianceBernstein Holding L.P.

6 unchanged sentences

Foreign currency translation adjustments, before reclassification and tax:

reclassification adjustment for gains included in net income upon liquidation — — 1,613

( 6,571 ) 5,678 ( 19,805 )

reclassification adjustment for (losses) included in net income upon liquidation ( 4,039 ) — —

Foreign currency translation adjustments, before tax;

Income tax (expense) benefit ( 252 ) 249 147

( 2,532 ) 5,678 ( 19,805 )

Income tax benefit (expense) 158 ( 252 ) 249

Foreign currency translation adjustments, net of tax ( 2,374 ) 5,426 ( 19,556 )

2 unchanged sentences

Recognized actuarial gain 1,089 3,560 1,293

reclassification adjustment for (losses) included in net income upon retirement plan liquidation ( 1,918 ) — —

Changes in employee benefit related items 3,030 3,569 1,281

4 unchanged sentences

See Accompanying Notes to Financial Statements.

AllianceBernstein

2024 Annual Report 61

AllianceBernstein Holding L.P.

13 unchanged sentences

Retirement of AB Holding Units ( 64,487 ) ( 85,300 ) ( 114,794 )

Retirement of AB Holding Units for EQH Exchange Agreement ( 185,101 ) — —

Issuance of AB Holding Units to fund long-term incentive compensation plan awards 115,640 104,167 76,230

13 unchanged sentences

See Accompanying Notes to Financial Statements.

2023 Annual Report 65

AllianceBernstein

AllianceBernstein Holding L.P.

9 unchanged sentences

Changes in assets and liabilities:

Decrease in other assets — — 92

(Decrease) increase in other liabilities ( 328 ) ( 517 ) 264

Increase (decrease) in other liabilities 1,475 ( 328 ) ( 517 )

Net cash provided by operating activities 340,481 293,975 362,614

15 unchanged sentences

Non-cash investing activities:

Fair value of assets acquired (less cash acquired of zero , $ 40.8 million and zero in 2023, 2022 and 2021, respectively)

Fair value of assets acquired (less cash acquired of zero , zero and $ 40.8 in 2024, 2023 and 2022, respectively)

$ — $ — $ 1,087,218

1 unchanged sentence

Fair value of non-redeemable non-controlling interest assumed — — 13,191

Fair value of assets contributed to AB (less cash acquired of zero , $ 40.8 million and zero in 2023, 2022 and 2021, respectively)

Fair value of assets contributed to AB (less cash acquired of zero , zero and $ 40.8 in 2024, 2023 and 2022, respectively)

— — ( 1,087,218 )

3 unchanged sentences

Retirement of AB Holding Units ( 64,487 ) ( 85,300 ) ( 114,794 )

AllianceBernstein

2024 Annual Report 63

Years Ended December 31

6 unchanged sentences

Equity consideration received from AB in connection with acquisition — — ( 589,169 )

Retirement of AB Holding Units for EQH Exchange Agreement ( 185,101 ) — —

See Accompanying Notes to Financial Statements.

2023 Annual Report 67

AllianceBernstein

AllianceBernstein Holding L.P.

14 unchanged sentences

• Private Wealth Management Services —servicing its private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately managed accounts, hedge funds, mutual funds and other investment vehicles.

• Bernstein Research Services —servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.

AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.

9 unchanged sentences

• Passively managed equity and fixed income strategies, including index, ESG index and enhanced index strategies.

AllianceBernstein

As of December 31, 2023, EQH owns approximately 3.5 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“ AB Holding Units ”).

(1) April 1, 2024 AB and Societe Generale, a leading European bank, completed their transaction to form a jointly owned equity research provider and cash equity trading partner for institutional investors.

AB has deconsolidated the Bernstein Research Services business and contributed the business to the joint venture.

For further discussion, see Note 24 Divestiture to AB's consolidated financial statements.

2024 Annual Report 65

AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “ General Partner ”) is the general partner of both AB Holding and AB.

4 unchanged sentences

Unaffiliated holders 0.6

Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.2 % economic interest in AB as of December 31, 2023.

Summary of Significant Accounting Policies

16 unchanged sentences

Long-term Incentive Compensation Plans

AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“ Eligible Directors ”).

2023 Annual Report 69

AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“ AB Holding Units ”) to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“ Eligible Directors ”).

AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them.

1 unchanged sentence

AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.

AllianceBernstein

Repurchases of AB Holding Units for the years ended December 31, 2024 and 2023 consisted of the following:

16 unchanged sentences

AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.

During 2023, AB granted to employees and Eligible Directors 5.6 million restricted AB Holding Units (including 5.0 million granted in December for 2023 year-end awards).

During 2022, AB granted to employees and Eligible Directors 4.7 million restricted AB Holding Units (including 3.8 million granted in December for 2022 year-end awards).

During 2024, AB granted to employees and Eligible Directors 5.9 million restricted AB Holding Units (including 4.1 million granted in December 2024 under our year-end Incentive Compensation Award Program to employees).

During 2023, AB granted to employees and Eligible Directors 5.6 million restricted AB Holding Units (including 5.0 million granted in December 2023 under our year-end Incentive Compensation Award Program to employees).

AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards.

During 2023 and 2022, AB Holding issued zero and 5,774 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units.

AB Holding used the proceeds of zero and $ 0.2 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.

Subsequent Events

We have evaluated subsequent events through the date that these financial statements were filed with the SEC.

See Note 2 Summary of Significant Accounting Policies to AB's consolidated financial statements included in this Form 10-K for additional details.

AllianceBernstein

We have evaluated subsequent events through the date that these financial statements were filed with the SEC and did not identify any subsequent events that would require disclosure in these financial statements.

Net Income Per Unit

13 unchanged sentences

There were no anti-dilutive options excluded from diluted net income in the years ended December 31, 2024, 2023 or 2022.

2024 Annual Report 67

Investment in AB

5 unchanged sentences

Cash distributions received from AB ( 377,581 ) ( 329,900 )

Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units — 178

Capital contributions to AB — 1,590

Capital contributions (from) AB ( 770 ) ( 2,164 )

AB Holding Units retired ( 64,487 ) ( 85,300 )

AB Holding Units retired for EQH Exchange Agreement ( 185,101 ) —

AB Holding Units issued to fund long-term incentive compensation plans 115,640 104,167

AB Holding Units issued to fund CarVal acquisition — 589,169

Change in AB Holding Units held by AB for long-term incentive compensation plans 6,822 7,366

Investment in AB as of December 31, $ 2,034,632 $ 2,077,540

2023 Annual Report 71

Units Outstanding

1 unchanged sentence

Outstanding as of January 1, 114,436,091 113,801,097

Options exercised — 5,774

Units issued 3,201,493 3,283,594

3,283,594 17,326,222

Units retired (1)

( 7,107,255 ) ( 2,648,600 )

Outstanding as of December 31, 110,530,329 114,436,091

(1) Includes 15,321,535 Units issued in 2022 as a result of the CarVal acquisition.

On December 19, 2024, the company entered into a master exchange agreement with EQH providing for the issuance by AB of up to 10,000,000 units representing assignments of beneficial ownership of limited partnership interests in AB (“ AB Units ”) to EQH in exchange for an equal number of AB Holding Units owned by EQH, with such exchanges to occur over the next two years.

Each AB Holding Unit exchanged will be retired following the exchange.

On December 19, 2024, EQH and AB exchanged 5,211,194 AB Units for AB Holding Units and the AB Holding Units were retired.

See Exhibit 10.32 to this Form 10-K for further details.

(1) Includes 5,211,194 Units retired in connection with a master exchange agreement entered into with EQH on December 19, 2024.

See Exhibit 10.32 to this Form 10-K for further details.

AB Holding is a publicly-traded partnership (" PTP ") for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes.

10 unchanged sentences

Income tax expense and effective tax rate $ 38,575 8.4 % $ 35,597 11.9 % $ 31,339 10.3 %

AllianceBernstein

AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues by AB Holding’s ownership interest in AB, multiplied by the 3.5 % tax rate.

17 unchanged sentences

Total income taxes $ 38,575 $ 35,597 $ 31,339 8.4 % 13.6 %

AllianceBernstein

In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business.

If AB Holding were to lose its status as a PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.

If AB Holding were to lose or surrender its status as a PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.

We recognize the effects of a tax position in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based on its technical merits and their applicability to the facts and circumstances of the tax position.

6 unchanged sentences

Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding’s investment in AB.

With respect to all significant litigation matters, we consider the likelihood of a negative outcome.

If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation.

Any such accruals are adjusted thereafter as appropriate to reflect changed circumstances.

When we are able to do so, we also determine estimates of reasonably possible losses or ranges of reasonably possible losses for such matters, whether in excess of any related accrued liability or where there is no accrued liability, and we disclose an estimate of the possible loss or range of losses.

However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages.

Such is particularly the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope.

In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.

As a result of these types of factors, we are unable, at this time, to estimate the losses that are reasonably possible to be incurred or ranges of such losses with respect to our significant litigation matters.

On December 14th, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan" ) filed a class action complaint (the “Complaint” ) in the U.S.

District Court for the Southern District of New York against AB, current and former members of the Compensation Committee of the Board of Directors, and the Investment and Administrative Committees under the Plan.

Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended (" ERISA ") by including proprietary collective investment trusts as investment options offered under the Plan.

The Complaint seeks unspecified damages, disgorgement and other equitable relief.

AB is prepared to defend itself vigorously against these claims and filed a motion to dismiss on February 24, 2023.

While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity.

AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages.

It is reasonably possible that AB could incur losses pertaining to these matters, but management cannot currently estimate any such losses.

Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity.

However, any inquiry, proceeding or litigation has the element of uncertainty;

management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period.

On July 1, 2022, AB Holding acquired a 100 % ownership interest in CarVal Investors L.P.

(“ CarVa l”), a global private alternatives investment manager primarily focused on opportunistic and distressed credit, renewable energy, infrastructure, specialty finance and transportation investments that, as of the acquisition date, constituted approximately $ 12.2 billion in AUM.

Also on July 1, immediately following the acquisition of CarVal, AB Holding contributed 100 % of its equity interests in CarVal to AB in exchange for AB Units.

Post-acquisition, CarVal was rebranded AB CarVal Investors (“ AB CarVal ”).

On the acquisition date, AB Holding issued approximately 3.2 million AB Holding Units (with a fair value of $ 132.8 million), with the remaining 12.1 million Units (with a fair value of $ 456.4 million) issued on November 1, 2022.

The fair value of the units issued on November 1, 2022 reflects final adjustments to the estimated unit issuance recorded as of acquisition close on July 1, 2022 and as disclosed in the third quarter 2022 Form 10-Q.

For significant litigation matters, we assess the likelihood of a negative outcome.

If a negative outcome is probable and the loss can be reasonably estimated, we record an estimated loss.

If a negative outcome is reasonably possible and we can estimate the potential loss or range of loss, or if a negative outcome is probable and we can estimate the potential loss or range of loss beyond any amounts already accrued, we disclose this information.

However, predicting outcomes or estimating losses is often challenging due to litigation uncertainties, especially in early stages or complex cases.

In such instances, we disclose our inability to predict the outcome or estimate losses.

AB may face regulatory inquiries, administrative proceedings, and litigation, some alleging significant damages.

While it is possible we could incur losses from these matters, we cannot currently estimate such losses or their range.

Management, after consulting with legal counsel, believes that the outcome of any individual or combined matters will not materially affect our operations, financial condition, or liquidity.

However, due to inherent uncertainties, future developments could potentially have a material adverse effect on our results, financial condition, or liquidity in future reporting periods.

2024 Annual Report 69

AB received 100 % equity interest in CarVal from AB Holding and issued approximately 15.3 million AB Units (with a fair value of $ 589.2 million).

AB also recorded a contingent consideration payable of $ 228.9 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027.

The AB Units, as discussed above , were issued to AB Holding;

AB Holding then issued the equal amount of AB Holding Units to CarVal.

The excess of the purchase price over the current fair value of identifiable net liabilities acquired of $ 156.1 million (net of cash acquired of $ 40.8 million), resulted in the recognition of $ 671.2 million of goodwill and the recording of $ 303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years.

As a result of the transfer of equity to AB, AB recorded a net deferred tax asset of $ 5.1 million, resulting in the recognition of $ 666.1 million of goodwill.

The goodwill recorded is not deductible for tax purposes as the CarVal acquisition was an investment in a partnership.

The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date (reflecting acquisition adjustments recorded in the fourth quarter of 2022), as well as the consideration transferred to acquire CarVal (in thousands):

Summary of purchase consideration:

Fair value of AB Holding units issued $ 589,169

Fair value of contingent consideration 228,885

Total purchase consideration 818,054

Purchase price allocation:

Assets acquired:

Cash and cash equivalents $ 40,777

Receivables, net 82,523

Investments - other 947

Furniture, equipment, and leasehold improvements, net 2,464

Right-of-use assets 16,482

Other assets 10,600

Intangible assets 303,000

Goodwill 671,203

Total assets acquired 1,127,996

Liabilities assumed:

Accounts payable and accrued expenses ( 17,793 )

Accrued compensation and benefits ( 219,726 )

Debt ( 42,661 )

Lease liabilities ( 16,571 )

Non-redeemable non-controlling interests in consolidated entities ( 13,191 )

Total liabilities assumed ( 309,942 )

Net assets acquired $ 818,054

The CarVal acquisition did not have a significant impact on our 2022 revenues and earnings.

As a result, we have not provided supplemental pro forma financial information.

AllianceBernstein

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

We have audited the accompanying consolidated statements of financial condition of AllianceBernstein L.P.

and its subsidiaries (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, of comprehensive income, of changes in partners’ capital and of cash flows for each of the three years in the period ended December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of income, of comprehensive income, of changes in partners' capital and of cash flows for each of the three years in the period ended December 31, 2024, including the related notes and financial statement schedule listed in the index appearing under Item 15 (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

21 unchanged sentences

2023 Annual Report 75

AllianceBernstein

Critical Audit Matters

1 unchanged sentence

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Performance Based Fees

As described in Notes 2 and 3 to the consolidated financial statements, the Company’s performance-based fees earned were $144.9 million for the year ended December 31, 2023, which are earned based on the value of the investors’ assets under management (AUM).

Management calculates AUM using established market-based valuation methods and fair valuation (non-observable market) methods.

The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are (i) a high degree of auditor effort in performing procedures and evaluating audit evidence related to these fees, including evaluating audit evidence related to the assessment of the constraining factors impacting the amount of variable consideration and the calculation of AUM and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Valuation of the Initial Investment in the Unconsolidated JVs

As described in Notes 2 and 24 to the consolidated financial statements, the Company and Societe Generale completed the transaction to form a global joint venture with two joint venture holding companies, one outside of North America and one within North America ("NA JV", and together the "JVs").

The Company maintains an equity method investment in each of the JVs and recorded an initial investment in the JVs at fair value as of April 1, 2024 of $283.9 million.

The joint venture dividend discount model includes significant assumptions such as expected future distributable earnings, discount rate and a long term growth rate.

The principal considerations for our determination that performing procedures relating to the valuation of the initial investment in the unconsolidated JVs is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the initial investment in the unconsolidated JVs;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s revenue recognition process for performance-based fees, including controls over the assessment of the constraining factors and the calculation of AUM.