What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-16 compared with 2023-02-17 · 242 added, 262 removed, 1102 unchanged (31% of the section changed)

10 unchanged sentences

The Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP (PCAOB ID 238 ), an independent registered public accounting firm, as stated in their report appearing in “Report of Independent Registered Public Accounting Firm,” which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

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Report of Independent Registered Public Accounting Firm

24 unchanged sentences

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

3 unchanged sentences

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.

Impairment Measurement for Equity Method Investment in Affiliate

As described in Notes 1 and 10 to the consolidated financial statements, the Company’s equity method investments in affiliates balance was $2,139.5 million as of December 31, 2022.

Management periodically evaluates its equity method investments in affiliates for impairment by performing assessments to determine if fair value may have declined below related carrying value for a period that they consider to be other-than-temporary.

For the year ended December 31, 2022, management concluded that due to a decline in assets under management and a reduction in projected margin that there was a $50.0 million impairment to reduce the carrying value of an affiliate to fair value.

The fair value of the investment was determined using probability-weighted discounted cash flow analyses that require assumptions such as growth rates of assets under management and discount rates.

The principal considerations for our determination that performing procedures relating to the impairment measurement for the equity method investment in affiliate is a critical audit matter are (i) the significant judgment by management to evaluate the significant assumptions used in the discounted cash flow analyses to determine the fair value of the investment, which was used to determine the amount that fair value had declined below its related carrying value for a period considered to be other-than-temporary, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the growth rates of assets under management and discount rates used in the impairment measurement, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Impairment Assessment for Certain Equity Method Investments in Affiliates

As described in Notes 1 and 9 to the consolidated financial statements, the Company’s equity method investments in affiliates balance was $2,288.5 million as of December 31, 2023, a portion of which related to certain equity method investments.

For its affiliates accounted for under the equity method, management periodically performs assessments to determine if the fair value of an investment may have declined below its related carrying value for a period that management considers to be other-than-temporary.

Management first considers whether certain qualitative and quantitative factors (including discount rates) indicate an increased likelihood of a decline in the fair value.

If such a decline is identified, and it is likely that an investment’s fair value may have declined below its carrying value, management performs a quantitative assessment to determine if an impairment exists.

The principal considerations for our determination that performing procedures relating to the impairment assessment for certain equity method investments in affiliates is a critical audit matter are (i) the significant judgment by management in assessing whether there were certain qualitative and quantitative factors indicating an increased likelihood of a decline in the fair value of certain equity method investments in affiliates, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence related to management’s assessment of indicators of impairment related to the discount rate assumptions, 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 impairment measurement for the equity method investment in affiliate, including controls over the discounted cash flow analyses and significant assumptions used to determine the fair value of the equity method investment in affiliate.

These procedures also included, among others, testing management’s process for determining the fair value of its equity method investment in affiliate, including evaluating the appropriateness of the discounted cash flow analyses, testing the completeness and accuracy of the underlying data used in the discounted cash flow analyses, and evaluating the reasonableness of the significant assumptions used by management in developing the fair value measurement related to the growth rates of assets under management and discount rates.

The reasonableness of the growth rates of assets under management was evaluated by considering (i) the consistency with external market and industry data, (ii) the consistency with past performance of the affiliate, and (iii) whether the growth rates were consistent with evidence obtained in other areas of the audit.

The reasonableness of the discount rate assumption was evaluated by considering the cost of capital of comparable businesses and other industry factors.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the discount rates used to determine whether the fair value of the equity method investment had declined below its carrying value for a period considered to be other-than-temporary.

These procedures included testing the effectiveness of controls relating to management’s impairment assessment for equity method investments in affiliates to assess whether there were certain qualitative and quantitative factors indicating an increased likelihood of a decline in the fair value.

These procedures also included, among others, (i) testing management’s process for assessing whether there were certain qualitative and quantitative factors indicating an increased likelihood of a decline in the fair value of certain equity method investments in affiliates, (ii) testing the completeness and accuracy of the underlying data used in management’s assessment of indicators of an increased likelihood of a decline in the fair value, (iii) evaluating the reasonableness of management’s discount rate assumptions by considering whether the assumptions were consistent with evidence obtained in other areas of the audit, (iv) and the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s discount rate assumptions.

/s/ PricewaterhouseCoopers LLP

2 unchanged sentences

We have served as the Company’s auditor since 1993.

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AFFILIATED MANAGERS GROUP, INC.

12 unchanged sentences

Total consolidated expenses 1,631.4 1,673.5 1,496.6

Equity method income (loss) (net) ( 43.4 ) 242.5 338.1

BPEA Transaction gain (Note 10) — — 641.9

Equity method income (net) 242.5 338.1 280.0

Affiliate Transaction gains (Notes 8 and 9) — 641.9 133.1

Investment and other income 117.6 110.3 117.1

9 unchanged sentences

The accompanying notes are an integral part of the Consolidated Financial Statements.

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AFFILIATED MANAGERS GROUP, INC.

7 unchanged sentences

Change in net realized and unrealized gain (loss) on derivative financial instruments 0.4 ( 0.5 ) 0.3

Change in net unrealized loss on available-for-sale debt securities — — ( 1.0 )

Change in net unrealized gain (loss) on available-for-sale debt securities — ( 1.0 ) 0.5

Other comprehensive income (loss), net of tax 7.2 ( 142.8 ) 41.9

3 unchanged sentences

The accompanying notes are an integral part of the Consolidated Financial Statements.

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AFFILIATED MANAGERS GROUP, INC.

32 unchanged sentences

The accompanying notes are an integral part of the Consolidated Financial Statements.

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AFFILIATED MANAGERS GROUP, INC.

10 unchanged sentences

Net income — — — 565.7 — 324.4 890.1

Other comprehensive income, net of tax — — 10.5 — — 3.2 13.7

Other comprehensive income (loss), net of tax — — 10.4 — — ( 3.2 ) 7.2

Share-based compensation — 63.4 — — — — 63.4

Common stock issued under share-based incentive plans — ( 53.5 ) — — 36.8 — ( 16.7 )

Repurchases of junior convertible securities — ( 7.1 ) — — — — ( 7.1 )

Share repurchases — 17.3 — — ( 527.2 ) — ( 509.9 )

1 unchanged sentence

— — — ( 1.7 ) — — ( 1.7 )

Investments in Affiliates — — — — — 247.0 247.0

Affiliate equity activity:

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December 31, 2021 $ 0.6 $ 651.6 $ ( 87.9 ) $ 4,569.5 $ ( 2,347.4 ) $ 924.2 $ 3,710.6

Impact of adoption of new accounting standard (ASU 2020-06) — ( 80.6 ) — 4.5 — — ( 76.1 )

Net income — — — 1,145.9 — 242.2 1,388.1

Other comprehensive income (loss), net of tax — — 10.4 — — ( 3.2 ) 7.2

Other comprehensive loss, net of tax — — ( 115.5 ) — — ( 27.3 ) ( 142.8 )

Share-based compensation — 62.4 — — — — 62.4

Common stock issued under share-based incentive plans — ( 38.6 ) — — 21.5 — ( 17.1 )

Repurchases of junior convertible securities — ( 7.1 ) — — — — ( 7.1 )

Share repurchases — ( 45.0 ) — — ( 654.7 ) — ( 699.7 )

1 unchanged sentence

— — — ( 1.7 ) — — ( 1.7 )

Investments in Affiliates — — — — — 247.0 247.0

Affiliate equity activity:

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December 31, 2022 $ 0.6 $ 695.5 $ ( 203.4 ) $ 5,718.2 $ ( 2,980.6 ) $ 945.3 $ 4,175.6

Impact of adoption of new accounting standards (ASU 2020-06)

— ( 80.6 ) — 4.5 — — ( 76.1 )

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Net income — — — 672.9 — 233.2 906.1

Other comprehensive loss, net of tax — — ( 115.5 ) — — ( 27.3 ) ( 142.8 )

Other comprehensive income, net of tax — — 35.8 — — 6.1 41.9

Share-based compensation — 59.4 — — — — 59.4

8 unchanged sentences

Changes in redemption value of Redeemable non-controlling interests — ( 55.5 ) — — — — ( 55.5 )

Transfers to Redeemable non-controlling interests — — — — — ( 1.8 ) ( 1.8 )

Transfers from Redeemable non-controlling interests — — — — — 8.9 8.9

Capital contributions and other — — — — — 13.5 13.5

Distributions to non-controlling interests — — — — — ( 271.3 ) ( 271.3 )

Effect of deconsolidation of Affiliates — 16.8 — — — ( 17.2 ) ( 0.4 )

December 31, 2023 $ 0.6 $ 741.4 $ ( 167.6 ) $ 6,389.6 $ ( 3,376.1 ) $ 982.2 $ 4,570.1

The accompanying notes are an integral part of the Consolidated Financial Statements.

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AFFILIATED MANAGERS GROUP, INC.

9 unchanged sentences

Deferred income tax expense 91.2 32.0 31.4

Equity method loss (income) (net) 43.4 ( 242.5 ) ( 338.1 )

BPEA Transaction gain — — ( 641.9 )

Distributions of earnings received from equity method investments 236.8 337.5 393.5

Share-based compensation and Affiliate equity expense 119.2 126.7 113.8

Equity method income (net) ( 242.5 ) ( 338.1 ) ( 280.0 )

Distributions received from equity method investments 337.5 393.5 490.8

Affiliate Transaction gains — ( 641.9 ) ( 133.1 )

Share-based compensation and Affiliate equity compensation expense 126.7 113.8 112.1

Net realized and unrealized gains on investment securities ( 108.7 ) ( 103.5 ) ( 84.2 )

3 unchanged sentences

Sales of securities by consolidated Affiliate sponsored investment products 58.0 33.8 54.3

Decrease in receivables 1.1 31.7 87.0

Decrease (increase) in receivables 31.7 87.0 ( 48.4 )

Decrease in other assets 23.8 41.6 9.2

(Decrease) increase in payables, accrued liabilities, and other liabilities ( 64.2 ) 64.5 9.9

Increase (decrease) in payables, accrued liabilities, and other liabilities 64.5 9.9 ( 189.4 )

Cash flow from operating activities 1,259.2 1,054.7 874.3

1 unchanged sentence

Investments in Affiliates, net of cash acquired ( 562.6 ) ( 291.1 ) ( 294.7 )

Proceeds from the BPEA Transaction and return of capital from equity method investments — 4.4 224.4

Proceeds from Affiliate Transactions — 223.6 294.0

Return of capital from equity method investments 4.4 0.8 0.2

Purchase of fixed assets ( 8.4 ) ( 11.4 ) ( 12.4 )

Purchase of investment securities ( 73.5 ) ( 312.0 ) ( 731.1 )

Sale of investment securities 47.0 56.4 280.2

Cash flow used in investing activities ( 53.7 ) ( 583.7 ) ( 109.9 )

Maturities and sales of investment securities 56.4 280.2 1,008.5

Cash flow from (used in) investing activities ( 583.7 ) ( 109.9 ) 264.5

Cash flow from (used in) financing activities:

Borrowings of senior bank debt, senior notes, and junior subordinated notes 874.8 200.0 —

Borrowings of senior bank debt 200.0 — 25.0

Repayments of senior bank debt and junior convertible securities ( 33.0 ) ( 60.8 ) ( 25.0 )

4 unchanged sentences

Affiliate equity issuances 117.7 15.2 13.4

Subscriptions to consolidated Affiliate sponsored investment products, net of redemptions 12.9 40.9 13.0

Subscriptions (redemptions) to consolidated Affiliate sponsored investment products, net 40.9 13.0 ( 12.6 )

Settlement of deferred payments, net ( 21.7 ) ( 201.0 ) ( 21.7 )

2 unchanged sentences

Effect of foreign currency exchange rate changes on cash and cash equivalents ( 0.8 ) ( 22.6 ) 6.9

Net increase (decrease) in cash and cash equivalents 502.3 ( 123.6 ) ( 480.7 )

Net (decrease) increase in cash and cash equivalents ( 123.6 ) ( 480.7 ) 387.4

Cash and cash equivalents at beginning of period 1,039.7 908.5 429.2

2 unchanged sentences

Supplemental disclosure of cash flow information:

Income taxes paid, net $ 87.1 $ 120.2 $ 314.5

Interest paid 103.0 109.4 110.4

Income taxes paid (refunds received), net ( 12.4 ) 87.1 120.2

Lease liabilities paid 38.8 41.8 37.7

1 unchanged sentence

Payables recorded for investments in Affiliates and contingent payment obligations $ 287.8 $ 31.2 $ 57.6

Stock issued upon vesting of restricted stock units and exercise of stock options 35.6 82.6 41.2

Right-of-use assets obtained in exchange for new operating leases 26.3 69.4 17.5

Stock issued upon vesting of restricted stock units and exercise of stock options 82.6 41.2 55.0

Stock received for tax withholdings on share-based payments 19.9 19.4 31.4

Shares received for settlement of accelerated share repurchase agreement — — 14.1

Payables recorded for share repurchases 16.7 — 12.0

3 unchanged sentences

The accompanying notes are an integral part of the Consolidated Financial Statements.

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AFFILIATED MANAGERS GROUP, INC.

3 unchanged sentences

Affiliated Managers Group, Inc.

(“AMG” or the “Company”) is a leading partner to independent investment management firms globally.

AMG’s strategy is to generate long-term value by investing in a diverse array of high-quality partner-owned investment firms, referred to as “Affiliates.” The Company’s Affiliates provide a comprehensive and diverse range of differentiated investment strategies designed to assist institutional and wealth clients worldwide in achieving their investment objectives.

(“AMG” or the “Company”) is a strategic partner to leading independent investment management firms globally.

AMG’s strategy is to generate long-term value by investing in a diverse array of high-quality independent partner-owned firms, referred to as “Affiliates.” The Company’s Affiliates provide a comprehensive and diverse range of differentiated investment strategies designed to assist institutional and wealth clients worldwide in achieving their investment objectives.

The Company operates in one segment, global investment management.

1 unchanged sentence

Each operating agreement reflects the specific terms of the Company’s economic participation in the Affiliate, which, in each case, uses a “structured partnership interest.”

For a majority of Affiliates, the Company uses structured partnership interests in which the Company contractually shares in the Affiliate’s revenue without regard to expenses.

In this type of structured partnership interest, the Affiliate allocates a specified percentage of its revenue to the Company and Affiliate management, while using the remainder of its revenue for operating expenses and for additional distributions to Affiliate management.

The form of the Company’s structured partnership interests in Affiliates differs from Affiliate to Affiliate and ranges from structures where the Company contractually shares in the Affiliate’s revenue without regard to expenses, comprising Affiliates that contribute a majority of the Company’s Consolidated revenue, to others where the Company contractually shares in the Affiliate’s revenue less agreed-upon expenses.

Further, the structure at a particular Affiliate, or the expenses that the Company agrees to share in, may change during the course of the Company’s investment.

Where the Company shares in the Affiliate’s revenue without regard to expenses, the Affiliate allocates a specified percentage of its revenue to the Company and Affiliate management, while using the remainder for operating expenses and additional distributions to Affiliate management.

The Company and Affiliate management, therefore, participate in any increase or decrease in revenue and only Affiliate management participates in any increase or decrease in expenses.

Under these structured partnership interests, the Company’s contractual share of revenue generally has priority over distributions to Affiliate management.

For other Affiliates, the Company uses structured partnership interests in which the Company contractually shares in the Affiliate’s revenue less agreed-upon expenses.

This type of partnership interest allows the Company to benefit from any increase in revenue or any decrease in the agreed-upon expenses, but also exposes the Company to any decrease in revenue or any increase in such agreed-upon expenses.

Where the Company shares in the Affiliate’s revenue less agreed-upon expenses, the Company benefits from any increase in revenue or any decrease in the agreed-upon expenses, but also has exposure to any decrease in revenue or any increase in such agreed-upon expenses.

The degree of the Company’s exposure to agreed-upon expenses from these structured partnership interests varies by Affiliate, and includes several Affiliates in which the Company fully shares in the expenses of the business.

3 unchanged sentences

All intercompany balances and transactions have been eliminated.

Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements.

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When an Affiliate is consolidated, the portion of the earnings attributable to Affiliate management’s and any co-investor’s equity ownership is included in Net income (non-controlling interests) in the Consolidated Statements of Income.

Undistributed earnings attributable to Affiliate management’s and any co-investor’s equity ownership, along with their share of any tangible or intangible net assets, are presented within Non-controlling interests on the Consolidated Balance Sheets.

Undistributed earnings attributable to Affiliate management’s and any co-investor’s equity ownership, along with their share of any tangible or intangible net assets, are included in Non-controlling interests on the Consolidated Balance Sheets.

Affiliate equity interests where the holder has certain rights to demand settlement are presented, at their current redemption values, as Redeemable non-controlling interests or Other liabilities on the Consolidated Balance Sheets.

1 unchanged sentence

Because these transactions take place between entities under common control, any gains or losses attributable to these transactions are required to be included in Additional paid-in capital on the Consolidated Balance Sheets, net of any related income tax effects in the period the transaction occurs.

When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method income (loss) (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is reported in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets.

Deferred taxes recorded on intangible assets upon acquisition of an Affiliate accounted for under the equity method are presented on a gross basis within Equity method investments in Affiliates (net) and Deferred income tax liability (net) in the Consolidated Balance Sheets.

The Company’s share of income taxes incurred directly by Affiliates accounted for under the equity method is recorded in Income tax expense in the Consolidated Statements of Income.

The Company periodically performs assessments to determine if fair value of an investment may have declined below its related carrying value for its Affiliates accounted for under the equity method for a period that the Company considers to be other-than-temporary.

Where the Company believes that such declines may have occurred, the Company determines the amount of impairment using valuation methods, such as discounted cash flow analyses.

Impairments are recorded as an expense in Equity method income (loss) (net) to reduce the carrying value of the Affiliate to its fair value.

When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method income (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is recorded in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets.

The Company periodically performs assessments to determine if the fair value of an investment may have declined below its related carrying value for its Affiliates accounted for under the equity method for a period that the Company considers to be other-than-temporary.

The Company performs these assessments if certain triggering events occur or annually during the fourth quarter.

The Company first considers whether certain qualitative factors indicate an increased likelihood of a decline in the fair value of an Affiliate during the reporting period.

If such a decline is identified, and it is likely that an investment’s fair value may have declined below its carrying value, the Company performs a quantitative assessment to determine if an impairment exists.

Impairments are recorded as an expense in Equity method income (net) to reduce the carrying value of the Affiliate to its fair value.

Affiliate Sponsored Investment Products

4 unchanged sentences

As a result, the Company generally does not consolidate these products.

However, for certain products, the Company’s consolidated Affiliates, as the investment manager, have the power to direct the activities of the investment product and have an exposure to the economics of the VIE that is more than insignificant, though generally only for a short period while the product is established and has yet to attract significant other investors.

When the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income.

Purchases and sales of securities are presented within purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows, respectively, and the third-party investors’ interests are recorded in Redeemable non-controlling interests.

When the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities on the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income.

Purchases and sales of securities are included in purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows, respectively, and the third-party investors’ interests are recorded in Redeemable non-controlling interests.

When the Company or its consolidated Affiliates no longer control these products, due to a reduction in ownership or other reasons, the products are deconsolidated with only the Company’s or its consolidated Affiliate’s investment in the product reported from the date of deconsolidation.

2 unchanged sentences

(d) Cash and Cash Equivalents

The Company considers all highly liquid investments, including money market mutual funds, with original maturities of three months or less to be cash equivalents.

The Company considers certain highly liquid investments, including money market mutual funds, with original maturities of three months or less to be cash equivalents.

Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments.

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The Company’s Affiliates earn asset- and performance-based fees, which are billed based on the terms of the related contracts.

Billed but uncollected asset- and performance-based fees are presented within Receivables on the Consolidated Balance Sheets and are generally short-term in nature.

Billed but uncollected asset- and performance-based fees are recorded in Receivables on the Consolidated Balance Sheets and are generally short-term in nature.

Certain of the Company’s Affiliates in the UK act as intermediaries between clients and their sponsored investment products.

3 unchanged sentences

Equity securities

Realized and unrealized gains or losses on investments in equity securities are reported within Investment and other income.

Realized and unrealized gains or losses on investments in equity securities are recorded in Investment and other income.

Realized gains and losses are recorded on the trade date on a specific identified basis, except for consolidated Affiliate sponsored investment products which use an average cost basis.

1 unchanged sentence

Investments in debt securities are classified as either trading, available-for-sale, or held-to-maturity based on the Company’s intent and ability to hold the security to maturity.

Securities classified as trading are measured at fair value with unrealized gains and losses reported within Investment and other income.

Securities classified as available-for-sale are measured at fair value with unrealized gains and losses reported in Accumulated other comprehensive loss as a separate component of stockholders’ equity on the Consolidated Balance Sheets.

Securities classified as trading are measured at fair value with unrealized gains and losses recorded in Investment and other income.

Securities classified as available-for-sale are measured at fair value with unrealized gains and losses recorded in Accumulated other comprehensive loss as a separate component of stockholders’ equity on the Consolidated Balance Sheets.

Securities classified as held-to-maturity are measured at amortized cost.

Realized gains and losses on debt securities are reported within Investment and other income.

Realized gains and losses on debt securities are recorded in Investment and other income.

(g) Fair Value Measurements

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Fixed assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives.

The estimated useful lives of office equipment and furniture and fixtures range from two years to seven years and three years to ten years , respectively.

The estimated useful lives of office equipment and furniture and fixtures range from two years to ten years and three years to ten years , respectively.

Computer software developed or obtained for internal use is amortized over the estimated useful life of the software, generally two years to five years .

8 unchanged sentences

Whether a lease is classified as an operating lease or a finance lease, the Company and its Affiliates must record a right-of-use asset and a lease liability at the commencement date of the lease, other than for leases with an initial term of 12 months or less.

As permitted under Accounting Standard Update (“ASU”) 2016-02 Leases (and related ASUs), the Company and its Affiliates elect not to record short-term leases with an initial lease term less than 12 months on the Company’s Consolidated Balance Sheets.

Right-of-use assets and lease liabilities are reported in Other assets and Other liabilities, respectively.

Right-of-use assets and lease liabilities are included in Other assets and Other liabilities, respectively.

A lease liability is initially and subsequently reported at the present value of the outstanding lease payments determined by discounting those lease payments over the remaining lease term using the incremental borrowing rate of the legal entity entering into the lease as of the commencement date.

A right-of-use asset is initially reported at the present value of the corresponding lease liability plus any prepaid lease payments and initial direct costs

A right-of-use asset is initially reported at the present value of the corresponding lease liability plus any prepaid lease payments and initial direct costs of entering into the

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

of entering into the lease, and reduced by any lease incentives.

lease, and reduced by any lease incentives.

Subsequently, a right-of-use asset is reported at the present value of the lease liability adjusted for any prepaid or accrued lease payments, remaining balances of any lease incentives received, unamortized initial direct costs of entering into the lease, and any impairments of the right-of-use asset.

The Company and its Affiliates test for possible impairments of right-of-use assets annually or more frequently whenever events or changes in circumstances indicate that the carrying value of a right-of-use asset may exceed its fair value.

If the carrying value of the right-of-use asset exceeds its fair value, then the carrying value of the right-of-use asset is reduced to its fair value and the expense is recorded in Other expenses (net) on the Consolidated Statements of Income.

Subsequent to an impairment, the carrying value of the right-of-use asset is amortized on a straight-line basis over the remaining lease term.

Lease liabilities and right-of-use assets based on variable lease payments that depend on an index or rate are initially measured using the index or rate at the commencement date with any subsequent changes in variable lease payments reported in Other expenses (net) as incurred.

Most lease agreements for office space that are classified as operating leases contain renewal options, rent escalation clauses, or other lease incentives provided by the lessor.

Lease expense is accrued to recognize lease escalation provisions and renewal options that are reasonably certain to be exercised, as well as lease incentives provided by the lessor, on a straight-line basis over the lease term and is reported in Other expenses (net).

If a right-of-use asset is impaired, the lease expense is subsequently reported in Other expenses (net) as the straight-line amortization of the right-of-use asset and the accretion of the lease liability, thereby transitioning to a front-loaded expense recognition profile for the associated lease.

If a right-of-use asset is impaired, the lease expense is subsequently recorded in Other expenses (net) as the straight-line amortization of the right-of-use asset and the accretion of the lease liability, thereby transitioning to a front-loaded expense recognition profile for the associated lease.

The Company and its Affiliates combine lease and non-lease components for their office space leases and separate non-lease components for their equipment leases in calculating their lease liabilities.

Sublease income is reported in Investment and other income.

Sublease income is recorded in Investment and other income.

The Company’s debt instruments are carried at amortized cost.

Unamortized discounts and debt issuance costs associated with its debt instruments, with the exception of the Company’s senior unsecured multicurrency revolving credit facility (the “revolver”), are presented within the Consolidated Balance Sheets as an adjustment to the carrying value of the associated debt.

Unamortized discounts and debt issuance costs associated with its debt instruments, with the exception of the Company’s senior unsecured multicurrency revolving credit facility (the “revolver”), are presented on the Consolidated Balance Sheets as an adjustment to the carrying value of the associated debt.

The carrying value of the debt is accreted to the principal amount at maturity over the remaining life of the underlying debt.

The accretion of the debt and the amortization of debt issuance costs, are recognized in Interest expense in the Consolidated Statements of Income, using the effective interest method.

Unamortized issuance costs associated with the revolver are recorded in Other assets and amortized over the remaining term of the revolver to Interest expense in the Consolidated Statements of Income.

The accretion of the debt and the amortization of debt issuance costs, are recorded in Interest expense in the Consolidated Statements of Income, using the effective interest method.

Unamortized issuance costs associated with the revolver are recorded in Other assets and amortized over the remaining term of the revolver to Interest expense.

Gains and losses on repurchases or settlement of debt are recorded in Interest expense.

1 unchanged sentence

The Company and its Affiliates may use derivative financial instruments to offset exposure to changes in interest rates, foreign currency exchange rates, and markets.

The Company records derivatives in the Consolidated Balance Sheets at fair value.

The Company records derivatives on the Consolidated Balance Sheets at fair value.

The Company assesses hedge effectiveness at derivative inception and on a quarterly basis.

Changes in fair value of a hedging instrument that are excluded from the assessment of hedge effectiveness, also known as excluded components, are recorded in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.

For derivative financial instruments designated as cash flow hedges, the Company uses a qualitative method of assessing hedge effectiveness by comparing the notional amounts, timing of payments, currencies (for the forward foreign currency contracts), and interest rates (for the interest rate swap).

The effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss) as a separate component of stockholders’ equity and reclassified to earnings with the hedged item.

For derivative financial instruments designated as cash flow hedges, the Company uses a qualitative method of assessing hedge effectiveness by comparing the notional amounts, timing of payments, currencies (for forward foreign currency contracts), and interest rates (for interest rate swaps).

The effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss), net of tax as a separate component of stockholders’ equity and reclassified to earnings with the hedged item.

If the qualitative assessment indicates ineffectiveness, then the Company performs a quantitative assessment which is generally measured by comparing the present value of the cumulative change in the expected future cash flows of the hedged contract with the present value of the cumulative change in the expected future cash flows of the hedged item.

Upon termination of these instruments or the repayment of the Company’s outstanding Secured Overnight Financing Rate (“SOFR”)-based borrowings, any gain or loss recorded in Accumulated other comprehensive loss will be reclassified into earnings.

Changes in the fair values of cash flow hedges are reported in Change in net realized and unrealized gain (loss) on derivative financial instruments in the Consolidated Statements of Comprehensive Income.

Changes in the fair values of cash flow hedges are recorded in Change in net realized and unrealized gain (loss) on derivative financial instruments in the Consolidated Statements of Comprehensive Income.

For net investment hedges, hedge effectiveness is measured using the spot rate method.

Changes in the fair values of the effective net investment hedges are reported in

The effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss) as a separate component of stockholders’ equity and

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income.

reclassified to earnings with the hedged item.

Changes in the fair values of the effective net investment hedges are recorded in Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income.

Upon the sale or liquidation of the underlying investment, any gain or loss remaining in Accumulated other comprehensive loss will be reclassified to earnings.

1 unchanged sentence

(m) Revenue Recognition

Consolidated revenue primarily represents asset- and performance-based fees earned by the Company and its Affiliates for managing the assets of clients.

Consolidated revenue primarily represents asset- and performance-based fees earned by the Company and its consolidated Affiliates for managing the assets of clients.

Substantially all of the Company’s and its Affiliates’ contracts contain a single performance obligation, which is the provision of investment management services.

Investment management, broker-dealer, and administrative services are performed and consumed simultaneously and, therefore, the Company recognizes these asset-based fees ratably over time.

Substantially all the Company’s asset-based fees for services are based on the value of client assets over time, which are typically determined using observable market data.

Substantially all the Company’s asset-based fees for services are based on the value of client assets over time, which are typically determined using observable market data, or on committed capital.

Services may be invoiced in advance or in arrears and are payable upon receipt.

7 unchanged sentences

Fees received and expenses incurred under these arrangements are primarily based on the value of client assets over time.

Distribution-related fees are presented within Consolidated revenue gross of any related expenses when the Company and its Affiliates are the principal in their role as primary obligor under their distribution-related services arrangements.

Distribution-related expenses are presented within Selling, general and administrative expenses in the Consolidated Statements of Income.

Distribution-related fees are recorded in Consolidated revenue gross of any related expenses when the Company and its consolidated Affiliates are the principal in their role as primary obligor under their distribution-related services arrangements.

Distribution-related expenses are recorded in Selling, general and administrative expenses in the Consolidated Statements of Income.

The Company and its Affiliates may enter into contracts for which the costs to obtain or fulfill the contract are based upon a percentage of the value of a client’s future assets under management.

8 unchanged sentences

Gains and losses resulting from changes to expected payments are included in Other expenses (net) and the accretion of these obligations to their expected payment amounts are included in Interest expense.

For Affiliates accounted for under the equity method of accounting, the Company records a liability in Other liabilities when a payment becomes probable, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net).

For Affiliates accounted for under the equity method, the Company records a liability in Other liabilities when a payment becomes probable, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net).

(o) Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the financial reporting bases of assets and liabilities and their respective tax bases, using tax rates in effect for the year in which the differences are expected to reverse.

The effect on deferred tax assets and liabilities of a change in tax rates is recorded in Income tax expense in the period when the change is enacted.

The Company regularly assesses the recoverability of its deferred income tax assets to determine whether these assets are

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

more-likely-than-not to be realized.

The effect on deferred tax assets and liabilities of a change in tax rates is recorded in Income tax expense in the period when the change is enacted.

The Company regularly assesses the recoverability of its deferred income tax assets to determine whether these assets are more-likely-than-not to be realized.

In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations.

19 unchanged sentences

These financial institutions are typically located in countries in which the Company and its Affiliates operate.

For the Company and certain of its Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits.

For the Company and certain of its Affiliates, cash deposits at a financial institution may, from time to time, exceed insurance limits (similar to Federal Deposit Insurance Corporation insurance limits).

(r) Earnings Per Share

11 unchanged sentences

The issuance of shares and the related income acquired are excluded from the calculation if an assumed purchase of Redeemable non-controlling interests would be anti-dilutive to diluted earnings per share.

The Company had junior convertible securities outstanding during the periods presented and is required to apply the if-converted method to these securities in its calculation of Earnings per share (diluted).

Under the if-converted method, shares that are issuable upon conversion are deemed outstanding, regardless of whether the securities are contractually convertible into the Company’s common stock at that time.

For this calculation, the interest expense (net of tax) attributable to these dilutive

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

securities is added back to Net income (controlling interest), reflecting the assumption that the securities have been converted.

For this calculation, the interest expense (net of tax) attributable to these dilutive securities is added back to Net income (controlling interest), reflecting the assumption that the securities have been converted.

Issuable shares for these securities and related interest expense are excluded from the calculation if an assumed conversion would be anti-dilutive to diluted earnings per share.

6 unchanged sentences

(t) Recent Accounting Developments

Effective January 1, 2022, the Company adopted ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity using a modified retrospective method.

ASU 2020-06 removes the separate liability and equity accounting for the Company’s junior convertible securities.

Consequently, the Company’s junior convertible securities are accounted for wholly as debt and are carried at their face value less unamortized debt issuance costs.

The adoption resulted in increases in Debt and beginning Retained Earnings of $ 101.5 million and $ 4.5 million, respectively, and decreases in Additional paid-in-capital and Deferred income tax liability (net) of $ 80.6 million and $ 25.4 million, respectively.

As a result of the adoption of ASU 2020-06, the Company also updated its Earnings Per Share accounting policy as described above.

In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820):

1 unchanged sentence

The standard is effective for interim and annual periods beginning after December 15, 2023 for the Company, and is effective for interim and annual periods beginning after December 15, 2024 for the Company’s Affiliates.

The Company is evaluating the impact of this standard, however it currently does not expect the adoption to have a material impact on its Consolidated Financial Statements.

The Company does not expect the adoption to have a material impact on its Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

The standard is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024.

The Company does not currently expect the adoption to have a material impact on its Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires greater disaggregation of income tax disclosures related to the income tax rate reconciliation and income taxes paid.

The standard is effective for annual periods beginning after December 15, 2024.

The Company does not currently expect the adoption to have a material impact on its Consolidated Financial Statements.

Investments in Marketable Securities

5 unchanged sentences

Fair value $ 447.9 $ 37.9

As of December 31, 2022, investments in equity securities include ordinary shares of EQT AB (“EQT”), a public company listed on Nasdaq Stockholm (EQT.ST) (see Note 10), with a fair value of $ 405.1 million.

Between January 1, 2023 and February 15, 2023, the Company has sold $ 196.0 million of EQT ordinary shares.

As of December 31, 2021 and 2022, investments in equity securities include consolidated Affiliate sponsored investment products with fair values of $ 28.9 million and $ 23.5 million, respectively.

For the year ended December 31, 2022, the Company recorded realized and unrealized gains on EQT ordinary shares of $ 43.8 million and $ 57.9 million, respectively.

As of December 31, 2022, investments in equity securities include ordinary shares of EQT AB (“EQT”), a public company listed on Nasdaq Stockholm (EQT.ST), with fair value of $ 405.1 million.

The Company received the EQT shares through the

sale of its equity interest in Baring Private Equity Asia (“BPEA”), in connection with the strategic combination of BPEA and

EQT, which was completed in the fourth quarter of 2022.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022 and 2023, investments in equity securities include consolidated Affiliate sponsored investment products with fair values of $ 23.5 million and $ 15.8 million, respectively.

For the years ended December 31, 2022 and 2023, the Company recognized net unrealized gains on equity securities still held as of December 31, 2022 and 2023 of $ 35.5 million and $ 2.9 million, respectively.

Debt Securities

The following table summarizes the cost, gross unrealized losses, and fair value of investments in U.S.

Treasury Notes classified as available-for-sale, of which $ 100.7 million mature in 2023 and $ 150.3 million mature in 2024, and other debt securities classified as trading:

The following table summarizes the cost, unrealized gains, unrealized losses, and fair value of investments in U.S.

Treasury securities classified as available-for-sale, all of which mature in 2024, and consolidated Affiliate sponsored investment products classified as trading:

Available-for-Sale Trading

1 unchanged sentence

Cost $ 252.3 $ 405.4 $ 19.7 $ 17.9

Unrealized gains — 0.0 — —

Unrealized losses ( 1.3 ) ( 0.1 ) ( 1.7 ) ( 0.1 )

Fair value $ 251.0 $ 405.3 $ 18.0 $ 17.8

As of December 31, 2021 and 2022, investments in debt securities classified as trading include consolidated Affiliate sponsored investment products with fair values of $ 14.0 million and $ 18.0 million, respectively.

For the year ended December 31, 2022, there were no maturities or sales of available-for-sale securities.

For the year ended December 31, 2023, the Company received $ 511.1 million of proceeds from the maturity of available-for-sale securities.

For the years ended December 31 2022 and 2023, the Company recognized net unrealized gains (losses) on debt securities classified as trading still held as of December 31, 2022 and 2023 of $( 2.2 ) million and $ 0.8 million, respectively.

Other Investments

8 unchanged sentences

December 31, 2022 December 31, 2023

Category of Investment Fair Value Unfunded

Fair Value Unfunded

Commitments Fair Value Unfunded

4 unchanged sentences

___________________________

__________________________

(1) The Company accounts for the majority of its interests in private equity funds one quarter in arrears (adjusted for current period calls and distributions).

1 unchanged sentence

Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally up to 15 years.

(2) These are multi-disciplinary funds that invest across various asset classes and strategies, including equity, credit, and real estate.

(2) These are multi-disciplinary funds that invest across various asset classes and strategies, including equity and credit.

Investments are generally redeemable on a daily, monthly, or quarterly basis.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Fair value attributable to the controlling interest was $ 275.1 million and $ 324.9 million as of December 31, 2022 and 2023, respectively.

3 unchanged sentences

The following table summarizes the cost, cumulative unrealized gains, and carrying amount of investments without readily determinable fair values:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cost $ 8.5 $ 8.5

1 unchanged sentence

Carrying amount $ 50.4 $ 50.4

During the year ended December 31, 2022, the Company recorded no gains or losses on the underlying investment.

For the year ended December 31, 2023, the Company recorded no gains or losses on the underlying investment.

The following table presents the changes in Other investments:

8 unchanged sentences

___________________________

(1) Recognized in Investment and other income.

(1) Recorded in Investment and other income.

Fair Value Measurements

The following tables summarize financial assets and liabilities that are measured at fair value on a recurring basis:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

6 unchanged sentences

269.0 — 269.0 —

Derivative financial instruments (2)

Financial Liabilities (3)

1 unchanged sentence

Affiliate equity purchase obligations 24.5 — — 24.5

Derivative financial instruments 0.8 — 0.8 —

Fair Value Measurements

6 unchanged sentences

423.1 — 423.1 —

Derivative financial instruments (2)

Financial Liabilities (3)

1 unchanged sentence

Affiliate equity purchase obligations 53.9 — — 53.9

Derivative financial instruments 0.9 — 0.9 —

___________________________

(1) Amounts are presented within Investments in marketable securities.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Amounts are presented within Other assets.

(3) Amounts are presented within Other liabilities.

(1) Amounts are recorded in Investments in marketable securities.

(2) Amounts are recorded in Other assets.

(3) Amounts are recorded in Other liabilities.

Level 3 Financial Liabilities

8 unchanged sentences

Settlements and reductions — ( 52.1 ) — ( 75.4 )

Net realized and unrealized (gains) losses (2)

Net realized and unrealized gains (2)

( 19.3 ) ( 11.8 ) ( 6.3 ) ( 8.9 )

Balance, end of period $ 21.0 $ 24.5 $ 14.7 $ 53.9

Net change in unrealized gains relating to instruments still held at the reporting date $ — $ — $ ( 19.3 ) $ ( 5.9 )

Net change in unrealized (gains) losses relating to instruments still held at the reporting date (1)

$ ( 19.3 ) $ ( 5.9 ) $ ( 6.3 ) $ ( 4.0 )

___________________________

(1) Affiliate equity purchase obligation activity includes transfers from Redeemable non-controlling interests.

1 unchanged sentence

The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s recurring Level 3 fair value measurements:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Quantitative Information About Level 3 Fair Value Measurements

20 unchanged sentences

The following table summarizes the Company’s other financial liabilities not carried at fair value:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 31, 2022 December 31, 2023

5 unchanged sentences

The carrying amount of Cash and cash equivalents, Receivables, Payables and accrued liabilities, and certain Other liabilities approximates fair value because of the short-term nature of these instruments.

The carrying value of notes receivable, which is reported in Other assets, approximates fair value because interest rates and other terms are at market rates.

The carrying value of the credit facilities (as defined in Note 6) approximates fair value because the credit facilities have variable interest based on selected short-term rates.

12 unchanged sentences

Affiliates accounted for under the equity method $ 1,273.5 $ 2,051.6 $ 1,492.4 $ 2,198.2

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022 and 2023, the carrying value and maximum exposure to loss for all of the Company’s Affiliates accounted for under the equity method was $ 2,139.5 million and $ 2,288.5 million, respectively, including Affiliates accounted for under the equity method considered VREs of $ 87.9 million and $ 90.3 million, respectively.

11 unchanged sentences

The following table summarizes the Company’s Debt:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior bank debt $ 349.9 $ 349.9

3 unchanged sentences

Debt $ 2,535.3 $ 2,537.5

Effective January 1, 2022, the Company adjusted the carrying value of its junior convertible securities (see Note 1).

Senior Bank Debt

The Company has a $ 1.25 billion revolver and a $ 350.0 million senior unsecured term loan facility (the “term loan” and, together with the revolver, the “credit facilities”).

On November 18, 2022, the Company (i) amended the revolver, extending the maturity date of the revolver by one year to October 25, 2027, and (ii) further amended the revolver and amended the term loan, replacing LIBOR with a term SOFR-based rate as an applicable benchmark for each facility.

The term loan matures on October 23, 2026.

The revolver matures on October 25, 2027 and the term loan matures on October 23, 2026.

Subject to certain conditions, the Company may increase the commitments under the revolver by up to an additional $ 500.0 million and may borrow up to an additional $ 75.0 million under the term loan.

5 unchanged sentences

The Company pays commitment fees on the unused portion of its revolver.

For the years ended December 31, 2021 and 2022, these fees amounted to $ 1.5 million and $ 1.3 million, respectively.

For the years ended December 31, 2022 and 2023, these fees amounted to $ 1.3 million.

As of December 31, 2023, the Company had senior notes outstanding, the respective principal terms and effective interest rates of which are presented below:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Notes 2025

10 unchanged sentences

In each case, the senior notes may be redeemed at a make-whole redemption price, plus accrued and unpaid interest.

The make-whole redemption price, in each case, is equal to the greater of 100 % of the principal amount of the notes to be redeemed and the remaining principal and interest payments on the notes being redeemed (excluding accrued but unpaid interest to, but not including, the redemption date) discounted to their present value as of the redemption date at the applicable treasury rate plus 0.25 %, in the case of the 2024 and the 2025 senior

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

notes, and to their present value as of the redemption date on a semi-annual basis at the applicable treasury rate plus 0.40 %, in the case of the 2030 senior notes.

On February 15, 2024, the Company’s $ 400.0 million 4.25 % senior notes due 2024 matured and were fully repaid.

Junior Subordinated Notes

18 unchanged sentences

Junior Convertible Securities

Effective January 1, 2022, the Company adopted ASU 2020-06.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2023, the Company had $ 341.7 million of principal outstanding in its 5.15 % junior convertible trust preferred securities (the “junior convertible securities”), maturing in 2037.

1 unchanged sentence

As of December 31, 2022 and 2023, the unamortized issuance costs related to the junior convertible securities were $ 3.1 million and $ 2.9 million, respectively.

The following table presents interest expense recognized in connection with the junior convertible securities:

The following table presents interest expense recorded in connection with the junior convertible securities:

For the Years Ended December 31,

2021 2022 2023

Contractual interest expense $ 22.2 $ 18.3 $ 17.6

3 unchanged sentences

Effective interest rate 5.99 % 5.21 % 5.21 %

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Holders of the junior convertible securities have no rights to put these securities to the Company.

5 unchanged sentences

The Company estimates that these deductions will generate annual deferred tax liabilities of approximately $ 9 million.

During the years ended December 31, 2021 and 2022, the Company repurchased a portion of its junior convertible securities for a purchase price of $ 33.0 million and $ 60.9 million, respectively, and as a result of these repurchases, the Company reduced its Deferred income tax liability (net) by $ 7.0 million and $ 11.4 million, respectively.

Derivative Financial Instruments

In 2020, the Company terminated its pound sterling-denominated forward foreign currency contracts and its corresponding collar contracts, which were designated as net investment hedges, and upon settlement, the Company received net proceeds of $ 24.9 million.

The net proceeds from the termination of the contracts are presented within sale of investment securities in the Consolidated Statements of Cash Flows.

During 2021, the Company terminated its interest rate swap contract (the “interest rate swap”) with a large financial institution (the “swap counterparty”), and upon settlement paid $ 0.4 million.

The interest rate swap was designated as a cash flow hedge and was used to exchange a portion of the Company’s LIBOR-based interest payments for fixed rate interest payments.

Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign exchange rate movements, which are designated as cash flow hedges.

These contracts do not include set-off rights and are therefore presented on a gross basis in Other assets and Other liabilities, which were $ 0.9 million and $ 0.8 million, respectively, as of December 31, 2021, and $ 0.5 million and $ 0.9 million, respectively, as of December 31, 2022.

The following table summarizes the effects of the derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income:

For the Years Ended December 31,

Gain (Loss) Recorded in Other Comprehensive Income (loss) Gain (loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings Loss Recorded in Other Comprehensive Income (Loss) Loss Reclassified from Accumulated Other Comprehensive Loss into Earnings

Forward foreign currency contracts $ ( 1.0 ) $ 1.0 $ ( 0.5 ) $ ( 1.0 )

Interest rate swap 1.9 ( 0.4 ) — —

Total $ 0.9 $ 0.6 $ ( 0.5 ) $ ( 1.0 )

For the year ended December 31, 2022, the Company repurchased a portion of its junior convertible securities for a purchase price of $ 60.9 million and as a result of these repurchases, the Company reduced its Deferred income tax liability (net) by $ 11.4 million.

The Company did not repurchase any of its junior convertible securities during the year ended December 31, 2023.

Commitments and Contingencies

4 unchanged sentences

As of December 31, 2023, these unfunded commitments were $ 187.2 million and may be called in future periods.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022, the Company was obligated to make deferred payments and was contingently liable to make payments in connection with certain of its consolidated Affiliates as follows:

As of December 31, 2023, the Company was obligated to make deferred payments and was contingently liable to make payments in connection with certain of its consolidated Affiliates, which are included in Other liabilities, as follows:

Earliest Payable

6 unchanged sentences

The Company is contingently liable to make maximum contingent payments of up to $ 110.0 million ($ 24.9 million attributable to the co-investor), of which $ 100.0 million and $ 10.0 million may become payable in 2024 and 2025, respectively.

The Company had liabilities for deferred and contingent payment obligations related to certain of its investments in Affiliates accounted for under the equity method.

As of December 31, 2022, the Company was obligated to make payments of up to $ 31.2 million, all of which is payable in 2023.

Liabilities for deferred and contingent payments are included in Other liabilities.

As of December 31, 2022, the Company was contingently liable to make payments of $ 153.5 million related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, all of which, may become payable from 2023 through 2029.

As of December 31, 2022, the Company expected to make payments of approximately $ 13 million.

In the event certain financial targets are not met at one of the Company’s Affiliates accounted for under the equity method, the Company may receive payments of up to $ 12.5 million and also has the option to reduce its ownership interest and receive an incremental payment of $ 25.0 million.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2023, the Company was obligated to make deferred payments of $ 59.8 million related to certain of its investments in Affiliates accounted for under the equity method, all of which is payable in 2024.

Deferred payment obligations are included in Other liabilities.

As of December 31, 2023, the Company was contingently liable to make payments of $ 237.1 million related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, of which $ 89.5 million may become payable in 2024 and $ 147.6 million may become payable from 2025 through 2029.

As of December 31, 2023, the Company agreed to provide one of its Affiliates accounted for under the equity method up to $ 50.0 million of contingent financing.

In the event that certain financial targets are not met, the Company may receive payments from one of its Affiliates accounted for under the equity method of up to $ 12.5 million and also has the option to reduce its ownership interest and receive an incremental payment of $ 25.0 million.

Affiliate equity interests provide holders at consolidated Affiliates with a conditional right to put their interests to the Company over time.

4 unchanged sentences

Balance, beginning of period $ 2,689.2 $ 2,648.7

New investments 30.5 —

Veritable Transaction (1)

Foreign currency translation ( 40.5 ) 16.5

1 unchanged sentence

Balance, end of period $ 2,648.7 $ 2,523.6

___________________________

(1) Represents Goodwill allocated to Veritable as of the closing date, including $ 3.5 million attributable to the non-controlling interests.

As of September 30, 2023, the Company completed its annual impairment assessment on goodwill and no impairment was indicated.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquired Client Relationships (Net)

5 unchanged sentences

Balance, as of December 31, 2021 $ 1,364.2 $ ( 1,028.1 ) $ 336.1 $ 1,630.3 $ 1,966.4

New investments 232.0 — 232.0 725.0 957.0

Intangible amortization and impairments — ( 49.1 ) ( 49.1 ) ( 2.5 ) ( 51.6 )

Foreign currency translation ( 9.1 ) 7.5 ( 1.6 ) ( 37.2 ) ( 38.8 )

Transfers (1)

( 35.0 ) 35.0 — — —

Balance, as of December 31, 2022 $ 1,355.1 $ ( 1,069.7 ) $ 285.4 $ 1,590.6 $ 1,876.0

Veritable Transaction (1)

( 85.1 ) 57.0 ( 28.1 ) — ( 28.1 )

Intangible amortization and impairments — ( 48.3 ) ( 48.3 ) — ( 48.3 )

Foreign currency translation 0.8 ( 0.5 ) 0.3 16.6 16.9

Transfers (2)

( 10.3 ) 10.3 — ( 4.1 ) ( 4.1 )

Balance, as of December 31, 2023 $ 1,260.5 $ ( 1,051.2 ) $ 209.3 $ 1,603.1 $ 1,812.4

___________________________

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Represents acquired client relationships attributable to Veritable as of the closing date, including $ 6.7 million attributable to the non-controlling interests.

(2) Transfers include acquired client relationships at Affiliates that were deconsolidated during the period.

1 unchanged sentence

The Company recorded amortization expense in Intangible amortization and impairments for these relationships of $ 35.7 million, $ 49.1 million, and $ 48.3 million for the years ended December 31, 2021, 2022, and 2023, respectively.

Based on relationships existing as of December 31, 2022, the Company estimates that its consolidated amortization expense will be approximately $ 50 million in 2023, approximately $ 35 million in 2024, and approximately $ 30 million in each of 2025, 2026, and 2027.

Based on relationships existing as of December 31, 2023, the Company estimates that its consolidated amortization expense will be approximately $ 30 million in 2024 and approximately $ 25 million in each of 2025, 2026, 2027, and 2028.

As of December 31, 2023, no impairments of definite-lived acquired client relationships were indicated.

As of December 31, 2023, no impairments of indefinite-lived acquired client relationships were indicated.

As of December 31, 2022, the Company had no provisional purchase price allocations.

Veritable Transaction

In the third quarter of 2023, the Company completed the sale of its equity interest in Veritable, LP (“Veritable”), one of the Company’s consolidated Affiliates, (the “Veritable Transaction”).

Pursuant to the terms of the agreement, under which a third party acquired 100 % of the outstanding equity interests in Veritable, the Company received $ 287.4 million in cash, net of transaction costs.

Veritable is included in the Company’s results through the closing date, and the Company’s gain on the transaction was $ 133.1 million, which is recorded in Affiliate Transaction gains in the Consolidated Statements of Income.

Equity Method Investments in Affiliates

In the first and fourth quarters of 2022, the Company completed an additional investment in Systematica Investments, an innovative technology-driven systematic manager, and completed a minority investment in Peppertree Capital Management, Inc.

(“Peppertree”), a private markets firm specializing in communications infrastructure, respectively.

The majority of the consideration paid for Peppertree will be deductible for U.S.

In the third quarter of 2023, the Company completed a minority investment in Forbion Group Holding B.V., a private markets firm focused on investing in high-quality life sciences companies, and in the fourth quarter of 2023, the Company completed a minority investment in Ara Partners Group, LLC (“Ara Partners”), a private markets firm specializing in industrial decarbonization.

The majority of the consideration paid for Ara Partners will be deductible for U.S.

tax purposes over a 15-year life.

The Company’s purchase price allocation for each investment was measured using discounted cash flow analyses that included assumptions of expected market performance, net client cash flows, and discount rates.

The Company’s provisional purchase price allocation for each investment was measured using financial models that include assumptions of expected market performance, net client cash flows, and discount rates.

The financial results of certain Affiliates accounted for under the equity method are recognized in the Consolidated Financial Statements one quarter in arrears.

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Investments in Affiliates 326.1 349.8

BPEA Transaction (1)

Earnings 497.2 375.6

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___________________________

(1) Represents the Company’s equity method investment in Baring Private Equity Asia (“BPEA”) as of the BPEA Transaction closing date.

(1) Represents the Company’s equity method investment in BPEA as of the closing date.

Definite-lived acquired client relationships at the Company’s Affiliates accounted for under the equity method are amortized over their expected period of economic benefit.

The Company recorded amortization expense for these relationships of $ 123.0 million, $ 109.1 million, and $ 86.0 million for the years ended December 31, 2021, 2022, and 2023, respectively.

Based on relationships existing as of December 31, 2022, the Company estimates the amortization expense attributable to its Affiliates will be approximately $ 85 million in 2023, approximately $ 55 million in 2024, approximately $ 50 million in 2025, and approximately $ 45 million in each of 2026 and 2027.

For the year ended 2021, the Company recorded a $ 52.0 million expense to reduce the carrying value of an Affiliate to fair value.

The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment.

The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected compounded growth in assets under management over the first five years of 0.3 %, long-term growth rate of 5 %, discount rates of 11 % and 20 % for asset- and performance-based fees, respectively, and a market participant tax rate of 25 %.

Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

For the year ended 2022, the Company recorded a $ 50.0 million expense to reduce the carrying value of an Affiliate to fair value.

Based on relationships existing as of December 31, 2023, the Company estimates the amortization expense attributable to its Affiliates will be approximately $ 65 million in 2024, approximately $ 62 million in 2025, approximately $ 55 million in each of 2026 and 2027, and approximately $ 50 million in 2028.

For the year ended December 31, 2022, the Company recorded a $ 50.0 million expense to reduce the carrying value of an Affiliate to fair value.

The decline in the fair value was a result of a decline in assets under management and a reduction in projected margin, which decreased the forecasted income associated with the investment.

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Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

For the year ended December 31, 2023, the Company recorded $ 9.6 million of expenses to reduce the carrying values of certain of its Affiliates because it concluded that the fair value of its investments had declined below their carrying values and that the declines were other-than-temporary.

For the year ended December 31, 2023, the Company completed its annual assessme nt of its investments in Affiliates accounted for under the equity method and no other impairments were indicated.

The Company had liabilities for deferred and contingent payment obligations related to certain of its investments in Affiliates accounted for under the equity method.

The Company had 20 and 22 Affiliates accounted for under the equity method as of December 31, 2022 and 2023, respectively.

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These percentages would be subject to a separate future negotiation if an Affiliate were to be sold or liquidated.

The following table presents summarized financial information for Affiliates accounted for under the equity method:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents summarized financial information for Affiliates accounted for under the equity method:

For the Years Ended December 31,

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(1) Revenue and net income include asset- and performance-based fees, the impact of consolidated sponsored investment products, and new Affiliate investments for the full-year, regardless of the date of the Company’s investment.

BPEA Transaction Gain

In the fourth quarter of 2022, the Company completed the previously announced sale of its equity interest in BPEA, an Affiliate accounted for by the Company under the equity method, to EQT (the “BPEA Transaction”) in connection with the strategic combination of BPEA and EQT.

Pursuant to the terms of the Securities Purchase and Merger Agreement with EQT, under which the Company and each of the other owners agreed to sell their respective equity interests in BPEA, the Company received $ 223.6 million in cash, net of transaction costs, and 28.68 million EQT ordinary shares ( 25 % of which are subject to a six-month lock-up, which expires in April 2023), and other investments.

BPEA is included in the Company’s results through the closing date and the Company’s gain on the transaction was $ 641.9 million.

The transaction was taxable at closing.

During the fourth quarter of 2022 and through February 15, 2023, the Company has sold 17.4 million EQT ordinary shares.

BPEA Transaction

In the fourth quarter of 2022, the Company completed the sale of its equity interest in BPEA, an Affiliate accounted for by the Company under the equity method, to EQT (the “BPEA Transaction”) in connection with the strategic combination of BPEA and EQT.

Pursuant to the terms of the Securities Purchase and Merger Agreement with EQT, under which the Company and each of the other owners agreed to sell their respective equity interests in BPEA, the Company received $ 223.6 million in cash, net of transaction costs, and 28.68 million EQT ordinary shares ( 25 % of which were subject to a six-month lock-up, which expired in April 2023), and other investments.

BPEA is included in the Company’s results through the closing date, and the Company’s gain on the transaction was $ 641.9 million, which is recorded in Affiliate Transaction gains.

Lease Commitments

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Total lease costs (net) $ 26.7 $ 31.8 $ 31.0

As of December 31, 2021 and 2022, the Company’s and its Affiliates’ weighted average operating lease term was seven years and eight years , respectively, and the weighted average operating lease discount rate was 3 %.

As of December 31, 2022 and 2023, the Company’s and its Affiliates’ weighted average operating lease term was eight years and seven years , respectively, and the weighted average operating lease discount rate was 3 %.

As of December 31, 2023, the maturities of lease liabilities were as follows:

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A prior owner of one of the Company’s consolidated Affiliates retains interests in certain of the Affiliate’s private equity partnerships and, as a result, is a related party of the Company.

The prior owner’s interests are presented within Other liabilities and were $ 28.5 million and $ 21.0 million as of December 31, 2021 and 2022, respectively.

The prior owner’s interests are included in Other liabilities and were $ 21.0 million and $ 18.5 million as of December 31, 2022 and 2023, respectively.

The Company may invest from time to time in funds or products advised by its Affiliates.

The Company’s executive officers and directors may invest from time to time in funds advised or products offered by its Affiliates, or receive other investment services provided by its Affiliates, on substantially the same terms as other investors.

In addition, the Company and its Affiliates earn asset- and performance-based fees and incur distribution and other expenses for services provided to Affiliate sponsored investment products.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s Board of Directors authorized share repurchase programs in October 2022, January 2022, and January 2021 to repurchase up to 3.0 million, 2.0 million, and 5.0 million shares of its common stock, respectively, and these authorizations have no expiry.

The Company’s Board of Directors authorized share repurchase programs in January 2022, October 2022, and October 2023 to repurchase up to 2.0 million, 3.0 million, and 3.3 million shares of its common stock, respectively, and these authorizations have no expiry.

Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of trading plans, as well as pursuant to accelerated share repurchase programs or other share repurchase strategies that may include derivative financial instruments.

As of December 31, 2022, the Company had repurchased all of the shares of the January 2021 authorized amount, and there were a total of 3.9 million shares available for repurchase under the Company’s October 2022 and January 2022 share repurchase programs.

As of December 31, 2023, the Company had repurchased all of the shares in the repurchase program authorized in January 2022, and there were a total of 4.2 million shares available for repurchase under the Company’s share repurchase programs.

In December 2022, the Company entered into an accelerated share repurchase agreement to repurchase shares of its common stock in exchange for an upfront payment of $ 225.0 million.

The Company received an initial share delivery of 1.1 million shares in December 2022, which represents 80 % of the upfront payment based on the closing price of the Company’s common stock on the agreement date.

Such shares have been reflected in Treasury stock on the Consolidated Balance Sheets as of December 31, 2022.

The total number of shares to be repurchased will be based on volume-weighted average prices of the Company’s common stock during the term of the agreement less a discount and subject to adjustments pursuant to the terms and conditions of such agreement.

The final settlement of this transaction is expected to be completed in the second or third quarter of 2023.

The Company received an initial share delivery of 1.1 million shares in December 2022, which represented 80 % of the upfront payment based on the closing price of the Company’s common stock on the agreement date.

In the second quarter of 2023, the Company received a final share delivery of 0.4 million shares.

Under this agreement, the Company repurchased a total of 1.5 million shares at an average price of $ 147.29 per share.

The following is a summary of the Company’s share repurchase activity:

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For awards with performance conditions, the number of restricted stock units expected to vest may change over time depending upon the performance level achieved.

The total fair value of shares vested was $ 24.1 million, $ 51.7 million, and $ 54.6 million during the years ended December 31, 2020, 2021, and 2022, respectively.

The total fair value of shares vested was $ 51.7 million, $ 54.6 million, and $ 86.2 million for the years ended December 31, 2021, 2022, and 2023, respectively.

As of December 31, 2023, the Company had 2.4 million shares available for grant under its plans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company granted stock options with fair values of $ 4.4 million, $ 2.0 million, and $ 1.8 million for the years ended December 31, 2020, 2021, and 2022, respectively.

The Company granted stock options with fair values of $ 2.0 million and $ 1.8 million for the years ended December 31, 2021 and 2022, respectively.

The Company did not grant any stock options for the year ended December 31, 2023.

Stock options generally vest over a period of three years to five years and expire seven years after the grant date.

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The Company generally uses treasury stock to settle stock option exercises.

The total intrinsic value of stock options exercised during the years ended December 31, 2020, 2021, and 2022 was $ 0.0 million , $ 13.4 million, and $ 1.2 million, respectively.

The cash received for stock options exercised was zero , $ 3.6 million, and $ 2.6 million during the years ended December 31, 2020, 2021, and 2022, respectively.

The total intrinsic value of stock options exercised for the years ended December 31, 2021, 2022, and 2023 was $ 13.4 million, $ 1.2 million, and $ 0.2 million, respectively.

The cash received for stock options exercised was $ 3.6 million, $ 2.6 million, and zero for the years ended December 31, 2021, 2022, and 2023, respectively.

As of December 31, 2023, the intrinsic value of exercisable stock options outstanding was $ 1.9 million, and 1.1 million options were available for grant under the Company’s option plans.

The weighted average fair value of stock options was $ 18.33 , $ 54.19 , and $ 47.84 per option for the years ended December 31, 2020, 2021, and 2022, respectively.

The weighted average fair value of stock options granted was $ 54.19 and $ 47.84 per option for the years ended December 31, 2021 and 2022, respectively.

The Company uses the Black-Scholes option pricing model to determine the fair value of options.

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For the Years Ended December 31,

2020 2021 2022

Dividend yield 0.0 % 0.0 %

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Risk-free interest rate (2)

0.9 % 1.0 % 1.7 %

Expected life of stock options (in years) (3)

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Affiliate equity holders generally have a conditional right to put their interests to the Company at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure).

Prior to becoming redeemable, the Company’s Affiliate equity is presented within Non-controlling interests.

Prior to becoming redeemable, the Company’s Affiliate equity is included in Non-controlling interests.

Upon becoming redeemable, these interests are reclassified to Redeemable non-controlling interests at their current redemption values.

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The following table presents the changes in Redeemable non-controlling interests:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Redeemable Non-controlling Interests

Balance, beginning of period $ 673.9 $ 465.4

Veritable Transaction — ( 16.8 )

Decrease attributable to consolidated Affiliate sponsored investment products ( 4.9 ) ( 8.3 )

Transfers to Other liabilities ( 59.6 ) ( 93.5 )

Transfers from Non-controlling interests 3.9 1.8

Transfers from (to) Non-controlling interests 1.8 ( 8.9 )

Changes in redemption value ( 145.8 ) 55.5

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$ 465.4 $ 393.4

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

__________________________

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The amount of cash paid for purchases was $ 150.5 million, $ 61.5 million, and $ 67.4 million for the years ended December 31, 2021, 2022, and 2023, respectively.

The total amount of cash received for issuances was $ 20.2 million, $ 117.7 million (including $ 99.6 million from a co-investor), and $ 15.2 million for the years ended December 31, 2020, 2021, and 2022, respectively.

The total amount of cash received for issuances was $ 117.7 million (including $ 99.6 million from a co-investor), $ 15.2 million, and $ 13.4 million for the years ended December 31, 2021, 2022, and 2023, respectively.

Sales and purchases of Affiliate equity generally occur at fair value;

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The following table presents unrecognized Affiliate equity compensation expense:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Controlling Interest Remaining Life Non-controlling Interests Remaining Life

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Effects of Changes in the Company’s Ownership in Affiliates

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company periodically acquires interests from, and transfers interests to, Affiliate equity holders.

Because these transactions do not result in a change of control, any gain or loss related to these transactions is recorded to Additional paid-in capital, which increases or decreases the controlling interest’s equity.

No gain or loss related to these transactions is recognized in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.

No gain or loss related to these transactions is recorded in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.

While the Company presents the current redemption value of Affiliate equity within Redeemable non-controlling interests, with changes in the current redemption value increasing or decreasing the controlling interest’s equity over time, the following table presents the cumulative effect that ownership changes had on the controlling interest’s equity related only to Affiliate equity transactions that occurred during the applicable periods:

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Net income (controlling interest) $ 565.7 $ 1,145.9 $ 672.9

(Decrease) increase in controlling interest paid-in capital from Affiliate equity issuances 1.1 ( 17.5 ) ( 0.2 )

Decrease in controlling interest paid-in capital from Affiliate equity issuances ( 17.5 ) ( 0.2 ) ( 13.5 )

Decrease in controlling interest paid-in capital from Affiliate equity purchases ( 63.2 ) ( 38.2 ) ( 50.4 )

Net income (loss) (controlling interest) including the net impact of Affiliate equity transactions $ ( 35.8 ) $ 485.0 $ 1,107.5

Net income (controlling interest) including the net impact of Affiliate equity transactions $ 485.0 $ 1,107.5 $ 609.0

Benefit Plans

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Under this plan, the Company is able to make discretionary contributions for the benefit of its employees that are qualified plan participants, up to Internal Revenue Service (“IRS”) limits.

The Company’s consolidated Affiliates generally have their own qualified defined contribution retirement plans covering their respective employees or, for several Affiliates, have their employees covered under the Company’s plan.

In each case, the relevant Affiliate is able to make discretionary contributions for the benefit of its employees, as applicable, that are qualified plan participants, up to IRS limits.

The Company’s consolidated Affiliates generally have their own qualified defined contribution retirement plans covering their respective employees or, for several Affiliates, had their employees covered under the Company’s plan until February or March 2023, as applicable.

In each case, the relevant Affiliate was able to make discretionary contributions for the benefit of its employees, as applicable, that were qualified plan participants, up to IRS limits.

Consolidated expenses related to these plans were $ 19.1 million, $ 20.9 million, and $ 24.8 million for the years ended December 31, 2021, 2022, and 2023, respectively.

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The following table presents the consolidated provision for income taxes:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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(1) Taxes attributable to the controlling interest divided by income before income taxes (controlling interest).

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The consolidated provision for income taxes consisted of the following:

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federal statutory tax rate to the Company’s effective tax rate:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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Unrecognized tax benefits 0.1 0.4 0.6

Affiliate divestments ( 6.2 ) — —

BPEA Transaction (1)

Changes in U.S.

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(1) Reflective of the BPEA Transaction gain of $ 641.9 million and realized and unrealized gains on EQT ordinary shares of $ 43.8 million and $ 57.9 million, respectively.

The Company’s effective tax rate (controlling interest) in 2020 is not significantly different from the marginal tax rate.

The effective tax rate (controlling interest) in 2021 is higher than the marginal tax rate, primarily due to non-deductible compensation expense and an increase in deferred tax expense resulting from the revaluation of certain deferred tax liabilities

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

due to an increase in the UK tax rate enacted during 2021.

(1) The year ended December 31, 2022 is reflective of the BPEA Transaction gain of $ 641.9 million and realized and unrealized gains on EQT ordinary shares of $ 43.8 million and $ 57.9 million, respectively.

The Company’s effective tax rate (controlling interest) in 2021 is higher than the marginal tax rate, primarily due to non-deductible compensation expense and an increase in deferred tax expense resulting from the revaluation of certain deferred tax liabilities due to an increase in the UK tax rate enacted during 2021.

The effective tax rate (controlling interest) in 2022 is lower than the marginal rate primarily due to the tax benefits of foreign operations and a state tax benefit related to the BPEA Transaction.

The effective tax rate (controlling interest) in 2023 is lower than the marginal rate primarily due to discrete benefits from foreign operations.

Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting bases and tax bases of the Company’s assets and liabilities.

The significant components of the Company’s Deferred income tax liability (net) are as follows:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Tax Assets

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(1) As of December 31, 2021 and 2022, foreign loss carryforwards of $ 22.2 million (net of a $ 20.3 million valuation allowance) and $ 20.0 million (net of a $ 16.5 million valuation allowance), respectively, are presented within Other assets as they represent a net deferred tax asset in a foreign jurisdiction.

As of December 31, 2022, the Company had available state net operating loss carryforwards of $ 238.8 million, a majority of which will expire over seven years to 12 years.

As of December 31, 2022, the Company had foreign loss carryforwards of $ 75.7 million, of which $ 58.8 million will expire over ten years to 18 years and $ 16.9 million will carry forward indefinitely.

As of December 31, 2022, the Company had foreign tax credit carryforwards of $ 15.4 million which will expire over six years to ten years .

(1) As of December 31, 2022 and 2023, foreign loss carryforwards of $ 20.0 million (net of a $ 16.5 million valuation allowance) and $ 19.8 million (net of a $ 17.0 million valuation allowance), respectively, are included in Other assets as they represent a net deferred tax asset in a foreign jurisdiction.

As of December 31, 2023, the Company had available state net operating loss carryforwards of $ 228.2 million, a majority of which will expire over six years to 11 years.

As of December 31, 2023, the Company had foreign loss carryforwards of $ 74.8 million, of which $ 57.5 million will expire over nine years to 16 years and $ 17.3 million will carry forward indefinitely.

As of December 31, 2023, the Company had foreign tax credit carryforwards of $ 16.0 million, a majority of which will expire over five years to eight years .

The Company believed it was more-likely-than-not that the benefit from certain state and foreign loss carryforwards and foreign tax credit carryforwards would not be fully realized, and, as of December 31, 2023, had valuation allowances of $ 14.6 million, $ 17.0 million, and $ 16.0 million on the state and foreign loss carryforwards and the foreign tax credit carryforwards, respectively.

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The Company’s estimates and assumptions regarding the realization of its state and foreign loss carryforwards do not contemplate certain changes in ownership of the Company’s stock which could limit the utilization of these carryforwards.

The Company provides for U.S.

income taxes on all foreign earnings.

The Company does not provide for U.S.

income taxes on the excess of the financial reporting bases over tax bases in the Company’s investments in foreign subsidiaries considered permanent in duration.

Such amount would generally become

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

taxable upon the repatriation of assets from, or a sale or liquidation of, the foreign subsidiaries.

income taxes on the portion of the excess of the financial reporting bases over tax bases in the Company’s investments in foreign subsidiaries considered permanent in duration.

Such amount would generally become taxable upon the repatriation of assets from, or a sale or liquidation of, the foreign subsidiaries.

While a determination of the potential amount of unrecognized deferred U.S.

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A reconciliation of the changes in unrecognized tax benefits is as follows:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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federal, state and local, or foreign taxing authorities for periods prior to 2017.

In August 2022, the Inflation Reduction Act was enacted into law and included provisions for a 15% corporate alternative minimum income tax and a 1% excise tax on repurchases of the Company’s common stock.

These provisions, which were effective for the Company beginning January 1, 2023, did not have a material impact on the Company’s Consolidated Financial Statements for the year ended December 31, 2023.

The Company records the excise tax as part of the cost basis of its common stock repurchased.

Earnings Per Share

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Stock options and restricted stock units 0.2 0.2 0.2

Junior convertible securities 2.2 — —

Shares issuable to settle Redeemable non-controlling interests — 0.1 0.7

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For the Year Ended December 31, 2021

Pre-Tax Tax (Expense)

Benefit Net of Tax

Foreign currency translation gain $ 25.5 $ ( 10.3 ) $ 15.2

Change in net realized and unrealized loss on derivative financial instruments ( 1.9 ) 0.4 ( 1.5 )

Other comprehensive income $ 23.6 $ ( 9.9 ) $ 13.7

For the Year Ended December 31, 2021

Pre-Tax Tax Expense Net of Tax

Foreign currency translation gain $ 10.3 $ ( 3.5 ) $ 6.8

Change in net realized and unrealized gain on derivative financial instruments 0.9 ( 0.5 ) 0.4

Change in net realized and unrealized gain (loss) on derivative financial instruments 0.9 ( 0.5 ) 0.4

Other comprehensive income $ 11.2 $ ( 4.0 ) $ 7.2

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Foreign currency translation loss $ ( 144.1 ) $ 2.8 $ ( 141.3 )

Change in net realized and unrealized loss on derivative financial instruments ( 0.5 ) 0.0 ( 0.5 )

Change in net unrealized loss on available-for-sale debt securities ( 1.3 ) 0.3 ( 1.0 )

Change in net realized and unrealized gain (loss) on derivative financial instruments ( 0.5 ) 0.0 ( 0.5 )

Change in net unrealized gain (loss) on available-for-sale debt securities ( 1.3 ) 0.3 ( 1.0 )

Other comprehensive loss $ ( 145.9 ) $ 3.1 $ ( 142.8 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Year Ended December 31, 2023

Pre-Tax Tax (Expense) Benefit Net of Tax

Foreign currency translation gain $ 44.8 $ ( 3.7 ) $ 41.1

Change in net realized and unrealized gain (loss) on derivative financial instruments 0.3 0.0 0.3

Change in net unrealized gain (loss) on available-for-sale debt securities 0.5 0.0 0.5

Other comprehensive income $ 45.6 $ ( 3.7 ) $ 41.9

The components of accumulated other comprehensive income (loss), net of taxes, were as follows:

Foreign Currency Translation Adjustment Realized and Unrealized Gains (Losses) on Derivative Financial Instruments Unrealized Losses on Available-for-Sale Debt Securities Total

Foreign Currency Translation Adjustment Realized and Unrealized Gains (Losses) on Derivative Financial Instruments Unrealized Gains (Losses) on Available-for-Sale Debt Securities Total

Balance, as of December 31, 2021 $ ( 155.1 ) $ 0.1 $ — $ ( 155.0 )

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Amounts reclassified — ( 1.0 ) — ( 1.0 )

Net other comprehensive income 6.8 0.4 — 7.2

Net other comprehensive loss ( 141.3 ) ( 0.5 ) ( 1.0 ) ( 142.8 )

Balance, as of December 31, 2022 $ ( 296.4 ) $ ( 0.4 ) $ ( 1.0 ) $ ( 297.8 )

Other comprehensive income (loss) before reclassifications ( 141.3 ) 0.5 ( 1.0 ) ( 141.8 )

Other comprehensive income before reclassifications 41.1 1.9 0.5 43.5

Amounts reclassified — ( 1.6 ) — ( 1.6 )

Net other comprehensive loss ( 141.3 ) ( 0.5 ) ( 1.0 ) ( 142.8 )

Net other comprehensive income 41.1 0.3 0.5 41.9

Balance, as of December 31, 2023 $ ( 255.3 ) $ ( 0.1 ) $ ( 0.5 ) $ ( 255.9 )

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(1) Other allowances represented reserves on notes received in connection with transfers of the Company’s interests in certain Affiliates, as well as other receivable amounts, which the Company considered uncollectible.

(1) Other allowances primarily represents reserves on notes received in connection with transfers of the Company’s interests in certain Affiliates, as well as other receivable amounts, which the Company considered uncollectible.

Deductions represented the reversal of such reserves upon collection of the amounts due.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data