AFFILIATED MANAGERS GROUP, INC. 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following executive overview, which summarizes the significant trends affecting our results of operations and financial condition, as well as the remainder of this Management’s Discussion and Analysis of Financial Condition and Results of Operations of Affiliated Managers Group, Inc. and its subsidiaries, should be read in conjunction with the “Forward-Looking Statements” section set forth in Part I, the “Risk Factors” section set forth in Item 1A of Part I and with our Consolidated Financial Statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K, and in any more recent filings with the SEC. Our discussion and analysis of the key operating performance measures and financial results for fiscal year 2024 compared to fiscal year 2023 is included herein. For discussion and analysis of fiscal year 2023 compared to fiscal year 2022 , please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 , which was filed with the SEC on February 16, 2024 . Executive Overview AMG is a strategic partner to leading independent investment firms globally. Our strategy is to generate long-term value by investing in high-quality independent partner-owned firms, which we refer to as “Affiliates,” through a proven partnership approach, and allocating resources across our unique opportunity set to the areas of highest growth and return. With their entrepreneurial, investment-centric cultures and alignment of interests with clients through direct equity ownership by firm principals, independent firms have fundamental competitive advantages in offering unique return streams to the marketplace. Through AMG’s distinctive approach, we enhance these advantages to magnify the long-term success of our Affiliates and actively support their independence. Our innovative model enables each Affiliate’s management team to retain autonomy and significant equity ownership in their firm, while they leverage our strategic capabilities and insight, including growth capital, product strategy and development, capital formation, and incentive alignment and succession planning. As of December 31, 2024 , our aggregate assets under management were approximately $708 billion across a diverse range of private markets, liquid alternatives, and differentiated long-only investment strategies. On February 6, 2025, we announced the completion of our minority investment in NorthBridge Partners, LLC (“NorthBridge”), a private markets manager specializing in industrial logistics real estate assets . Following the close of the transaction, NorthBridge partners continue to hold a significant majority of the equity of the firm and direct its day-to-day operations. The financial results will be recognized in the Consolidated Financial Statements one quarter in arrears. Operating Performance Measures Under accounting principles generally accepted in the U.S. (“GAAP”), we are required to consolidate certain of our Affiliates and use the equity method of accounting for others. Whether we consolidate an Affiliate or use the equity method of accounting, we maintain the same innovative partnership approach and provide support and assistance in substantially the same manner for all of our Affiliates. Furthermore, all of our Affiliates are investment managers and are impacted by similar marketplace factors and industry trends . Therefore, certain key aggregate operating performance measures are important in providing management with a comprehensive view of the operating performance and material trends across our entire business. The following table presents our key aggregate operating performance measures: As of and for the Years Ended December 31, (in billions, except as noted) 2022 2023 % Change 2024 % Change Assets under management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 650.8 $ 672.7 3 % $ 707.9 5 % Average assets under management . . . . . . . . . . . . . . . . . . . . . . . . . 709.4 660.3 (7) % 700.5 6 % Aggregate fees (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,560.5 5,066.6 (9) % 5,236.0 3 % Assets under management, and therefore average assets under management, include the assets under management of our consolidated and equity method Affiliates. Assets under management is presented on a current basis without regard to the timing of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial Statements. Average assets under management reflects the timing of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial Statements. Average assets under management for mutual funds and similar investment products generally represents an average of the daily net assets under management, while for 23 Table of Contents institutional and high net worth clients, average assets under management generally represents an average of the assets at the beginning or end of each month during the applicable period. Aggregate fees consist of the total asset- and performance-based fees earned by all of our consolidated and equity method Affiliates. For certain of our Affiliates accounted for under the equity method, we report the Affiliate’s aggregate fees one quarter in arrears. Aggregate fees are provided in addition to, but not as a substitute for, Consolidated revenue or other GAAP performance measures. Assets Under Management Our Affiliates manage capital on behalf of clients across a diverse range of investment strategies. Our Affiliates earn asset- based fees on the capital that they manage and certain of our Affiliate’s strategies earn performance-based fees based on the performance generated by their investment products. Assets under management increased du ring the year ended December 31, 2024 , primarily driven by investment performance generated across our Affiliates, partially offset by net outflows. We continue to see client demand for alternative strategies (both in private markets and liquid alternatives), as evidenced by our net inflows in this category, but our equity strategies experienced net outflows in line with trends across the industry. As we continue to invest in new and existing Affiliates, we expect to further evolve our business mix and better position AMG to benefit from industry growth trends. The following table presents changes in our assets under management by strategy: Alternatives Differentiated Long-Only (in billions) Private Markets Liquid Alternatives Equities (1) Multi-Asset & Fixed Income Total December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114.8 $ 124.0 $ 329.4 $ 104.5 $ 672.7 Client cash inflows and commitments . . . . . . . . . . . . 23.7 27.5 38.1 22.1 111.4 Client cash outflows . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (25.6) (80.2) (19.3) (125.3) Net client cash flows . . . . . . . . . . . . . . . . . . . . . . 23.5 1.9 (42.1) 2.8 (13.9) New investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 — — 0.7 1.4 Market changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.4 10.6 41.4 8.7 61.1 Foreign exchange (2) . . . . . . . . . . . . . . . . . . . . . . . . . . (0.3) (0.8) (4.6) (1.2) (6.9) Realizations and distributions (net) . . . . . . . . . . . . . . (4.4) (0.5) (1.4) (0.3) (6.6) Other (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 5.5 (6.5) 0.4 0.1 December 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 135.4 $ 140.7 $ 316.2 $ 115.6 $ 707.9 ___________________________ (1) Equities i ncludes assets under management attributable to both global equities and U.S. equities. (2) Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional currency is not the U.S. dollar into our functional currency. (3) Other includes assets under management attributable to product transitions and reclassifications. The following tables present performance of our investment strategies, where available, measured by the percentage of assets under management ahead of their relevant benchmark: AUM Weight % of AUM Ahead of Benchmark (1) IRR Latest Vintage IRR Last Three Vintages Private markets (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19% 85% 84% AUM Weight % of AUM Ahead of Benchmark (1) 3-year 5-year 10-year Liquid alternatives (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20% 87% 95% 87% Equities (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45% 36% 53% 53% Multi-asset and fixed income (4) . . . . . . . . . . . . . . . . . . . . . . . . 16% N/A N/A N/A 24 Table of Contents ___________________________ (1) Past performance is not indicative of future results. Performance and AUM information is as of December 31, 2024 and is based on data available at the time of calculation. Product returns are sourced from Affiliates while benchmark returns are generally sourced via third-party subscriptions. (2) For private markets products, performance is reported as the percentage of assets that have outperformed benchmarks on a since-inception internal rate of return basis. Benchmarks utilized include a combination of public market equivalents, peer medians, and absolute returns where benchmarks are not available. For purposes of investment performance comparisons, the latest vintage comparison includes the most recent vehicles and strategies (traditional long-duration investment funds, customized vehicles, and other evergreen vehicles and product structures) where meaningful performance is available and calculable. In order to illustrate the performance of our private markets product category over a longer period of history, the last three vintages comparison incorporates the latest vintage vehicles and the prior two vintages for traditional long- duration investment funds, as well as additional vehicles and strategies launched during the equivalent time period as the last three vintages of traditional long-duration investment funds. Due to the nature of these investments and vehicles, reported performance is typically on a three- to six-month lag basis. (3) For liquid alternative and equity products, performance is reported as the percentage of assets that have outperformed benchmarks across the indicated periods, and excludes market-hedging products. For purposes of investment performance comparisons, products are an aggregation of portfolios (separate accounts, investment funds, and other products) that each represent a particular investment objective, using the most representative portfolio for the performance comparison. Performance is presented for products with a three-, five-, and/or ten-year track record and is measured on a consistent basis relative to the most appropriate benchmarks. Benchmark appropriateness is generally reviewed annually to reflect any changes in how underlying portfolios/mandates are managed. Product and benchmark performance is reflected as total return and is annualized. Reported product performance is gross-of-fees for institutional and high-net-worth separate accounts, and generally net-of-fees across retail funds and other commingled vehicles such as hedge funds. (4) Multi-asset and fixed income products are mainly our wealth management and solutions offerings. These investment products are primarily customized toward wealth preservation, estate planning, and liability and tax management, and therefore are typically not measured against a benchmark. Aggregate Fees Aggregate fees consist of asset- and performance-based fees of our consolidated and equity method Affiliates. Asset-based fees include advisory and other fees earned by our Affiliates for services provided to their clients and are typically determined as a percentage of the value of a client’s assets under management, generally inclusive of uncalled commitments. Asset-based fees are generally impacted by the level of average assets under management and the composition of these assets across our strategies with different asset-based fee ratios. Our asset-based fee ratio is calculated as asset-based fees divided by average assets under management. In some cases, if product returns exceed certain performance thresholds, we will participate in performance-based fees. Performance-based fees are based on investment performance, typically on an absolute basis or relative to a benchmark or hurdle rate, and are generally recognized when it is improbable that there will be a significant reversal in the amount of revenue recognized. Performance-based fees are generally recognized less frequently than asset-based fees and will vary from period to period because they inherently depend on investment performance. As of December 31, 2024 , approximately 27% of our total assets under management could potentially earn performance-based fees. These percentages were approximately 12% and 47% of our assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method, respectively. We anticipate performance-based fees will be a recurring component of our aggregate fees; however we do not anticipate these fees to be a significant component of our Consolidated revenue as these fees are predominately earned by our Affiliates accounted for under the equity method. Aggregate fees were $5,236.0 million in 2024 , an increase of $169.4 million or 3% as compared to 2023 . The increase in our aggregate fees was due to a $323.1 million or 6% increase from asset-based fees, offset by a $153.7 million or 3% decrease from performance-based fees, primarily in our liquid alternative strategies. The increase in asset-based fees was principally due to an increase in our average assets under management, primarily in our liquid alternative and private markets strategies, and changes in the composition of our assets under management primarily driven by investments in new Affiliates. 25 Table of Contents Financial and Supplemental Financial Performance Measures The following table presents our key financial and supplemental financial performance measures: For the Years Ended December 31, (in millions) 2022 2023 % Change 2024 % Change Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,388.1 $ 906.1 (35) % $ 740.6 (18) % Net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145.9 672.9 (41) % 511.6 (24) % Adjusted EBITDA (controlling interest) (1) . . . . . . . . . . . . . . . . . . . 1,053.8 935.7 (11) % 973.1 4 % Economic net income (controlling interest) (1) . . . . . . . . . . . . . . . . . 797.2 717.8 (10) % 701.6 (2) % ___________________________ (1) Adjusted EBITDA (controlling interest) and Economic net income (controlling interest) are non-GAAP performance measures and are discussed in “Supplemental Financial Performance Measures.” Net income (controlling interest) decreased $161.3 million or 24% in 2024 . This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the sale of our equity interest in Veritable, LP, one of our consolidated Affiliates, in the third quarter of 2023 (the “Veritable Transaction”) and a $38.3 million decrease in Investment and other income attributable to the controlling interest. Adjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management as it provides a comprehensive view of our share of the financial performance of our business. Adjusted EBITDA (controlling interest) increased $37.4 million or 4% in 2024 , primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which we hold a greater economic interest. We believe Economic net income (controlling interest) is an important supplemental financial performance measure because it represents our performance before non-cash expenses primarily related to our acquisition of interests in Affiliates and improves comparability of performance between periods. Economic net income (controlling interest) decreased $16.2 million or 2% in 2024 , primarily due to a $32.8 million increase in current and other deferred taxes attributable to the controlling interest and a $9.5 million increase in Interest expense attributable to the controlling interest. These decreases were partially offset by a $37.4 million or 4% increase in Adjusted EBITDA (controlling interest). Results of Operations The following discussion includes the key operating performance measures and financial results of our consolidated and equity method Affiliates. Our consolidated Affiliates’ financial results are included in our Consolidated revenue, Consolidated expenses, and Investment and other income, and our share of our equity method Affiliates’ financial results is reported, net of intangible amortization and impairments, in Equity method income (net). Consolidated Revenue Our Consolidated revenue is derived from our consolidated Affiliates, primarily from asset-based fees from investment management services. For these Affiliates, we typically use operating structures where we contractually share in the Affiliate’s revenue without regard to expenses. Consolidated revenue is generally determined by the level of our consolidated Affiliates’ average assets under management and the composition of these assets across our consolidated Affiliates’ investment strategies with different asset-based fee ratios and performance-based fees. The following table presents our consolidated Affiliates’ average assets under management and Consolidated revenue: For the Years Ended December 31, (in millions, except as noted) 2022 2023 % Change 2024 % Change Consolidated Affiliate average assets under management (in billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 422.2 $ 393.7 (7) % $ 399.3 1 % Consolidated revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,329.6 $ 2,057.8 (12) % $ 2,040.9 (1) % Our Consolidated revenue decreased $16.9 million or 1% in 2024 , primarily due to a $20.3 million or 1% decrease from asset-based fees. The decrease in asset-based fees was principally due to changes in the composition of our assets under 26 Table of Contents management, including the impact of the Veritable Transaction, partially offset by an increase in our consolidated Affiliate average assets under management, primarily in our private markets strategies. Consolidated Expenses The following table presents our Consolidated expenses: For the Years Ended December 31, (in millions) 2022 2023 % Change 2024 % Change Compensation and related expenses . . . . . . . . . . . . . . . . . . . . . . . . $ 1,071.5 $ 907.5 (15) % $ 915.3 1 % Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . 385.5 358.2 (7) % 376.5 5 % Intangible amortization and impairments . . . . . . . . . . . . . . . . . . . . 51.6 48.3 (6) % 29.0 (40) % Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.4 123.8 8 % 133.3 8 % Depreciation and other amortization . . . . . . . . . . . . . . . . . . . . . . . 15.8 13.0 (18) % 13.4 3 % Other expenses (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.7 45.8 32 % 40.3 (12) % Total consolidated expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,673.5 $ 1,496.6 (11) % $ 1,507.8 1 % Compensation and related expenses increased $7.8 million or 1% in 2024 , primarily due to a $16.3 million increase in compensation accruals and a $6.9 million increase in Affiliate equity compensation expense. These increases were partially offset by a $16.0 million decrease in compensation and related expenses due to the Veritable Transaction . Selling, general and administrative expenses increased $18.3 million or 5% in 2024 , primarily due to a $22.4 million increase in distribution and investment-related expenses, principally as a result of the increase in average assets under management on which these expenses are incurred. This increase was partially offset by a $2.4 million decrease in professional fees and a $1.6 million decrease in non-income based taxes . Intangible amortization and impairments decreased $19.3 million or 40% in 2024 , primarily due to a $14.1 million decrease in amortization expense related to certain definite-lived assets being fully amortized and a $5.0 million decrease due to the Veritable Transaction. Interest expense increased $9.5 million or 8% in 2024 , primarily due to a $23.8 million increase from our 6.75% junior subordinated notes issued in March 2024 (the “2064 junior subordinated notes”) and an $8.1 million increase from our 5.50% senior unsecured notes issued in August 2024 (the “2034 senior notes”). These increases were partially offset by a $15.5 million decrease due to the maturity of our 4.25% senior notes in February 2024 (the “2024 senior notes”) and an $8.2 million decrease due to the repayment of our senior unsecured term loan facility (the “term loan”). There were no significant changes to Depreciation and other amortization in 2024 . Other expenses (net) decreased $5.5 million or 12% in 2024 , primarily due to a $2.7 million decrease in expenses related to changes in the values of contingent payment obligations and a $1.5 million decrease in rent and related office costs. Equity Method Income (Net) When we do not own a controlling equity interest in an Affiliate, but have significant influence, we account for our interest in the Affiliate under the equity method. Our share of earnings or losses from Affiliates accounted for under the equity method (“equity method earnings”), net of amortization and impairments, is included in Equity method income (net). For certain of our Affiliates accounted for under the equity method, we report the Affiliate’s financial results in our Consolidated Financial Statements one quarter in arrears. For a majority of these Affiliates, we use operating structures where we contractually share in the Affiliate’s revenue less agreed-upon expenses. We also use operating structures where we contractually share in the Affiliate’s revenue without regard to expenses. Our equity method revenue is derived primarily from asset- and performance-based fees from investment management services earned by our equity method Affiliates. Equity method revenue incorporates the total asset- and performance-based fees earned by all of our Affiliates accounted for under the equity method and is generally determined by the level of our equity method Affiliate average assets under management and the composition of these assets across our strategies with different asset-based fee ratios and performance-based fees. Our Affiliates accounted for under the equity method manage a greater 27 Table of Contents proportion of assets subject to performance-based fees than our consolidated Affiliates and, as a result, equity method revenue will generally have more performance-based fees than Consolidated revenue. The following table presents equity method Affiliate average assets under management and equity method Affiliate revenue (“equity method revenue”), as well as equity method earnings, equity method intangible amortization, and equity method intangible impairments, if any, which in aggregate form Equity method income (net): For the Years Ended December 31, (in millions, except as noted) 2022 2023 % Change 2024 % Change Operating Performance Measures Equity method Affiliate average assets under management (in billions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 287.2 $ 266.6 (7) % $ 301.2 13 % Equity method revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,230.9 $ 3,008.8 (7) % $ 3,195.1 6 % Financial Performance Measures Equity method earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 497.2 $ 375.6 (24) % $ 442.7 18 % Equity method intangible amortization . . . . . . . . . . . . . . . . . . . . . (109.1) (86.0) (21) % (90.1) 5 % Equity method intangible impairments . . . . . . . . . . . . . . . . . . . . . . (50.0) (9.6) (81) % (39.9) N.M. (1) Equity method income (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 338.1 $ 280.0 (17) % $ 312.7 12 % ___________________________ (1) Percent change is not meaningful. Our equity method revenue increased $186.3 million or 6% in 2024 , due to a $343.4 million or 11% increase from asset- based fees, offset by a $157.1 million or 5% decrease from performance-based fees, primarily in our liquid alternative strategies. The increase in asset-based fees was principally due to an increase in our equity method Affiliate average assets under management, primarily in our liquid alternative and private markets strategies, and changes in the composition of our assets under management primarily driven by investments in new Affiliates. Equity method earning s increased $67.1 million or 18% in 2024 , primarily due to a $186.3 million or 6% increase in equity method revenue. Equity method earnings increased more than equity method revenue on a percentage basis primarily due to an increase in earnings at certain Affiliates in which we share in revenue less agreed-upon expenses and the recognition of performance-based fees earned by Affiliates in which we hold a greater economic interest. Equity method intangible amortization increased $4.1 million or 5% in 2024 , primarily due to a $19.5 million increase in amortization expense due to investments in new Affiliates and a $17.9 million increase in amortization expense due to a decrease in actual and expected client attrition for certain definite-lived acquired client relationships. These increases were partially offset by a $33.3 million decrease in amortization expense related to certain definite-lived assets being fully amortized. Equity method intangible impairments increased $30.3 million in 2024 . See Note 8 of our Consolidated Financial Statements. Affiliate Transaction Gains For the years ended December 31, 2022 and 2023 , we recorded gains of $641.9 million on the sale of our equity interest in Baring Private Equity Asia ("BPEA") to EQT AB ("EQT"), a public company listed on the Nasdaq Stockholm (EQT.ST) (the "BPEA Transaction"), in connection with the strategic combination of BPEA and EQT, which was completed in the fourth quarter of 2022, and $133.1 million on the Veritable Transaction, respectively. See Notes 7 and 8 of our Consolidated Financial Statements. Investment and Other Income The following table presents our Investment and other income: For the Years Ended December 31, (in millions) 2022 2023 % Change 2024 % Change Investment and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110.3 $ 117.1 6 % $ 77.4 (34) % 28 Table of Contents Investment and other income decreased $39.7 million or 34% in 2024 , primarily due to a $35.3 million decrease in net realized and unrealized gains on investments in marketable securities. Income Tax Expense The following table presents our Income tax expense: For the Years Ended December 31, (in millions) 2022 2023 % Change 2024 % Change Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 358.3 $ 185.3 (48) % $ 182.6 (1) % Our consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to the non-controlling interests. Income tax expense decreased $2.7 million or 1% in 2024 . Our effective rate (controlling interest) for the year ended December 31, 2024 was 25.5% as compared to 20.9% for the year ended December 31, 2023 . The increase in the tax rate (controlling interest) was primarily due to discrete foreign tax benefits for the year ended December 31, 2023, and an expense to reduce the carrying value of an Affiliate to fair value for which no tax benefit was recorded, partially offset by higher tax windfalls attributable to share-based compensation, for the year ended December 31, 2024. Net Income The following table presents Net income, Net income (non-controlling interests), and Net income (controlling interest) : For the Years Ended December 31, (in millions) 2022 2023 % Change 2024 % Change Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,388.1 $ 906.1 (35) % $ 740.6 (18) % Net income (non-controlling interests) . . . . . . . . . . . . . . . . . . . . . . 242.2 233.2 (4) % 229.0 (2) % Net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,145.9 672.9 (41) % 511.6 (24) % Net income (controlling interest) decreased $161.3 million or 24% in 2024 , primarily due to the recognition of a pre-tax gain associated with the Veritable Transaction in the third quarter of 2023 and a decrease in Investment and other income attributable to the controlling interest. Supplemental Financial Performance Measures As supplemental information to our GAAP performance measures, including Net income (see Note 21 of our Consolidated Financial Statements), we provide non-GAAP performance measures of Adjusted EBITDA (controlling interest), Economic net income (controlling interest), and Economic earnings per share. We believe that many investors use our Adjusted EBITDA (controlling interest) when comparing our financial performance to other companies in the investment management industry. Management utilizes these non-GAAP performance measures to assess our performance before our share of certain non-cash GAAP expenses primarily related to the acquisition of interests in Affiliates and to improve comparability between periods. Economic net income (controlling interest) and Economic earnings per share are used by management and our Board of Directors as our principal performance benchmarks, including as one of the measures for determining executive compensation. These non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income, Net income (controlling interest), Earnings per share, or other GAAP performance measures. Adjusted EBITDA (controlling interest) Adjusted EBITDA (controlling interest) represents our performance before our share of interest expense, income and certain non-income based taxes, depreciation, amortization, impairments, gains and losses related to Affiliate Transactions, and non-cash items such as certain Affiliate equity activity, gains and losses on our contingent payment obligations, and unrealized gains and losses on seed capital, general partner commitments, and other strategic investments. Adjusted EBITDA (controlling interest) is also adjusted to include realized economic gains and losses related to these seed capital, general partner commitments, and other strategic investments. 29 Table of Contents The following table presents a reconciliation of Net income (controlling interest) to Adjusted EBITDA (controlling interest): For the Years Ended December 31, (in millions) 2022 2023 2024 Net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,145.9 $ 672.9 $ 511.6 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114.4 123.8 133.3 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347.4 185.2 187.9 Intangible amortization and impairments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.0 128.5 149.2 Affiliate Transactions (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (743.6) (162.7) — Other items (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5.3) (12.0) (8.9) Adjusted EBITDA (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,053.8 $ 935.7 $ 973.1 ___________________________ (1) Intangible amortization and impairments in our Consolidated Statements of Income include amortization attributable to the non-controlling interests of our consolidated Affiliates. For our Affiliates accounted for under the equity method, we do not separately report intangible amortization and impairments in our Consolidated Statements of Income. Our share of these Affiliates’ amortization and impairments is included in Equity method income (net). The following table presents the Intangible amortization and impairments shown above: For the Years Ended December 31, (in millions) 2022 2023 2024 Consolidated intangible amortization and impairments . . . . . . . . . . . . . . . . . . . . . . . . . $ 51.6 $ 48.3 $ 29.0 Consolidated intangible amortization and impairments (non-controlling interests) . . . (15.7) (15.4) (9.8) Equity method intangible amortization and impairments . . . . . . . . . . . . . . . . . . . . . . . 159.1 95.6 130.0 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 195.0 $ 128.5 $ 149.2 (2) The year ended December 31, 2022 includes 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 year ended December 31, 2023 includes Veritable Transaction gain of $133.1 million and realized gains on ordinary shares of EQT of $29.6 million . (3) Other items include certain non-income based taxes, depreciation, and non-cash items such as certain Affiliate equity activity, gains and losses on our contingent payment obligations, unrealized gains and losses on seed capital, general partner commitments, and other strategic investments, and realized economic gains and losses related to these seed capital, general partner commitments, and other strategic investments. Economic Net Income (controlling interest) and Economic Earnings Per Share Under our Economic net income (controlling interest) definition, we adjust Net income (controlling interest) for our share of pre-tax intangible amortization and impairments related to intangible assets (including the portion attributable to equity method investments in Affiliates) because these expenses do not correspond to the changes in the value of these assets, which do not diminish predictably over time. We also adjust for deferred taxes attributable to intangible assets because we believe it is unlikely these accruals will be used to settle material tax obligations. Further, we adjust for gains and losses related to Affiliate Transactions, net of tax, and other economic items. Economic earnings per share represents Economic net income (controlling interest) divided by the Average shares outstanding (adjusted diluted). In this calculation, we exclude the potential shares issued upon settlement of Redeemable non- controlling interests from Average shares outstanding (adjusted diluted) because we intend to settle those obligations without issuing shares, consistent with all prior Affiliate equity purchase transactions. The potential share issuance in connection with our junior convertible securities is measured using a “treasury stock” method. Under this method, only the net number of shares of common stock equal to the value of these junior convertible securities in excess of par, if any, are deemed to be outstanding. We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used to repurchase shares of common stock) that occurs when these securities are converted and we are relieved of our debt obligation. 30 Table of Contents The following table presents a reconciliation of Net income (controlling interest) to Economic net income (controlling interest) and Economic earnings per share: For the Years Ended December 31, (in millions, except per share data) 2022 2023 2024 Net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,145.9 $ 672.9 $ 511.6 Intangible amortization and impairments (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195.0 128.5 149.2 Intangible-related deferred taxes (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45.5 57.3 61.9 Affiliate Transactions (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (576.0) (122.1) — Other economic items (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13.2) (18.8) (21.1) Economic net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 797.2 $ 717.8 $ 701.6 Average shares outstanding (diluted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0 42.2 36.1 Hypothetical issuance of shares to settle Redeemable non-controlling interests . . . . . . . . (7.4) (3.7) (1.6) Assumed issuance of junior convertible securities shares . . . . . . . . . . . . . . . . . . . . . . . . . (1.8) (1.7) (1.7) Average shares outstanding (adjusted diluted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39.8 36.8 32.8 Economic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20.02 $ 19.48 $ 21.36 ___________________________ (1) See note (1) to the table in “Adjusted EBITDA (controlling interest).” (2) For the years ended December 31, 2022, and 2023, intangible-related deferred taxes have been adjusted to eliminate benefits of $13.5 million related to the BPEA Transaction and $28.9 million related to the Veritable Transaction, respectively. (3) The year ended December 31, 2022 includes 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, net of $167.6 million of income tax expense. The year ended December 31, 2023 includes Veritable Transaction gain of $133.1 million and realized gains on EQT shares of $29.6 million , net of $40.6 million income tax expense. (4) Other economic items include certain Affiliate equity activity, gains and losses related to contingent payment obligations, tax windfalls and shortfalls from share-based compensation, unrealized gains and losses on seed capital, general partner commitments, and other strategic investments, and realized economic gains and losses related to these seed capital, general partner commitments, and other strategic investments. For the years ended December 31, 2022 , 2023 , and 2024 , other economic items were net of income tax expense (benefit) of $(6.4) million, $5.2 million, and $4.1 million, respectively. Liquidity and Capital Resources We generate long-term value by investing in new Affiliate partnerships, existing Affiliates, and strategic value-add capabilities through which we can leverage our scale and resources to benefit our Affiliates and enhance their long-term growth prospects. Given our annual cash generation from operations, in addition to investing for growth in our business, we are also able to return excess capital to shareholders primarily through share repurchases. We continue to manage our capital structure consistent with an investment grade company and are currently rated A3 by Moody’s Investors Service and BBB+ by S&P Global Ratings. Cash and cash equivalents were $950.0 million as of December 31, 2024 and were attributable to both our controlling and the non-controlling interests. In 2024 , we met our cash requirements primarily through cash generated by operating activities. Our principal uses of cash in 2024 were for the return of excess capital through share repurchases, repayment of debt, purchases of investment securities, and distributions to Affiliate equity holders . We expect investments in new Affiliates, investments in existing Affiliates, primarily through purchases of Affiliate equity interests and general partner and seed capital investments, the return of capital through share repurchases and the payment of cash dividends on our common stock, repayment of debt, distributions to Affiliate equity holders, payment of income taxes, purchases of marketable securities, and general working capital to be the primary uses of cash on a consolidated basis for the foreseeable future. We anticipate that our current cash balance, cash flows from operations, proceeds from sales of our marketable securities, and borrowings under our senior unsecured multicurrency revolving credit facility (the “revolver”) will be sufficient to support our uses of cash for the foreseeable future. In addition, we may draw funding from the debt and equity capital markets, and our credit ratings, among other factors, allow us to access these sources of funding on favorable terms. 31 Table of Contents The following table presents operating, investing, and financing cash flow activities: For the Years Ended December 31, (in millions) 2022 2023 2024 Operating cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,054.7 $ 874.3 $ 932.1 Investing cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109.9) 264.5 379.1 Financing cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,402.9) (758.3) (1,175.9) Operating Cash Flow Operating cash flows are calculated by adjusting Net income for other significant sources and uses of cash, significant non- cash items, and timing differences in the cash settlement of assets and liabilities. For the year ended December 31, 2024 , Cash flows from operating activities were $932.1 million , primarily from Net income of $740.6 million and distributions of earnings received from equity method investments of $403.9 million . These items were partially offset by timing differences in the cash settlement of receivables, other assets, and payables, accrued liabilities, and other liabilities of $56.8 million . In 2024 , operating cash flows were primarily attributable to the controlling interest. Investing Cash Flow For the year ended December 31, 2024 , Cash flows from investing activities were $379.1 million , primarily due to $898.1 million of maturities and sales of investment securities, partially offset by $510.4 million of purchases of investment securities. In 2024 , investing cash flows were primarily attributable to the controlling interest. Financing Cash Flow For the year ended December 31, 2024 , Cash flows used in financing activities were $1,175.9 million , primarily due to $709.8 million of repurchases of common stock, net, repayment of senior notes and senior bank debt of $400.0 million and $350.0 million, respectively, $258.0 million of distributions to non-controlling interests, $100.2 million of Affiliate equity purchases, net of issuances, and $98.7 million of deferred payments. These items were partially offset by the issuance of junior subordinated notes and senior notes of $450.0 million and $397.6 million, respectively. In 2024 , financing cash flows were primarily attributable to the controlling interest. Affiliate Equity We periodically purchase Affiliate equity from and issue Affiliate equity to our consolidated Affiliate partners and other parties under agreements that provide us with a conditional right to call and Affiliate equity holders with a conditional right to put their Affiliate equity interests to us at certain intervals. We have the right to settle a portion of these purchases in shares of our common stock. For Affiliates accounted for under the equity method, we do not typically have such put and call arrangements. The purchase price of these conditional purchases is generally calculated based upon a multiple of the Affiliate’s cash flow distributions, which is intended to represent fair value. Affiliate equity holders are also permitted to sell their equity interests to other individuals or entities in certain cases, subject to our approval or other restrictions. As of December 31, 2024 , the current redemption value of Affiliate equity interests was $405.3 million , of which $350.5 million was presented as Redeemable non-controlling interests (including $12.9 million of consolidated Affiliate sponsored investment products primarily attributable to third-party investors), and $54.8 million was included in Other liabilities. Although the timing and amounts of these purchases are difficult to predict, we paid $106.5 million for Affiliate equity purchases and received $6.3 million for Affiliate equity issuances in 2024 , and we expect net purchases of approximately $175 million of Affiliate equity in 2025 . In the event of a purchase, we become the owner of the cash flow associated with the purchased equity. See Notes 15 and 16 of our Consolidated Financial Statements. Share Repurchases Our Board of Directors authorized share repurchase programs in October 2022 , October 2023 , and July 2024 to repurchase up to 3.0 million , 3.3 million , and 5.4 million shares of our 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. For the year ended December 31, 2024 , we 32 Table of Contents repurchased 4.3 million shares of our common stock at an average price per share of $162.65 . As of March 31, 2024, we had repurchased all of the shares in the repurchase program authorized in October 2022. As of December 31, 2024 , we had repurchased all of the shares in the repurchase program authorized in October 2023, and there were a total of 5.3 million shares available for repurchase under our July 2024 share repurchase program. Debt The following table presents the carrying value of our outstanding indebtedness. The weighted average maturity of our outstanding debt is 21 years, with approximately 87% of debt maturing in 2030 and beyond. Our nearest term maturity relates to our $350.0 million senior notes due August 2025 (“the 2025 senior notes”). See Note 5 of our Consolidated Financial Statements. December 31, (in millions) 2022 2023 2024 Senior bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350.0 $ 350.0 $ — Senior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,098.7 1,099.4 1,097.4 Junior subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765.9 765.9 1,216.0 Junior convertible securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341.7 341.7 341.7 The carrying value of our debt differs from the amount reported in the notes to our Consolidated Financial Statements, as the carrying value of our debt in the table above is not reduced for debt issuance costs. Senior Bank Debt During the year ended December 31, 2024 , we repaid the $350.0 million outstanding under the term loan. As of December 31, 2024 , w e had a $1.25 billion revolver . We amended and restated the revolver in November 2024, extending the maturity from October 25, 2027 to November 15, 2029, and the term loan terminated upon payment in full in the third quarter of 2024 . Subject to certain conditions, we may increase the commitments under the revolver by up to an additional $500.0 million . Under the terms of the revolver we are required to meet two financial ratio covenants. The first of these covenants is a maximum ratio of debt to EBITDA (the “bank leverage ratio”) of 3.25x. The second covenant is a minimum EBITDA to cash interest expense ratio of 3.00x (the “bank interest coverage ratio”). For purposes of calculating these ratios, share-based compensation and certain Affiliate equity expenses, among other specified expenses, charges, and costs, are added back to Adjusted EBITDA. As of December 31, 2024 , our bank leverage and bank interest coverage ratios were 0.9x and 8.1x , respectively. As of December 31, 2024 , we had no outstanding borrowings under the revolver, and could borrow all capacity and remain in compliance with all of the terms of the revolver . Senior Notes In the first quarter of 2024, our $400.0 million 2024 senior notes matured and were fully repaid. As of December 31, 2024 , we had senior notes outstanding, the respective principal terms of which are presented below: 2025 Senior Notes 2030 Senior Notes 2034 Senior Notes Issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 2015 June 2020 August 2024 Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . August 2025 June 2030 August 2034 Par value (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 350.0 $ 350.0 $ 400.0 Stated coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.50 % 3.30 % 5.50 % Coupon frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Semi-annually Semi-annually Semi-annually In the third quarter of 2024, we issued $400.0 million of 2034 senior unsecured notes with a maturity date of August 20, 2034. Interest is payable beginning February 20, 2025. In addition to customary event of default provisions, the indenture 33 Table of Contents governing the 2034 senior notes limits our ability to consolidate, merge or sell all or substantially all of its assets and requires us to make an offer to repurchase the 2034 senior notes upon certain change of control triggering events. The senior notes may be redeemed, in whole or in part, at a make-whole redemption price (plus accrued and unpaid interest), at any time, in the case of the 2025 senior notes, at any time prior to March 15, 2030, in the case of the 2030 senior notes, and at any time prior to May 20, 2034, in the case of the 2034 senior notes. In addition, the 2030 and 2034 senior notes may be redeemed at par, in whole or in part, at any time, on or after March 15, 2030 and May 20, 2034, respectively. We may also repurchase senior notes in the open market or in privately negotiated transactions from time to time at management’s discretion. We have used a majority of the net proceeds from the 2034 senior notes for the repayment of the term loan, and in the future intend to use the remaining net proceeds for general corporate purposes, which may include share repurchases and investments in new and existing Affiliates , as well as further repayment or refinancing of indebtedness. Junior Subordinated Notes As of December 31, 2024 , we had junior subordinated notes outstanding, the respective principal terms of which are presented below: 2059 Junior Subordinated Notes 2060 Junior Subordinated Notes 2061 Junior Subordinated Notes 2064 Junior Subordinated Notes Issue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . March 2019 September 2020 July 2021 March 2024 Maturity date . . . . . . . . . . . . . . . . . . . . . . . . . . March 2059 September 2060 September 2061 March 2064 Par value (in millions) . . . . . . . . . . . . . . . . . . . $ 300.0 $ 275.0 $ 200.0 $ 450.0 Stated coupon . . . . . . . . . . . . . . . . . . . . . . . . . 5.875 % 4.75 % 4.20 % 6.75 % Coupon frequency . . . . . . . . . . . . . . . . . . . . . . Quarterly Quarterly Quarterly Quarterly NYSE Symbol . . . . . . . . . . . . . . . . . . . . . . . . . MGR MGRB MGRD MGRE In the first quarter of 2024, we issued $450.0 million of 2064 junior subordinated notes with a maturity date of March 30, 2064. Interest was payable commencing on June 30, 2024, and we have the right to defer interest payments in accordance with the terms of the notes. The 2064 junior subordinated notes were issued at 100% of the principal amount and rank junior and subordinate in right of payment and upon liquidation to all of our current and future senior indebtedness. As of December 31, 2024 , the 2059 junior subordinated notes could be redeemed at any time, in whole or in part. The other junior subordinated notes may be redeemed at any time, in whole or in part, on or after September 30, 2025, in the case of the 2060 junior subordinated notes, on or after September 30, 2026, in the case of the 2061 junior subordinated notes, and on or after March 30, 2029, in the case of the 2064 junior subordinated notes. In each case, the junior subordinated notes may be redeemed at 100% of the principal amount of the notes being redeemed, plus any accrued and unpaid interest thereon. Prior to the applicable redemption date, at our option, the applicable junior subordinated notes may also be redeemed, in whole but not in part, at 100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations, or interpretations occur; or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with features similar to the applicable notes. We have used, and in the future intend to use, the net proceeds from the 2064 junior subordinated notes for general corporate purposes, which may include share repurchases, investments in new and existing Affiliates, and the repayment or refinancing of indebtedness. Junior Convertible Securities As of December 31, 2024 , we had $341.7 million of principal outstanding in our 5.15% junior convertible trust preferred securities outstanding (the “junior convertible securities”) maturing in 2037. The junior convertible securities were issued by AMG Capital Trust II, a Delaware statutory trust, in October 2007. Each of the junior convertible securities represents an undivided beneficial interest in the assets of the trust. The trust’s only assets are junior subordinated convertible debentures issued to it by us, and have substantially the same payment terms as the junior convertible securities. We own all of the trust’s common securities, and have fully and unconditionally guaranteed, on a subordinated basis, the payment obligations on the junior convertible securities. We do not consolidate the trust’s financial results into our Consolidated Financial Statements. 34 Table of Contents Holders of the junior convertible securities have no rights to put these securities to us. Upon conversion, holders will receive cash or shares of our common stock, or a combination thereof, at our election. We may redeem the junior convertible securities, subject to our stock trading at or above certain specified levels over specified times periods, and may also repurchase junior convertible securities in the open market or in privately negotiated transactions from time to time at management’s discretion. The junior convertible securities are considered contingent payment debt instruments under federal income tax regulations, which require us to deduct interest in an amount greater than our reported interest expense. We estimate that these deductions will generate annual deferred tax liabilities of approximately $10 million . We did not repurchase any of our junior convertible securities during the years ended December 31, 2023 and 2024 . Equity Distribution Program In the second quarter of 2022, we entered into equity distribution and forward equity agreements with several major securities firms under which we may, from time to time, issue and sell shares of our common stock (immediately or on a forward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”). As of December 31, 2024 , no sales had occurred under the equity distribution program. Commitments See Note 6 of our Consolidated Financial Statements. Other Contingent Commitments See Notes 3 and 6 of our Consolidated Financial Statements. Leases As of December 31, 2024 , our lease obligations were $35.1 million through 2025 , $51.7 million from 2026 through 2027, $44.1 million from 2028 through 2029, and $47.3 million thereafter. The portion of these lease obligations attributable to the controlling interest were $9.3 million through 2025, $6.6 million from 2026 through 2027, $4.0 million from 2028 through 2029, and $6.4 million thereafter. See Note 9 of our Consolidated Financial Statements. Recent Accounting Developments See Note 1 of our Consolidated Financial Statements. Critical Accounting Estimates and Judgments The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. See Note 1 of our Consolidated Financial Statements for a discussion of our significant accounting policies. The following are our critical accounting estimates and judgments used in the preparation of our Consolidated Financial Statements, and due to their subjectivity, actual results could differ materially from the amounts reported. Fair Value Measurements Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. These standards establish a fair value hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. We make judgments to determine the fair value of certain assets, liabilities, and equity interests when allocating the purchase price of our new investments, when revaluing our contingent payment obligations, when we issue or purchase Affiliate equity interests, and when we test our goodwill, indefinite- and definite-lived acquired client relationships, or equity method investments for impairment. In determining fair values that reflect our own assumptions concerning unobservable inputs, we typically use valuation techniques, including probability-weighted discounted cash flow analyses and Monte Carlo simulations, where we make assumptions about growth rates of assets under management, client attrition, asset- and performance-based fee rates, and expenses. In these analyses, we also consider historical and current market multiples, tax benefits, credit risk, interest rates, tax rates, discount rates, volatility, and discounts for lack of marketability. We consider the reasonableness of our assumptions by 35 Table of Contents comparing our valuation conclusions to observed market transactions and, in certain instances, by consulting with third-party valuation firms. Changes in the assumptions used could significantly impact fair values. Goodwill Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not separately recognized. We perform a qualitative impairment assessment at least annually to determine if the carrying value of our single reporting unit is in excess of its fair value. In this qualitative assessment, we typically measure the excess of the fair value of our reporting unit over its carrying value using various qualitative and quantitative factors (including our market capitalization). If there is an indication that the carrying value of the reporting unit is in excess of the fair value under this test, then we must determine if a potential impairment is more-likely-than-not. To determine if a potential impairment is more- likely-than-not, we perform a single step quantitative test with any excess of carrying value over fair value recorded as an expense in Intangible amortization and impairments. We completed our annual qualitative goodwill impairment assessment as of September 30, 2024 and no impairment was indicated. Based on our assessment, the fair value of our reporting unit was substantially greater than its respective carrying amount, including goodwill. Indefinite-Lived Acquired Client Relationships Indefinite-lived acquired client relationships include investment advisory contracts between our Affiliates and their mutual funds and other retail-oriented investment products. Because these contracts are with the investment products themselves, and not with the underlying investors, and the contracts between our Affiliates and the investment products are typically renewed on an annual basis, industry practice under GAAP is to consider the contract life to be indefinite and, as a result, not amortizable. We perform indefinite-lived acquired client relationship impairment assessments annually, or more frequently should circumstances indicate fair value has declined below the related carrying value. For purposes of our assessments, we consider various qualitative and quantitative factors to determine if it is more-likely-than-not that the fair value of each asset group is greater than its carrying amount. If we determine that it is likely that the fair value has declined below our related carrying value, we perform discounted cash flow analyses to determine the fair value of the asset group and record an expense in Intangible amortization and impairments to reduce the carrying value to its fair value. In these analyses, the most relevant assumptions are revenue growth rates and discount rates. For the year ended December 31, 2024 , we completed our annual assessment and performed discounted cash flow analyses for certain asset groups due to continued declines in assets under management. The most relevant assumptions used in these analyses were revenue growth rates over the next five years ranging from (18)% to 0%, long-term revenue growth rates of 0.0%, and discount rates of 11.0%. Our analyses indicated that the value of these asset groups exceeded their carrying value by less than 10%. While we believe all assumptions utilized in our assessment are reasonable and appropriate, changes in these estimates could produce different values which could imply an impairment. For example, assuming all other assumptions remain constant, a decrease in the revenue growth rate of 200 basis points or an increase in the discount rate of 100 basis points would result in an impairment of approximately $30 million. Equity Method Investments in Affiliates We periodically perform assessments to determine if the fair value of an investment may have declined below its related carrying value for our Affiliates accounted for under the equity method for a period that we consider to be other-than- temporary. We perform these assessments if certain triggering events occur or annually during the fourth quarter. We first consider whether certain qualitative and quantitative factors (including discount rates) 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, we perform 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. When we quantitatively test our equity method investments for impairment, we typically use valuation methods such as discounted cash flow analyses. In these analyses, our most significant assumptions relate to growth rates of projected assets under management, client attrition, asset- and performance-based fees, expenses, and discount rates. We consider the reasonableness of our assumptions by comparing our valuation conclusions to observed market transactions, comparable company valuations, and, in certain instances, by consulting with third-party valuation firms. Changes in these assumptions could significantly impact the respective fair value of an Affiliate. 36 Table of Contents In the second quarter of 2024, the Company recorded a $39.9 million expense to reduce the carrying value of an Affiliate to fair value. See Note 8 of our Consolidated Financial Statements. For the year ended December 31, 2024 , the Company completed its annual assessme nt of its investments in Affiliates accounted for under the equity method and no other impairments were indicated.