What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 267 added, 414 removed, 389 unchanged (64% of the section changed)

31 unchanged sentences

Our strategy is to generate long-term value

by investing in a diverse array of high-quality independent partner-owned firms, referred 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

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.

September 30, 2024 , our aggregate assets under management were approximately $728 billion across a diverse range of

private markets, liquid alternatives, and differentiated long-only investment strategies.

In the second quarter of 2024, we completed our minority investment in Suma Capital (“Suma”), a pan-European private

markets firm that invests in the transition to a lower carbon economy.

Following the close of the transaction, Suma partners

continue to hold a significant majority of the equity of the firm and direct its day-to-day operations.

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.

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.

March 31, 2025 , our aggregate assets under management were approximately $712 billion across a diverse range of private

markets, liquid alternative , and differentiated long-only investment strategies.

In the first quarter of 2025, we completed a 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.

In May 2025, we completed a minority investment in Verition Fund Management LLC (“Verition”), a global multi-

strategy investment firm.

Following the close of this transaction, Verition partners continue to hold a significant majority of

the equity of the business and direct its day-to-day operations.

In May 2025, we entered into an agreement to acquire a minority equity interest in Qualitas Energy, a renewables-

focused global infrastructure manager specializing in energy transition.

Following the close of the transaction, Qualitas

Energy partners will continue to hold a majority of the equity of the business and direct its day-to-day operations.

transaction is expected to close during the fourth quarter of 2025, and is subject to customary closing conditions.

financial results will be recognized in the Consolidated Financial Statements one quarter in arrears.

In May 2025, we entered into an agreement to sell our equity interest in Peppertree Capital Management, Inc.

(“Peppertree”), our Affiliate accounted for under the equity method, as part of the announced acquisition of Peppertree by

(“TPG”), a public company listed on the Nasdaq Global Select Market.

Pursuant to the terms of the agreement, we

are expected to receive total consideration of approximately $240 million , based on the TPG closing share price on May 2,

2025, and includes approximately $102 million in cash, subject to certain closing adjustments, and approximately 2.9 million

TPG Class A common shares.

Peppertree will continue to be included in our results until closing of the transaction, which is

expected to occur in the third quarter of 2025, subject to customary closing conditions.

Operating Performance Measures

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marketplace factors and industry trends.

Therefore, our key aggregate operating performance measures are important in

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.

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Three Months Ended

September 30,

As of and for the

Nine Months Ended

September 30,

(in billions, except as noted)

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Assets Under Management

Our Affiliates provide a diverse range of differentiated return streams through their specialized investment processes.

continue to see client demand for alternative strategies, as evidenced by our net inflows in this category for the three and nine

months ended September 30, 2024 .

At the same time, our equity strategies saw outflows in line with client cash flow trends

across the industry.

We continue to invest our capital and resources in areas aligned with long-term client demand trends, most

notably in private markets and liquid alternatives .

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.

We also anticipate that independent

investment firms will continue to seek access to an evolving range of partnership solutions, and that we have a significant

opportunity to invest in additional high-quality firms across the global investment management industry.

The following charts present information regarding the composition of our assets under management by strategy and client

type as of September 30, 2024 :

Assets Under Management

___________________________

(1) Alternatives include private markets strategies, which accounted for 18% of our assets under management as of

September 30, 2024 .

The following tables present changes in our assets under management by strategy and client type for the three and nine

months ended September 30, 2024 :

By Strategy - Quarter to Date

(in billions)

Multi-Asset &

June 30, 2024

Client cash inflows and commitments

Client cash outflows

Net client cash flows

New investments (1)

Market changes

Foreign exchange (2)

Realizations and distributions (net)

September 30, 2024

By Client Type - Quarter to Date

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.

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 for the three months ended March 31,

Differentiated Long-Only

(in billions)

Institutional

June 30, 2024

Client cash inflows and commitments

Client cash outflows

Net client cash flows

New investments (1)

Market changes

Foreign exchange (2)

Realizations and distributions (net)

September 30, 2024

By Strategy - Year to Date

Multi-Asset &

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Realizations and distributions (net)

September 30, 2024

By Client Type - Year to Date

Institutional

December 31, 2023

Client cash inflows and commitments

Client cash outflows

Net client cash flows

New investments

Market changes

Foreign exchange (2)

Realizations and distributions (net)

September 30, 2024

March 31, 2025

___________________________

(1) Includes assets under management related to a new investment made by an existing Affiliate.

(1) Equities includes assets under management attributable to both global equities and U.S.

(2) Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional

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% of AUM Ahead of Benchmark (1)

Liquid alternatives (2)

Global equity (2)

Multi-asset and fixed income (3)

% of AUM Ahead of Benchmark (1)

IRR Latest Vintage

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Private markets (2)

% of AUM Ahead of Benchmark (1)

Liquid alternatives (3)

Multi-asset and fixed income (4)

___________________________

(1) Past performance is not indicative of future results.

Performance and AUM information is as of September 30, 2024 and is

Performance and AUM information is as of March 31, 2025 and is

based on data available at the time of calculation.

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generally sourced via third-party subscriptions.

(2) For liquid alternative, global equity, and U.S.

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

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.

(3) 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.

(2) For private markets products, performance is reported as the percentage of assets that have outperformed benchmarks on a

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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

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hurdle rate, and are generally recognized when it is improbable that there will be a significant reversal in the amount of revenue

Performance-based fees are generally billed less frequently than asset-based fees and will vary from period to

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 September 30, 2024 , approximately 27% of our total

As of March 31, 2025 , approximately 28% of our total

assets under management could potentially earn performance-based fees.

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Affiliates accounted for under the equity method.

Aggregate fees were $1,157.1 million for the three months ended September 30, 2024 , an increase of $159.6 million or

16% as compared to the three months ended September 30, 2023 .

The increase in our aggregate fees was due to a $97.2 million

or 10% increase from asset-based fees and a $62.4 million or 6% increase from performance-based fees, primarily in our liquid

alternatives strategies.

The increase in asset-based fees was principally due to an increase in our average assets under

management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily

driven by investments in new Affiliates.

Aggregate fees were $3,726.8 million for the nine months ended September 30, 2024 , an increase of $221.1 million or 6%

as compared to the nine months ended September 30, 2023 .

The increase in our aggregate fees was due to a $245.7 million or

7% increase from asset-based fees, offset by a $24.6 million or 1% decrease from performance-based fees, primarily in our

liquid alternatives strategies.

Aggregate fees were $1,270.4 million for the three months ended March 31, 2025 , a decrease of $201.2 million or 14% as

compared to the three months ended March 31, 2024 .

The decrease in our aggregate fees was due to a $213.4 million or 15%

decrease from performance-based fees, primarily in our liquid alternative strategies, partially offset by a $12.2 million or 1%

increase from asset-based fees.

The increase in asset-based fees was principally due to an increase in our average assets under

management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily

driven by investments in new Affiliates.

management, primarily in our private markets and liquid alternative strategies, partially offset by changes in the composition of

our assets under management.

Financial and Supplemental Financial Performance Measures

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

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measures and are discussed in “Supplemental Financial Performance Measures.”

Net income (controlling interest) decreased $77.4 million or 52% for the three months ended March 31, 2025 .

decrease was primarily due to a $62.4 million increase in Intangible amortization and impairments attributable to the controlling

interest and a $42.2 million decrease in Equity method income (net).

These decreases were partially offset by a $28.6 million

decrease in Income tax expense attributable to the controlling interest.

Adjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management.

Our Adjusted EBITDA (controlling interest) increased $5.7 million or 3% in the three months ended September 30, 2024

primarily due to a $159.6 million or 16% increase in aggregate fees.

Adjusted EBITDA increased less than aggregate fees on a

percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser

economic interest.

For the nine months ended September 30, 2024 , our Adjusted EBITDA (controlling interest) increased $51.8 million or

8% , primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which

we hold a greater economic interest.

For the three months ended September 30, 2024 , our Net income (controlling interest) decreased $93.4 million or 43% .

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 (“Veritable”) in the third quarter of 2023 (the “ Veritable Transaction”), partially offset by a $46.4

million decrease in Income tax expense attributable to the controlling interest.

For the nine months ended September 30, 2024 , our Net income (controlling interest) decreased $127.3 million or 27% .

This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the Veritable Transaction in

the third quarter of 2023 and a $30.4 million decrease in Investment and other income attributable to the controlling interest.

These decreases were partially offset by a $26.2 million decrease in Income tax expense attributable to the controlling interest.

Our Adjusted EBITDA (controlling interest) decreased $31.6 million or 12% for the three months ended March 31, 2025 ,

primarily due to a $201.2 million or 14% decrease in aggregate fees.

We believe Economic net income (controlling interest) is an important supplemental financial performance measure

because it represents our performance before non-cash expenses relating to the acquisition of interests in Affiliates and

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.

For the three months ended September 30, 2024 , our Economic net

income (controlling interest) increased $3.7 million or 2% , primarily due to a $5.7 million increase in Adjusted EBITDA

(controlling interest), partially offset by a $3.6 million increase in Interest expense attributable to the controlling interest.

For the nine months ended September 30, 2024 , our Economic net income (controlling interest) increased $20.9 million or

4% , primarily due to a $51.8 million increase in Adjusted EBITDA (controlling interest).

This increase was partially offset by

a $26.2 million increase in current and other deferred taxes attributable to the controlling interest and a $5.7 million increase in

Interest expense attributable to the controlling interest.

For the three months ended March 31, 2025 , our Economic net

income (controlling interest) decreased $28.0 million or 15% , primarily due to a $31.6 million decrease in Adjusted EBITDA

(controlling interest) and a $4.2 million increase in Interest expense attributable to the controlling interest.

These decreases

were partially offset by a $10.1 million decrease in current and other deferred taxes attributable to the controlling interest.

Results of Operations

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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).

intangible amortization and impairments and tax , in Equity method income (net).

Consolidated Revenue

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions, except as noted)

Consolidated Affiliate average assets under

management (in billions)

Consolidated Affiliate average assets under management (in billions)

Consolidated revenue

Our Consolidated revenue decreased $8.8 million or 2% for the three months ended September 30, 2024 , due to an $11.9

million or 2% decrease from asset-based fees, offset by a $3.1 million increase from performance-based fees, primarily in our

private markets strategies.

The decrease in asset-based fees was principally due to changes in the composition of our assets

under management driven by the Veritable Transaction, offset by an increase in our consolidated Affiliate average assets under

management, primarily in our alternative s strategies.

Our Consolidated revenue decreased $38.6 million or 2% for the nine months ended September 30, 2024 , primarily due to

a $39.2 million or 2% decrease from asset-based fees.

The decrease in asset-based fees was principally due to changes in the

composition of our assets under management driven by the Veritable Transaction and a decrease in our consolidated Affiliate

average assets under management, primarily in our global equity strategies.

Our Consolidated revenue decreased $3.3 million or 1% for the three months ended March 31, 2025 , due to a $10.9 million

or 3% decrease from asset-based fees, partially offset by a $7.6 million or 2% increase from performance-based fees, primarily

in our private markets strategies.

The decrease in asset-based fees was principally due to changes in the composition of our

assets under management, partially offset by an increase in our consolidated Affiliate average assets under management,

primarily in our private markets strategies.

Consolidated Expenses

Our Consolidated expenses are primarily attributable to the non-controlling interests of our consolidated Affiliates.

The following table presents our Consolidated expenses:

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

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Total consolidated expenses

Compensation and related expenses increased $9.0 million or 4% for the three months ended September 30, 2024 ,

primarily due to a $13.6 million increase in compensation accruals at Affiliates, partially offset by a decrease in compensation

and related expenses due to the Veritable Transaction.

Compensation and related expenses increased $13.5 million or 2% for the nine months ended September 30, 2024 ,

primarily due to a $21.9 million increase in compensation accruals primarily at Affiliates and a $7.0 million increase in Affiliate

equity compensation expense.

These increases were partially offset by a decrease in compensation and related expenses due to

the Veritable Transaction.

Selling, general and administrative expenses increased $5.9 million or 6% for the three months ended September 30, 2024 ,

primarily due to a $3.3 million increase in professional fees and a $2.4 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.

Selling, general and administrative expenses increased $4.7 million or 2% for the nine months ended September 30, 2024 ,

___________________________

(1) Percentage change is not meaningful.

Compensation and related expenses decreased $10.1 million or 4% for the three months ended March 31, 2025 , primarily

due to a $10.3 million decrease in share-based compensation and a $4.8 million decrease in Affiliate equity compensation

These decreases were partially offset by a $5.0 million increase in c ompensation accruals .

Selling, general and administrative expenses increased $3.0 million or 3% for the three months ended March 31, 2025 ,

primarily due to a $1.8 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 $1.3 million

decrease in non-income based and other taxes.

Intangible amortization and impairments decreased $5.2 million or 42% for the three months ended September 30, 2024 ,

primarily due to a $3.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized

and a $1.7 million decrease due to the Veritable Transaction.

Intangible amortization and impairments decreased $15.7 million or 42% for the nine months ended September 30, 2024 ,

primarily due to a $10.6 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 $3.6 million or 12% for the three months ended September 30, 2024 , primarily due to a $7.6

million increase from our 6.75% junior subordinated notes issued in March 2024 (the “2064 junior subordinated notes”) and a

average assets under management on which these expenses are incurred, and a $1.4 million increase in professional fees.

Intangible amortization and impairments increased $76.0 million for the three months ended March 31, 2025 , primarily due

to a $70.0 million expense to reduce the carrying value of indefinite-lived acquired client relationships for certain asset groups

to fair value and a $7.0 million expense to reduce the carrying value of an indefinite-lived acquired client relationship to zero

due to the closure of a retail investment product.

These increases were partially offset by a $1.0 million decrease in

amortization expense due to certain definite-lived assets being fully amortized .

Interest expense increased $4.2 million or 14% for the three months ended March 31, 2025 , primarily due to a $6.6 million

increase from our 6.75% junior subordinated notes issued in March 2024 (the “2064 junior subordinated notes”) and a $5.6

million increase from our 5.50% senior unsecured notes issued in August 2024 (the “2034 senior notes”).

This increase

was partially offset by a $4.4 million decrease due to the maturity of our 4.25% senior notes in February 2024 (the “2024 senior

notes”) and a $2.8 million decrease due to the repayment of our senior unsecured term loan facility (the “term loan”) .

Interest expense increased $5.7 million or 6% for the nine months ended September 30, 2024 , primarily due to a $16.1

million increase from our 2064 junior subordinated notes and a $2.5 million increase from our 2034 senior notes.

This increase

was partially offset by an $11.1 million decrease due to the maturity of our 2024 senior notes in February 2024 and a $2.5

million decrease primarily due to the repayment of our term loan.

There were no significant changes to Depreciation and other amortization for the three and nine months ended

September 30, 2024 .

Other expenses (net) increased $3.7 million or 47% for the three months ended September 30, 2024 , primarily due to a $3.8

million increase in expenses related to changes in the values of contingent payment obligations.

Other expenses (net) decreased $4.7 million or 13% for the nine months ended September 30, 2024 , primarily due to a $5.4

million decrease in expenses related to changes in the values of contingent payment obligations.

These increases were

partially offset by a $5.5 million decrease due to the repayment of our senior unsecured term loan facility, which was fully

repaid during the third quarter of 2024, and a $2.2 million decrease due to the maturity of our 4.25% senior notes in February

2024 (the “2024 senior notes”).

There were no significant changes to Depreciation and other amortization for the three months ended March 31, 2025 .

Other expenses (net) increased $2.7 million or 30% for the three months ended March 31, 2025 , p rimarily due to a $5.0

million increase in expenses related to changes in the values of contingent payment obligations, partially offset by a $0.9

million decrease in rent and related office costs .

Equity Method Income (Net)

For our Affiliates accounted for under the equity method, we use structured partnership interests in which we contractually

share in the Affiliate’s revenue or revenue less agreed-upon expenses.

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

For our Affiliates accounted for under the equity method, we use operating structures where we contractually share in the

Affiliate’s revenue or revenue less agreed-upon expenses.

Our share of pre-tax earni ngs or losses from Affiliates accounted for

under the equity method (“ pre-tax equity method earnings ”), net of amortization and impairments and tax , is included in Equity

method income (net).

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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):

revenue (“equity method revenue”), as well as pre-tax equity method earnings , equity method intangible amortization, equity

method intangible impairmen ts, if any, and equity method income tax, which in aggregate form Equity method income (net) :

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions, except as noted)

Operating Performance Measures

Equity method Affiliate average assets under

management (in billions)

Equity method Affiliate average assets under management (in billions)

Equity method revenue

Financial Performance Measures

Equity method earnings

Pre-tax equity method earnings

Equity method intangible amortization

Equity method intangible impairments

Equity method income tax

Equity method income (net)

___________________________

(1) Percentage change is not meaningful.

Our equity method revenue increased $168.4 million or 36% for the three months ended September 30, 2024 , due to a

$109.1 million or 23% increase from asset-based fees and a $59.3 million or 13% increase from performance-based fees,

primarily in our liquid alternatives 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 alternatives strategies, and changes in the composition of

our assets under management primarily driven by investments in new Affiliates.

For the three months ended September 30, 2024 , equity method earnings increased $14.3 million or 23% , primarily due to

a $168.4 million or 36% increase in equity method revenue.

Equity method earnings increased less than equity method revenue

on a percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser

economic interest and an increase in revenue at certain Affiliates in which we share in revenue less agreed-upon expenses .

Equity method intangible amortization increased $1.5 million or 7% for the three months ended September 30, 2024 ,

primarily due to a $5.3 million increase in amortization expense due to investments in new Affiliates and a $4.5 million

increase in amortization expense due to an increase in actual and expected client attrition for certain definite-lived acquired

client relationships.

These increases were partially offset by an $8.3 million decrease in amortization expense related to certain

definite-lived assets being fully amortized.

Our equity method revenue increased $259.7 million or 13% for the nine months ended September 30, 2024 , due to a

$284.9 million or 14% increase from asset-based fees, offset by a $25.2 million or 1% decrease from performance-based fees,

primarily in our liquid alternatives strategies.

Our equity method revenue decreased $197.9 million or 20% for the three months ended March 31, 2025 , due to a $221.0

million or 22% decrease from performance-based fees, primarily in our liquid alternative strategies, partially offset by a $23.1

million or 2% increase from asset-based fees.

The increase in asset-based fees was principally due to an increase in our equity

method Affiliate average assets under management, primarily in our alternatives strategies, and changes in the composition of

our assets under management primarily driven by investments in new Affiliates.

For the nine months ended September 30, 2024 , equity method earnings increased $75.3 million or 35% , primarily due to a

$259.7 million or 13% 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 $1.4 million or 2% for the nine months ended September 30, 2024 ,

primarily due to a $15.8 million increase in amortization expense due to investments in new Affiliates and a $10.5 million

increase in amortization expense due to an increase in actual and expected client attrition for certain definite-lived acquired

client relationships.

These increases were partially offset by a $24.9 million decrease in amortization expense related to certain

definite-lived assets being fully amortized.

Equity method intangible impairments increased $39.9 million for the nine months ended September 30, 2024 .

10 of our Consolidated Financial Statements.

Affiliate Transaction Gain

For the three and nine months ended September 30, 2023, we recorded a $133.1 million pre-tax gain on the Veritable

See Note 9 of our Consolidated Financial Statements.

method Affiliate average assets under management, primarily in our liquid alternative strategies, partially offset by changes in

the composition of our assets under management.

For the three months ended March 31, 2025 , pre-tax equity method earnings decreased $42.9 million or 30% , primarily due

to a $197.9 million or 20% decrease in equity method revenue.

Pre-tax eq uity m ethod earnings decreased more than equity

method revenue on a percentage basis primarily due to a decrease in earnings at certain Affiliates in which we share in revenue

less agreed-upon expenses.

Equity method intangible amortization decreased $2.2 million or 11% for the three months ended March 31, 2025 ,

primarily due to a $1.8 million decrease in amortization expense related to certain definite-lived assets being fully amortized

and a $0.6 million decrease in amortization expense due to a decrease in actual and expected client attrition for certain definite-

lived acquired client relationships.

These decreases were partially offset by a $0.2 million increase in amortization expense due

to investments in new Affiliates.

Investment and Other Income

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

Investment and other income

Investment and other income decreased $0.2 million or 1% for the three months ended September 30, 2024 , primarily due

to a $9.9 million decrease in realized gains on Investments in marketable securities, offset by an $8.4 million increase in

unrealized gains on Other investments.

Investment and other income decreased $27.2 million or 31% for the nine months ended September 30, 2024 , primarily due

to a $30.6 million decrease in net realized and unrealized gains on Investments in marketable securities.

Investment and other income decreased $6.4 million or 36% for the three months ended March 31, 2025 , primarily due to a

$6.3 million decrease in net realized and unrealized gains on investments in marketable securities.

Income Tax Expense

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

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attributable to the non-controlling interests.

Income tax expense decreased $46.4 million or 60% for the three months ended September 30, 2024 .

Income tax expense decreased $28.0 million or 51% for the three months ended March 31, 2025 .

Our effective tax rate

(controlling interest) for the three months ended September 30, 2024 was 19.3% as compared to 25.9% for the three months

ended September 30, 2023 .

The decrease in the tax rate (controlling interest) was primarily due to tax windfalls attributable to

share-based compensation in the three months ended September 30, 2024 .

Income tax expense decreased $25.4 million or 16% for the nine months ended September 30, 2024 .

Our effective rate

(controlling interest) for the nine months ended September 30, 2024 was 26.1% as compared to 23.9% for the nine months

ended September 30, 2023 .

The increase in the tax rate (controlling interest) was primarily due to discrete foreign tax benefits

and tax windfalls attributable to share-based compensation in the nine months ended September 30, 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 in the nine months ended September 30, 2024 .

(controlling interest) for the three months ended March 31, 2025 was 25.4% as compared to 26.2% for three months ended

March 31, 2024 .

The decrease in the effective tax rate (controlling interest) was primarily due to a decrease in non-deductible

compensation and uncertain tax positions for the three months ended March 31, 2025 .

The following table presents Net income, Net income (non-controlling interests), and Net income (controlling interest):

For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

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Net income (controlling interest)

Net income (controlling interest) decreased $93.4 million or 43% for the three months ended September 30, 2024 ,

primarily due to the recognition of a pre-tax gain associated with the Veritable Transaction in the third quarter of 2023, partially

offset by a decrease in Income tax expense attributable to the controlling interest.

Net income (controlling interest) decreased $127.3 million or 27% for the nine months ended September 30, 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.

These decreases were partially offset by a

decrease in Income tax expense attributable to the controlling interest.

Net income (controlling interest) decreased $77.4 million or 52% for the three months ended March 31, 2025 , primarily

due to an increase in Intangible amortization and impairments attributable to the controlling interest and a decrease in Equity

method income (net).

These decreases were partially offset by a decrease in Income tax expense attributable to the controlling

Supplemental Financial Performance Measures

As supplemental information, 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 (controlling interest), Earnings per share, or other GAAP performance measures.

As supplemental information t o our GAAP performance measures, including Net income (see Note 18 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)

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

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Interest expense

Income taxes (1)

Intangible amortization and impairments (2)

Affiliate Transactions (2)

Other items (3)

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___________________________

(1) Includes e quity method income tax .

(2) Intangible amortization and impairments in our Consolidated Statements of Income include amortization attributable to the

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions)

Consolidated intangible amortization and impairments

Consolidated intangible amortization and impairments (non-controlling

Consolidated intangible amortization and impairments (non-controlling interests)

Equity method intangible amortization and impairments

(2) The three and nine months ended September 30, 2023 includes Veritable Transaction gain of $133.1 million and gains of

$6.5 million and $29.6 million on ordinary shares of EQT AB (“EQT”), a public company listed on Nasdaq Stockholm

(EQT.ST), respectively.

We received the EQT shares through the sale of our 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

(3) Other items include certain non-income based taxes, depreciation, and non-cash items such as certain Affiliate equity

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For the Three Months

Ended September 30,

For the Nine Months

Ended September 30,

Ended March 31,

(in millions, except per share data)

2 unchanged sentences

Intangible-related deferred taxes (2)

Affiliate Transactions (3)

Other economic items (3)

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Average shares outstanding (diluted)

Hypothetical issuance of shares to settle Redeemable non-controlling

Hypothetical issuance of shares to settle Redeemable non-controlling interests

Assumed issuance of junior convertible securities shares

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(1) See note (2) to the table in “Adjusted EBITDA (controlling interest).”

(2) For the three and nine months ended September 30, 2023 , intangible-related deferred taxes were adjusted to eliminate a

$28.9 million benefit related to the Veritable Transaction.

(3) The three and nine months ended September 30, 2023 includes Veritable Transaction gain of $133.1 million and gains on

EQT shares of $6.5 million and $29.6 million, net of $34.9 million and $40.6 million of income tax expense, respectively.

(2) Includes e quity method deferred taxes.

(3) Other economic items include certain Affiliate equity activity, gains and losses related to contingent payment obligations,

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partner commitments, and other strategic investments.

Other economic items were net of income tax expense of

$0.3 million and $1.7 million for the three months ended September 30, 2023 and 2024 , respectively, and $4.7 million and

$2.8 million for the nine months ended September 30, 2023 and 2024 , respectively.

Other economic items were net of income tax (benefit) expense of

$(0.0) million and $1.5 million for the three months ended March 31, 2024 and 2025 , respectively.

Liquidity and Capital Resources

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Global Ratings.

Cash and cash equivalents were $1,010.7 million as of September 30, 2024 and were attributable to both our controlling

and the non-controlling interests.

In the nine months ended September 30, 2024 , we met our cash requirements primarily

through cash generated by operating activities.

Our principal uses of cash in the nine months ended September 30, 2024 were

for the return of excess capital through share repurchases, repayment of debt, purchases of investment securities, and

distributions to Affiliate equity holders.

Cash and cash equivalents were $816.5 million as of March 31, 2025 and were attributable to both our controlling and the

non-controlling interests.

In the three months ended March 31, 2025 , we met our cash requirements primarily through cash

generated by operating activities.

Our principal uses of cash in the three months ended March 31, 2025 were for the return of

excess capital through share repurchases, investments in new Affiliates, and distributions to Affiliate equity holders.

We expect investments in new Affiliates, investments in existing Affiliates, primarily through purchases of Affiliate equity

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The following table presents operating, investing, and financing cash flow activities:

For the Nine Months

Ended September 30,

For the Three Months

Ended March 31,

(in millions)

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cash items, and timing differences in the cash settlement of assets and liabilities.

For the nine months ended September 30, 2024 , Cash flows from operating activities were $719.6 million , primarily from

Net income of $519.5 million and distributions of earnings received from equity method investments of $357.3 million .

items were partially offset by timing differences in the cash settlement of receivables, other assets, and payables, accrued

liabilities, and other liabilities of $100.0 million .

For the nine months ended September 30, 2024 , operating cash flows were

primarily attributable to the controlling interest.

For the three months ended March 31, 2025 , Cash flows from operating activities were $208.9 million , primarily from Net

income of $99.2 million and distributions of earnings received from equity method investments of $204.7 million .

were partially offset by timing differences in the cash settlement of receivables, other assets, and payables, accrued liabilities,

and other liabilities of $131.4 million .

For the three months ended March 31, 2025 , operating cash flows were primarily

attributable to the controlling interest.

Investing Cash Flow

For the nine months ended September 30, 2024 , Cash flows from investing activities were $370.6 million , primarily due to

$875.2 million of maturities and sales of investment securities, partially offset by $496.4 million of purchases of investment

For the nine months ended September 30, 2024 , investing cash flows were primarily attributable to the controlling

For the three months ended March 31, 2025 , Cash flows used in investing activities were $35.6 million , primarily due to

$49.5 million of investments in Affiliates and $8.2 million of purchases of investment securities.

These items were partially

offset by $23.7 million of maturities and sales of investment securities.

For the three months ended March 31, 2025 , investing

cash flows were primarily attributable to the controlling interest.

Financing Cash Flow

For the nine months ended September 30, 2024 , Cash flows used in financing activities were $904.1 million , primarily due

to $589.5 million of repurchases of common stock (net), repayment of senior notes and senior bank debt of $400.0 million and

$350.0 million , respectively, $206.5 million of distributions to non-controlling interests, and $54.1 million of Affiliate equity

purchases, net of issuances.

These items were partially offset by the issuance of junior subordinated notes and senior notes of

$450.0 million and $397.6 million, respectively.

For the three months ended March 31, 2025 , Cash flows used in financing activities were $316.9 million , primarily due to

$176.2 million of repurchases of common stock (net), $87.0 million of distributions to non-controlling interests, and

$28.3 million of Affiliate equity purchases, net of issuances.

For the three months ended March 31, 2025 , financing cash flows

were primarily attributable to the controlling interest.

Affiliate Equity

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interests to other individuals or entities in certain cases, subject to our approval or other restrictions.

As of September 30, 2024 , the current redemption value of Affiliate equity interests was $456.0 million , of which $397.1

As of March 31, 2025 , the current redemption value of Affiliate equity interests was $414.5 million , of which $366.1

million was presented as Redeemable non-controlling interests (including $15.0 million of consolidated Affiliate sponsored

1 unchanged sentence

Although the timing and amounts of these purchases are difficult to predict, we paid $29.8 million for Affiliate equity purchases

and received $6.3 million for Affiliate equity issuances during the nine months ended September 30, 2024 , and we expect net

and received $1.5 million for Affiliate equity issuances during the three months ended March 31, 2025 , and we expect net

purchases of approximately $150 million of Affiliate equity during the remainder of 2025 .

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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 sha res of our common stock, respectively, and these authorizations have no

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 March 31, 2024 , we had repurchased all of

the shares in the repurchase program authorized in October 2022.

D uring the three and nine months ended September 30, 2024 ,

we repurchased 0.6 million and 3.6 million shares of our common stock at an average price per share of $163.23 and $158.62 ,

respectively.

As of September 30, 2024 , there were a total of 5.9 million shares available for repurchase under our share

repurchase programs.

Our Board of Directors authorized a share repurchase program in July 2024 to repurchase up to 5.4 million shares of our

common stock and this authorization has 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.

During the three months ended March 31, 2025 , we repurchased 1.0 million shares of our common stock at an average price per

share of $171.00 .

As of March 31, 2025 , there were a total of 4.3 million shares available for repurchase under our July 2024

share repurchase program.

The following table presents the carrying value of our outstanding indebtedness.

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(in millions)

September 30,

Senior bank debt

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Senior Bank Debt

During the nine months ended September 30, 2024 , we repaid the $350.0 million outstanding under the term loan .

As of September 30, 2024 , we had a $1.25 billion revolver.

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

terminated upon payment in full.

Subject to certain conditions, we may increase the commitments under the revolver by up to

an additional $500.0 million .

As of September 30, 2024 , we had no outstanding borrowings under the revolver, and could borrow all capacity and remain

in compliance with the revolver.

In the first quarter of 2024, our $400.0 million 2024 senior notes matured and were fully repaid.

As of September 30, 2024 , we had senior notes outstanding, the respective principal terms of which are presented and

As of March 31, 2025 , we had a $1.25 billion revolver which matures on November 15, 2029.

Subject to certain

conditions, we may increase the commitments under the revolver by up to an additional $500.0 million .

As of March 31, 2025 , 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 .

As of March 31, 2025 , we had senior notes outstanding, the respective principal terms of which are presented and

described below:

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Semi-annually

On August 20, 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 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

4 unchanged sentences

also repurchase senior notes in the open market or in privately negotiated transactions from time to time at management’s

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 further repayment or refinancing of indebtedness, as well for other general

corporate purposes, which may include share repurchases and investments in new and existing Affiliates.

Junior Subordinated Notes

As of September 30, 2024 , we had junior subordinated notes outstanding, the respective principal terms of which are

presented and described below:

As of March 31, 2025 , we had junior subordinated notes outstanding, the respective principal terms of which are presented

and described below:

Junior Subordinated

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Coupon frequency

On March 20, 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 September 30,

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

As of March 31, 2025 , the 2059 junior subordinated notes could be redeemed at any time, in whole or in part.

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.

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;

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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 the repayment or refinancing of indebtedness , share repurchases, and investments in

new and existing Affiliates.

Junior Convertible Securities

As of September 30, 2024 , we had $341.7 million of principal outstanding in our 5.15% junior convertible trust preferred

As of March 31, 2025 , we had $341.7 million of principal outstanding in our 5.15% junior convertible trust preferred

securities (the “junior convertible securities”), maturing in 2037.

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convertible securities in the open market or in privately negotiated transactions from time to time at management’s discretion.

We did not repurchase any of our junior convertible securities during the nine months ended September 30, 2023 and 2024 .

We did not repurchase any of our junior convertible securities during the three months ended March 31, 2024 and 2025 .

Equity Distribution Program

In the second quarter of 2022, we entered into equity distribution and forward equity agreements with several major

On March 7, 2025, we entered into an equity distribution agreement and forward sale 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

1 unchanged sentence

distribution program superseded and replaced our prior equity distribution program.

As of September 30, 2024 , no sales had

As of March 31, 2025 , no sales had

occurred under the equity distribution program.

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See Notes 4 and 7 of our Consolidated Financial Statements.

As of September 30, 2024 , our lease obligations were $10.2 million for the remainder of 2024 , $62.4 million from 2025

As of March 31, 2025 , our lease obligations were $27.0 million for the remainder of 2025 , $53.4 million from 2026

through 2027, $44.8 million from 2028 through 2029, and $47.8 million thereafter.

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Critical Accounting Estimates and Judgments

Our 2023 Annual Report on Form 10‑K includes additional information about our Critical Accounting Estimates and

Judgments, and should be read in conjunction with this Quarterly Report on Form 10‑Q.

The following is an update to our 2024 Annual Report on Form 10‑K, which includes additional information about our

Critical Accounting Estimates and Judgments, and should be read in conjunction with this Quarterly Report on Form 10‑Q.

Indefinite-Lived Acquired Client Relationships

In the first quarter of 2025, we completed an impairment assessment of the indefinite-lived acquired client relationships for

certain mutual fund assets and determined that the fair value of the assets had declined below their carrying values.

Accordingly, we recorded an expense in Intangible amortization and impairments of $59.2 million attributable to the controlling

interest ( $70.0 million in aggregate) to reduce the carrying value of the assets to fair value.

The decline in the fair value was a

result of current and projected declines in assets under management that decreased the forecasted revenue associated with the

The most relevant assumptions used in these analyses were revenue growth rates over the next five years ranging from

(21)% to 0% , long-term revenue growth rates of 0% , and discount rates of 11% .

While we believe all assumptions used in our assessments are reasonable and appropriate, changes in these estimates could

produce different values.

We performed a sensitivity analysis over the most relevant assumptions used in these assessments.

Assuming all other assumptions remain constant, a decrease in the revenue growth rates over the next five years of 200 basis

points would result in an additional impairment amount of approximately $49 million , while an increase in the discount rate of

100 basis points would result in an additional impairment amount of approximately $91 million .

Further declines in assets

under management resulting from negative investment performance or net client outflows above our estimates could result in

additional future impairments.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk for the three

months ended March 31, 2025 .

Please refer to Item 7A of our 2024 Annual Report on Form 10-K.

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-Q

Item 2. Management’s Discussion and Analysis