What changed in this filing

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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-28 · 35 added, 80 removed, 154 unchanged (43% of the section changed)

9 unchanged sentences

Assets under management could decline due to a variety of factors including, but not limited to, the following:

▪ General domestic and global economic, political and public health conditions.

▪ General domestic and global economic, political and other conditions.

Capital, equity and credit markets can experience substantial volatility.

Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws, trade barriers, commodity prices, currency exchange rates, national and international political circumstances and conflicts, public health issues and other conditions may impact the capital, equity and credit markets.

Changes in interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws, trade barriers and tariffs, commodity prices, currency exchange rates, national and international political circumstances and conflicts, public health issues and other conditions may impact the capital, equity and credit markets.

Employment rates, economic weakness and budgetary challenges in parts of the world, uncertainty regarding governmental regulations and international trade policies, conflicts such as in Ukraine and the Middle East, concern over prospects in China and emerging markets, and growing debt for certain countries all indicate that economic and political conditions remain unpredictable.

The occurrence of public health issues such as a major epidemic or pandemic that affect public health and public perception of health risk, as well as local, state and/or national government restrictive measures implemented to control such issues, could adversely affect the global financial markets, our employees and the systems we rely on.

Any of the conditions listed herein, among others, may impact our assets under management.

Past volatility in the markets has highlighted the interconnection of the global economies and markets and has demonstrated how deteriorating financial condition of one institution may adversely impact the performance of other institutions.

Our assets under management have exposure to many different industries and counterparties and may be exposed to credit, operational or other risk due to the default by a counterparty or client or in the event of a market failure or disruption.

Negative, uncertain or diminishing investor confidence in the markets and/or adverse market conditions could result in a decrease in investor risk tolerance.

Such a decrease could prompt investors to reduce their rate of investment or to partially or fully withdraw from markets, which could reduce our overall assets under management and have an adverse effect on our revenues, earnings and growth prospects.

In the event of extreme circumstances, including economic, political or business or health crises, such as a widespread systemic failure in the global financial system, failures of firms that have significant obligations as counterparties, political conflicts or global pandemics, we may suffer significant declines in assets under management and severe liquidity or valuation issues.

▪ Price declines in individual securities, market segments or geographic areas.

Portfolios that we manage that are focused on certain geographic markets or industry sectors are particularly vulnerable to political, social and economic events in those markets and sectors.

If those markets or industries decline or experience volatility, this could have a negative impact on our assets under management and our revenues.

For example, certain non-U.S.

markets, particularly emerging markets, are not as developed or as efficient as the U.S.

financial markets and, as a result, may be less liquid, less regulated and significantly more volatile than the U.S.

financial markets.

In addition, certain industry sectors can experience significant volatility, such as the technology or oil sector.

Liquidity or values in such markets or sectors may be adversely impacted by factors including political or economic events, government policies, expropriation, volume trading limits by foreign investors, social or civil unrest, etc.

These factors may negatively impact the market value of a security or our ability to dispose of it.

Portfolios that we manage that are focused on certain geographic markets or industry sectors may be particularly vulnerable to political, social and economic events in those markets and sectors.

Negative, uncertain or diminishing investor confidence in the markets and/or adverse market conditions as a result of the conditions listed herein, among others, may decrease investor risk tolerance and negatively impact security prices.

Such impacts could prompt investors to reduce their rate of investment or to partially or fully withdraw from markets, which could reduce our overall assets under management and have an adverse effect on our revenues, earnings and growth prospects.

In the event of extreme circumstances, including economic, political or business or public health crises, such as a widespread systemic failure in the global financial system, failures of firms that have significant obligations as counterparties, we may suffer significant declines in our assets under management and severe liquidity or valuation issues.

▪ Real or perceived negative absolute or relative performance.

Sales and redemptions of our investment strategies can be affected by investment performance relative to established benchmarks or other competing investment strategies.

Sales and redemptions of our investment strategies can be

affected by investment performance relative to established benchmarks or other competing investment strategies.

Negative absolute performance as a result of price declines in securities may also negatively impact our sales and redemptions and the value of our assets under management.

Our investment management strategies are rated, ranked or assessed by independent third-parties, distribution partners and industry periodicals and services.

These assessments often influence the investment decisions of clients.

If the performance of our investment strategies is perceived to be underperforming relative to peers, it could result in

increased withdrawals of assets by existing clients and the inability to attract additional investments from new and existing clients.

We may engage in significant transactions that may not achieve the anticipated benefits or could expose us to additional or increased risks.

Third party financial intermediaries, advisers or consultants may remove our investment products from recommended lists due to poor performance or for other reasons.

These assessments often influence the investment decisions of clients and may lead to increased withdrawals of assets by existing clients and the inability to attract additional investments from new and existing clients.

We may engage in strategic transactions that could pose financial or business risks.

We have executed several inorganic transactions over the past years and we regularly evaluate potential transactions, including acquisitions, consolidations, joint ventures, strategic partnerships, or similar transactions, some of which could be significant.

Our past acquisitions and strategic transactions have led to a significant increase in our assets under management and an expansion of our product and service offerings.

We cannot provide assurance that we will continue to be successful in closing on transactions or achieving anticipated financial benefits, including such things as revenue or cost synergies.

Any transaction may also involve a number of other risks, including additional demands on our staff, unanticipated problems regarding integration of operating facilities, technologies and new employees, and the existence of liabilities or contingencies not disclosed to, or otherwise unknown by, us prior to closing a transaction.

In addition, any business we acquire may underperform relative to expectations or may lose customers or employees.

Any transaction may also involve a number of risks, including underperforming relative to expectations, the loss of customers or personnel, additional demands on our staff, unanticipated problems regarding integration of operating facilities, technologies and new employees, and the existence of liabilities or contingencies not disclosed to, or otherwise unknown by, us prior to closing a transaction.

Additionally, we cannot provide assurance that we will continue to be successful in closing on transactions or that we will achieve the anticipated benefits from a transaction, including such things as revenue, tax benefits or cost synergies.

Our investment management agreements are subject to renegotiation or termination on short notice, which could negatively impact our business.

Our clients include our sponsored fund investors, represented by boards of trustees or directors (the "fund boards"), managed account program sponsors, individual private clients, and institutional clients.

Our clients include our sponsored fund investors, represented by boards of trustees or directors (the "fund boards"), managed account program sponsors, institutional clients, and individual private clients.

Our investment management agreements with these clients may be terminated on short notice and without penalty.

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We incur indebtedness for a variety of business reasons, including in relation to financing acquisitions and transactions.

The indebtedness we incur can take many forms including, but not limited to, term loans or revolving lines of credit that customarily contain covenants.

The indebtedness we incur can take many forms including, but not limited to, term loans or revolving lines of

credit that customarily contain covenants.

At December 31, 2024, we had $236.1 million of total debt outstanding under its credit agreement, excluding debt of consolidated investment products ("CIP"), and had no borrowings outstanding under our $175.0 million revolving credit facility.

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We face significant competition from a wide variety of financial institutions, including other investment management companies, as well as from proprietary products offered by our distribution partners such as banks, broker-dealers and financial planning firms.

Competition in our businesses is based on several factors, including investment performance, fees charged, access to distribution channels and service to financial advisors.

Competition in our businesses is based on several factors, including investment performance, fees charged, access to distribution channels and service to financial advisors and clients.

Our competitors, many of which are larger, often offer similar products, use the same distribution sources, offer less expensive products, maintain greater access to key distribution channels, and have greater resources, geographic footprints and name recognition.

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Competition could cause us to reduce the fees that we charge.

If our clients, including our fund boards, were to view our fees as being inappropriately high relative to the market or the returns generated by our investment products, we may choose, or be required, to reduce our fee levels, or we may experience significant redemptions in our assets under management, which could have an adverse impact on our results of operations and financial condition.

If our clients, including our fund boards, were to view our fees as being inappropriately high

relative to the market or the returns generated by our investment products, we may choose, or be required, to reduce our fee levels, or we may experience significant redemptions in our assets under management, which could have an adverse impact on our results of operations and financial condition.

We utilize unaffiliated firms to provide investment management services and any matters that adversely impact them or any change in our relationships with them could adversely affect our revenues and profitability.

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Any failure or interruption of third-party systems, whether resulting from technology or infrastructure breakdowns, defects or external causes such as fire, natural disaster, computer viruses, acts of terrorism or power disruptions, or public health events could result in financial loss, negatively impact our reputation and negatively affect our ability to do business.

Although we and our third-party service providers have disaster recovery plans in place, we may nonetheless experience interruptions if a natural or man-made disaster or prolonged power outage were to occur, which could have an adverse impact on our business and profitability.

Although we and our third-party service providers have business continuity and disaster recovery plans in place, we may nonetheless experience interruptions if a natural or man-made disaster, prolonged power outage, or other business interruption event were to occur, which could have an adverse impact on our business and profitability.

In addition, our computer systems are regularly the target of viruses or other malicious codes, unauthorized access, cyber-attacks or other computer-related penetrations.

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Our third-party service providers' systems may also be affected by, or fail, as a result of, catastrophic events, such as fires, floods, hurricanes and tornadoes.

A breach of our systems, or of those of third-party service providers, through cyber-attacks or failure to manage and sufficiently secure our technology environment could result in interruptions or malfunctions in the operations of our business, loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by a breach or to recover access to our systems, additional costs to mitigate against future incidents, and litigation

costs resulting from an incident.

Any of these conditions could have an adverse impact on our business and profitability.

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We are subject to regulation by the SEC, other federal and state agencies, certain international regulators, as well as FINRA and other self-regulatory organizations.

Each of our affiliated investment managers and unaffiliated subadvisers is registered with the SEC under the Investment Advisers Act.

Each of our investment management subsidiaries and unaffiliated subadvisers is registered with the SEC under the Investment Advisers Act.

There are various regulatory reform initiatives in the U.S.

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Many aspects of our business involve substantial risks of liability, and there have been substantial incidences of litigation and regulatory investigations in the financial services industry in recent years, including customer claims as well as class action suits seeking substantial damages.

From time to time, we and/or our sponsored funds may be named as defendants or co-defendants in lawsuits or be involved in disputes that involve the threat of lawsuits seeking substantial

We and/or our sponsored funds are also involved from time to time in governmental and self-regulatory organization investigations and proceedings.

From time to time, we and/or our sponsored funds may be named as defendants or co-defendants in lawsuits or be involved in disputes that involve the threat of lawsuits seeking substantial damages.

We and/or our sponsored funds are also involved from time to time in governmental and self-regulatory

organization investigations and proceedings.

"Legal Proceedings" for further information.)

8 unchanged sentences

We are subject to income as well as non-income-based taxes and are subject to ongoing tax audits, in various jurisdictions in which we operate.

Tax authorities may disagree with certain positions we have taken that may result in the assessment of additional taxes.

Tax authorities may disagree with certain positions we have taken that may result in the assessment of additional taxes and/or penalties and interest.

We regularly assess the appropriateness of our tax positions and reporting.

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RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

We may not pay dividends as intended or at all.

The declaration, payment and determination of the amount of our quarterly dividends may change at any time.

In making decisions regarding our dividends, we consider general economic and business conditions as well as our strategic plans and prospects, business and investment opportunities, financial condition and operating results, working capital requirements and anticipated cash needs, contractual and regulatory restrictions (including under the terms of our credit agreement) and other obligations, that may have implications on the payment of distributions by us to our shareholders or by our subsidiaries to us, and such other factors as we may deem relevant.

Our ability to pay or increase our dividends maybe subject to restrictions under the terms of our credit agreement.

We cannot make any assurances that any dividends, whether quarterly or otherwise, will continue to be paid in the future.

We have corporate governance provisions that may make an acquisition of us more difficult.

Certain provisions of our certificate of incorporation and bylaws could discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions by which stockholders might otherwise receive a premium for their shares.

These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.

Stockholders who wish to participate in these transactions may not have the opportunity to do so.

In addition, the provisions of Section 203 of the Delaware General Corporation Law also restrict certain business combinations with interested stockholders.

Certain provisions in our certificate of incorporation and bylaws and Delaware law could discourage, delay or prevent a merger, acquisition or other change in control even if certain shareholders may consider a change of control to be beneficial.

These provisions could have the effect of making it more difficult for a third party to acquire, or discourage a third party from attempting to acquire, control of the Company without negotiating with our board of directors.

Such provisions could also limit the price that certain investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock.

These provisions, among other things:

▪ Allow our board of directors to issue preferred stock and determine the powers, preferences and rights thereof without shareholder approval;

▪ Prohibit the Company's ability to engage, under certain circumstances, in business combinations with any interested shareholder for three years following the date that the shareholder became an interested shareholder;

▪ Require that special meetings of shareholders be called only by the chairperson of our board of directors;

▪ Contain advance notice procedures that shareholders must comply with to nominate candidates to our board of directors or present proposals.

GENERAL RISK FACTORS

8 unchanged sentences

Our intangible assets may become impaired as a result of a variety of factors which could adversely affect our financial condition and results of operations.

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

All statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking statements." These statements may be identified by such forward-looking terminology as "expect," "estimate," "intent," "plan," "intend," "believe," "anticipate," "may," "will," "should," "could," "continue," "project," "opportunity," "predict," "would," "potential," "future," "forecast," "guarantee," "assume," "likely," "target" or similar statements or variations of such terms.

Our forward-looking statements are based on a series of expectations, assumptions and projections about the Company and the markets in which we operate, are not guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections concerning our assets under management, net asset inflows and outflows, operating cash flows, business plans and ability to borrow, for all future periods.

All forward-looking statements contained in this Annual Report on Form 10-K are as of the date of this Annual Report on Form 10-K only.

We can give no assurance that such expectations or forward-looking statements will prove to be correct.

Actual results may differ materially.

We do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this Annual Report on Form 10-K, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized.

If there are any future public statements or disclosures by us that modify or impact any of the forward-looking statements contained in or accompanying this Annual Report on Form 10-K, such statements or disclosures will be deemed to modify or supersede such statements in this Annual Report on Form 10-K.

Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including those discussed under "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Annual Report on Form 10-K, resulting from:

(i) any reduction in our assets under management;

(ii) inability to achieve the expected benefits of strategic transactions;

(iii) withdrawal, renegotiation or termination of investment management agreements;

(iv) damage to our reputation;

(v) inability to satisfy financial debt covenants and required payments;

(vi) inability to attract and retain key personnel;

(vii) challenges from competition;

(viii) adverse developments related to unaffiliated subadvisers;

(ix) negative changes in key distribution relationships;

(x) interruptions, breaches, or failures of technology systems;

(xi) loss on our investments;

(xii) lack of sufficient capital on satisfactory terms;

(xiii) adverse regulatory and legal developments;

(xiv) failure to comply with investment guidelines or other contractual requirements;

(xv) adverse civil litigation, government investigations, or proceedings;

(xvi) unfavorable changes in tax laws or limitations;

(xvii) inability to make common stock dividend payments;

(xviii) impediments from certain corporate governance provisions;

(xix) losses or costs not covered by insurance;

(xx) impairment of goodwill or other intangible assets;

and other risks and uncertainties.

Any occurrence of, or any material adverse change in, one or more risk factors or risks and uncertainties referred to in this Annual Report on Form 10-K and our other periodic reports filed with the SEC could materially and adversely affect our operations, financial results, cash flows, prospects and liquidity.

Certain other factors that may impact our continuing operations, prospects, financial results and liquidity, or that may cause actual results to differ from such forward-looking statements, are discussed or included in the Company's periodic reports filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to carefully consider all such factors.

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

What changed 10-K

Item 1A. Risk Factors