AFFILIATED MANAGERS GROUP INC
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 471 previous paragraphs and 500 current paragraphs.
263 unchanged; 131 reworded; 87 added; 64 removed; 13 previous and 19 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (87)
Current report
In the second quarter of 2024, we completed our minority investment in Suma Capital (“Suma”), a pan-European private
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markets firm that invests in the transition to a lower carbon economy. Following the close of the transaction, Suma partners
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continue to hold a significant majority of the equity of the firm and direct its day-to-day operations.
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notably in private markets and liquid alternatives. As we continue to invest in new and existing Affiliates, we expect to further
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(1)Includes assets under management related to a new investment made by an existing Affiliate.
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Aggregate fees were$1,157.1 million for thethree months ended September 30, 2024, an increase of$159.6 million or
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economic interest.
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This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the sale of our equity
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This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the Veritable Transaction in
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income (controlling interest)increased $3.7 million or 2%, primarily due to a $5.7 million increase in Adjusted EBITDA
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For thenine months ended September 30, 2024, our Economic net income (controlling interest)increased $20.9 million or
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4%, primarily due to a$51.8 million increase in Adjusted EBITDA (controlling interest). This increase was partially offset by
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Interest expense attributable to the controlling interest.
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million or 2% decrease from asset-based fees, offset by a $3.1 million increase from performance-based fees, primarily in our
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under management driven by the Veritable Transaction, offset by an increase in our consolidated Affiliate average assets under
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Our Consolidated revenue decreased $38.6 million or 2% for thenine months ended September 30, 2024, primarily due to
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a $39.2 million or 2% decrease from asset-based fees. The decrease in asset-based fees was principally due to changes in the
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composition of our assets under management driven by the Veritable Transaction and a decrease in our consolidated Affiliate
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Compensation and related expenses increased $9.0 million or 4% for thethree months ended September 30, 2024,
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primarily due to a $13.6 million increase in compensation accruals at Affiliates, partially offset by a decrease in compensation
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and related expenses due to the Veritable Transaction.
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Compensation and related expenses increased $13.5 million or 2% for thenine months ended September 30, 2024,
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primarily due to a $21.9 million increase in compensation accruals primarily at Affiliates and a $7.0 million increase in Affiliate
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the Veritable Transaction.
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primarily due to a $3.3 million increase in professional fees and a $2.4 million increase in distribution and investment-related
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decrease in non-income based and other taxes.
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primarily due to a $3.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized
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Intangible amortization and impairments decreased $15.7 million or 42% for thenine months ended September 30, 2024,
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primarily due to a $10.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized
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and a $5.0 million decrease due to the Veritable Transaction.
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$2.5 million increase from our 5.50% senior unsecured notes issued in August 2024 (the “2034 senior notes”). This increase
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Interest expense increased $5.7 million or 6% for thenine months ended September 30, 2024, primarily due to a $16.1
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million increase from our 2064 junior subordinated notes and a $2.5 million increase from our 2034 senior notes. This increase
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million decrease primarily due to the repayment of our term loan.
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Other expenses (net)increased $3.7 million or 47% for thethree months ended September 30, 2024, primarily due to a $3.8
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Our equity method revenue increased $168.4 million or 36% for thethree months ended September 30, 2024, due to a
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$109.1 million or 23% increase from asset-based fees and a $59.3 million or 13% increase from performance-based fees,
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on a percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which wehold a lesser
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economic interest and an increase in revenue at certain Affiliates in which we share inrevenue less agreed-upon expenses.
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Equity method intangible amortization increased $1.5 million or 7% for thethree months ended September 30, 2024,
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sustainable investment strategies, wealth management, and Asia — through new and existing Affiliates, to better position AMG
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Aggre gate fees were$1,098.1 million for thethree months ended June 30, 2024, anincrease of$95.0 million or 9% as
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increase from asset-based fees and a $21.1 million or 2% increase from performance-based fees, primarily in our liquid
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investments in new Affiliates.
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increase from asset-based fees, offset by an $87.0 million or 3% decrease from performance-based fees, primarily in our liquid
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investments in new Affiliates.
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decrease was primarily due to a $37.7 million decrease in Equity method income (net) and a $9.3 million increase in Income tax
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by a $21.2 million increase in Equity method income (net).
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(controlling interest)decreased $11.4 million or 7%, primarily due to an $11.0 million increase in current and other deferred
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taxes.
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For thesix months ended June 30, 2024, our Economic net income (controlling interest)increased $17.2 million or 5%,
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primarily due to a$46.2 million increase in Adjusted EBITDA (controlling interest), partially offset by a $24.5 million increase
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Our Consolidated revenue decreased $29.6 million or 3% for thesix months ended June 30, 2024, due to a $27.1 million or
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3% decrease from asset-based fees and a $2.5 million decrease from performance-based fees, primarily in our private markets
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strategies. The decrease in asset-based fees was principally due to a decrease in consolidated Affiliate average assets under
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Compensation and related expenses decreased $13.6 million or 6% for thethree months ended June 30, 2024, primarily due
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to a $9.0 million decrease in compensation correlated to the decrease in Consolidated revenue and a $3.9 million decrease in
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share-based compensation expense.
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Compensation and related expenses increased $4.5 million or 1% for thesix months ended June 30, 2024, primarily due to
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a $6.4 million increase in Affiliate equity compensation expense and a $2.5 million increase in share-based compensation
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Consolidated revenue.
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decrease in professional fees.
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primarily due to a $3.2 million decrease in professional fees.
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Transaction).
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Intangible amortization and impairments decreased $10.5 million or 42% for thesix months ended June 30, 2024, primarily
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due to a $7.0 million decrease from achange in expected future economic benefit related to certain definite-lived assets and a
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$3.3 million decrease due to the Veritable Transaction.
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notes”).
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Interest expense increased $2.1 million or 3% for thesix months ended June 30, 2024, primarily due to an $8.6 million
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increase from our 2064 junior subordinated notes. This increase was partially offset by a $6.7 million decrease due to the
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Other expenses (net)decreased $8.4 million or 30% for thesix months ended June 30, 2024, primarily due to a $9.2 million
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Our equity method revenue increased $107.2 million or 22% for thethree months ended June 30, 2024, due to an $82.7
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million or 17% increase from asset-based fees and a $24.5 million or 5% increase from performance-based fees, primarily in
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economic interest, partially offset by the contribution from investments in new Affiliates.
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While equity method intangible amortization did not change for thethree months ended June 30, 2024, it reflects an $8.3
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million decrease in amortization expense related to certain definite-lived assets being fully amortized, partially offset by a $5.3
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our Consolidated Financial Statements.
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Our equity method revenue increased $91.1 million or 6% for thesix months ended June 30, 2024, due to a $175.6 million
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or 12% increase from asset-based fees offset by an $84.5 million or 6% decrease from performance-based fees, primarily in our
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Equity method intangible amortization decreased $0.1 million for thesix months ended June 30, 2024, primarily due to a
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Annual Report on Form 10-K for the year ended December 31,2023, and from time to time, as applicable, our Quarterly
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Annual Report on Form 10-K for the year ended December 31, 2023, and from time to time, as applicable, our Quarterly
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June 30, 2024, our aggregate assets under management were approximately$701 billion across a diverse range of private
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September 30, 2024, our aggregate assets under management were approximately$728 billion across a diverse range of
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markets, liquid alternatives, and differentiated long-only investment strategies.
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private markets, liquid alternatives, and differentiated long-only investment strategies.
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continue to see client demand for alternative strategies, as evidenced by our net inflows in this category for thethree andsix
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continue to see client demand for alternative strategies, as evidenced by our net inflows in this category for thethree andnine
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months ended June 30, 2024. At the same time, our equity strategies saw outflows in line with client cash flow trends across
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months ended September 30, 2024. At the same time, our equity strategies saw outflows in line with client cash flow trends
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the industry. We continue to invest in areas of long-term client demand — including private markets, liquid alternatives,
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across the industry. We continue to invest our capital and resources in areas aligned with long-term client demand trends, most
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to benefit from industry growth trends. We also anticipate that independent investment firms will continue to seek access to an
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evolve our business mix and better position AMG to benefit from industry growth trends. We also anticipate that independent
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evolving range of partnership solutions, and that we have a significant opportunity to invest in additional high-quality firms
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investment firms will continue to seek access to an evolving range of partnership solutions, and that we have a significant
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across the global investment management industry.
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opportunity to invest in additional high-quality firms across the global investment management industry.
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(1)Alternatives include private markets strategies, which accounted for 18% of our assets under management as of June 30,
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(1)Alternatives include private markets strategies, which accounted for 18% of our assets under management as of
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The following tables present changes in our assets under management by strategy and client type for thethree andsix
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The following tables present changes in our assets under management by strategy and client type for thethree andnine
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(1)Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional
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(2)Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional
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(2)Other includes assets under management attributable to product transitions and reclassifications.
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(3)Other includes assets under management attributable to product transitions and reclassifications.
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(1)Past performance is not indicative of future results. Performance and AUM information is as of June 30, 2024 and is based
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(1)Past performance is not indicative of future results. Performance and AUM information is as of September 30, 2024 and is
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on data available at the time of calculation. Product returns are sourced from Affiliates while benchmark returns are
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based on data available at the time of calculation. Product returns are sourced from Affiliates while benchmark returns are
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period because they inherently depend on investment performance. As of June 30, 2024, approximately 27% of our total assets
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period because they inherently depend on investment performance. As of September 30, 2024, approximately 27% of our total
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under management could potentially earn performance-based fees. These percentages were approximately 12% and 47% of our
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assets under management could potentially earn performance-based fees. These percentages were approximately 12% and 46%
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assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method, respectively.
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of our assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method,
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We anticipate performance-based fees will be a recurring component of our aggregate fees; however we do not anticipate these
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respectively. We anticipate performance-based fees will be a recurring component of our aggregate fees; however we do not
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fees to be a significant component of our Consolidated revenue as these fees are predominately earned by our Affiliates
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anticipate these fees to be a significant component of our Consolidated revenue as these fees are predominately earned by our
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compared to thethree months ended June 30, 2023. The increase in our aggregate fees was due to a $73.9 million or 7%
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16% as compared to thethree months ended September 30, 2023. The increase in our aggregate fees was due to a $97.2 million
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primarily in our alternatives strategies, and changes in the composition of our assets under management primarily driven by
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or 10% increase from asset-based fees and a $62.4 million or 6% increase from performance-based fees, primarily in our liquid
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alternatives strategies. The increase in asset-based fees was due to an increase in our average assets under management,
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alternatives strategies. The increase in asset-based fees was principally due to an increase in our average assets under
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management primarily driven by investments in new Affiliates.
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driven by investments in new Affiliates.
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Aggregate fees were$2,569.7 million for thesix months ended June 30, 2024, anincrease of$61.5 million or 2% as
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Aggregate fees were$3,726.8 million for thenine months ended September 30, 2024, anincrease of$221.1 million or 6%
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compared to thesix months ended June 30, 2023. The increase in our aggregate fees was due to a $148.5 million or 5%
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as compared to thenine months ended September 30, 2023. The increase in our aggregate fees was due to a $245.7 million or
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or 1% decrease from asset-based fees and a $3.4 million or 1% decrease from performance-based fees, primarily in our private
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7% increase from asset-based fees, offset by a $24.6 million or 1% decrease from performance-based fees, primarily in our
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alternatives strategies. The increase in asset-based fees wasdue to an increase in our average assets under management,
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liquid alternatives strategies. The increase in asset-based fees was principally due to an increase in our average assets under
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Our Adjusted EBITDA (controlling interest)increased $3.2 million or 1% in thethree months ended June 30, 2024 primarily
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Our Adjusted EBITDA (controlling interest)increased $5.7 million or 3% in thethree months ended September 30, 2024
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due to a $95.0 million or 9% increase in aggregate fees. Adjusted EBITDA increased less than aggregate fees on a percentage
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primarily due to a $159.6 million or 16% increase in aggregate fees. Adjusted EBITDA increased less than aggregate fees on a
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For thesix months ended June 30, 2024, our Adjusted EBITDA (controlling interest)increased $46.2 million or 11%,
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For thenine months ended September 30, 2024, our Adjusted EBITDA (controlling interest)increased $51.8 million or
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primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which we
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8%, primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which
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hold a greater economic interest.
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we hold a greater economic interest.
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For thethree months ended June 30, 2024, our Net income (controlling interest)decreased $49.3 million or 39%. This
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For thethree months ended September 30, 2024, our Net income (controlling interest)decreased $93.4 million or 43%.
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and a $1.7 million decrease due to the sale of our equity interest in Veritable, LP in the third quarter of 2023, (the “Veritable
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interest in Veritable, LP (“Veritable”) in the third quarter of 2023 (the “Veritable Transaction”), partially offset by a $46.4
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expense attributable to the controlling interest.
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million decrease in Income tax expense attributable to the controlling interest.
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For thesix months ended June 30, 2024, our Net income (controlling interest)decreased $34.0 million or 13%. This
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For thenine months ended September 30, 2024, our Net income (controlling interest)decreased $127.3 million or 27%.
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decrease was primarily due to a $22.8 million decrease in Investment and other income attributable to the controlling interest
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the third quarter of 2023 and a $30.4 million decrease in Investment and other income attributable to the controlling interest.
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and a $20.1 million increase in Income tax expense attributable to the controlling interest. These decreases were partially offset
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These decreases were partially offset by a $26.2 million decrease in Income tax expense attributable to the controlling interest.
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improves comparability of performance between periods. For thethree months ended June 30, 2024, our Economic net income
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improves comparability of performance between periods. For thethree months ended September 30, 2024, our Economic net
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Affiliates accounted for under the equity method.
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management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily
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management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily
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driven by investments in new Affiliates.
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management, primarily in our alternatives strategies.
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expenses, principally as a result of the increase in average assets under management on which these expenses are incurred.
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and a $1.7 million decrease due to the Veritable Transaction.
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primarily in our liquid alternatives strategies. The increase in asset-based fees wasprincipally due to an increase in our equity
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method Affiliate average assets under management, primarily in our alternatives strategies, and changes in the composition of
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our assets under management primarily driven by investments in new Affiliates.
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method Affiliate average assets under management, primarily in our alternatives strategies, and changes in the composition of
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our assets under management primarily driven by investments in new Affiliates.
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definite-lived assets being fully amortized.
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share-based compensation in thethree months ended September 30, 2024.
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primarily attributable to the controlling interest.
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On August 20, 2024, we issued$400.0 million of 2034 senior unsecured notes with a maturity date of August 20, 2034.
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also repurchase senior notes in the open market or in privately negotiated transactions from time to time at management’s
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corporate purposes, which may include share repurchases and investments in new and existing Affiliates.
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occurred under the equity distribution program.
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accounted for under the equity method.
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primarily in our alternatives strategies, and changes in the composition of our assets under management primarily driven by
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basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser economic
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management, primarily in our global equity strategies.
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assets under management, primarily in our alternatives strategies, and changes in the composition of our assets under
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liquid alternatives strategies. The increase in asset-based fees was due to an increase in our equity method Affiliate average
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assets under management, primarily in our alternatives strategies, and changes in the composition of our assets under
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management primarily driven by investments in new Affiliates.
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percentage basis primarily due to the contribution from investments in new Affiliates and the recognition of performance-based
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Equity method intangible impairments increased $39.9 million for thesix months ended June 30, 2024. See Note 10 of our
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expense in thethree months ended June 30, 2023, and an expense to reduce the carrying value of an Affiliate to fair value in the
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three months ended June 30, 2024 for which no tax benefit was recorded. See Note 15 of our Consolidated Financial
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revolver matures on October 25, 2027 and the term loan matures on October 23, 2026. Subject to certain conditions, we may