Compass Diversified Holdings

Company Background

Compass Diversified Holdings, a Delaware statutory trust, was formed in Delaware on November 18, 2005. Compass Group Diversified Holdings, LLC, a Delaware limited liability company, was also formed on November 18, 2005. The Trust and the LLC were formed to acquire and manage a group of small and middle-market businesses headquartered in North America. The Trust is the sole owner of 100% of the Trust Interests, as defined in our LLC Agreement, of the LLC. Pursuant to the LLC Agreement, the Trust owns an identical number of Trust Interests in the LLC as exist for the number of outstanding shares of the Trust.

The Trust was previously treated as a partnership for U.S. federal income tax purposes but elected, effective September 1, 2021, to be taxed as an association taxable as a corporation.

The LLC is the operating entity with a board of directors (the "Board") whose corporate governance responsibilities are similar to that of a Delaware corporation. The LLC’s Board oversees the management of the Company and our businesses and the performance of our Manager. Certain persons who are employees, former employees or members of our Manager receive a profit allocation as beneficial owners (through Sostratus LLC) of the Allocation Interests, as defined in our LLC Agreement.

We acquire controlling interests in and actively manage our subsidiaries that we believe (i) operate in industries with long-term macroeconomic growth opportunities, (ii) have positive and stable cash flows, (iii) face minimal threats of technological or competitive obsolescence, and (iv) have strong management teams largely in place. We offer investors a unique opportunity to own a diverse group of leading middle-market businesses in the branded-consumer and industrial sectors.

Our disciplined approach to our target markets provides opportunities to methodically acquire and manage attractive businesses that will create value for our shareholders. For sellers of businesses, our unique financial structure allows us to purchase businesses efficiently with fewer third-party financing contingencies and, following acquisition, to provide our businesses with access to growth capital. In addition, our permanent capital model generally allows us to acquire businesses at any point across economic cycles, ensuring that we are able to act quickly when the opportunity presents itself, even when markets are volatile.

Private company operators and corporate parents looking to sell their business units may consider us an attractive purchaser because of our ability to:

•provide ongoing strategic and financial support for their businesses, including professionalization of our subsidiaries at scale;

•maintain a long-term outlook as to the ownership of those businesses;

•sustainably invest in growth capital and/or add-on acquisitions where appropriate; and

•consummate transactions efficiently without being dependent on third-party transaction financing.

In particular, our long-term approach and our active management may alleviate the concern that many private company operators and parent companies may have with regard to their businesses going through multiple sale processes in a short period of time. We believe our approach enhances our ability to develop a comprehensive strategy to grow the earnings and cash flows of each of our businesses.

Finally, it has been our experience, that our ability to acquire businesses without the cumbersome delays and conditions typical of third-party transactional financing is appealing to sellers of businesses who are interested in confidentiality, speed and certainty of close.

Our management team’s strong relationships with industry executives, accountants, attorneys, business brokers, commercial and investment bankers, and other potential sources of acquisition opportunities offer us opportunities to assess small to middle market businesses available for acquisition. In addition, the flexibility, creativity, experience and expertise of our management team in structuring transactions allows us to consider non-traditional and complex transactions tailored to fit a specific acquisition target.

We categorize the current businesses we own into two separate groups: (i) branded consumer businesses and (ii) industrial businesses. Branded consumer businesses are those businesses that we believe capitalize on a valuable brand name in their respective market sector. We believe that our branded consumer businesses are leaders in their product categories. Industrial businesses are those businesses that focus on manufacturing and selling products and/or industrial services within a specific market sector. We believe that our industrial businesses are leaders in their specific market sectors.

The following is a brief summary of the businesses in which we own a controlling interest at December 31, 2025:

5.11

5.11 ABR Corp. ("5.11") is a global apparel, footwear, and gear company serving consumers who demand performance, durability, and versatility across work, training, and adventure. 5.11 is a brand known for innovation and authenticity and works directly with end users to create purpose-built apparel, footwear and gear designed to enhance the safety, accuracy, speed and performance of tactical professionals and enthusiasts worldwide. Headquartered in Costa Mesa, California, 5.11 operates sales offices and distribution centers globally, and 5.11 products are widely distributed in uniform stores, military exchanges, outdoor retail stores, its own retail stores and on 511tactical.com. We made loans to and purchased a controlling interest in 5.11 for approximately $408.2 million in August 2016. We currently own 97.8% of the outstanding stock of 5.11 on a primary basis and 87.6% on a fully diluted basis.

BOA

BOA Holdings Inc. ("BOA") creator of the award-winning, patented BOA Fit System, partners with market-leading brands to make the best gear even better. Delivering fit solutions purpose-built for performance, the BOA Fit System is featured in footwear across snow sports, cycling, outdoor, athletic, workwear as well as performance headwear and bracing. The system consists of three integral parts: a micro-adjustable dial, high-tensile lightweight laces, and low friction lace guides creating a superior alternative to laces, buckles, Velcro, and other traditional closure mechanisms. Each unique BOA configuration is designed with brand partners to deliver superior fit and performance for athletes, is engineered to perform in the toughest conditions and is backed by The BOA Lifetime Guarantee. BOA is headquartered in Denver, Colorado and has operations in Austria, Greater China, South Korea, Japan and Vietnam. We made loans to, and acquired a controlling interest in, BOA on October 16, 2020 for approximately$456.8 million. We currently own 91.4% of the outstanding stock of BOA on a primary basis and 82.8% on a fully diluted basis.

PrimaLoft Technologies Holdings, Inc. ("PrimaLoft") is a leading provider of branded, high-performance synthetic insulation and materials used primarily in consumer outerwear, and accessories. The portfolio of PrimaLoft synthetic insulations offers products that can both mimic natural down aesthetics and provide the freedom to design garments ranging from stylish puffers to lightweight performance apparel. PrimaLoft insulations also offer superior economics to the brand partner and enable better sustainability characteristics through the use of recycled, low-carbon inputs. We made loans to, and purchased a controlling interest in, PrimaLoft on July 12, 2022 for approximately $541.1 million. PrimaLoft is headquartered in Latham, New York. We currently own 90.7% of the outstanding stock of PrimaLoft on a primary basis and 84.7% on a fully diluted basis.

The Honey Pot Co. is a leading “better-for-you” feminine care brand, powered by plant-derived ingredients and clinically tested formulas. Founded in 2012 by CEO Beatrice Dixon, The Honey Pot Co. is rooted in the belief that all products should be made with healthy and efficacious ingredients that are kind to and safe for skin. The Honey Pot Co. offers an extensive range of holistic wellness products across the feminine hygiene, menstrual, personal care, and sexual wellness categories. The Honey Pot Co.'s mission is to educate, support, and provide consumers around the world with tools and resources that promote menstrual health and vaginal wellness. Its products can be found in stores across the U.S. through mass merchants, drug and grocery retail chains, and online. We made loans to, and purchased a controlling interest in, The Honey Pot Co. on January 31, 2024 for approximately

$380 million. The Honey Pot Co. is headquartered in Atlanta, Georgia. We currently own 85.0% of the outstanding stock of The Honey Pot Co. on a primary basis and 76.5% on a fully diluted basis.

Velocity Outdoor Inc. ("Velocity Outdoor" or "Velocity") is a leading designer, manufacturer, and marketer of archery products, hunting apparel and related accessories. The archery product category consists of products including Ravin crossbows and CenterPoint archery products, and the apparel category offers high-performance, feature rich hunting and casual apparel under the King's Camo brand, utilizing King’s own proprietary camo patterns. Velocity Outdoor offers its products through national retail chains and dealer and distributor networks. We made loans to, and purchased a controlling interest in, Velocity Outdoor on June 2, 2017 for approximately $150.4 million. Velocity Outdoor is headquartered in Rochester, New York. We currently own 99.4% of the outstanding stock of Velocity Outdoor on a primary basis and 93.2% on a fully diluted basis.

FFI Compass, Inc. ("Altor Solutions" or "Altor") (formerly "Foam Fabricators"), headquartered in St. Louis, MO, is a designer and manufacturer of custom molded protective foam solutions and original equipment manufacturer ("OEM") components made from expanded polystyrene ("EPS") and other expanded polymers. Altor provides products to a variety of end-markets, including appliances and electronics, pharmaceuticals, health and wellness, automotive, building products and others. Altor’s molded foam solutions offer shock and vibration protection, surface protection, temperature control, resistance to water absorption and vapor transmission and other protective properties critical for shipping small, delicate items, heavy equipment or temperature-sensitive goods. Altor operates molding and fabricating facilities across North America, creating a geographic footprint of strategically located manufacturing plants to efficiently serve national customer accounts. We acquired Altor on February 15, 2018 for a purchase price of approximately $253.4 million. We currently own 99.3% of the outstanding stock of Altor on a primary basis and 90.5% on a fully diluted basis.

Arnold

AMT Acquisition Corp. ("Arnold") serves a variety of markets including aerospace and defense, general industrial, motorsport/ automotive, oil and gas, medical, energy, semiconductor and advertising specialties. Over the course of more than 100 years, Arnold has successfully evolved and adapted its products, technologies, and manufacturing presence to meet the demands of current and emerging markets. Arnold engineers solutions for and produces high performance permanent magnets (PMAG), stators, rotors and full electric motors (Ramco), precision foil products (Precision Thin Metals), and flexible magnets (Flexmag™) that are mission critical in motors, generators, sensors and other systems and components. Arnold has expanded globally and built strong relationships with its customers worldwide. Arnold is the largest and, we believe, the most technically advanced U.S. manufacturer of engineered magnetic systems. Arnold is headquartered in Rochester, New York. We made loans to, and purchased a controlling interest in, Arnold on March 5, 2012 for approximately $128.8 million. We currently own 98.0% of the outstanding stock of Arnold on a primary basis and 82.8% on a fully diluted basis.

Sterno

SternoCandleLamp Holdings, Inc. ("Sterno"), headquartered in Texarkana, Texas, is the parent company of Sterno Products, LLC ("Sterno Products") and Rimports, LLC ("Rimports"). Sterno is a leading manufacturer and marketer of portable food warming systems, creative indoor and outdoor lighting, and home fragrance solutions for the consumer markets. Sterno offers a broad range of wick and gel chafing systems, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps through Sterno Products, as well as scented wax cubes, warmer products, outdoor lighting and essential oils used for home decor and fragrance systems, through Rimports. We made loans to, and purchased all of the equity interests in, Sterno on October 10, 2014 for approximately $160.0 million. Sterno offers a broad range of wick and gel chafing fuels, butane stoves and accessories, liquid and traditional wax candles, catering equipment and lamps through their Sterno Products division. In February 2018, Sterno acquired Rimports, a manufacturer and distributor of branded and private label scented wax cubes and warmer products used for home decor and fragrance systems. We currently own 98.4% of the outstanding stock of Sterno on a primary basis and 92.2% on a fully diluted basis.

Our businesses also represent our operating segments. See “Our Businesses” and “Note R – Operating Segment Data” to our Consolidated Financial Statements for further discussion of our businesses as our operating segments, including information related to geographies.

Lugano

Lugano was an operating segment of the Company until November 16, 2025 when Lugano filed a voluntary Chapter 11 petition under the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Lugano Bankruptcy”)and, as a result, was deconsolidated. Lugano entered into an Agency Agreement with Enhanced Retail Funding, LLC (a Gordon Brothers affiliate – “Gordon Brothers”) in contemplation of a Chapter 11 filing on November 16, 2025 (the “Lugano Agency Agreement”). The bankruptcy court approved the Lugano Agency Agreement on an interim basis on November 20, 2025, with final approval granted on December 31, 2025. Pursuant to the agreement, Gordon Brothers acquired the right to sell specified Lugano assets, including merchandise. Under the Lugano Agency Agreement, Gordon Brothers effectively agreed to purchase the inventory of Lugano and operate the remaining retail stores through the bankruptcy period. Gordon Brothers issued a guarantee as to the amount that the bankruptcy estate would receive related to the inventory sale, with any upside to be apportioned pursuant to the terms of the Lugano Agency Agreement. Lugano is a designer, manufacturer, and retailer of high-end jewelry. Refer to “Note C – Deconsolidation” to our Consolidated Financial Statements for additional information concerning Lugano.

2025 Distributions

Common shares - For the 2025 fiscal year we declared distributions to our common shareholders totaling $0.50 per share. On May 27, 2025, in light of the Lugano Investigation and related matters, the Company announced that it suspended the quarterly cash distribution historically paid to common shareholders. No common distributions were paid subsequent to April 24, 2025.

Preferred shares - For the 2025 fiscal year we declared distributions to our preferred shareholders totaling $1.8125 per share on our Series A Preferred Shares, $1.96875 per share on our Series B Preferred Shares and $1.96875 per share on our Series C Preferred Shares.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We make filings with the Securities and Exchange Commission (the "SEC" or the "Commission"), including on Forms S-1 and S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and on Forms 10-K, 10-Q, and 8-K under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which include exhibits, schedules and amendments to those reports, as well as other filings required by the SEC. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. In addition, copies of such reports, and amendments thereto, are available free of charge through our website athttps://compassdiversified.com/ as soon as reasonably practicable after such documents are electronically filed with, or furnished to, the SEC.

Organizational Structure (1)

Our Manager

Our Manager, CGM, has been engaged to manage the day-to-day operations and affairs of the Company and to execute our strategy, as discussed below. Collectively, our management team has extensive experience in acquiring and managing small and middle market businesses. We believe our Manager is unique in the marketplace in terms of the success and experience of its employees in acquiring and managing diverse businesses of the size and general nature of our businesses. We believe this experience will provide us with an advantage in executing our overall strategy. Our management team devotes substantially all of its time to the affairs of the Company.

We have entered into a management services agreement (the “Management Services Agreement” or “MSA”) pursuant to which our Manager manages the day-to-day operations and affairs of the Company and oversees the management and operations of our businesses. We pay our Manager a quarterly management fee for the services it performs on our behalf. In addition, certain persons who are employees and partners of our Manager receive a profit allocation with respect to the Allocation Interests. All of the Allocation Interests in us are owned by Sostratus LLC. Payment of profit allocations to Sostratus LLC can occur, if due pursuant to the profit allocation formula, for each of our subsidiaries during the 30-day period following the fifth anniversary of the date upon which we acquired a controlling interest in that business (a "Holding Event") and upon the sale of a subsidiary (a "Sale Event"). See Part III, Item 13. “Certain Relationships and Related Transactions, and Director Independence” for further descriptions of the management fees and profit allocations.

The Company’s Chief Executive Officer and Chief Financial Officer are employees of our Manager and have been seconded to us. Neither the Trust nor the LLC currently has any other employees. Although our Chief Executive Officer and Chief Financial Officer are employees of our Manager, they report directly to the Board. The management fee paid to our Manager covers all expenses related to the services performed by our Manager, including the compensation of our Chief Executive Officer and other personnel providing services to us. The LLC reimburses our Manager for the compensation and related costs and expenses of our Chief Financial Officer and his staff, who dedicate substantially all of their time to the affairs of the Company.

See Part III, Item 13. “Certain Relationships and Related Party Transactions, and Director Independence” of this Form 10-K and "Note T - Subsequent Events" included in the Notes to the Financial Statements in this Form 10-K for additional information concerning the MSA.

Market Opportunity

We acquire and actively manage small and middle market businesses. We characterize small to middle market businesses as those that generate annual cash flows of up to $100 million per year. We believe that the acquisition market for these businesses is highly fragmented and often provides opportunities to purchase at more attractive prices and achieve better outcomes for our shareholders. We believe this is driven by the following factors:

•third-party financing for these acquisitions is often less available or terms are less favorable for the borrower;

•sellers of these businesses frequently consider non-economic factors, such as legacy or the effect of the sale on their employees;

•these businesses are more likely to be sold outside of an auction process or as part of a limited process; and

•"add-on" acquisitions can often be completed at attractive multiples of cash flow.

Frequently, opportunities exist to support and augment existing management at such businesses and improve the performance of these businesses upon their acquisition through active management. We are business builders rather than asset traders. In the past, our management team has acquired businesses that were owned by entrepreneurs or large corporate parents. In these cases, our management team has frequently found opportunities to profitably invest in areas of the acquired businesses beyond levels that existed at the time of acquisition. In addition, our management team has frequently found that processes such as financial reporting and management information systems of acquired businesses may be improved, leading to improvements in reporting and operations and ultimately earnings and cash flow. Finally, our management team often acts as a business development arm for our businesses to pursue organic or external growth strategies that may not have been pursued by their previous owners.

Our Strategy

Our capital structure enables us to acquire, manage and grow attractive businesses that are leaders in their respective markets and to work closely with their management teams to drive operational improvements and long-term value creation. We actively invest in people, processes, and culture to strengthen our subsidiary companies and support growth initiatives, operational improvements and transformational change. We allocate capital to support long-term value creation, and we periodically adjust our priorities based on market conditions and our balance sheet objectives. In the near term, we expect to prioritize balance sheet strength and debt reduction, including through disciplined capital allocation and continued enhancements to our risk management, governance and oversight practices. We execute our strategy through two pillars:

•Subsidiary Value Creation: We focus on growing earnings and cash flow across our subsidiaries and help them professionalize at scale. We do this by strengthening operating capabilities, supporting organic growth initiatives, and working with management teams to identify and execute selective add-on acquisitions aligned with each business’s long-term strategy.

•Disciplined Acquisition Strategy: We apply a disciplined approach to capital allocation, prioritizing acquisitions that align with our core values and offer the potential for superior risk-adjusted returns and pursuing acquisitions selectively and consistent with our leverage and liquidity objectives.

Management Strategy

Our management strategy involves proactive financial and operational management and oversight of our subsidiaries to increase cash flows and enhance long-term shareholder value. In executing this strategy, we seek to promote timely and relevant reporting, accountability, and effective escalation practices across our subsidiaries, and we continually evaluate and refine these practices as our businesses evolve. Our Manager supports the management teams of each of our subsidiaries by, among other things:

•Recruiting and Retaining Talent: Supporting strong leadership teams through structured incentive compensation programs, including non-controlling equity ownership, tailored to each business.

•Instilling Financial Discipline: Regularly monitoring financial and operational performance and reinforcing accountability through clear metrics and monitoring practices.

•Strengthening Controls and Systems: Working to support the development and implementation of information systems, processes, and controls to enhance reporting, accountability, and decision-making.

•Supporting Growth Initiatives: Assisting management in their analysis and pursuit of prudent organic growth strategies and selective add-on acquisitions aligned with each business’s long-term goals.

•Improving Operating Efficiency: Working with management teams to identify opportunities to manage costs, right-size overhead, and improve productivity.

•Professionalizing at Scale: Supporting governance and operating practices that enable sustainable growth, including establishing subsidiary-level boards of directors and promoting transparency and periodic reporting and reviewing practices appropriate to each business.

While our businesses have different growth opportunities and potential rates of growth, our Manager works with the management teams of each of our businesses to pursue initiatives designed to enhance performance and increase cash flow, which may include:

•Selective capital investments to expand geographic reach, increase capacity, or improve cost structures.

•Investment in research and development for new products, services or processes to better serve customers.

•Strengthening sales and marketing capabilities to improve commercial execution.

•Improving operational efficiency and managing overhead costs to support scalable operations.

Ongoing Enhancements to Governance and Oversight

Our governance and oversight framework and financial reporting processes have supported our ability to manage a diverse group of subsidiary businesses over time. In light of the Lugano Investigation (as defined below) and the resulting restatement of our historical financial statements, we are implementing additional enhancements to our governance and oversight practices and, as appropriate, to financial reporting processes and internal controls. These enhancements are intended to further strengthen the quality and timeliness of information and to support earlier identification and escalation of issues across our subsidiaries. We cannot provide assurance that these enhancements will prevent all future issues. For more information regarding our controls and procedures see Part II, Item 9A. “Controls and Procedures”.

Value-Driven Stewardship

We believe a values-driven approach to ownership and oversight supports long-term value creation. The Company seeks to be a responsible steward of the businesses we own, and we look to support subsidiary management teams in a manner consistent with our values.

In practice, our stewardship focuses on practices that support sustainable performance, including monitoring of operating and financial results and an emphasis on transparency and accountability.

Our stewardship approach includes:

•Ethical Conduct and Governance: Promoting a culture of integrity, transparency, and accountability, supported by appropriate policies, processes, and practices.

•People and Safety: Supporting practices that prioritize employee health and safety, development, and engagement.

•Environmental Responsibility: Encouraging prudent environmental practices appropriate to each business’s operations and industry.

•Stakeholder Focus: Fostering responsible decision making that considers the long-term interests of our businesses, employees, communities, and shareholders.

Acquisition Strategy

Our acquisition strategy is to acquire middle-market companies that we believe have durable competitive advantages and opportunities to gain share in attractive markets. We seek to acquire businesses capable of generating stable and growing earnings and cash flow over the long term. We generally pursue segment-level acquisitions in industries other than those in which our subsidiaries currently operate. We believe that attractive opportunities will continue to present themselves as private sector owners seek liquidity in long-standing and privately-held businesses and corporate parents divest their “non-core” operations.

Our ideal acquisition candidate has the following characteristics:

•a leading branded consumer, industrial, healthcare or critical outsourced service company headquartered in North America;

•defensible positions in the markets it serves and with its customers;

•favorable long-term macroeconomic and industry trends;

•a strong management team with meaningful incentives, either currently in place or previously identified;

•low risk of technological and/or product obsolescence; and

•a diversified customer and supplier base.

In addition to segment-level acquisitions, our subsidiaries often acquire and integrate complementary add-on businesses. We believe add-on acquisitions may improve financial and operational performance by enabling our businesses to:

•leverage manufacturing and distribution operations;

•leverage branding and marketing programs and customer relationships;

•add experienced management or management expertise;

•increase market share and enter new markets; and/or

•realize cost synergies through scale and improved management practices.

Sourcing and Execution

We benefit from our Manager’s ability to identify acquisition opportunities across a variety of industries. The Manager assists in sourcing, evaluating and negotiating potential acquisitions, including by conducting customary diligence and analysis appropriate to the nature and complexity of the target business and the transaction. This diligence process may involve a combination of internal review and third-party workstreams and may include an assessment of the target’s management team, operations, financial profile and industry dynamics, as well as negotiation of transaction terms and conditions. However, no diligence process can identify all risks or ensure that acquired businesses will perform as expected.

The process of acquiring new businesses is both time-consuming and complex and, historically, it has taken fromtwo to twenty-four months to perform due diligence, negotiate and close acquisitions. The Manager may evaluate multiple transactions at different stages at any given time, and there may be periods during which the Manager does not recommend any new acquisitions. Any acquisition remains subject to review and approval by our Board, and our Board considers the Manager’s recommendations together with other information it deems relevant when evaluating such acquisitions.

Following an acquisition, we and the Manager work with the management team of the acquired business to develop and execute an operating plan aligned with our objectives.

Strategic Advantages

Based on the experience of our Manager and its ability to identify, evaluate, and negotiate acquisitions, we believe we have the capability to acquire and manage additional businesses that are consistent with our leverage and liquidity objectives and disciplined capital allocation. Our Manager maintains strong relationships with business brokers, investment and commercial bankers, accountants, attorneys, and other sources of acquisition opportunities, and has experience acquiring and managing small-to-middle-market businesses across industries, including in complex situations such as corporate spin-offs, transitions of family-owned businesses, management buyouts, and reorganizations.

We believe our sourcing capabilities and our extensive network provide access to a pipeline of potential acquisition targets. We also have access to third-party consultants and advisors who may assist in due diligence, transaction execution, and post-acquisition planning, as appropriate.

Finally, we believe our ability to finance acquisitions using capital resources raised at the Company level can reduce delays and closing conditions often associated with transaction-specific financing (for more information regarding our financing sources see the section titled “Financing” below).

Valuation and Due Diligence

Our Manager performs an evaluation process appropriate for the target business and the nature of the transaction, including an assessment of the target’s operations and the outlook for its industry. While valuation is an inherently subjective process, we evaluate potential acquisitions using a variety of analytical approaches, including:

•discounted cash flow analyses;

•evaluation of trading values of comparable companies;

•expected value matrices; and

•examination of comparable recent transactions.

As part of this process, our Manager develops projections of the expected cash flows and assesses the levels of risk associated with those projections. To assist us in evaluating key assumptions and assessing risks, we may engage third-party experts to review areas, such as legal, tax, regulatory, accounting, insurance and environmental matters and may also engage technical, operational or industry consultants, as appropriate.

A critical component of our evaluation of potential acquisitions is the assessment of the capability of the existing management team, including historical performance, expertise, experience, culture, and incentives. Where appropriate and consistent with our management strategy, we may seek to augment, supplement or replace existing members of management. We also consider the adequacy of a target’s information systems and reporting capabilities in light of the operating plan and integration strategy, and we may implement enhancements over time where appropriate.

Financing

We incur third-party debt financing almost entirely at the Company level, which we use, together with our equity capital, to provide debt financing to each of our businesses and to acquire additional businesses. We believe this financing structure can be more efficient than each business borrowing directly from third-party lenders.

We intend to finance future acquisitions through cash on hand and, if necessary, additional equity and debt financings. We believe, and it has been our experience, that having the ability to finance our acquisitions with the capital resources raised by us, rather than relying on transaction specific third-party financing, can reduce delays and closing conditions. In certain circumstances, we may also pursue additional debt or equity financings, or offer equity, in order to fund multiple future acquisitions.

In connection with future acquisitions, we may provide a combination of equity capital and intercompany debt financing within the capital structure of the businesses we acquire, including debt funded at the Company level (for example, through our existing 2022 Credit Facility). This intercompany debt structure may allow us to distribute cash to the parent company through interest payments and scheduled principal amortization on these intercompany loans.

Debt Financing

2022 Credit Facility

On July 12, 2022, the LLC entered into the Credit Agreement to amend and restate its prior credit facility. The 2022 Credit Facility provides for (i) the 2022 Revolving Credit Facility and (ii) the 2022 Term Loan. Amounts outstanding under the 2022 Revolving Credit Facility mature on July 12, 2027. Borrowings under the 2022 Credit Facility bear interest at either a base rate or a term secured overnight financing rate (“Term SOFR”), plus an applicable margin that varies based on the Company’s Consolidated Total Leverage Ratio (as defined in the 2022 Credit Facility). The 2022 Credit Facility is secured by substantially all assets of the Company, including equity interests in, and loans to, its consolidated subsidiaries.

First Amendment of 2022 Credit Facility

On January 9, 2025, the LLC entered into a First Incremental Facility Amendment (the “First Amendment”) to the 2022 Credit Facility, which provided for (i) an additional $200.0 million advance under the term loan (the “Incremental Term Loan”) and (ii) delayed draw term loan commitments in an aggregate amount of $100.0 million (the “Incremental Delayed Draw Term Loan Commitments”). The proceeds were intended to be used for acquisitions, working capital, capital expenditures and other general corporate purposes. The Incremental Term Loan, together with the existing term loan, requires quarterly principal repayments commencing March 31, 2025, with the remaining principal and interest due on July 12, 2027. The Incremental Delayed Draw Term Loan Commitments were terminated prior to the end of the availability period in connection with Lugano-related events of default.

Forbearance Agreements and Related Amendments and Fifth Amendment

In 2025, in connection with the Lugano matters and related events of default under the 2022 Credit Facility, the LLC entered into a series of forbearance agreements and related amendments with the Administrative Agent and the required Lenders (the “Forbearance Agreements”). The Forbearance Agreements provided the LLC with time to complete the Lugano Investigation and restatement process and, among other things, limited revolver availability and uses of borrowings, removed the ability to borrow under the delayed draw term loan facility mentioned above, imposed cash disbursement controls and cash forecasting requirements, and limited certain restricted payments and management fee payments. Certain of the Forbearance Agreements also reduced the revolving commitments to $100.0 million. The Fifth Amendment described below formally waived all outstanding Lugano-related events of default that were outstanding prior to the Fifth Amendment.

On December 19, 2025, the LLC entered into a Fifth Amendment to the 2022 Credit Facility (the “Fifth Amendment”) and a related transaction letter (the “Transaction Letter”) with the Administrative Agent and the required Lenders. Among other things, the Fifth Amendment and Transaction Letter (i) waived certain Lugano-related events of default that were outstanding prior to the Fifth Amendment, (ii) set the aggregate revolving commitments at $100.0 million, (iii) revised pricing and certain financial and other covenant requirements, including revised financial covenant levels for periods after the quarter ended March 31, 2025, (iv) required repayment of 100% of net cash proceeds from certain dispositions and deleveraging transactions to repay indebtedness, and (v) imposed additional limitations on certain restricted payments and management fee payments, as well as enhanced reporting requirements, including periodic cash flow forecasting. The Transaction Letter also provides for milestone fees payable to the lenders if specified leverage thresholds are not achieved on certain dates.

At December 31, 2025, outstanding letters of credit under the 2022 Credit Facility totaled approximately $3.2 million and borrowing availability under the 2022 Revolving Credit Facility, as amended, was approximately $96.8 million.

The Company has $1.0 billion aggregate principal amount of 5.250% senior notes due 2029 (the “2029 Notes”) and $300.0 million aggregate principal amount of 5.000% senior notes due 2032 (the “2032 Notes” and, together with the 2029 Notes, the “Notes”). The Notes are general unsecured obligations of the Company and are not guaranteed by the Company’s subsidiaries.

Indenture Forbearance Agreement and PIK Payments

In connection with the Lugano matters and related delayed periodic reporting during 2025, on August 29, 2025, the LLC entered into a forbearance agreement with certain holders of the Notes (the “Indenture Forbearance Agreement”), pursuant to which such holders agreed to forbear from exercising rights and remedies with respect to specified defaults relating to the Company’s failure to deliver certain financial statements within the time periods required under the senior note indentures. As consideration for the Indenture Forbearance Agreement, the Company agreed to pay (in kind) an upfront fee equal to 1.75% of the aggregate principal amount of Notes outstanding and additional interest at an incremental rate equivalent to 5.00% per annum for the period between August 1, 2025 and October 24, 2025 (together, the “PIK Payments”), which were effected through supplemental indentures dated September 9, 2025. The Company recognized $38.2 million in paid-in-kind interest related to the upfront fee and additional interest in connection with the Indenture Forbearance Agreement.

Equity Financing

Trust Common Shares

The Trust is authorized to issue 500,000,000 Trust common shares and the Company is authorized to issue a corresponding number of LLC interests. The Company will, at all times have an equal amount of LLC interests outstanding as Trust shares. At December 31, 2025, there were approximately 75.2 million Trust common shares outstanding.

At-the market program - common shares

On September 5, 2024, the Company refreshed its at-the-market program for the common shares of the Trust, which was initially established on September 7, 2021, by filing a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $500 million common shares of the Trust in amounts and at times to be determined by the Company. Actual sales will depend on a variety of factors to be determined by us from time to time, including market conditions, the trading price of Trust common shares and determinations by us regarding appropriate sources of funding.

In connection with refreshing the program, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (the “Amended Common Sales Agreement”) with B. Riley Securities, Inc. ("B. Riley Securities"), Goldman Sachs & Co. LLC ("Goldman") and TD Securities (USA) LLC (each a “Common Sales Agent” and, collectively, the “Common Sales Agents”). The Amended Common Sales Agreement provides that the Company may offer and sell Trust common shares from time to time through or to the Common Sales Agents, as sales agent or principal, up to $500 million, in amounts and at times to be determined by the Company. Pursuant to the Amended Common Sales Agreement, the shares may be offered and sold through each Common Sales Agent, acting separately, in ordinary brokers’ transactions, to or through a market maker, on or through the New York Stock Exchange ("NYSE") or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

During the year ended December 31, 2025, there were no sales of Trust common shares under the Amended Common Sales Agreement.

During the year ended December 31, 2024, the Company sold 381,957 Trust common shares under the Amended Common Sales Agreement. For the same period, the Company received total net proceeds of approximately

$8.4 million from these sales, and incurred approximately $0.1 million in commissions payable to the Common Sales Agents.

During the year ended December 31, 2023, there were no sales of Trust common shares under the Amended Common Sales Agreement as the at-the-market program for common shares was not active when the share repurchase program was active.

Trust Preferred Shares

The Trust is authorized to issue up to 50,000,000 Trust preferred shares and the Company is authorized to issue a corresponding number of Trust Interests. We issued 4,000,000 7.250% Series A Preferred Shares in 2017, 4,000,000 7.875% Series B Preferred Shares in 2018 and 4,600,000 7.875% Series C Preferred Shares in 2019.

At-the market program - preferred shares

On September 5, 2024, the Company refreshed its at-the-market program for certain preferred shares of the Trust, which was initially established in the first quarter of 2024, by filing a prospectus supplement pursuant to which the Company may, but has no obligation to, issue and sell up to $200 million of the Trust’s 7.250% Series A Preferred Shares (the “Series A Preferred Shares”), 7.875% Series B Preferred Shares (the “Series B Preferred Shares”), and 7.875% Series C Preferred Shares (the “Series C Preferred Shares” and together with the Series A Preferred Shares and the Series B Preferred Shares, the “Preferred Shares”), each representing beneficial interests in the Trust. The at-the-market program for Preferred Shares of the Trust was initially established on March 20, 2024 and allowed for the issuance and sale of up to $100 million of the Trust’s Preferred Shares.

In connection with refreshing the program, the Company entered into an Amended and Restated At Market Issuance Sales Agreement (the “Amended Preferred Sales Agreement”) with B. Riley Securities, Inc. (the “Preferred Sales Agent”). The Amended Preferred Sales Agreement provides that the Company may offer and sell Trust Preferred Shares from time to time through or to the Preferred Sales Agent, as sales agent or principal, up to $200 million, in amounts and at times to be determined by the Company. Pursuant to the Amended Preferred Sales Agreement, the shares may be offered and sold through the Preferred Sales Agent in ordinary brokers’ transactions, to or through a market maker, on or through the NYSE or any other market venue where the securities may be traded, in the over-the-counter market, in privately negotiated transactions, in transactions that are deemed to be “at the market offerings” as defined in Rule 415 under the Securities Act or through a combination of any such methods of sale.

The following table reflects the activity in the Preferred Share at-the-market program during the years ended December 31, 2025 and 2024(in thousands, except share data):

During 2025, the Company sold Trust preferred shares under the Amended Preferred Sales Agreement as reflected in the table above. Beginning in April 2025, in light of the Lugano Investigation and related events, the Company discontinued sales under the Amended Preferred Sales Agreement for the remainder of fiscal year 2025.

We intend to finance future acquisitions through cash on hand and, if necessary and when we determine we can efficiently access the capital markets, additional equity and debt financings. We believe, and it has been our experience, that having the ability to finance our acquisitions with the capital resources raised by us, rather than negotiating separate third-party financing specifically related to the acquisition of individual businesses, provides us with an advantage in acquiring attractive businesses by minimizing delay and closing conditions that are often related to acquisition-specific financings. In this respect, we believe that in the future, we may need to pursue additional debt or equity financings, or offer equity in Holdings or target businesses to the sellers of such target businesses, in order to fund future acquisitions.