{"url_path":"/sec/mgre/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-02-17","source_url":"https://www.sec.gov/Archives/edgar/data/1004434/0001628280-26-008665-index.html","accession_number":"0001628280-26-008665","cik":"0001004434","ticker":"AMG","issuer_name":"AFFILIATED MANAGERS GROUP, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1004434/0001628280-26-008665-index.html","primary_entity_key":"0001004434","primary_entity_name":"AFFILIATED MANAGERS GROUP, INC."},"word_count":13056,"has_tables":true,"body_markdown":"Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations\n\nThe following executive overview, which summarizes the significant trends affecting our results of operations and financial\n\ncondition, as well as the remainder of this Management’s Discussion and Analysis of Financial Condition and Results of\n\nOperations of Affiliated Managers Group, Inc. and its subsidiaries, should be read in conjunction with the “Forward-Looking\n\nStatements” section set forth in Part I, the “Risk Factors” section set forth in Item 1A of Part I and with our Consolidated\n\nFinancial Statements and the notes thereto contained elsewhere in this Annual Report on Form 10-K, and in any more recent\n\nfilings with the SEC.\n\nOur discussion and analysis of the key operating performance measures and financial results for fiscal year 2025\n\ncompared to fiscal year 2024 is included herein.  For discussion and analysis of fiscal year 2024 compared to fiscal year 2023,\n\nplease refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II\n\nin our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on\n\nFebruary 14, 2025. \n\nExecutive Overview\n\nAMG is a strategic partner to leading independent investment firms globally.  Our strategy is to generate long-term value\n\nby investing in high-quality independent partner-owned firms, which we refer to as “Affiliates,” through a proven partnership\n\napproach, and allocating resources across our unique opportunity set to the areas of highest growth and return.  With their\n\nentrepreneurial, investment-centric cultures and alignment of interests with clients through direct equity ownership by firm\n\nprincipals, independent firms have fundamental competitive advantages in offering unique return streams to the marketplace. \n\nThrough AMG’s distinctive approach, we enhance these advantages to magnify the long-term success of our Affiliates and\n\nactively support their independence.  Our innovative model enables each Affiliate’s management team to retain autonomy\n\nand significant equity ownership in their firm, while they leverage our strategic capabilities and insight, including access to\n\ngrowth capital, product strategy and development, capital formation capabilities, incentive alignment and succession\n\nplanning, and strategic advisory to expand their reach, diversify their businesses, and enhance their long-term success.  As of\n\nDecember 31, 2025, our aggregate assets under management were approximately $813 billion across a diverse range of\n\nprivate markets, liquid alternative, and differentiated long-only investment strategies.\n\nIn 2025, we advanced our strategy of allocating capital to areas of durable client demand by entering into four new\n\npartnerships with independent firms collectively managing approximately $23 billion in alternative strategies, announcing a\n\nstrategic partnership with Brown Brothers Harriman (“BBH”), and further expanding our U.S. wealth platform.\n\nIn the first quarter of 2025, we completed our minority investment in NorthBridge Partners, LLC (“NorthBridge”), a\n\nprivate markets manager specializing in industrial logistics real estate assets, and in the second quarter of 2025, we completed\n\nour minority investment in Verition Fund Management LLC (“Verition”), a global multi-strategy investment firm. \n\nIn the fourth quarter of 2025, we completed our minority investments in Montefiore Investment (“Montefiore”), a\n\nEuropean private equity firm focused on the services sector, and Qualitas Energy, a renewables-focused global infrastructure\n\nmanager specializing in energy transition.  We also announced a strategic partnership with BBH, a privately held global\n\nfinancial services firm, to acquire a minority equity interest in BBH Credit Partners, a newly formed subsidiary of BBH\n\nfocused on structured and alternative credit investment strategies.  The transaction was completed in January 2026. \n\nFollowing the close of these transactions, Affiliate management continues to hold a significant majority of the equity of the\n\nrespective businesses and directs the day-to-day operations.\n\nOn February 12, 2026, we announced the completion of our additional minority investment in Garda Capital Partners LP\n\n(“Garda”), a liquid alternatives manager specializing in fixed income relative value strategies and an Affiliate since 2019, and\n\nour minority investment in HighBrook Investors (“HighBrook”), a private markets manager specializing in real estate assets. \n\nFollowing the close of the transactions, our investment in Garda continues to be accounted for under the equity method and\n\nAffiliate management continues to hold a majority of the equity of the respective businesses and directs the day-to-day\n\noperations.\n\nWhile Affiliates typically partner with AMG to preserve their independence and partnership culture, evolving conditions\n\nmay lead an Affiliate to consider strategic alternatives; consistent with our partnership approach, in such instances, we\n\ncollaborate with Affiliates to evaluate these options.  When strategic transactions occur, they typically enhance our flexibility\n\nto execute our growth strategy and return capital to shareholders, as we deploy the resulting proceeds in accordance with our\n\ndisciplined capital allocation framework.\n\n25\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nIn the third quarter of 2025, we completed the sale of our minority equity interest in Peppertree Capital Management,\n\nInc. (“Peppertree”), as part of the announced acquisition of Peppertree by TPG Inc. (“TPG”), a public company listed on the\n\nNasdaq Global Select Market (the “Peppertree Transaction”).  Pursuant to the terms of the agreement with TPG, under which\n\nwe and each of the other owners agreed to sell our respective equity interests in Peppertree, we received total consideration of\n\n$253.2 million, net of transaction costs, which included $99.8 million in cash and 2.9 million TPG Class A common shares,\n\nall of which we have since sold.  Our gain from the transaction was $127.6 million.\n\nIn November 2025, Comvest Partners (“Comvest”) completed the previously announced agreement to sell its private\n\ncredit business to Manulife Financial Corporation (the “Comvest Transaction”).  Pursuant to the terms of the agreement, we\n\nreceived total cash consideration of $282.0 million for our portion of Comvest’s private credit business and our gain from the\n\ntransaction was $227.6 million.\n\nIn December 2025, we completed the sale of our minority equity interest in Montrusco Bolton Investments Inc.\n\n(“Montrusco Bolton”) to Walter Global Asset Management Inc. (the “Montrusco Bolton Transaction”).  Pursuant to the terms\n\nof the agreement, we received total cash consideration of $22.0 million and our gain from the transaction was $16.2 million.\n\nOperating Performance Measures\n\nUnder accounting principles generally accepted in the U.S. (“GAAP”), we are required to consolidate certain of our\n\nAffiliates and use the equity method of accounting for others.  Whether we consolidate an Affiliate or use the equity method of\n\naccounting, we maintain the same innovative partnership approach and provide support and assistance in substantially the same\n\nmanner for all of our Affiliates.  Furthermore, all of our Affiliates are investment managers and are impacted by similar\n\nmarketplace factors and industry trends.  Therefore, certain key aggregate operating performance measures are important in\n\nproviding management with a comprehensive view of the operating performance and material trends across our entire business.\n\nThe following table presents our key aggregate operating performance measures:\n\nAs of and for the Years Ended December 31,\n\n(in billions, except as noted)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nAssets under management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$672.7\n\n$707.9\n\n5%\n\n$813.3\n\n15%\n\nAverage assets under management . . . . . . . . . . . . . . . . . . . . . . . . .\n\n660.3\n\n700.5\n\n6%\n\n764.2\n\n9%\n\nAggregate fees (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n5,066.6\n\n5,236.0\n\n3%\n\n6,167.5\n\n18%\n\nAssets under management, and therefore average assets under management, include the assets under management of our\n\nconsolidated and equity method Affiliates.  Assets under management is presented on a current basis without regard to the\n\ntiming of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial\n\nStatements.  Average assets under management reflects the timing of the inclusion of an Affiliate’s financial results in our\n\noperating performance measures and Consolidated Financial Statements.  Average assets under management for equities and\n\nsimilar investment products generally represents an average of the daily net assets under management, while for liquid\n\nalternatives and multi-asset and fixed income products, average assets under management generally represents an average of the\n\nassets at the beginning or end of each month during the applicable period.  Average assets under management for private\n\nmarkets products generally represents total commitments or invested assets under management.\n\nAggregate fees consist of the total asset- and performance-based fees earned by all of our consolidated and equity method\n\nAffiliates.  In the case of our equity method Affiliates, asset- and performance-based fees are presented net of certain expense\n\nreimbursements paid by the underlying products.  For certain of our Affiliates accounted for under the equity method, we report\n\nthe Affiliate’s aggregate fees one quarter in arrears.  Aggregate fees are provided in addition to, but not as a substitute for,\n\nConsolidated revenue or other GAAP performance measures.\n\nAssets Under Management\n\nOur Affiliates manage capital on behalf of clients across a diverse range of investment strategies.  Our Affiliates earn asset-\n\nbased fees on the capital that they manage and certain of our Affiliate’s strategies earn performance-based fees based on the\n\nperformance generated by their investment products.  For the year ended December 31, 2025, assets under management\n\nincreased $105.4 billion or 15% driven by a combination of investment performance generated across our Affiliates, net client\n\ncash inflows, and the addition of assets associated with new partnerships with Affiliates operating in growing areas within\n\nalternative strategies.  Client demand for alternative strategies continued in 2025, with strong net inflows into liquid alternative\n\nstrategies and momentum in private markets fundraising, which more than offset net outflows in equity strategies — an area\n\n26\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nthat continues to face headwinds in line with industry trends — and the removal of assets under management associated with\n\nthe sale of certain minority equity interests in Affiliates completed during the year.  As we continue to execute our growth\n\nstrategy by investing in new and existing Affiliates, as well as in AMG’s strategic capabilities, we expect our business mix to\n\nfurther evolve, expanding our exposure to in-demand strategies in both private markets and liquid alternatives, better\n\npositioning AMG to continue to benefit from industry growth trends with an increasingly diversified business profile.\n\nThe following table presents changes in our assets under management by strategy:\n\nAlternatives\n\nDifferentiated Long-Only\n\n(in billions)\n\nPrivate\n\nMarkets\n\nLiquid\n\nAlternatives\n\nEquities\n\nMulti-Asset &\n\nFixed Income\n\nTotal\n\nDecember 31, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$135.4\n\n$140.7\n\n$316.2\n\n$115.6\n\n$707.9\n\nClient cash inflows and commitments . . . . . . . . . . . .\n\n24.1\n\n73.6\n\n42.5\n\n20.7\n\n160.9\n\nClient cash outflows . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(0.2)\n\n(23.1)\n\n(87.8)\n\n(21.1)\n\n(132.2)\n\nNet client cash flows . . . . . . . . . . . . . . . . . . . . . . .\n\n23.9\n\n50.5\n\n(45.3)\n\n(0.4)\n\n28.7\n\nNew investments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n10.6\n\n12.4\n\n—\n\n—\n\n23.0\n\nAffiliate transactions(2) . . . . . . . . . . . . . . . . . . . . . . . .\n\n(20.4)\n\n(0.0)\n\n(11.4)\n\n(0.7)\n\n(32.5)\n\nMarket changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n2.3\n\n21.4\n\n48.8\n\n12.8\n\n85.3\n\nForeign exchange(3) . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n1.0\n\n3.7\n\n5.8\n\n1.4\n\n11.9\n\nRealizations and distributions (net) . . . . . . . . . . . . . .\n\n(5.4)\n\n(0.4)\n\n(2.0)\n\n(0.4)\n\n(8.2)\n\nOther(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(1.4)\n\n(1.1)\n\n(0.0)\n\n(0.3)\n\n(2.8)\n\nDecember 31, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$146.0\n\n$227.2\n\n$312.1\n\n$128.0\n\n$813.3\n\n___________________________\n\n(1)Attributable to NorthBridge, Verition, Montefiore, and Qualitas Energy as of their respective closing dates.\n\n(2)Attributable to Peppertree, Comvest’s private credit business, and Montrusco Bolton as of their respective closing dates.\n\n(3)Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional\n\ncurrency is not the U.S. dollar into our functional currency.\n\n(4)Other includes product transitions and reclassifications.\n\nThe following tables present performance of our investment strategies, where available, measured by the percentage of\n\nassets under management ahead of their relevant benchmark:\n\nAUM Weight\n\n% of AUM Ahead of Benchmark(1)\n\nIRR Latest Vintage\n\nIRR Last Three Vintages\n\nPrivate markets(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n18%\n\n86%\n\n86%\n\nAUM Weight\n\n% of AUM Ahead of Benchmark(1)\n\n3-year\n\n5-year\n\n10-year\n\nLiquid alternatives(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n28%\n\n93%\n\n97%\n\n90%\n\nEquities(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n38%\n\n38%\n\n44%\n\n55%\n\nMulti-asset and fixed income(4) . . . . . . . . . . . . . . . . . . . . . . . .\n\n16%\n\nN/A\n\nN/A\n\nN/A\n\n___________________________\n\n(1)Past performance is not indicative of future results.  Performance and AUM information is as of December 31, 2025 and is\n\nbased on data available at the time of calculation.  Product returns are sourced from Affiliates while benchmark returns are\n\ngenerally sourced via third-party subscriptions. \n\n(2)For private markets products, performance is reported as the percentage of assets that have outperformed benchmarks on a\n\nsince-inception internal rate of return basis.  Benchmarks utilized include a combination of public market equivalents, peer\n\nmedians, and absolute returns where benchmarks are not available.  For purposes of investment performance comparisons,\n\nthe latest vintage comparison includes the most recent vehicles and strategies (traditional long-duration investment funds,\n\n27\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\ncustomized vehicles, and other evergreen vehicles and product structures) where meaningful performance is available and\n\ncalculable.  In order to illustrate the performance of our private markets product category over a longer period of history,\n\nthe last three vintages comparison incorporates the latest vintage vehicles and the prior two vintages for traditional long-\n\nduration investment funds, as well as additional vehicles and strategies launched during the equivalent time period as the\n\nlast three vintages of traditional long-duration investment funds.  Due to the nature of these investments and vehicles,\n\nreported performance is typically on a three- to six-month lag basis.\n\n(3)For liquid alternative and equity products, performance is reported as the percentage of assets that have outperformed\n\nbenchmarks across the indicated periods, and excludes market-hedging products.  For purposes of investment performance\n\ncomparisons, products are an aggregation of portfolios (separate accounts, investment funds, and other products) that each\n\nrepresent a particular investment objective, using the most representative portfolio for the performance comparison. \n\nPerformance is presented for products with a three-, five-, and/or ten-year track record and is measured on a consistent\n\nbasis relative to the most appropriate benchmarks.  Benchmark appropriateness is generally reviewed annually to reflect\n\nany changes in how underlying portfolios/mandates are managed.  Product and benchmark performance is reflected as total\n\nreturn and is annualized.  Reported product performance is gross-of-fees for institutional and high-net-worth separate\n\naccounts, and generally net-of-fees across retail funds and other commingled vehicles such as hedge funds.\n\n(4)Multi-asset and fixed income products are mainly our wealth management and solutions offerings.  These investment\n\nproducts are primarily customized toward wealth preservation, estate planning, and liability and tax management, and\n\ntherefore are typically not measured against a benchmark.\n\nAggregate Fees\n\nAggregate fees consist of asset- and performance-based fees of our consolidated and equity method Affiliates.  In the case\n\nof our equity method Affiliates, asset- and performance-based fees are presented net of certain expense reimbursements paid by\n\nthe underlying products.  Asset-based fees include advisory and other fees earned by our Affiliates for services provided to their\n\nclients and are typically determined as a percentage of the value of a client’s assets under management, generally inclusive of\n\nuncalled commitments.  Asset-based fees are generally impacted by the level of average assets under management and the\n\ncomposition of these assets across our strategies with different asset-based fee ratios.  Our asset-based fee ratio is calculated as\n\nasset-based fees divided by average assets under management.\n\nIn some cases, if product returns exceed certain performance thresholds, we will participate in performance-based fees. \n\nPerformance-based fees are based on investment performance, typically on an absolute basis or relative to a benchmark or\n\nhurdle rate, and are generally recognized when it is improbable that there will be a significant reversal in the amount of revenue\n\nrecognized.  Performance-based fees are generally recognized less frequently than asset-based fees and will vary from period to\n\nperiod because they inherently depend on investment performance.  As of December 31, 2025, approximately 28% of our total\n\nassets under management could potentially earn performance-based fees.  These percentages were approximately 10% and 47%\n\nof our assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method,\n\nrespectively.  We anticipate performance-based fees will be a recurring component of aggregate fees; however we do not\n\nanticipate these fees to be a significant component of Consolidated revenue as these fees are predominately earned by our\n\nAffiliates accounted for under the equity method.\n\nAggregate fees were $6,167.5 million in 2025, an increase of $931.5 million or 18% as compared to 2024.  The increase in\n\naggregate fees was due to a $660.2 million or 13% increase from asset-based fees and a $271.3 million or 5% increase from\n\nperformance-based fees, primarily in liquid alternative strategies.  The increase in asset-based fees was principally due to an\n\nincrease in our Affiliates’ average assets under management, primarily in liquid alternative and private markets strategies, and\n\nchanges in the composition of our assets under management, including net client cash flows from our Affiliates managing\n\nalternative strategies, which typically have higher fee rates and the impact of our investments in new Affiliates primarily\n\nmanaging alternative strategies.\n\n28\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nFinancial and Supplemental Financial Performance Measures\n\nThe following table presents our key financial and supplemental financial performance measures:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nNet income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$906.1\n\n$740.6\n\n(18)%\n\n$904.0\n\n22%\n\nNet income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n672.9\n\n511.6\n\n(24)%\n\n716.6\n\n40%\n\nAdjusted EBITDA (controlling interest)(1) . . . . . . . . . . . . . . . . . . .\n\n935.7\n\n973.1\n\n4%\n\n1,076.8\n\n11%\n\nEconomic net income (controlling interest)(1) . . . . . . . . . . . . . . . . .\n\n717.8\n\n701.6\n\n(2)%\n\n769.3\n\n10%\n\n___________________________\n\n(1)Adjusted EBITDA (controlling interest) and Economic net income (controlling interest) are non-GAAP performance\n\nmeasures and are discussed in “Supplemental Financial Performance Measures.”\n\nNet income (controlling interest) increased $205.0 million or 40% in 2025.  This increase was primarily due to $371.3\n\nmillion of Affiliate transaction gains and a $150.2 million increase in Equity method income (net).  These increases were\n\npartially offset by a $97.4 million increase in Income tax expense attributable to the controlling interest, primarily due to\n\nAffiliate transaction gains, a $97.1 million increase in Intangible amortization and impairments attributable to the controlling\n\ninterest, and a $91.2 million increase in Affiliate equity expense attributable to the controlling interest.\n\nAdjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management as it\n\nprovides a comprehensive view of our share of the financial performance of our business.  Adjusted EBITDA (controlling\n\ninterest) increased $103.7 million or 11% in 2025, primarily due to a $931.5 million or 18% increase in aggregate fees. \n\nAdjusted EBITDA (controlling interest) increased less than aggregate fees on a percentage basis primarily due to an increase in\n\nearnings at certain Affiliates, many of which manage alternative strategies and are accounted for under the equity method, and\n\ntherefore we own less of an economic interest.\n\nWe believe Economic net income (controlling interest) is an important supplemental financial performance measure\n\nbecause it represents our performance before non-cash expenses primarily related to our acquisition of interests in Affiliates and\n\nimproves comparability of performance between periods.  Economic net income (controlling interest) increased $67.7 million\n\nor 10% in 2025, primarily due to a $103.7 million or 11% increase in Adjusted EBITDA (controlling interest).\n\nResults of Operations\n\nThe following discussion includes the key operating performance measures and financial results of our consolidated and\n\nequity method Affiliates.  Our consolidated Affiliates’ financial results are included in Consolidated revenue, Consolidated\n\nexpenses, and Investment and other income, and our share of our equity method Affiliates’ financial results is reported, net of\n\nintangible amortization and impairments and tax, in Equity method income (net) in our Consolidated Statements of Income.\n\nConsolidated Revenue\n\nConsolidated revenue is derived primarily from asset-based fees from investment management services earned by our\n\nconsolidated Affiliates.  For these Affiliates, we typically use operating structures where we contractually share in the\n\nAffiliate’s revenue without regard to expenses.  Consolidated revenue is generally determined by the level of our consolidated\n\nAffiliates’ average assets under management and the composition of these assets across our consolidated Affiliates’ investment\n\nstrategies with different asset-based fee ratios and performance-based fees.\n\nThe following table presents our consolidated Affiliates’ average assets under management and Consolidated revenue:\n\n \n\nFor the Years Ended December 31,\n\n(in millions, except as noted)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nConsolidated Affiliate average assets under management (in\n\nbillions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$393.7\n\n$399.3\n\n1%\n\n$411.0\n\n3%\n\nConsolidated revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$2,057.8\n\n$2,040.9\n\n(1)%\n\n$2,074.4\n\n2%\n\nConsolidated revenue increased $33.5 million or 2% in 2025, due to a $26.1 million or 1% increase from asset-based fees\n\nand a $7.4 million or 1% increase from performance-based fees, primarily in private markets strategies.  The increase in asset-\n\n29\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nbased fees was principally due to an increase in our consolidated Affiliates’ average assets under management, primarily in\n\nprivate markets strategies, partially offset by changes in the composition of our assets under management.\n\nConsolidated Expenses\n\nThe following table presents our Consolidated expenses:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nCompensation and related expenses . . . . . . . . . . . . . . . . . . . . . . . .\n\n$907.5\n\n$915.3\n\n1%\n\n$1,019.8\n\n11%\n\nSelling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . .\n\n358.2\n\n376.5\n\n5%\n\n408.6\n\n9%\n\nIntangible amortization and impairments . . . . . . . . . . . . . . . . . . . .\n\n48.3\n\n29.0\n\n(40)%\n\n160.3\n\nN.M.(1)\n\nInterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n123.8\n\n133.3\n\n8%\n\n136.5\n\n2%\n\nDepreciation and other amortization . . . . . . . . . . . . . . . . . . . . . . .\n\n13.0\n\n13.4\n\n3%\n\n10.4\n\n(22)%\n\nOther expenses (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n45.8\n\n40.3\n\n(12)%\n\n69.8\n\n73%\n\nTotal consolidated expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$1,496.6\n\n$1,507.8\n\n1%\n\n$1,805.4\n\n20%\n\n___________________________\n\n(1)Percent change is not meaningful.\n\nCompensation and related expenses increased $104.5 million or 11% in 2025, primarily due to an $83.9 million increase in\n\nAffiliate equity-related activities and a $7.2 million increase in share-based compensation.\n\nSelling, general and administrative expenses increased $32.1 million or 9% in 2025, primarily due to a $23.8 million\n\nincrease in professional fees and an $8.5 million increase in investment-related expenses driven by an increase in average assets\n\nunder management on which these expenses are incurred.\n\nIntangible amortization and impairments increased $131.3 million in 2025, primarily due to expenses of $135.0 million to\n\nreduce the carrying value of indefinite-lived acquired client relationships for certain mutual fund assets to fair value.  This\n\nincrease was partially offset by a $3.7 million decrease in amortization expense due to certain definite-lived assets being fully\n\namortized.\n\nInterest expense increased $3.2 million or 2% in 2025, primarily due to a $14.4 million increase from our 5.50% senior\n\nunsecured notes issued in August 2024 (the “2034 senior notes”), a $6.7 million increase from our 6.75% junior subordinated\n\nnotes issued in March 2024 (the “2064 junior subordinated notes”), and a $3.6 million increase from borrowings under our\n\nsenior unsecured multicurrency revolving credit facility (the “revolver”).  These increases were partially offset by a $13.0\n\nmillion decrease due to the repayment of our senior unsecured term loan facility in the third quarter of 2024, a $5.3 million\n\ndecrease due to the maturity of our 3.50% senior notes in August 2025, and a $2.2 million decrease due to the maturity of our\n\n4.25% senior notes in February 2024.\n\nThere were no significant changes to Depreciation and other amortization in 2025.\n\nOther expenses (net) increased $29.5 million or 73% in 2025, primarily due to a $9.2 million increase in expenses related\n\nto the settlement of conversions with respect to our junior convertible securities (see Note 5) and an $8.2 million increase in\n\nexpenses related to changes in the values of contingent payment obligations.\n\nEquity Method Income (Net)\n\nWhen we do not own a controlling equity interest in an Affiliate, but have significant influence, we account for our interest\n\nin the Affiliate under the equity method.  Our share of pre-tax earnings or losses from Affiliates accounted for under the equity\n\nmethod (“pre-tax equity method earnings”), net of intangible amortization and impairments and tax, is included in Equity\n\nmethod income (net).  For certain of our Affiliates accounted for under the equity method, we report the Affiliate’s financial\n\nresults in our Consolidated Financial Statements one quarter in arrears.\n\nFor a majority of these Affiliates, we use operating structures where we contractually share in the Affiliate’s revenue less\n\nagreed-upon expenses.  We also use operating structures where we contractually share in the Affiliate’s revenue without regard\n\nto expenses.\n\n30\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nEquity method revenue, net is derived primarily from asset- and performance-based fees from investment management\n\nservices earned by our equity method Affiliates, net of certain expense reimbursements paid by the underlying products.  Equity\n\nmethod revenue, net is generally determined by the level of our equity method Affiliates’ average assets under management and\n\nthe composition of these assets across our equity method Affiliates’ investment strategies with different asset-based fee ratios\n\nand performance-based fees.  Our Affiliates accounted for under the equity method manage a greater proportion of assets\n\nsubject to performance-based fees than our consolidated Affiliates and, as a result, equity method revenue, net will generally\n\nhave more performance-based fees than Consolidated revenue.\n\nThe following table presents our equity method Affiliates’ average assets under management and equity method Affiliate\n\nrevenue, net, as well as pre-tax equity method earnings, equity method intangible amortization, equity method intangible\n\nimpairments, if any, and equity method income tax, which in aggregate form Equity method income (net):\n\nFor the Years Ended December 31,\n\n(in millions, except as noted)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nOperating Performance Measures\n\nEquity method Affiliate average assets under management (in\n\nbillions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$266.6\n\n$301.2\n\n13%\n\n$353.2\n\n17%\n\nEquity method revenue, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$3,008.8\n\n$3,195.1\n\n6%\n\n$4,093.1\n\n28%\n\nFinancial Performance Measures\n\nPre-tax equity method earnings . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$382.5\n\n$455.7\n\n19%\n\n$578.1\n\n27%\n\nEquity method intangible amortization . . . . . . . . . . . . . . . . . . . . .\n\n(86.0)\n\n(90.1)\n\n5%\n\n(98.1)\n\n9%\n\nEquity method intangible impairments . . . . . . . . . . . . . . . . . . . . . .\n\n(9.6)\n\n(39.9)\n\nN.M.(1)\n\n—\n\nN.M.(1)\n\nEquity method income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(6.9)\n\n(13.0)\n\n88%\n\n(17.1)\n\n32%\n\nEquity method income (net) . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$280.0\n\n$312.7\n\n12%\n\n$462.9\n\n48%\n\n___________________________\n\n(1)Percent change is not meaningful.\n\nEquity method revenue, net increased $898.0 million or 28% in 2025, due to a $634.1 million or 20% increase from asset-\n\nbased fees and a $263.9 million or 8% increase from performance-based fees, primarily in liquid alternative strategies.  The\n\nincrease in asset-based fees was principally due to an increase in our equity method Affiliates’ average assets under\n\nmanagement, primarily in liquid alternative strategies, and changes in the composition of our assets under management,\n\nincluding net client cash flows from our equity method Affiliates managing alternative strategies, which typically have higher\n\nfee rates and the impact of our investments in new Affiliates primarily managing alternative strategies.\n\nPre-tax equity method earnings increased $122.4 million or 27% in 2025, primarily due to an $898.0 million or 28%\n\nincrease in equity method revenue, net.\n\nEquity method intangible amortization increased $8.0 million or 9% in 2025, primarily due to a $17.6 million increase in\n\namortization expense due to investments in new Affiliates.  This increase was partially offset by a $4.6 million decrease in\n\namortization expense related to certain definite-lived assets being fully amortized and a $3.9 million decrease in amortization\n\nexpense due to a decrease in actual and expected client attrition for certain definite-lived acquired client relationships.\n\nFor the year ended December 31, 2024, we recorded a $39.9 million impairment on equity method investments.  For the\n\nyear ended December 31, 2025, no equity method intangible impairments were recorded.  See Note 8 of our Consolidated\n\nFinancial Statements.\n\nAffiliate Transaction Gains\n\nThe following table presents our Affiliate transaction gains:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nAffiliate transaction gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$133.1\n\n$—\n\nN.M.(1)\n\n$371.3\n\nN.M.(1)\n\n31\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\n___________________________\n\n(1)Percent change is not meaningful.\n\nFor the years ended December 31, 2023 and 2025, we recorded a gain of $133.1 million on the sale of our equity interest in\n\nVeritable, LP (“Veritable”) (the “Veritable Transaction”), and total gains of $371.3 million related to the sale of our equity\n\ninterests in Peppertree, Comvest’s private credit business, and Montrusco Bolton, respectively.  See Notes 7 and 8 of our\n\nConsolidated Financial Statements.\n\nInvestment and Other Income\n\nThe following table presents our Investment and other income:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nInvestment and other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$117.1\n\n$77.4\n\n(34)%\n\n$83.1\n\n7%\n\nInvestment and other income increased $5.7 million or 7% in 2025, primarily due to increases in net realized and\n\nunrealized gains on other investments and marketable securities of $17.4 million and $5.8 million, respectively.  These\n\nincreases were partially offset by a $16.6 million decrease in interest income.\n\nIncome Tax Expense\n\nThe following table presents our Income tax expense:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nIncome tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$185.3\n\n$182.6\n\n(1)%\n\n$282.3\n\n55%\n\nOur consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes\n\nattributable to the non-controlling interests.\n\nIncome tax expense increased $99.7 million or 55% in 2025.  Our effective tax rate (controlling interest) for the year ended\n\nDecember 31, 2025 was 27.5% as compared to 25.5% for the year ended December 31, 2024.  The increase in the effective tax\n\nrate (controlling interest) was primarily due to unrecognized tax benefits and non-deductible compensation expense, partially\n\noffset by higher tax windfalls attributable to share-based compensation for the year ended December 31, 2025.                                                                                                                                                                                                             \n\nNet Income\n\nThe following table presents Net income, Net income (non-controlling interests), and Net income (controlling interest):\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n% Change\n\n2025\n\n% Change\n\nNet income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$906.1\n\n$740.6\n\n(18)%\n\n$904.0\n\n22%\n\nNet income (non-controlling interests) . . . . . . . . . . . . . . . . . . . . . .\n\n233.2\n\n229.0\n\n(2)%\n\n187.4\n\n(18)%\n\nNet income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n672.9\n\n511.6\n\n(24)%\n\n716.6\n\n40%\n\nNet income (controlling interest) increased $205.0 million or 40% in 2025, primarily due to Affiliate transaction gains and\n\nan increase in Equity method income (net).  These increases to Net income (controlling interest) were partially offset by\n\nincreases in Income tax expense attributable to the controlling interest, primarily due to Affiliate transaction gains, Intangible\n\namortization and impairments attributable to the controlling interest, and Affiliate equity expense attributable to the controlling\n\ninterest.\n\nSupplemental Financial Performance Measures\n\nAs supplemental information to our GAAP performance measures, including Net income (see Note 21 of our Consolidated\n\nFinancial Statements), we provide non-GAAP performance measures of Adjusted EBITDA (controlling interest), Economic net\n\nincome (controlling interest), and Economic earnings per share.  We believe that many investors use our Adjusted EBITDA\n\n(controlling interest) when comparing our financial performance to other companies in the investment management industry. \n\n32\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nManagement utilizes these non-GAAP performance measures to assess our performance before our share of certain non-cash\n\nGAAP expenses primarily related to the acquisition of interests in Affiliates and to improve comparability between periods. \n\nEconomic net income (controlling interest) and Economic earnings per share are used by management and our Board of\n\nDirectors as our principal performance benchmarks, including as one of the measures for determining executive compensation. \n\nThese non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income, Net income\n\n(controlling interest), Earnings per share, or other GAAP performance measures.\n\nAdjusted EBITDA (controlling interest)\n\nAdjusted EBITDA (controlling interest) represents our performance before our share of interest expense, income and\n\ncertain non-income based taxes, depreciation, amortization, impairments, gains and losses related to Affiliate transactions, and\n\nnon-cash items such as certain Affiliate equity-related activities, gains and losses on our contingent payment obligations, and\n\nunrealized gains and losses on seed capital, general partner commitments, and other strategic investments.  Adjusted EBITDA\n\n(controlling interest) is also adjusted to include realized economic gains and losses related to these seed capital, general partner\n\ncommitments, and other strategic investments.\n\nThe following table presents a reconciliation of Net income (controlling interest) to Adjusted EBITDA (controlling\n\ninterest):\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n2025\n\nNet income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$672.9\n\n$511.6\n\n$716.6\n\nInterest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n123.8\n\n133.3\n\n136.3\n\nIncome taxes(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n185.2\n\n187.9\n\n289.3\n\nIntangible amortization and impairments(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n128.5\n\n149.2\n\n214.4\n\nAffiliate transactions(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(162.7)\n\n—\n\n(377.5)\n\nOther items(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(12.0)\n\n(8.9)\n\n97.7\n\nAdjusted EBITDA (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$935.7\n\n$973.1\n\n$1,076.8\n\n___________________________\n\n(1)Includes equity method income tax.\n\n(2)Intangible amortization and impairments in our Consolidated Statements of Income include amortization attributable to the\n\nnon-controlling interests of our consolidated Affiliates.  For our Affiliates accounted for under the equity method, we do\n\nnot separately report intangible amortization and impairments in our Consolidated Statements of Income.  Our share of\n\nthese Affiliates’ amortization and impairments is included in Equity method income (net).  The following table presents the\n\nIntangible amortization and impairments shown above:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n2025\n\nConsolidated intangible amortization and impairments . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$48.3\n\n$29.0\n\n$160.3\n\nConsolidated intangible amortization and impairments (non-controlling interests) . . .\n\n(15.4)\n\n(9.8)\n\n(44.0)\n\nEquity method intangible amortization and impairments . . . . . . . . . . . . . . . . . . . . . . .\n\n95.6\n\n130.0\n\n98.1\n\nTotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$128.5\n\n$149.2\n\n$214.4\n\n(3)The year ended December 31, 2023 includes a gain of $133.1 million related to the Veritable Transaction and realized\n\ngains of $29.6 million on ordinary shares of EQT AB (“EQT”), a public company listed on the Nasdaq Stockholm\n\n(EQT.ST), which we received in connection with the sale of our equity interest in Baring Private Equity Asia (“BPEA”) in\n\nthe fourth quarter of 2022 (the “BPEA Transaction”).  The year ended December 31, 2025 includes total gains of\n\n$371.3 million related to the Peppertree, Comvest, and Montrusco Bolton Transactions and realized gains of $6.2 million\n\non TPG Class A common shares.  See Notes 7 and 8 of our Consolidated Financial Statements.  Veritable, Peppertree,\n\nComvest, and Montrusco Bolton Transaction gains are recorded in Affiliate transaction gains, and realized gains on EQT\n\nordinary shares and TPG Class A common shares are recorded in Investment and other income in our Consolidated\n\nStatements of Income.\n\n33\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\n(4)Other items include certain non-income based taxes, depreciation, and non-cash items such as certain Affiliate equity-\n\nrelated activities, gains and losses on our contingent payment obligations, unrealized gains and losses on seed capital,\n\ngeneral partner commitments, and other strategic investments, and realized economic gains and losses related to these seed\n\ncapital, general partner commitments, and other strategic investments.  For the year ended December 31, 2025, the increase\n\nin other items was predominantly the result of Affiliate equity-related activities.\n\nEconomic Net Income (controlling interest) and Economic Earnings Per Share\n\nUnder our Economic net income (controlling interest) definition, we adjust Net income (controlling interest) for our share\n\nof pre-tax intangible amortization and impairments related to intangible assets (including the portion attributable to equity\n\nmethod investments in Affiliates) because these expenses do not correspond to the changes in the value of these assets, which\n\ndo not diminish predictably over time.  We also adjust for deferred taxes attributable to intangible assets because we believe it\n\nis unlikely these accruals will be used to settle material tax obligations.  Further, we adjust for gains and losses related to\n\nAffiliate transactions, net of tax, and other economic items.\n\nEconomic earnings per share represents Economic net income (controlling interest) divided by the Average shares\n\noutstanding (adjusted diluted).  In this calculation, we exclude the potential shares issued upon settlement of Redeemable non-\n\ncontrolling interests from Average shares outstanding (adjusted diluted) because we intend to settle those obligations without\n\nissuing shares, consistent with all prior Affiliate equity purchase transactions.  The potential share issuance in connection with\n\nour junior convertible securities is measured using a “treasury stock” method.  Under this method, only the net number of\n\nshares of common stock equal to the value of these junior convertible securities in excess of par, if any, are deemed to be\n\noutstanding.  We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in\n\navailable capital resources (which could be used to repurchase shares of our common stock) that occurs when these securities\n\nare converted and we are relieved of our debt obligation.\n\nThe following table presents a reconciliation of Net income (controlling interest) to Economic net income (controlling\n\ninterest) and Economic earnings per share:\n\nFor the Years Ended December 31,\n\n(in millions, except per share data)\n\n2023\n\n2024\n\n2025\n\nNet income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$672.9\n\n$511.6\n\n$716.6\n\nIntangible amortization and impairments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n128.5\n\n149.2\n\n214.4\n\nIntangible-related deferred taxes(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n57.3\n\n61.9\n\n45.1\n\nAffiliate transactions(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(122.1)\n\n—\n\n(284.4)\n\nOther economic items(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(18.8)\n\n(21.1)\n\n77.6\n\nEconomic net income (controlling interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$717.8\n\n$701.6\n\n$769.3\n\nAverage shares outstanding (diluted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n42.2\n\n36.1\n\n33.0\n\nHypothetical issuance of shares to settle Redeemable non-controlling interests . . . . . . . .\n\n(3.7)\n\n(1.6)\n\n(1.9)\n\nAssumed issuance of junior convertible securities shares . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(1.7)\n\n(1.7)\n\n(1.7)\n\nDilutive impact of junior convertible securities shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n—\n\n—\n\n0.1\n\nAverage shares outstanding (adjusted diluted) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n36.8\n\n32.8\n\n29.5\n\nEconomic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$19.48\n\n$21.36\n\n$26.05\n\n___________________________\n\n(1)See note (2) to the table in “Adjusted EBITDA (controlling interest).”\n\n(2)Includes equity method deferred taxes.  For the year ended December 31, 2023, intangible-related deferred taxes have been\n\nadjusted to eliminate benefits of $28.9 million related to the Veritable Transaction.  For the year ended December 31, 2025,\n\nintangible-related deferred taxes have been adjusted to eliminate net expenses of $4.4 million related to the Peppertree and\n\nComvest Transactions.\n\n(3)The year ended December 31, 2023 includes a gain of $133.1 million related to the Veritable Transaction and realized\n\ngains of $29.6 million on EQT ordinary shares related to the BPEA Transaction, net of $40.6 million income tax expense. \n\nThe year ended December 31, 2025 includes total gains of $371.3 million related to the Peppertree, Comvest, and\n\n34\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nMontrusco Bolton Transactions and realized gains of $6.2 million on TPG Class A common shares, net of $93.1 million of\n\nincome tax expense.  See Notes 7 and 8 of our Consolidated Financial Statements.\n\n(4)Other economic items include certain Affiliate equity-related activities, gains and losses related to contingent payment\n\nobligations, tax windfalls and shortfalls from share-based compensation, unrealized gains and losses on seed capital,\n\ngeneral partner commitments, and other strategic investments, and realized economic gains and losses related to these seed\n\ncapital, general partner commitments, and other strategic investments.  For the year ended December 31, 2025, the increase\n\nin other economic items was predominantly the result of Affiliate equity-related activities. \n\nLiquidity and Capital Resources\n\nWe generate long-term value by investing in new Affiliate partnerships, existing Affiliates, and strategic value-add\n\ncapabilities through which we can leverage our scale and resources to benefit our Affiliates and enhance their long-term growth\n\nprospects.  Given our annual cash generation from operations, in addition to investing for growth in our business, we are also\n\nable to return excess capital to shareholders primarily through share repurchases.  We continue to manage our capital structure\n\nconsistent with an investment grade company and are currently rated A3 by Moody’s Investors Service and BBB+ by S&P\n\nGlobal Ratings.\n\nCash and cash equivalents were $586.0 million as of December 31, 2025 and were attributable to both our controlling and\n\nthe non-controlling interests.  In 2025, we met our cash requirements primarily through cash generated by operating activities,\n\nsenior bank debt borrowings, and an issuance of senior notes.  In addition, during the year ended December 31, 2025, we\n\nreceived total after-tax net proceeds of approximately $490 million from the Peppertree, Comvest, and Montrusco Bolton\n\nTransactions.  Our principal uses of cash in 2025 were for investments in new Affiliates, the return of excess capital through\n\nshare repurchases, repayment of debt, and distributions to Affiliate equity holders.\n\nWe expect investments in new Affiliates, investments in existing Affiliates, primarily through purchases of Affiliate equity\n\ninterests and general partner and seed capital investments, the return of capital through share repurchases and the payment of\n\ncash dividends on our common stock, repayment of debt, distributions to Affiliate equity holders, payment of income taxes, and\n\ngeneral working capital to be the primary uses of cash on a consolidated basis for the foreseeable future.  In addition, in January\n\n2026, we settled each of our conversion obligations with respect to our junior convertible securities in cash for an aggregate\n\namount of $514.6 million.  We anticipate that our current cash balance, cash flows from operations, and borrowings under our\n\nrevolver will be sufficient to support our uses of cash for the foreseeable future.  In addition, we may draw funding from the\n\ndebt and equity capital markets, and our credit ratings, among other factors, allow us to access these sources of funding on\n\nfavorable terms.\n\nThe following table presents operating, investing, and financing cash flow activities:\n\nFor the Years Ended December 31,\n\n(in millions)\n\n2023\n\n2024\n\n2025\n\nOperating cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$874.3\n\n$932.1\n\n$973.2\n\nInvesting cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n264.5\n\n379.1\n\n(206.1)\n\nFinancing cash flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(758.3)\n\n(1,175.9)\n\n(1,148.7)\n\nOperating Cash Flow\n\nOperating cash flows are calculated by adjusting Net income for other significant sources and uses of cash, significant non-\n\ncash items, and timing differences in the cash settlement of assets and liabilities. \n\nFor the year ended December 31, 2025, Cash flows from operating activities were $973.2 million, primarily from Net\n\nincome of $904.0 million adjusted for non-cash items of $424.5 million and distributions of earnings received from equity\n\nmethod investments of $467.8 million.  In 2025, operating cash flows were primarily attributable to the controlling interest.\n\nInvesting Cash Flow\n\nFor the year ended December 31, 2025, Cash flows used in investing activities were $206.1 million, primarily due to\n\n$776.0 million of investments in Affiliates and $103.8 million of purchases of investment securities.  These items were partially\n\noffset by $403.8 million of cash proceeds from Affiliate transactions and $266.2 million of maturities and sales of investment\n\nsecurities.  In 2025, investing cash flows were primarily attributable to the controlling interest.\n\n35\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nFinancing Cash Flow\n\nFor the year ended December 31, 2025, Cash flows used in financing activities were $1,148.7 million, primarily due to\n\nrepayment of senior bank debt borrowings and matured senior notes of $826.1 million, $706.3 million of repurchases of\n\ncommon stock, net, $252.3 million of distributions to non-controlling interests, $170.3 million of Affiliate equity purchases, net\n\nof issuances, and $108.0 million of taxes paid on shares withheld for share-based awards.  These items were partially offset by\n\nsenior bank debt borrowings and an issuance of senior notes of $899.3 million.  In 2025, financing cash flows were primarily\n\nattributable to the controlling interest.\n\nAffiliate Equity\n\nWe periodically purchase Affiliate equity from and issue Affiliate equity to our consolidated Affiliate partners and other\n\nparties under agreements that provide us with a conditional right to call and Affiliate equity holders with a conditional right to\n\nput their Affiliate equity interests to us at certain intervals.  We have the right to settle a portion of these purchases in shares of\n\nour common stock.  For Affiliates accounted for under the equity method, we do not typically have such put and call\n\narrangements.  The purchase price of these conditional purchases is generally calculated based upon a multiple of the Affiliate’s\n\ncash flow distributions, which is intended to represent fair value.  In certain cases, Affiliate equity holders are also permitted to\n\nsell their equity interests to Affiliate partners or other parties, subject to our approval or other restrictions.\n\nAs of December 31, 2025, the current redemption value of Affiliate equity interests was $408.0 million, of which $246.8\n\nmillion was presented as Redeemable non-controlling interests (including $32.2 million of consolidated Affiliate sponsored\n\ninvestment products primarily attributable to third-party investors), and $161.2 million was included in Other liabilities on the\n\nConsolidated Balance Sheets.  Although the timing and amounts of these purchases are difficult to predict, we paid $176.7\n\nmillion for Affiliate equity purchases and received $6.4 million for Affiliate equity issuances in 2025, and we expect net\n\npurchases of approximately $100 million of Affiliate equity in 2026.  In the event of a purchase, we become the owner of the\n\ncash flow associated with the purchased equity.  See Notes 13 and 14 of our Consolidated Financial Statements.\n\nShare Repurchases\n\nOur Board of Directors authorized share repurchase programs in July 2024 and January 2026 to repurchase up to 5.4\n\nmillion and 4.2 million shares of our common stock, respectively, and these authorizations have no expiry.  Purchases may be\n\nmade from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including\n\nthrough the use of trading plans, as well as pursuant to accelerated share repurchase programs or other share repurchase\n\nstrategies that may include derivative financial instruments.  For the year ended December 31, 2025, we repurchased 3.3 million\n\nshares of our common stock at an average price per share of $212.92.  As of the January 26, 2026 authorization, there were a\n\ntotal of 6.0 million shares available for repurchase under our share repurchase programs.\n\nDebt\n\nThe following table presents the carrying value of our outstanding indebtedness and a reconciliation to Debt as presented\n\non our Consolidated Balance Sheets:\n\nDecember 31,\n\n(in millions)\n\n2024\n\n2025\n\nSenior bank debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$—\n\n$—\n\nSenior notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n1,097.4\n\n1,172.0\n\nJunior subordinated notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n1,216.0\n\n1,216.1\n\nJunior convertible securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n341.7\n\n340.6\n\nTotal carrying value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n2,655.1\n\n2,728.7\n\nDebt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n(34.9)\n\n(37.4)\n\nDebt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$2,620.2\n\n$2,691.3\n\nAs of December 31, 2025, the weighted average maturity of our outstanding senior and junior subordinated notes is 22\n\nyears, all of which is maturing in 2030 and beyond.  Our nearest term maturity with respect to our senior and junior\n\nsubordinated notes relates to our $350.0 million senior notes due June 2030 (“the 2030 senior notes”).  See Note 5 of our\n\nConsolidated Financial Statements.\n\n36\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nSenior Bank Debt\n\nAs of December 31, 2025, we had a $1.25 billion revolver which matures on November 15, 2029.  Subject to certain\n\nconditions, we may increase the commitments under the revolver by up to an additional $500.0 million.\n\nUnder the terms of the revolver we are required to meet two financial ratio covenants.  The first of these covenants is a\n\nmaximum ratio of debt to EBITDA (the “bank leverage ratio”) of 3.25x.  The second covenant is a minimum ratio of EBITDA\n\nto cash interest expense (the “bank interest coverage ratio”) of 3.00x.  For purposes of calculating these ratios, share-based\n\ncompensation and certain Affiliate equity expenses, among other specified expenses, charges, and costs, are added back to\n\nAdjusted EBITDA.  As of December 31, 2025, our bank leverage and bank interest coverage ratios were 0.9x and 8.5x,\n\nrespectively.\n\nAs of December 31, 2025, we had no outstanding borrowings under the revolver, and we could borrow all remaining\n\ncapacity and maintain compliance with all of the terms of the revolver.  As of the date of this Annual Report on Form 10-K, we\n\nhad outstanding borrowings of $475.0 million under the revolver.\n\nSenior Notes\n\nIn the third quarter of 2025, our $350.0 million 3.50% senior notes matured and were fully repaid.\n\nAs of December 31, 2025, we had senior notes outstanding, the respective principal terms of which are presented and\n\ndescribed below:\n\n2030\n\nSenior Notes\n\n2034\n\nSenior Notes\n\n2036\n\nSenior Notes\n\nIssue date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\nJune 2020\n\nAugust 2024\n\nDecember 2025\n\nMaturity date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\nJune 2030\n\nAugust 2034\n\nFebruary 2036\n\nPar value (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n$350.0\n\n$400.0\n\n$425.0\n\nStated coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\n3.30%\n\n5.50%\n\n5.50%\n\nCoupon frequency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\nSemi-annually\n\nSemi-annually\n\nSemi-annually\n\nOn December 11, 2025, we issued $425.0 million of 2036 senior unsecured notes with a maturity date of February 15,\n\n2036 (the “2036 senior notes”).  Interest is payable beginning August 15, 2026. \n\nIn addition to customary event of default provisions, the indenture governing the senior notes, including the applicable\n\nsupplemental indentures with respect to the 2030, 2034, and 2036 senior notes, limits our ability to consolidate, merge, or sell\n\nall or substantially all of our assets, and requires us to make an offer to repurchase the applicable senior notes at 101% of the\n\nprincipal amount (plus any accrued and unpaid interest), upon certain change of control triggering events.  The senior notes\n\nmay be redeemed, in whole or in part, at a make-whole redemption price (plus accrued and unpaid interest), at any time prior to\n\nMarch 15, 2030, in the case of the 2030 senior notes, at any time prior to May 20, 2034, in the case of the 2034 senior notes,\n\nand at any time prior to November 15, 2035, in the case of the 2036 senior notes. In addition, the 2030, 2034, and 2036 senior\n\nnotes may be redeemed at par (plus accrued and unpaid interest), in whole or in part, at any time, on or after March 15, 2030,\n\nMay 20, 2034, and November 15, 2035, respectively.  We may also repurchase senior notes in the open market or in privately\n\nnegotiated transactions from time to time at management’s discretion.\n\nWe used a majority of the net proceeds from the 2036 senior notes to settle our conversion obligations with respect to our\n\njunior convertible securities in January 2026, as further described below.\n\n37\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nJunior Subordinated Notes\n\nAs of December 31, 2025, we had junior subordinated notes outstanding, the respective principal terms of which are\n\npresented and described below: \n\n2059\n\nJunior Subordinated\n\nNotes\n\n2060\n\nJunior Subordinated\n\nNotes\n\n2061\n\nJunior Subordinated\n\nNotes\n\n2064\n\nJunior Subordinated\n\nNotes\n\nIssue date . . . . . . . . . . . . . . . . . . . . . . . . . . . .\n\nMarch 2019\n\nSeptember 2020\n\nJuly 2021\n\nMarch 2024\n\nMaturity date . . . . . . . . . . . . . . . . . . . . . . . . .\n\nMarch 2059\n\nSeptember 2060\n\nSeptember 2061\n\nMarch 2064\n\nPar value (in millions) . . . . . . . . . . . . . . . . . .\n\n$300.0\n\n$275.0\n\n$200.0\n\n$450.0\n\nStated coupon . . . . . . . . . . . . . . . . . . . . . . . . .\n\n5.875%\n\n4.75%\n\n4.20%\n\n6.75%\n\nCoupon frequency . . . . . . . . . . . . . . . . . . . . .\n\nQuarterly\n\nQuarterly\n\nQuarterly\n\nQuarterly\n\nNYSE Symbol . . . . . . . . . . . . . . . . . . . . . . . .\n\nMGR\n\nMGRB\n\nMGRD\n\nMGRE\n\nAs of December 31, 2025, each of the 2059 and 2060 junior subordinated notes could be redeemed at any time, in whole or\n\nin part.  The other junior subordinated notes may be redeemed at any time, in whole or in part, on or after September 30, 2026,\n\nin the case of the 2061 junior subordinated notes, and on or after March 30, 2029, in the case of the 2064 junior subordinated\n\nnotes.  In each case, the junior subordinated notes may be redeemed at 100% of the principal amount of the notes being\n\nredeemed, plus any accrued and unpaid interest thereon.  Prior to the applicable redemption date, at our option, the applicable\n\njunior subordinated notes may also be redeemed, in whole but not in part, at 100% of the principal amount, plus any accrued\n\nand unpaid interest, if certain changes in tax laws, regulations, or interpretations occur; or at 102% of the principal amount, plus\n\nany accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with\n\nfeatures similar to the applicable notes.\n\nJunior Convertible Securities\n\nAs of December 31, 2025, we had $340.6 million of principal outstanding on our junior convertible trust preferred\n\nsecurities outstanding (the “junior convertible securities”).  Prior to their redemption, as described below, the junior convertible\n\nsecurities bore interest at a rate of 5.15% per annum, which interest payments were payable quarterly in cash.  The junior\n\nconvertible securities were considered contingent payment debt instruments under federal income tax regulations, which\n\nrequired us to deduct interest in an amount greater than its reported interest expense (“excess interest expense deductions”). \n\nIn November 2025, pursuant to the terms of the junior convertible securities, we adjusted the conversion rate of the\n\nsecurities to 0.2582 shares of common stock per $50.00 junior convertible security, equivalent to an adjusted conversion price\n\nof $193.65 per share.  The adjustment was the result of our cumulative declared dividends on our common stock since the prior\n\nadjustment.\n\nOn December 8, 2025, we delivered notice that we had elected to redeem all of the outstanding junior convertible securities\n\non December 29, 2025 (the “Redemption Date”), and announced our intention to settle any and all conversion obligations in\n\ncash.  Substantially all holders of the junior convertible securities delivered requests to convert their securities prior to the\n\nRedemption Date.  On December 15, 2025, we made an irrevocable election to settle our conversion obligations in cash by\n\nreference to the daily volume weighted average price of our common stock during each applicable ten trading day conversion\n\nreference period.  These conversions resulted in a settlement value in excess of the associated carrying value (the “conversion\n\npremium”).  As of December 31, 2025, the conversion premium of $155.5 million was recorded within Other liabilities, with a\n\ncorresponding reduction to Additional paid-in capital on the Consolidated Balance Sheets.  In addition, the conversion resulted\n\nin a reduction to Deferred tax liability (net) on the Consolidated Balance Sheets of $38.9 million, with a corresponding increase\n\nto Additional paid-in capital.  Our election to settle each applicable conversion premium in cash using a ten-day reference\n\nperiod was accounted for as a forward sale contract, which resulted in a $9.2 million expense recorded in Other expenses (net)\n\nin our Consolidated Statements of Income, in the fourth quarter of 2025.\n\nOn the Redemption Date, we redeemed $1.1 million of junior convertible securities which were not converted, reflecting\n\nthe principal amount of the redeemed securities, plus accrued and unpaid interest, up to, but not including, the Redemption\n\nDate.\n\nIn January 2026, we settled each of our applicable conversion obligations in cash for an aggregate amount of\n\n$514.6 million which resulted in an incremental expense related to the forward sale contract of $9.3 million.  As a result of the\n\nsettlement of these securities, we expect to incur a current cash tax liability of approximately $56.0 million in 2026, reflective\n\n38\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nof the recapture of excess interest expense deductions.  As of the date of this Annual Report on Form 10-K, no junior\n\nconvertible securities are outstanding.\n\nEquity Distribution Program\n\nIn the first quarter of 2025, we entered into an equity distribution agreement and forward sale agreements with several\n\nmajor securities firms under which we may, from time to time, issue and sell shares of our common stock (immediately or on a\n\nforward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”).  This equity\n\ndistribution program superseded and replaced our prior equity distribution program.  As of December 31, 2025, no sales had\n\noccurred under the equity distribution program.\n\nCommitments\n\nSee Note 6 of our Consolidated Financial Statements. \n\nOther Contingent Commitments\n\nSee Notes 3 and 6 of our Consolidated Financial Statements.\n\nLeases\n\nAs of December 31, 2025, our lease obligations were $30.8 million through 2026, $53.4 million from 2027 through 2028,\n\n$48.0 million from 2029 through 2030, and $48.5 million thereafter.  The portion of these lease obligations attributable to the\n\ncontrolling interest were $5.8 million through 2026, $6.7 million from 2027 through 2028, $6.6 million from 2029 through\n\n2030, and $11.3 million thereafter.  See Note 9 of our Consolidated Financial Statements.\n\nRecent Accounting Developments\n\nSee Note 1 of our Consolidated Financial Statements.\n\nCritical Accounting Estimates and Judgments\n\nThe preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments,\n\nassumptions, and estimates that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. \n\nSee Note 1 of our Consolidated Financial Statements for a discussion of our significant accounting policies.\n\nThe following are our critical accounting estimates and judgments used in the preparation of our Consolidated Financial\n\nStatements, and due to their subjectivity, actual results could differ materially from the amounts reported.\n\nFair Value Measurements\n\nAccounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in\n\nthe principal or most advantageous market in an orderly transaction between market participants at the measurement date. \n\nThese standards establish a fair value hierarchy that gives the highest priority to quoted prices in active markets for identical\n\nassets or liabilities and the lowest priority to unobservable inputs.\n\nWe make judgments to determine the fair value of certain assets, liabilities, and equity interests when allocating the\n\npurchase price of our new investments, when revaluing our contingent payment obligations, when we issue or purchase\n\nAffiliate equity interests, and when we test our goodwill, indefinite- and definite-lived acquired client relationships, or equity\n\nmethod investments for impairment.\n\nIn determining fair values that reflect our own assumptions concerning unobservable inputs, we typically use valuation\n\ntechniques, including probability-weighted discounted cash flow analyses and Monte Carlo simulations, where we make\n\nassumptions about growth rates of assets under management, client attrition, asset- and performance-based fee rates, and\n\nexpenses.  In these analyses, we also consider historical and current market multiples, tax benefits, credit risk, interest rates, tax\n\nrates, discount rates, volatility, and discounts for lack of marketability.  We consider the reasonableness of our assumptions by\n\ncomparing our valuation conclusions to observed market transactions and, in certain instances, by consulting with third-party\n\nvaluation firms.  Changes in the assumptions used could significantly impact fair values.\n\n39\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nIndefinite-Lived Acquired Client Relationships\n\nIndefinite-lived acquired client relationships include investment advisory contracts between our Affiliates and their mutual\n\nfunds and other retail-oriented investment products.  Because these contracts are with the investment products themselves, and\n\nnot with the underlying investors, and the contracts between our Affiliates and the investment products are typically renewed on\n\nan annual basis, industry practice under GAAP is to consider the contract life to be indefinite and, as a result, not amortizable.\n\nWe perform indefinite-lived acquired client relationship impairment assessments annually, or more frequently should\n\ncircumstances indicate fair value has declined below the related carrying value.  For purposes of our assessments, we consider\n\nvarious qualitative and quantitative factors to determine if it is more-likely-than-not that the fair value of each asset group is\n\ngreater than its carrying amount.  If we determine that it is likely that the fair value has declined below our related carrying\n\nvalue, we perform discounted cash flow analyses to determine the fair value of the asset group and record an expense in\n\nIntangible amortization and impairments to reduce the carrying value to its fair value.  In these analyses, the most relevant\n\nassumptions are revenue growth rates and discount rates. \n\nIn the first quarter of 2025, we completed an impairment assessment of the indefinite-lived acquired client relationships for\n\ncertain mutual fund assets and determined that the fair value of the assets had declined below their carrying values. \n\nAccordingly, we recorded an expense in Intangible amortization and impairments of $59.2 million attributable to the controlling\n\ninterest ($70.0 million in aggregate) to reduce the carrying value of the assets to fair value.  The decline in the fair value was a\n\nresult of current and projected declines in assets under management that decreased the forecasted revenue associated with the\n\nassets.  The most relevant assumptions used in these analyses were revenue growth rates over the next five years ranging from\n\n(21)% to 0%, long-term revenue growth rates of 0%, and discount rates of 11.0%.\n\nIn the fourth quarter of 2025, we completed our annual impairment assessment of our indefinite-lived acquired client\n\nrelationships and determined that the fair value of certain mutual fund assets had declined below their carrying values. \n\nAccordingly, we recorded an expense in Intangible amortization and impairments of $37.0 million attributable to the controlling\n\ninterest ($58.0 million in aggregate) to reduce the carrying value of the assets to fair value.  The decline in the fair value was a\n\nresult of current and projected declines in assets under management that decreased the forecasted revenue associated with the\n\nassets.  The most relevant assumptions used in these analyses were revenue growth rates over the next five years ranging from\n\n(34)% to 0%, long-term revenue growth rates of 0%, and discount rates of 10.5%.\n\nWhile we believe all assumptions used in our assessments are reasonable and appropriate, changes in these estimates could\n\nproduce different values.  We performed a sensitivity analysis over the most relevant assumptions used in these assessments. \n\nAssuming all other assumptions remain constant, a decrease in the revenue growth rates over the next five years of 200 basis\n\npoints would result in an additional impairment amount of approximately $80 million, while an increase in the discount rate of\n\n100 basis points would result in an additional impairment amount of approximately $85 million.  Further declines in assets\n\nunder management resulting from negative investment performance or net client outflows above our estimates could result in\n\nadditional future impairments.\n\nFor the year ended December 31, 2025, no other impairments were indicated for our indefinite-lived acquired client\n\nrelationships.\n\nEquity Method Investments in Affiliates\n\nWe periodically perform assessments to determine if the fair value of an investment may have declined below its related\n\ncarrying value for our Affiliates accounted for under the equity method for a period that we consider to be other-than-\n\ntemporary.  We perform these assessments if certain triggering events occur or annually during the fourth quarter.  We first\n\nconsider whether certain qualitative and quantitative factors (including discount rates) indicate an increased likelihood of a\n\ndecline in the fair value of an Affiliate during the reporting period.  If such a decline is identified, and it is likely that an\n\ninvestment’s fair value may have declined below its carrying value, we perform a quantitative assessment to determine if an\n\nimpairment exists.  Impairments are recorded as an expense in Equity method income (net) to reduce the carrying value of the\n\nAffiliate to its fair value.\n\nWhen we quantitatively test our equity method investments for impairment, we typically use valuation methods such as\n\ndiscounted cash flow analyses.  In these analyses, our most significant assumptions relate to growth rates of projected assets\n\nunder management, client attrition, asset- and performance-based fees, expenses, and discount rates.  We consider the\n\nreasonableness of our assumptions by comparing our valuation conclusions to observed market transactions, comparable\n\ncompany valuations, and, in certain instances, by consulting with third-party valuation firms.  Changes in these assumptions\n\ncould significantly impact the respective fair value of an Affiliate.\n\n40\n\n[Table of Contents](#ibfa0590d77ac4199aa63edb4b8813f49_7)\n\nFor the year ended December 31, 2025, the Company completed its annual assessment of its investments in Affiliates\n\naccounted for under the equity method and no impairments were indicated."}