10-KPeriod: FY2017

AFFILIATED MANAGERS GROUP, INC. Annual Report, Year Ended Dec 31, 2017

Filed February 23, 2018For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) operates as a global asset management company by investing in and partnering with leading boutique investment management firms (Affiliates). As of December 31, 2017, AMG managed approximately $836.3 billion in assets across over 550 investment products, focusing on active return-oriented strategies. The company's innovative partnership model allows Affiliate management teams to retain significant equity in their firms, aligning interests and fostering operational autonomy while providing AMG with access to diverse investment strategies and client bases. Financially, AMG demonstrated robust growth in 2017, with total assets under management increasing by 21% to $836.3 billion and aggregate fees rising by 29% to $5,545.8 million. Net income attributable to controlling interest saw a significant 46% increase to $689.5 million. This strong performance was partly boosted by a one-time tax benefit from U.S. tax law changes. The company also repurchased shares and increased its quarterly dividend, indicating a commitment to returning value to shareholders. Despite market volatility and regulatory complexities inherent in the asset management industry, AMG's diversified affiliate model and focus on active management strategies position it for continued growth.

Financial Highlights

43 data points
Beta

Revenue

$2.31B

Net Income

$689.50M

29.9% Net Margin

EPS (Diluted)

$12.03

Total Assets

$8.70B

Cash & Equivalents

$439.50M

Free Cash Flow

$1.15B

Financial Statements
Beta
Revenue$2.31B
SG&A Expenses$373.10M
Operating Expenses$1.60B
Operating Income$1.11B
Interest Expense$87.80M
Net Income$689.50M
EPS (Basic)$12.30
EPS (Diluted)$12.03
Shares Outstanding (Basic)56.00M
Shares Outstanding (Diluted)58.60M

Key Highlights

  • 1Assets Under Management (AUM) grew significantly by 21% to $836.3 billion as of December 31, 2017.
  • 2Aggregate fees increased substantially by 29% to $5,545.8 million in 2017, driven by higher AUM and strong performance fees.
  • 3Net income attributable to controlling interest rose by 46% to $689.5 million in 2017, reflecting strong operational performance and a one-time tax benefit.
  • 4The company maintained a strong balance sheet with total assets of $8.7 billion and total equity of $4.6 billion as of December 31, 2017.
  • 5AMG continued its share repurchase program and increased its quarterly dividend, demonstrating a commitment to shareholder returns.
  • 6The business model relies on partnering with boutique investment firms, allowing them operational autonomy while AMG provides centralized support and strategic guidance.
  • 7The company operates in a highly regulated environment, with significant disclosures around compliance and potential regulatory changes impacting operations.

Frequently Asked Questions

AMG's core strategy is to invest in and partner with leading boutique investment management firms (Affiliates). They aim to generate shareholder value through the growth of these Affiliates, by making new investments and additional investments in existing ones. AMG provides centralized support in areas like strategic matters, marketing, distribution, and operations, while allowing Affiliates to maintain operational autonomy and significant equity ownership.

In 2017, AMG showed strong financial growth. Assets under management increased by 21% to $836.3 billion, and aggregate fees grew by 29% to $5,545.8 million. Net income attributable to controlling interest increased significantly by 46% to $689.5 million. This growth was supported by higher average assets under management and an increase in performance fees. The company also benefited from a one-time net tax benefit from changes in U.S. tax laws.

AMG faces several key risks, including: dependency on asset and performance-based fees which are sensitive to market fluctuations and investor preferences (especially the shift towards passive management); the need to continuously grow existing Affiliates and successfully integrate new investments; the highly competitive nature of both the asset management industry and the market for acquiring boutique firms; significant regulatory oversight in multiple jurisdictions; and reliance on key personnel within both AMG and its Affiliates. Reputational damage from any failure by AMG or its Affiliates could also severely impact business.

AMG's unique 'structured partnership interest' model is central to its affiliate relationships. This model allows Affiliate management teams to retain significant equity in their firms, aligning their interests with AMG and incentivizing long-term growth. AMG provides centralized support, but Affiliates maintain operational autonomy, preserving their entrepreneurial culture. Financial results from consolidated Affiliates are integrated, while equity-method Affiliates contribute their share of earnings to AMG's income.