In contrast to other entities which attempt outright acquisitions of investment firms, AMG's investment structure aligns the interests of the Affiliate, its clients, and AMG. Affiliate managers typically retain control of the operational management and distinct culture that shaped their success through a customized revenue sharing agreement that leaves day-to-day operations (including compensation and budgeting decisions) to the management of the Affiliate. In addition, AMG's approach provides a mechanism whereby Affiliate managers can individually realize the value of their retained equity and transfer their interests to the next generation within the firm. Clients of AMG's Affiliates benefit from seamless management and ownership transition as well as an uninterrupted focus on service, performance and growth. AMG also benefits from the continued success of its Affiliates. We believe our structure not only incents the growth of our Affiliates, but is also more attractive to boutique firms that anticipate future growth and want to retain equity upside and independence while implementing a succession plan.
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(1) Revenue sharing agreement provides operating autonomy to management partners, as well as allocates a fixed percentage of each year's revenues into two segments, the Operating Allocation and the Owners' Allocation.
(2) The Operating Allocation is allocated to cover all operating expenses of the firm and is spent at the discretion of management of the Affiliate.
(3) The Owners' Allocation is allocated to all partners of the firm (management and AMG) according to percentage ownership interest in the firm.