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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)    
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to          
Commission File Number 001-13459
AMG-20210630_G1.JPG
AFFILIATED MANAGERS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware   04-3218510
(State or other jurisdiction
of incorporation or organization)
  (IRS Employer Identification Number)
777 South Flagler Drive, West Palm Beach, Florida 33401
(Address of principal executive offices)
(800) 345-1100
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock ($0.01 par value) AMG New York Stock Exchange
5.875% Junior Subordinated Notes due 2059 MGR New York Stock Exchange
4.750% Junior Subordinated Notes due 2060 MGRB New York Stock Exchange
4.200% Junior Subordinated Notes due 2061 MGRD New York Stock Exchange



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer   Accelerated filer    Non-accelerated filer 
  Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
There were 41,205,816 shares of the registrant’s common stock outstanding on August 3, 2021.


FORM 10-Q
TABLE OF CONTENTS



PART I—FINANCIAL INFORMATION
Item 1.Financial Statements
AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(unaudited)
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Consolidated revenue $ 471.1  $ 586.3  $ 978.3  $ 1,145.4 
Consolidated expenses:
Compensation and related expenses 216.5  248.9  424.4  495.8 
Selling, general and administrative 73.6  88.6  163.8  167.4 
Intangible amortization and impairments 80.9  8.9  101.5  16.4 
Interest expense 22.3  26.8  41.8  54.3 
Depreciation and other amortization 5.0  4.1  10.1  8.4 
Other expenses (net) 11.3  12.6  22.3  26.1 
Total consolidated expenses 409.6  389.9  763.9  768.4 
Equity method income (loss) (net) 17.4  37.6  (95.8) 89.2 
Investment and other income (expense) (12.1) 21.1  (9.7) 53.5 
Income before income taxes 66.8  255.1  108.9  519.7 
Income tax expense 3.3  70.9  5.5  121.5 
Net income 63.5  184.2  103.4  398.2 
Net income (non-controlling interests) (32.8) (75.2) (88.3) (139.3)
Net income (controlling interest) $ 30.7  $ 109.0  $ 15.1  $ 258.9 
Average shares outstanding (basic) 47.2  41.6  47.5  42.1 
Average shares outstanding (diluted) 47.3  44.6  47.6  45.0 
Earnings per share (basic) $ 0.65  $ 2.62  $ 0.32  $ 6.15 
Earnings per share (diluted) $ 0.65  $ 2.55  $ 0.32  $ 5.96 

The accompanying notes are an integral part of the Consolidated Financial Statements.
2

AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Net income $ 63.5  $ 184.2  $ 103.4  $ 398.2 
Other comprehensive income (loss), net of tax:    
Foreign currency translation gain (loss) (23.2) 7.5  (76.1) 31.3 
Change in net realized and unrealized gain (loss) on derivative financial instruments (1.3) 0.4  (2.3) 0.9 
Other comprehensive income (loss), net of tax (24.5) 7.9  (78.4) 32.2 
Comprehensive income 39.0  192.1  25.0  430.4 
Comprehensive income (non-controlling interests) (32.2) (74.1) (71.5) (138.0)
Comprehensive income (loss) (controlling interest) $ 6.8  $ 118.0  $ (46.5) $ 292.4 

The accompanying notes are an integral part of the Consolidated Financial Statements.
3

AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
December 31,
2020
June 30,
2021
Assets    
Cash and cash equivalents $ 1,039.7  $ 777.9 
Receivables 421.6  711.8 
Investments in marketable securities 74.9  62.8 
Goodwill 2,661.4  2,669.7 
Acquired client relationships (net) 1,048.8  1,036.8 
Equity method investments in Affiliates (net) 2,074.8  2,119.1 
Fixed assets (net) 79.6  75.8 
Other investments 257.2  312.1 
Other assets 230.9  255.7 
Total assets $ 7,888.9  $ 8,021.7 
Liabilities and Equity  
Payables and accrued liabilities $ 712.4  $ 843.5 
Debt 2,312.1  2,299.3 
Deferred income tax liability (net) 423.4  497.1 
Other liabilities 452.2  468.2 
Total liabilities 3,900.1  4,108.1 
Commitments and contingencies (Note 9)
Redeemable non-controlling interests 671.5  755.7 
Equity:  
Common stock ($0.01 par value, 153.0 shares authorized; 58.5 shares outstanding in 2020 and 2021)
0.6  0.6 
Additional paid-in capital 728.9  539.3 
Accumulated other comprehensive loss (98.3) (64.8)
Retained earnings 4,005.5  4,263.4 
4,636.7  4,738.5 
Less: Treasury stock, at cost (14.5 shares in 2020 and 17.2 shares in 2021)
(1,857.0) (2,128.9)
Total stockholders' equity 2,779.7  2,609.6 
Non-controlling interests 537.6  548.3 
Total equity 3,317.3  3,157.9 
Total liabilities and equity $ 7,888.9  $ 8,021.7 

The accompanying notes are an integral part of the Consolidated Financial Statements.
4

AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
(unaudited)
Three Months Ended June 30, 2020 Total Stockholders’ Equity    
  Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Treasury
Stock at
Cost
Non-
controlling
Interests
Total
Equity
March 31, 2020 $ 0.6  $ 860.7  $ (146.5) $ 3,789.1  $ (1,523.9) $ 528.9  $ 3,508.9 
Net income —  —  —  30.7  —  32.8  63.5 
Other comprehensive loss, net of tax —  —  (23.9) —  —  (0.6) (24.5)
Share-based compensation —  22.5  —  —  —  —  22.5 
Common stock issued under share-based incentive plans —  (6.4) —  —  6.4  —  — 
Share repurchases —  (4.5) —  —  (45.5) —  (50.0)
Dividends ($0.01 per share)
—  —  —  (0.5) —  —  (0.5)
Affiliate equity activity:
Affiliate equity compensation —  5.1  —  —  —  5.1  10.2 
Issuances —  —  —  —  —  4.6  4.6 
Purchases —  1.7  —  —  —  (11.2) (9.5)
Changes in redemption value of Redeemable non-controlling interests —  (110.9) —  —  —  —  (110.9)
Transfers to Redeemable non-controlling interests —  —  —  —  —  (0.3) (0.3)
Distributions to non-controlling interests —  —  —  —  —  (72.1) (72.1)
June 30, 2020 $ 0.6  $ 768.2  $ (170.4) $ 3,819.3  $ (1,563.0) $ 487.2  $ 3,341.9 
Three Months Ended June 30, 2021 Total Stockholders’ Equity    
  Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Treasury
Stock at
Cost
Non-
controlling
Interests
Total
Equity
March 31, 2021 $ 0.6  $ 619.7  $ (73.8) $ 4,154.9  $ (2,050.2) $ 536.1  $ 3,187.3 
Net income —  —  —  109.0  —  75.2  184.2 
Other comprehensive income (loss), net of tax —  —  9.0  —  —  (1.1) 7.9 
Share-based compensation —  13.6  —  —  —  —  13.6 
Common stock issued under share-based incentive plans —  (2.0) —  —  1.3  —  (0.7)
Repurchases of junior convertible securities —  (1.9) —  —  —  —  (1.9)
Share repurchases —  —  —  —  (80.0) —  (80.0)
Dividends ($0.01 per share)
—  —  —  (0.5) —  —  (0.5)
Affiliate equity activity:
Affiliate equity compensation —  2.7  —  —  —  6.8  9.5 
Issuances —  (17.3) —  —  —  19.5  2.2 
Purchases —  (3.3) —  —  —  —  (3.3)
Changes in redemption value of Redeemable non-controlling interests —  (72.2) —  —  —  —  (72.2)
Transfers to Redeemable non-controlling interests —  —  —  —  —  (3.3) (3.3)
Capital contributions and other —  —  —  —  —  6.0  6.0 
Distributions to non-controlling interests —  —  —  —  —  (90.9) (90.9)
June 30, 2021 $ 0.6  $ 539.3  $ (64.8) $ 4,263.4  $ (2,128.9) $ 548.3  $ 3,157.9 
The accompanying notes are an integral part of the Consolidated Financial Statements.


5



AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
(unaudited)
Six Months Ended June 30, 2020 Total Stockholders' Equity    
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive Loss
Retained
Earnings
Treasury
Stock at
Cost
Non-
controlling
Interests
Total
Equity
December 31, 2019 $ 0.6  $ 707.2  $ (108.8) $ 3,819.8  $ (1,481.3) $ 561.6  $ 3,499.1 
Net income —  —  —  15.1  —  88.3  103.4 
Other comprehensive loss, net of tax —  —  (61.6) —  —  (16.8) (78.4)
Share-based compensation —  30.7  —  —  —  —  30.7 
Common stock issued under share-based incentive plans —  (39.8) —  —  33.4  —  (6.4)
Share repurchases —  (4.5) —  —  (115.1) —  (119.6)
Dividends ($0.33 per share)
—  —  —  (15.6) —  —  (15.6)
Affiliate equity activity:
Affiliate equity compensation —  7.9  —  —  —  18.9  26.8 
Issuances —  (1.8) —  —  —  18.6  16.8 
Purchases —  36.4  —  —  —  (11.2) 25.2 
Changes in redemption value of Redeemable non-controlling interests —  32.1  —  —  —  —  32.1 
Transfers to Redeemable non-controlling interests —  —  —  —  —  (5.4) (5.4)
Capital contributions and other —  —  —  —  —  4.9  4.9 
Distributions to non-controlling interests —  —  —  —  —  (171.7) (171.7)
June 30, 2020 $ 0.6  $ 768.2  $ (170.4) $ 3,819.3  $ (1,563.0) $ 487.2  $ 3,341.9 
Six Months Ended June 30, 2021 Total Stockholders' Equity    
Common
Stock
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Treasury
Stock at
Cost
Non-
controlling
Interests
Total
Equity
December 31, 2020 $ 0.6  $ 728.9  $ (98.3) $ 4,005.5  $ (1,857.0) $ 537.6  $ 3,317.3 
Net income —  —  —  258.9  —  139.3  398.2 
Other comprehensive income (loss), net of tax —  —  33.5  —  —  (1.3) 32.2 
Share-based compensation —  23.3  —  —  —  —  23.3 
Common stock issued under share-based incentive plans —  (46.3) —  —  35.4  —  (10.9)
Repurchases of junior convertible securities —  (4.8) —  —  —  —  (4.8)
Share repurchases —  17.3  —  —  (307.3) —  (290.0)
Dividends ($0.02 per share)
—  —  —  (1.0) —  —  (1.0)
Affiliate equity activity:
Affiliate equity compensation —  7.1  —  —  —  27.6  34.7 
Issuances —  (16.7) —  —  —  20.6  3.9 
Purchases —  8.3  —  —  —  15.8  24.1 
Changes in redemption value of Redeemable non-controlling interests —  (177.8) —  —  —  —  (177.8)
Transfers to Redeemable non-controlling interests —  —  —  —  —  (3.8) (3.8)
Capital contributions and other —  —  —  —  —  6.0  6.0 
Distributions to non-controlling interests —  —  —  —  —  (193.5) (193.5)
June 30, 2021 $ 0.6  $ 539.3  $ (64.8) $ 4,263.4  $ (2,128.9) $ 548.3  $ 3,157.9 
The accompanying notes are an integral part of the Consolidated Financial Statements.
6

AFFILIATED MANAGERS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
  For the Six Months Ended June 30,
  2020 2021
Cash flow from (used in) operating activities:
Net income $ 103.4  $ 398.2 
Adjustments to reconcile Net income to cash flow from (used in) operating activities:  
Intangible amortization and impairments 101.5  16.4 
Depreciation and other amortization 10.1  8.4 
Deferred income tax (benefit) expense (19.5) 68.2 
Equity method loss (income) (net) 95.8  (89.2)
Distributions of earnings received from equity method investments 160.2  226.6 
Share-based compensation and Affiliate equity expense 57.5  58.0 
Other non-cash items 24.3  (40.5)
Changes in assets and liabilities:  
Purchases of securities by consolidated Affiliate sponsored investment products (64.8) (60.1)
Sales of securities by consolidated Affiliate sponsored investment products 62.3  38.8 
Increase in receivables (92.5) (293.3)
Decrease (increase) in other assets 14.0  (15.0)
(Decrease) increase in payables, accrued liabilities, and other liabilities (76.9) 234.4 
Cash flow from operating activities 375.4  550.9 
Cash flow from (used in) investing activities:  
Investments in Affiliates (2.4) (144.8)
Purchase of fixed assets (4.5) (2.1)
Purchase of investment securities (23.5) (39.9)
Sale of investment securities 33.5  16.1 
Cash flow from (used in) investing activities 3.1  (170.7)
Cash flow from (used in) financing activities:  
Borrowings of senior bank debt, senior notes, and junior subordinated notes 599.8  — 
Repayments of senior bank debt and junior convertible securities (350.0) (22.8)
Repurchases of common stock (net) (113.3) (394.9)
Dividends paid on common stock (15.8) (0.9)
Distributions to non-controlling interests (171.7) (193.5)
Affiliate equity (purchases) / issuances (net) (143.5) (44.8)
Other financing items (31.8) 14.9 
Cash flow used in financing activities (226.3) (642.0)
Effect of foreign currency exchange rate changes on cash and cash equivalents (10.2) 3.9 
Net increase (decrease) in cash and cash equivalents 142.0  (257.9)
Cash and cash equivalents at beginning of period 539.6  1,039.7 
Effect of deconsolidation of Affiliate sponsored investment products —  (3.9)
Cash and cash equivalents at end of period $ 681.6  $ 777.9 

The accompanying notes are an integral part of the Consolidated Financial Statements.
7

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


1.Basis of Presentation and Use of Estimates
The Consolidated Financial Statements of Affiliated Managers Group, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for full year financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair statement of the Company’s interim financial position and results of operations have been included and all intercompany balances and transactions have been eliminated. Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation. Operating results for interim periods are not necessarily indicative of the results that may be expected for any other period or for the full year. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 includes additional information about its operations, financial position, and accounting policies, and should be read in conjunction with this Quarterly Report on Form 10-Q.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
All amounts in these notes, except per share data in the text and tables herein, are stated in millions unless otherwise indicated.
2.Accounting Standards and Policies
Recently Adopted Accounting Standards
Effective January 1, 2021, the Company adopted Accounting Standard Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes. The adoption of this standard did not have a significant impact on the Company’s Consolidated Financial Statements.
Recent Accounting Developments
In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments and will also modify how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share calculation. The standard is effective for interim and annual periods beginning after December 15, 2021 for the Company and its consolidated Affiliates, and is effective for interim and annual periods beginning after December 15, 2023 for the Company’s Affiliates accounted for under the equity method. The Company’s adoption of ASU 2020-06 will result in the Company accounting for its convertible debt instrument as a single liability measured at amortized cost and will modify how certain equity instruments that may be settled in cash or shares, at the Company’s option, impact the calculation of Earnings per share (diluted). The Company continues to evaluate the impact of this standard on its Consolidated Financial Statements.
3.Investments in Marketable Securities
The following table summarizes the cost, gross unrealized gains, gross unrealized losses, and fair value of Investments in marketable securities:
  December 31,
2020
June 30,
2021
Cost $ 69.4  $ 54.0 
Unrealized gains 5.5  9.3 
Unrealized losses (0.0  ) (0.5)
Fair value $ 74.9  $ 62.8 
As of December 31, 2020 and June 30, 2021, Investments in marketable securities include consolidated Affiliate sponsored investment products with fair values of $52.3 million and $19.7 million, respectively.
4.Other Investments
8

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Other investments consist of investments in funds advised by the Company’s Affiliates that are carried at net asset value (“NAV”) as a practical expedient and investments without readily determinable fair values. The income or loss related to these investments is recorded in Investment and other income (expense) on the Consolidated Statements of Income.
Investments Measured at NAV as a Practical Expedient
The Company’s Affiliates sponsor investment products in which the Company and its consolidated Affiliates may make general partner and seed capital investments. The Company uses the NAV of these investments as a practical expedient for their fair values. The following table summarizes the fair value of these investments and any related unfunded commitments:    
  December 31, 2020 June 30, 2021
Category of Investment Fair Value Unfunded
Commitments
Fair Value Unfunded
Commitments
Private equity funds(1)
$ 235.4  $ 122.2  $ 281.2  $ 128.5 
Investments in other strategies(2)
8.0  —  17.1  — 
Total(3)
$ 243.4  $ 122.2  $ 298.3  $ 128.5 
___________________________
(1)The Company accounts for the majority of its interests in private equity funds under the equity method of accounting and uses NAV as a practical expedient, one quarter in arrears (adjusted for current period calls and distributions), to determine the fair value. These funds primarily invest in a broad range of third-party funds and direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally up to 15 years.
(2)These are multi-disciplinary funds that invest across various asset classes and strategies, including equity, credit, and real estate. Investments are generally redeemable on a daily, monthly, or quarterly basis.
(3)Fair value attributable to the controlling interest was $164.4 million and $202.3 million as of December 31, 2020 and June 30, 2021, respectively.
As of December 31, 2020 and June 30, 2021, the Company held investments without readily determinable fair values of $13.8 million, including an upward adjustment of $5.3 million based on an observable price change recognized during the fourth quarter of 2020.
5.Fair Value Measurements
The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
    Fair Value Measurements
  December 31,
2020
  Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Financial Assets        
Investments in marketable securities $ 74.9  $ 25.7  $ 49.2  $ — 
Derivative financial instruments(1)
3.5  —  3.5  — 
Financial Liabilities(2)
       
Affiliate equity purchase obligations $ 22.0  $ —  $ —  $ 22.0 
Derivative financial instruments 4.2  —  4.2  — 
9

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

    Fair Value Measurements
  June 30,
2021
  Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)
Financial Assets        
Investments in marketable securities $ 62.8  $ 48.2  $ 14.6  $ — 
Derivative financial instruments(1)
1.6  —  1.6  — 
Financial Liabilities(2)
       
Affiliate equity purchase obligations $ 47.9  $ —  $ —  $ 47.9 
Derivative financial instruments 1.2  —  1.2  — 
__________________________
(1)Amounts are presented within Other assets on the Consolidated Balance Sheets.
(2)Amounts are presented within Other liabilities on the Consolidated Balance Sheets.
Level 3 Financial Liabilities
The following table presents the changes in level 3 liabilities for Affiliate equity purchase obligations:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2021 2020 2021
Balance, beginning of period $ 115.1  $ 66.1  $ 19.8  $ 22.0 
Net realized and unrealized (gains) losses(1)
(2.4) 1.3  (3.9) 2.2 
Purchases and issuances(2)
13.0  12.3  207.0  83.0 
Settlements and reductions (52.4) (31.8) (149.6) (59.3)
Balance, end of period $ 73.3  $ 47.9  $ 73.3  $ 47.9 
Net change in unrealized (gains) losses relating to instruments still held at the reporting date $ —  $ —  $ —  $ — 
___________________________
(1)Accretion expense for these arrangements and obligations is recorded in Interest expense in the Consolidated Statements of Income.
(2)Includes transfers from Redeemable non-controlling interests.
The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s level 3 fair value measurements:
  Quantitative Information About Level 3 Fair Value Measurements
December 31, 2020 June 30, 2021
  Valuation
Techniques
Unobservable
Input
Fair Value Range
Weighted Average(1)
Fair Value Range
Weighted Average(1)
Affiliate equity purchase obligations Discounted cash flow
Growth rates(2)
$ 22.0 
(5)% - 8%
% $ 47.9 
1% - 6%
%
  Discount rates  
14% - 16%
15  %  
15% - 16%
15  %
___________________________
(1)Calculated by comparing the relative fair value of an obligation to its respective total.
(2)Represents growth rates of asset- and performance-based fees.
10

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Affiliate equity purchase obligations include agreements to purchase Affiliate equity. As of June 30, 2021, there were no changes to growth or discount rates that had a significant impact to Affiliate equity purchase obligations recorded in prior periods.
Other Financial Assets and Liabilities Not Carried at Fair Value
The Company has other financial assets and liabilities, which are not required to be carried at fair value, but the Company is required to disclose their fair values. The carrying amount of Cash and cash equivalents, Receivables, and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable, which is reported in Other assets, approximates fair value because interest rates and other terms are at market rates. The carrying value of the credit facilities approximates fair value because the credit facilities have variable interest based on selected short-term rates.
The following table summarizes the Company’s other financial liabilities not carried at fair value:
  December 31, 2020 June 30, 2021
Carrying Value Fair Value Carrying Value Fair Value Fair Value Hierarchy
Senior notes $ 1,097.3  $ 1,206.6  $ 1,097.6  $ 1,186.4  Level 2
Junior subordinated notes 565.7  623.1  565.8  593.0  Level 2
Junior convertible securities 318.4  427.6  304.5  468.2  Level 2
6.Investments in Affiliates and Affiliate Sponsored Investment Products
In evaluating whether an investment must be consolidated, the Company evaluates the risk, rewards, and significant terms of each of its Affiliates and other investments to determine if an investment is considered a voting rights entity (“VRE”) or a variable interest entity (“VIE”). An entity is a VRE when the total equity investment at risk is sufficient to enable the entity to finance its activities independently, and when the equity holders have the obligation to absorb losses, the right to receive residual returns, and the right to direct the activities of the entity that most significantly impact its economic performance. An entity is a VIE when it lacks one or more of the characteristics of a VRE, which, for the Company, are Affiliate investments structured as partnerships (or similar entities) where the Company is a limited partner and lacks substantive kick-out or substantive participation rights over the general partner. Assessing whether an entity is a VRE or VIE involves judgment. Upon the occurrence of certain events, management reviews and reconsiders its previous conclusion regarding the status of an entity as a VRE or a VIE.
The Company consolidates VREs when it has control over significant operating, financial, and investing decisions of the entity. When the Company lacks such control, but is deemed to have significant influence, the Company accounts for the VRE under the equity method. Other investments in which the Company does not have rights to exercise significant influence are recorded at fair value on the Consolidated Balance Sheets, with changes in fair value included in Investment and other income (expense).
The Company consolidates VIEs when it is the primary beneficiary of the entity, which is defined as having the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Substantially all of the Company’s consolidated Affiliates considered VIEs are controlled because the Company holds a majority of the voting interests or it is the managing member or general partner. Furthermore, an Affiliate’s assets can be used for purposes other than the settlement of the respective Affiliate’s obligations. The Company applies the equity method of accounting to VIEs where the Company is not the primary beneficiary, but has the ability to exercise significant influence over operating and financial matters of the VIE.
Investments in Affiliates
Substantially all of the Company’s Affiliates are considered VIEs and are either consolidated or accounted for under the equity method. A limited number of the Company’s Affiliates are considered VREs and most of these are accounted for under the equity method.
When an Affiliate is consolidated, the portion of the earnings attributable to Affiliate management’s equity ownership is included in Net income (non-controlling interests) in the Consolidated Statements of Income. Undistributed earnings attributable to Affiliate managements’ equity ownership, along with their share of any tangible or intangible net assets, are
11

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

presented within Non-controlling interests on the Consolidated Balance Sheets. Affiliate equity interests where the holder has certain rights to demand settlement are presented, at their current redemption values, as Redeemable non-controlling interests on the Consolidated Balance Sheets. The Company periodically issues, sells, and purchases the equity of its consolidated Affiliates. Because these transactions take place between entities that are under common control, any gains or losses attributable to these transactions are required to be included in Additional paid-in capital in the Consolidated Balance Sheets, net of any related income tax effects in the period the transaction occurs.
When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method income (loss) (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is reported in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets. Deferred taxes recorded on intangible assets upon acquisition of an Affiliate accounted for under the equity method are presented on a gross basis within Equity method investments in Affiliates (net) and Deferred income tax liability (net) in the Consolidated Balance Sheets. The Company’s share of income taxes incurred directly by Affiliates accounted for under the equity method is recorded in Income tax expense in the Consolidated Statements of Income.
The Company periodically performs assessments to determine if the fair value of an investment may have declined below its related carrying value for its Affiliates accounted for under the equity method for a period that the Company considers to be other-than temporary. Where the Company believes that such declines may have occurred, the Company determines the amount of impairment using valuation methods, such as discounted cash flow analyses. Impairments are recorded as an expense in Equity method income (loss) (net) to reduce the carrying value of the Affiliate to its fair value.
The unconsolidated assets, net of liabilities and non-controlling interests of Affiliates accounted for under the equity method considered VIEs, and the Company’s carrying value and maximum exposure to loss, were as follows:
  December 31, 2020 June 30, 2021
Unconsolidated
VIE Net Assets
Carrying Value and
Maximum Exposure
to Loss
Unconsolidated
VIE Net Assets
Carrying Value and
Maximum Exposure
to Loss
Affiliates accounted for under the equity method $ 1,384.2  $ 1,962.1  $ 1,113.5  $ 2,009.6 
As of December 31, 2020 and June 30, 2021, the carrying value and maximum exposure to loss for all of the Company’s Affiliates accounted for under the equity method was $2,074.8 million and $2,119.1 million, respectively, including Affiliates accounted for under the equity method considered VREs of $112.7 million and $109.5 million, respectively.
Affiliate Sponsored Investment Products
The Company’s Affiliates sponsor various investment products where they also act as the investment adviser. These investment products are typically owned primarily by third-party investors; however, certain products are funded with general partner and seed capital investments from the Company and its Affiliates.
Third-party investors in Affiliate sponsored investment products are generally entitled to substantially all of the economics of these products, except for the asset- and performance-based fees earned by the Company’s Affiliates or any gains or losses attributable to the Company’s or its Affiliates’ investments in these products. As a result, the Company does not generally consolidate these products unless the Company’s or its consolidated Affiliate’s interest in the product is considered substantial. When the Company’s or its consolidated Affiliates’ interests are considered substantial and the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income (expense). Purchases and sales of securities are presented within purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows and the third-party investors’ interests are recorded in Redeemable non-controlling interests. When the Company or its consolidated Affiliates no longer control these products, due to a reduction in ownership or other reasons, the products are deconsolidated with only the Company’s or its consolidated Affiliate’s investment in the product reported from the date of deconsolidation.
The Company’s carrying value, and maximum exposure to loss from unconsolidated Affiliate sponsored investment products is its, or its consolidated Affiliates’ interest in the unconsolidated net assets of the respective products. The net assets of unconsolidated VIEs attributable to Affiliate sponsored investment products, and the Company’s carrying value and maximum exposure to loss, were as follows:
12

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

  December 31, 2020 June 30, 2021
Unconsolidated
VIE Net Assets
Carrying Value and
Maximum Exposure
to Loss
Unconsolidated
VIE Net Assets
Carrying Value and
Maximum Exposure
to Loss
Affiliate sponsored investment products $ 2,378.2  $ 0.9  $ 2,960.8  $ 13.1 

7.Debt
The following table summarizes the Company’s Debt:
December 31,
2020
June 30,
2021
Senior bank debt $ 349.8  $ 349.8 
Senior notes 1,091.9  1,092.7 
Junior subordinated notes 556.4  556.4 
Junior convertible securities 314.0  300.4 
Debt $ 2,312.1  $ 2,299.3 
The Company’s senior notes, junior subordinated notes, and junior convertible securities are carried at amortized cost. Unamortized discounts and debt issuance costs are presented within the Consolidated Balance Sheets as an adjustment to the carrying value of the associated debt. The table above does not include $200.0 million of junior subordinated notes issued by the Company on July 13, 2021, as more fully described below.
Senior Bank Debt
The Company has a $1.25 billion senior unsecured multicurrency revolving credit facility (the “revolver”) and a $350.0 million senior unsecured term loan facility (the “term loan” and, together with the revolver, the “credit facilities”). In January 2021, the Company amended the term loan to adjust the marginal rate by 0.075% to 0.95% and to extend the maturity by three years. In June 2021, the Company further amended the term loan to reduce the marginal rate by 0.10% to 0.85%. The commercial terms of the term loan otherwise remain the same. The revolver matures on January 18, 2024, and the term loan, as amended, matures on January 18, 2026. Subject to certain conditions, the Company may increase the commitments under the revolver by up to an additional $500.0 million and may borrow up to an additional $75.0 million under the term loan. The Company pays interest on any outstanding obligations under the credit facilities at specified rates, based either on an applicable LIBOR or prime rate, plus a marginal rate determined based on its credit rating. For the three months ended June 30, 2021, the interest rate for the Company’s borrowings under the term loan was LIBOR plus 0.85%. As of December 31, 2020 and June 30, 2021, the Company had no outstanding borrowings under the revolver.
Senior Notes and Junior Subordinated Notes
As of June 30, 2021, the Company had senior notes and junior subordinated notes outstanding. The carrying value of the senior notes and junior subordinated notes is accreted to the principal amount at maturity over the remaining life of the underlying instrument.









13

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The principal terms of the senior notes and junior subordinated notes outstanding as of June 30, 2021 were as follows:
2024
Senior Notes
2025
Senior Notes
2030
Senior Notes
2059
Junior Subordinated Notes
2060
Junior Subordinated Notes
Issue date February 2014 February 2015 June 2020 March 2019 September 2020
Maturity date February 2024 August 2025 June 2030 March 2059 September 2060
Par value (in millions) $ 400.0  $ 350.0  $ 350.0  $ 300.0  $ 275.0 
Stated coupon 4.25  % 3.50  % 3.30  % 5.875  % 4.75  %
Coupon frequency Semi-annually Semi-annually Semi-annually
Quarterly(3)
Quarterly(3)
Potential call date
Any time(1)
Any time(1)
Any time(1)
March 2024(2)
September 2025(2)
Call price
As defined(1)
As defined(1)
As defined(1)
As defined(2)
As defined(2)
Listing N.A. N.A. N.A. NYSE NYSE
__________________________
(1)The 2024, 2025, and 2030 senior notes may be redeemed, in whole or in part, at any time, in the case of the 2024 and 2025 senior notes, and at any time prior to March 15, 2030, in the case of the 2030 senior notes. In each case, the senior notes may be redeemed at a make-whole redemption price plus accrued and unpaid interest. The make-whole redemption price, in each case, is equal to the greater of 100% of the principal amount of the notes to be redeemed and the remaining principal and interest payments on the notes being redeemed (excluding accrued but unpaid interest to, but not including, the redemption date) discounted to their present value as of the redemption date at the applicable treasury rate plus 0.25%, in the case of the 2024 and the 2025 senior notes, and to their present value as of the redemption date on a semi-annual basis at the applicable treasury rate plus 0.40%, in the case of the 2030 senior notes.
(2)The 2059 and 2060 junior subordinated notes may be redeemed at any time, in whole or in part, on or after March 30, 2024, in the case of the 2059 junior subordinated notes, and on or after September 30, 2025, in the case of the 2060 junior subordinated notes. In each case, the junior subordinated notes may be redeemed at 100% of the principal amount of the notes being redeemed plus any accrued and unpaid interest thereon.  Prior to the applicable redemption date, at the Company’s option, the applicable junior subordinated notes may also be redeemed, in whole but not in part, at 100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations, or interpretations occur; or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with features similar to the applicable notes.
(3)The Company may, at its option, and subject to certain conditions and restrictions, defer interest payments subject to the terms of the junior subordinated notes.
On July 13, 2021, the Company issued $200.0 million of additional junior subordinated notes with a maturity date of September 30, 2061, (the “2061 junior subordinated notes”). The 2061 junior subordinated notes bear interest at a fixed-rate of 4.20% per annum. The junior subordinated notes are listed on the New York Stock Exchange. Interest is payable quarterly, commencing on September 30, 2021, and the Company has the right to defer interest payments in accordance with the terms of the notes. The 2061 junior subordinated notes were issued at 100% of the principal amount and rank junior and subordinate in right of payment and upon liquidation to all of the Company’s current and future senior indebtedness. On or after September 30, 2026, at the Company’s option, the 2061 junior subordinated notes may be redeemed in whole or in part, at 100% of the principal amount, plus any accrued and unpaid interest. Prior to September 30, 2026, at the Company’s option, the 2061 junior subordinated notes may be redeemed in whole but not in part, at 100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations, or interpretations occur; or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with features similar to the 2061 junior subordinated notes.
Junior Convertible Securities
As of June 30, 2021, the Company had 5.15% junior convertible trust preferred securities outstanding (the “junior convertible securities”) with a carrying value of $304.5 million. The carrying value is accreted to the principal amount at maturity ($409.8 million) over a remaining life of approximately 16 years. Holders of the junior convertible securities have no rights to put these securities to the Company. Upon conversion, holders will receive cash or shares of the Company’s common stock, or a combination thereof, at the Company’s election. The Company may redeem the junior convertible securities, subject to its stock trading at or above certain specified levels over specified times periods, and may also repurchase junior convertible
14

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

securities in the open market or in privately negotiated transactions from time to time at management’s discretion. During the six months ended June 30, 2021, the Company paid $22.8 million to repurchase a portion of its junior convertible securities, resulting in reductions of $15.4 million and $4.8 million to Debt and Additional paid-in capital, respectively. As a result of these repurchases, the Company also reduced its Deferred income tax liability (net) by $4.9 million.
8.Derivative Financial Instruments
The Company and its Affiliates may use derivative financial instruments to offset exposure to changes in interest rates, foreign currency exchange rates, and markets.
In the first quarter of 2020, the Company terminated its pound sterling-denominated forward foreign currency contracts and its corresponding collar contracts, which were designated as net investment hedges, and upon settlement, the Company received net proceeds of $24.9 million. The net proceeds from the termination of the contracts are presented within sale of investment securities in the Consolidated Statements of Cash Flows.
The Company has an interest rate swap contract (the “interest rate swap”) with a large financial institution (the “swap counterparty”), which will expire in March 2023. The interest rate swap, which is designated as a cash flow hedge, is used to exchange a portion of the Company’s LIBOR-based interest payments for fixed-rate interest payments. Under the contract, the Company receives payments based on one month LIBOR and makes payments based on an annual fixed-rate of 0.5135% on a notional amount of $250.0 million. The terms of the contract also require the Company and the swap counterparty to post cash collateral in certain circumstances throughout the duration of the contract. As of June 30, 2021, the Company held no cash collateral from the swap counterparty, and the swap counterparty held $1.6 million of cash collateral from the Company.
Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign exchange rate movements, which are designated as cash flow hedges.
The Company assesses hedge effectiveness on a quarterly basis. For derivative financial instruments designated as cash flow hedges, the Company uses a qualitative method of assessing hedge effectiveness by comparing the notional amounts, timing of payments, currencies (for the forward foreign currency contracts), and interest rates (for the interest rate swap). Upon termination of these instruments or the repayment of the Company’s outstanding LIBOR-based borrowings, any gain or loss recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets will be reclassified into earnings. Changes in the fair values of cash flow hedges are reported in Change in net realized and unrealized gain (loss) on derivative financial instruments in the Consolidated Statements of Comprehensive Income. Changes in the fair values of the effective net investment hedges are reported in Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income. Upon the sale or liquidation of the underlying investment, any gain or loss remaining in Accumulated other comprehensive loss will be reclassified to earnings.
The following table summarizes the Company’s and its Affiliates’ derivative financial instruments measured at fair value on a recurring basis:
December 31, 2020 June 30, 2021
Assets Liabilities Assets Liabilities
Forward foreign currency contracts $ 3.5  $ (2.3) $ 1.6  $ — 
Interest rate swap —  (1.9) —  (1.2)
Total $ 3.5  $ (4.2) $ 1.6  $ (1.2)

The Company and certain of its consolidated Affiliates have entered into contracts that do not include set-off rights and are therefore presented on a gross basis in Other assets and Other liabilities; they were $3.5 million and $4.2 million, respectively, as of December 31, 2020, and $1.6 million and $1.2 million, respectively, as of June 30, 2021.
The following table summarizes the effects of derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income:
15

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

For the Three Months Ended June 30,
2020 2021
Loss Recognized in Other Comprehensive Income (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings
Gain (Loss) Recognized in Earnings from Excluded Components(1)
Gain Recognized in Other Comprehensive Income Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings
Gain (Loss) Recognized in Earnings from Excluded Components(1)
Forward foreign currency contracts $ (0.5) $ 0.2  $ —  $ 0.3  $ 0.5  $ — 
Interest rate swap (1.2) —  —  0.1  —  — 
Total $ (1.7) $ 0.2  $ —  $ 0.4  $ 0.5  $ — 

For the Six Months Ended June 30,
2020 2021
Gain (Loss) Recognized in Other Comprehensive Income (Loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings
Gain Recognized in Earnings from Excluded Components(1)
Gain Recognized in Other Comprehensive Income Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings
Gain (Loss) Recognized in Earnings from Excluded Components(1)
Forward foreign currency contracts $ 64.5  $ 0.3  $ 2.8  $ 0.4  $ 1.0  $ — 
Put options (47.7) —  —  —  —  — 
Call options (1.3) —  —  —  —  — 
Interest rate swap (2.0) —  —  0.6  —  — 
Total $ 13.5  $ 0.3  $ 2.8  $ 1.0  $ 1.0  $ — 
___________________________
(1)The excluded components of the forward foreign currency contracts were recognized in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.
9.Commitments and Contingencies
From time to time, the Company and its Affiliates may be subject to claims, legal proceedings, and other contingencies in the ordinary course of their business activities. Any such matters are subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals, as necessary, for matters for which the outcome is probable and the amount of the liability can be reasonably estimated.
The Company has committed to co-invest in certain Affiliate sponsored investment products. As of June 30, 2021, these unfunded commitments were $128.5 million and may be called in future periods.
As of June 30, 2021, the Company was contingently liable to make payments of $188.0 million related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, of which $40.5 million may become payable in 2022 and $147.5 million may become payable from 2023 through 2029. As of June 30, 2021, the Company expected to make payments of approximately $13 million. In the event certain financial targets are not met at one of the Company’s Affiliates, the Company may receive payments of up to $12.5 million and also has the option to reduce its ownership interest and receive an incremental payment of $25.0 million.
Affiliate equity interests provide holders at consolidated Affiliates with a conditional right to put their interests to the Company over time. See Note 15. In connection with one of the Company’s investments in an Affiliate accounted for under the equity method, a minority owner has the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually. If the minority owner sells its interest to the Company, the Company will continue to account for the Affiliate under the equity method. In the fourth quarter of 2020, the Company was notified by the minority owner that it may elect to sell a 5% interest in the Affiliate to the Company. In the first quarter of 2021, with the consent of the Company, the
16

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

minority owner rescinded this notice. As of June 30, 2021, the minority owner maintained a 14% ownership interest in the Affiliate.
The Company and certain of its consolidated Affiliates operate under regulatory authorities that require the maintenance of minimum financial or capital requirements. The Company’s management is not aware of any significant violations of such requirements.
In July 2021, the Company entered into a definitive agreement to acquire a majority equity interest in Parnassus Investments (“Parnassus”), an ESG-dedicated fund manager. Following the close of the transaction, Parnassus partners will continue to hold a substantial portion of the equity of the business and direct its day-to-day operations. The transaction, which is expected to close during the second half of 2021, is subject to customary closing conditions and regulatory approvals.
10.Goodwill and Acquired Client Relationships
The following tables present the changes in the Company’s consolidated Affiliates’ Goodwill and components of Acquired client relationships (net):
Goodwill
Balance, as of December 31, 2020 $ 2,661.4 
Foreign currency translation 8.3 
Balance, as of June 30, 2021 $ 2,669.7 
  Acquired Client Relationships (Net)
  Definite-lived Indefinite-lived Total
  Gross Book
Value
Accumulated
Amortization
Net Book
Value
Net Book
Value
Net Book
Value
Balance, as of December 31, 2020 $ 1,166.6  $ (1,026.8) $ 139.8  $ 909.0  $ 1,048.8 
Intangible amortization and impairments —  (16.4) (16.4) —  (16.4)
Foreign currency translation 3.9  (3.5) 0.4  4.0  4.4 
Balance, as of June 30, 2021 $ 1,170.5  $ (1,046.7) $ 123.8  $ 913.0  $ 1,036.8 
Definite-lived acquired client relationships at the Company’s consolidated Affiliates are amortized over their expected period of economic benefit. The Company recorded amortization expense within Intangible amortization and impairments in the Consolidated Statements of Income for these relationships of $20.6 million and $41.2 million for the three and six months ended June 30, 2020, respectively, and $8.9 million and $16.4 million for the three and six months ended June 30, 2021, respectively. Based on relationships existing as of June 30, 2021, the Company estimates that its consolidated amortization expense will be approximately $15 million for the remainder of 2021, approximately $30 million in each of 2022 and 2023, approximately $15 million in 2024, and approximately $10 million in each of 2025 and 2026.
In the second quarter of 2020, the Company agreed with a consolidated Affiliate to strategically reposition their business and to sell its equity interest in the Affiliate. The Company recorded an expense in Intangible amortization and impairments of $32.8 million attributable to the controlling interest ($60.3 million in aggregate) to reduce the carrying value of the Affiliate’s acquired client relationships to zero as of June 30, 2020. In the third quarter of 2020, the Company sold its interest in the Affiliate.
As of June 30, 2021, no impairments of indefinite-lived acquired client relationships were indicated. If financial markets become depressed for a prolonged period as a result of the novel coronavirus global pandemic (“COVID-19”) or other factors, the fair values of these assets could drop below their carrying values resulting in future impairments.
11.Equity Method Investments in Affiliates
In the first and second quarters of 2021, the Company completed minority investments in Boston Common Asset Management LLC (“Boston Common”) and OCP Asia Limited (“OCP Asia”), respectively. The majority of the consideration paid for both Boston Common and OCP Asia is deductible for U.S. tax purposes over a 15 year life. The Company’s purchase price allocation for each investment was measured using financial models that included assumptions of expected market performance, net client cash flows, and discount rates.
17

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The financial results of certain Affiliates accounted for under the equity method are recognized in the Consolidated Financial Statements one quarter in arrears.
The following table presents the change in Equity method investments in Affiliates (net):
Equity Method Investments in Affiliates (Net)
Balance, as of December 31, 2020 $ 2,074.8 
Investments in Affiliates 144.2 
Earnings 153.7 
Intangible amortization and impairments (64.5)
Distributions of earnings (226.6)
Foreign currency translation 28.4 
Other 9.1 
Balance, as of June 30, 2021 $ 2,119.1 
Definite-lived acquired client relationships at the Company’s Affiliates accounted for under the equity method are amortized over their expected period of economic benefit. The Company recognized amortization expense for these relationships of $36.9 million and $76.2 million for the three and six months ended June 30, 2020, respectively, and $29.3 million and $64.5 million for the three and six months ended June 30, 2021, respectively. Based on relationships existing as of June 30, 2021, the Company estimates the amortization expense attributable to its Affiliates will be approximately $60 million for the remainder of 2021, approximately $80 million in each of 2022 and 2023, and approximately $50 million in each of 2024, 2025, and 2026.
In the first quarter of 2020, the Company recorded a $140.0 million expense to reduce the carrying value of an Affiliate to fair value. The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment. The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement, that included projected compounded growth in assets under management over the first five years of (2)%, discount rates of 11% and 20% for asset- and performance-based fees, respectively, and a market participant tax rate of 25%. Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.
As of June 30, 2021, the estimated fair values of the Company’s Affiliates accounted for under the equity method exceeded their carrying values. If financial markets become depressed for a prolonged period as a result of COVID-19 or other factors, or the financial performance of an Affiliate worsens as a result of net client cash outflows or performance, regardless of the performance of financial markets, the fair values of these assets could drop below their carrying values for periods considered other-than-temporary, resulting in future impairments.
As of June 30, 2021, the Company was obligated to make payments of $104.4 million related to certain of its Affiliates accounted for under the equity method, of which, $26.9 million is payable in 2021 and $77.5 million is payable in 2022.
12.Related Party Transactions
A prior owner of one of the Company’s consolidated Affiliates retains interests in certain of the Affiliate’s private equity partnerships and, as a result, is a related party of the Company. The prior owner’s interests are presented within Other liabilities and were $35.4 million and $32.8 million as of December 31, 2020 and June 30, 2021, respectively.
The Company may invest from time to time in funds or products advised by its Affiliates. The Company’s executive officers and directors may invest from time to time in funds advised or products offered by its Affiliates on substantially the same terms as other investors. In addition, the Company and its Affiliates earn asset- and performance-based fees and incur distribution and other expenses for services provided to Affiliate sponsored investment products. Affiliate management owners and the Company’s officers may serve as trustees or directors of certain investment vehicles from which the Company or an Affiliate earns fees.
18

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company has related party transactions in association with its contingent payment arrangements and Affiliate equity transactions, as more fully described in Notes 9, 11, 14, and 15.
13.Share-Based Compensation
The following table presents share-based compensation expense:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2021 2020 2021
Share-based compensation $ 22.5  $ 13.6  $ 30.7  $ 23.3 
Tax benefit 4.1  2.2  5.6  4.4 
As of December 31, 2020, the Company had unrecognized share-based compensation expense of $86.2 million. As of June 30, 2021, the Company had unrecognized share-based compensation expense of $85.4 million, which will be recognized over a weighted average period of approximately three years (assuming no forfeitures).
Restricted Stock
The following table summarizes transactions in the Company’s restricted stock units:
Restricted Stock Units Weighted Average Grant Date Value
Unvested units - December 31, 2020 1.2  $ 99.46 
Units granted 0.2  139.23 
Units vested (0.2) 154.47 
Units forfeited (0.1) 105.45 
Performance condition changes 0.0  110.02 
Unvested units - June 30, 2021 1.1  93.52 
For the six months ended June 30, 2020 and 2021, the Company granted restricted stock units with fair values of $30.5 million and $26.9 million, respectively. These restricted stock units were valued based on the closing price of the Company’s common stock on the grant date and the number of shares expected to vest. Restricted stock units containing vesting conditions generally require service over a period of three years to four years and may also require the satisfaction of certain performance conditions. For awards with performance conditions, the number of restricted stock units expected to vest may change over time depending upon the performance level achieved.
Stock Options
The following table summarizes transactions in the Company’s stock options:
Stock Options Weighted Average
Exercise Price
Weighted Average
Remaining
Contractual Life
(Years)
Unexercised options outstanding - December 31, 2020 2.9  $ 82.14   
Options granted 0.0  150.07 
Options exercised (0.2) 119.64 
Options forfeited (0.0  ) 91.86   
Performance condition changes —  — 
Unexercised options outstanding - June 30, 2021 2.7  79.66  5.0
Exercisable at June 30, 2021 0.2  136.09  1.6
For the six months ended June 30, 2020 and 2021, the Company granted stock options with fair values of $3.9 million and $1.8 million, respectively. Stock options generally vest over a period of three years to five years and expire seven years after
19

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

the grant date. All stock options have been granted with exercise prices equal to the closing price of the Company’s common stock on the grant date. Substantially all of the Company’s outstanding stock options contain both service and performance conditions. For awards with performance conditions, the number of stock options expected to vest may change over time depending upon the performance level achieved.
The weighted average fair value of options granted was $17.49 and $54.25, per option, for the six months ended June 30, 2020 and 2021, respectively. The Company uses the Black-Scholes option pricing model to determine the fair value of options. The weighted average grant date assumptions used to estimate the fair value of stock options granted were as follows:
For the Six Months Ended June 30,
2020 2021
Dividend yield 1.7  % 0.0  %
Expected volatility 29.4  % 37.3  %
Risk-free interest rate 0.9  % 1.0  %
Expected life of options (in years) 5.7 5.7
Forfeiture rate —  % —  %
14.Redeemable Non-Controlling Interests
Affiliate equity interests provide holders with an equity interest in one of the Company’s Affiliates, consistent with the structured partnership interests in place at the respective Affiliate. Affiliate equity holders generally have a conditional right to put their interests to the Company at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure). Prior to becoming redeemable, the Company’s Affiliate equity is presented within Non-controlling interests. Upon becoming redeemable, these interests are reclassified to Redeemable non-controlling interests at their current redemption values. Changes in the current redemption value are recorded to Additional paid-in capital. When the Company receives a put notice, and, therefore, has an unconditional obligation to purchase Affiliate equity interests, the interests are reclassified from Redeemable non-controlling interests to Other liabilities.
The following table presents the changes in Redeemable non-controlling interests:
Redeemable Non-controlling Interests
Balance, as of December 31, 2020(1)
$ 671.5 
Decrease attributable to consolidated Affiliate sponsored investment products (14.4)
Transfers to Other liabilities (83.0)
Transfers from Non-controlling interests 3.8 
Changes in redemption value 177.8 
Balance, as of June 30, 2021(1)
$ 755.7 
___________________________
(1)As of December 31, 2020 and June 30, 2021, Redeemable non-controlling interests include consolidated Affiliate sponsored investment products primarily attributable to third-party investors of $35.4 million and $21.0 million, respectively.
15.Affiliate Equity
Affiliate equity interests are allocated income in a manner that is consistent with the structured partnership interests in place at the respective Affiliate. The Company’s Affiliates generally pay quarterly distributions to Affiliate equity holders. Distributions paid to non-controlling interest Affiliate equity holders were $171.7 million and $193.5 million, for the six months ended June 30, 2020 and 2021, respectively.
The Company periodically purchases Affiliate equity from and issues Affiliate equity to the Company’s consolidated Affiliate partners and its officers under agreements that provide the Company a conditional right to call and Affiliate equity holders the conditional right to put their Affiliate equity interests to the Company at certain intervals. For Affiliates accounted
20

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

for under the equity method, the Company does not typically have such put and call arrangements. For the six months ended June 30, 2020 and 2021, the amount of cash paid for purchases was $160.6 million and $62.4 million, respectively. For the six months ended June 30, 2020 and 2021, the total amount of cash received for issuances was $17.1 million and $17.6 million, respectively.
Sales and purchases of Affiliate equity generally occur at fair value; however, the Company also grants Affiliate equity to its consolidated Affiliate partners and its officers as a form of compensation. If the equity is issued for consideration below the fair value of the equity, or purchased for consideration above the fair value of the equity, the difference is recorded as compensation expense in Compensation and related expenses in the Consolidated Statements of Income over the requisite service period.
The following table presents Affiliate equity compensation expense:
For the Three Months Ended June 30, For the Six Months Ended June 30,
2020 2021 2020 2021
Controlling interest $ 5.1  $ 2.7  $ 7.9  $ 7.1 
Non-controlling interests 5.1  6.8  18.9  27.6 
Total $ 10.2  $ 9.5  $ 26.8  $ 34.7 
The following table presents unrecognized Affiliate equity compensation expense:
Controlling Interest Remaining Life Non-controlling Interests Remaining Life
December 31, 2020 $ 35.9  4 years $ 109.7  5 years
June 30, 2021 49.1  5 years 109.2  5 years
The Company records amounts receivable from, and payable to, Affiliate equity holders in connection with the transfer of Affiliate equity interests that have not settled at the end of the period. The total receivable was $9.6 million and $8.6 million as of December 31, 2020 and June 30, 2021, respectively, and was included in Other assets. The total payable was $22.0 million and $47.9 million as of December 31, 2020 and June 30, 2021, respectively, and was included in Other liabilities.
Effects of Changes in the Company’s Ownership in Affiliates
The Company periodically acquires interests from, and transfers interests to, Affiliate equity holders. Because these transactions do not result in a change of control, any gain or loss related to these transactions is recorded to Additional paid-in capital, which increases or decreases the controlling interest’s equity. No gain or loss related to these transactions is recognized in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.
While the Company presents the current redemption value of Affiliate equity within Redeemable non-controlling interests, with changes in the current redemption value increasing or decreasing the controlling interest’s equity over time, the following table presents the cumulative effect that ownership changes had on the controlling interest’s equity related only to Affiliate equity transactions that settled during the applicable periods:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Net income (controlling interest) $ 30.7  $ 109.0  $ 15.1  $ 258.9 
Decrease in controlling interest paid-in capital from Affiliate equity issuances —  (17.0) (1.3) (17.5)
Decrease in controlling interest paid-in capital from Affiliate equity purchases (5.5) (8.2) (160.6) (56.0)
Net income (loss) (controlling interest) including the net impact of Affiliate equity transactions $ 25.2  $ 83.8  $ (146.8) $ 185.4 
16.Income Taxes
21

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to the non-controlling interests.
The following table presents the consolidated provision for income taxes:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Controlling interest:    
Current taxes $ 1.3  $ 17.8  $ 20.6  $ 48.4 
Intangible-related deferred taxes (3.1) 31.0  (34.1) 39.9 
Other deferred taxes 2.9  13.4  14.7  22.3 
Total controlling interest 1.1  62.2  1.2  110.6 
Non-controlling interests:        
Current taxes $ 2.2  $ 2.7  $ 4.4  $ 4.9 
Deferred taxes 0.0  6.0  (0.1) 6.0 
Total non-controlling interests 2.2  8.7  4.3  10.9 
Income tax expense $ 3.3  $ 70.9  $ 5.5  $ 121.5 
Income before income taxes (controlling interest) $ 31.8  $ 171.2  $ 16.3  $ 369.5 
Effective tax rate (controlling interest)(1)
3.4  % 36.3  % 7.6  % 29.9  %
___________________________
(1)Taxes attributable to the controlling interest divided by income before income taxes (controlling interest).
The Company’s effective tax rate (controlling interest) increased to 36.3% and 29.9% for the three and six months ended June 30, 2021, respectively, primarily due to a $19.2 million deferred tax expense resulting from the revaluation of certain deferred tax liabilities due to an increase in the UK tax rate enacted during the second quarter of 2021, as well as a $5.5 million benefit related to uncertain tax positions and a $4.1 million benefit for a capital loss carried back to a fiscal year prior to the effective date of the Tax Cuts and Jobs Act in 2020 that did not reoccur.
17.Earnings Per Share
The calculation of Earnings per share (basic) is based on the weighted average number of shares of the Company’s common stock outstanding during the period. Earnings per share (diluted) is similar to Earnings per share (basic), but adjusts for the dilutive effect of the potential issuance of incremental shares of the Company’s common stock.

22

AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following is a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share available to common stockholders:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Numerator    
Net income (controlling interest) $ 30.7  $ 109.0  $ 15.1  $ 258.9 
Interest expense on junior convertible securities, net of taxes —  4.6  —  9.4 
Net income (controlling interest), as adjusted $ 30.7  $ 113.6  $ 15.1  $ 268.3 
Denominator        
Average shares outstanding (basic) 47.2  41.6  47.5  42.1 
Effect of dilutive instruments:        
Stock options and restricted stock units 0.1  0.9  0.1  0.8 
Junior convertible securities —  2.1  —  2.1 
Average shares outstanding (diluted) 47.3  44.6  47.6  45.0 
Average shares outstanding (diluted) in the table above excludes stock options and restricted stock units that have not met certain performance conditions and items that have an anti-dilutive effect on Earnings per share (diluted). The following is a summary of items excluded from the denominator in the table above:
  For the Three Months Ended June 30, For the Six Months Ended June 30,
  2020 2021 2020 2021
Stock options and restricted stock units 3.2  0.3  3.2  0.3 
Junior convertible securities 2.2  —  2.2  — 
The Company may settle portions of its Affiliate equity purchases in shares of its common stock. Because it is the Company’s intention to settle these potential purchases in cash, the calculation of Average shares outstanding (diluted) excludes any potential dilutive effect from possible share settlements of Affiliate equity purchases.
For the three and six months ended June 30, 2021, under its authorized share repurchase programs, the Company repurchased 0.5 million and 2.1 million shares of its common stock, respectively, at an average price per share of $158.83 and $135.92, respectively.
18.Comprehensive Income
The following table presents the tax effects allocated to each component of Other comprehensive income (loss):
For the Three Months Ended June 30,
2020 2021
Pre-Tax Tax Benefit Net of Tax Pre-Tax Tax Expense Net of Tax
Foreign currency translation gain (loss) $ (23.9) $ 0.7  $ (23.2) $ 8.0  $ (0.5) $ 7.5 
Change in net realized and unrealized gain (loss) on derivative financial instruments (1.6) 0.3  (1.3) 0.4  (0.0  ) 0.4 
Other comprehensive income (loss) $ (25.5) $ 1.0  $ (24.5) $ 8.4  $ (0.5) $ 7.9 
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AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

For the Six Months Ended June 30,
2020 2021
Pre-Tax Tax (Expense) Benefit Net of Tax Pre-Tax Tax Expense Net of Tax
Foreign currency translation gain (loss) $ (64.9) $ (11.2) $ (76.1) $ 37.6  $ (6.3) $ 31.3 
Change in net realized and unrealized gain (loss) on derivative financial instruments (2.8) 0.5  (2.3) 1.0  (0.1) 0.9 
Other comprehensive income (loss) $ (67.7) $ (10.7) $ (78.4) $ 38.6  $ (6.4) $ 32.2 
The components of accumulated other comprehensive loss, net of taxes, were as follows:
Foreign
Currency
Translation
Adjustment
Realized and
Unrealized Gains (Losses)
on Derivative Financial Instruments
Total
Balance, as of December 31, 2020 $ (161.9) $ (0.3) $ (162.2)
Other comprehensive income before reclassifications 31.3  1.4  32.7 
Amounts reclassified —  (0.5) (0.5)
Net other comprehensive income 31.3  0.9  32.2 
Balance, as of June 30, 2021 $ (130.6) $ 0.6  $ (130.0)
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain matters discussed in this Quarterly Report on Form 10-Q, in our other filings with the Securities and Exchange Commission, in our press releases, and in oral statements made with the approval of an executive officer may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, and other non-historical statements, and may be prefaced with words such as “outlook,” “guidance,” “believes,” “expects,” “potential,” “preliminary,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “projects,” “positioned,” “prospects,” “intends,” “plans,” “estimates,” “pending investments,” “anticipates,” or the negative version of these words or other comparable words. Such statements are subject to certain risks and uncertainties, including, among others, the factors discussed under the caption “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020. These factors (among others) could affect our financial condition, business activities, results of operations, cash flows, or overall financial performance and cause actual results and business activities to differ materially from historical periods and those presently anticipated and projected. Forward-looking statements speak only as of the date they are made, and we will not undertake and we specifically disclaim any obligation to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we caution readers not to place undue reliance on any such forward-looking statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.
Executive Overview
We are a leading partner to independent active investment management firms globally. Our strategy is to generate long-term value by investing in a diverse array of high-quality independent partner-owned investment firms, which we call our “Affiliates,” through a proven partnership approach, and allocating resources across our unique opportunity set to the areas of highest growth and return. Our innovative partnership approach enables each Affiliate’s management team to own significant equity in their firm while maintaining operational and investment autonomy. In addition, we offer our Affiliates growth capital, global distribution, and other strategic value-added capabilities, which enhance the long-term growth of these independent businesses and enable them to align equity incentives across generations of principals to build enduring franchises. As of June 30, 2021, our aggregate assets under management were $755.7 billion across a broad range of return-oriented strategies.
In the first quarter of 2021, we completed a minority investment in Boston Common Asset Management LLC, a women-owned leader in global sustainable and impact investing. In the second quarter of 2021, we completed a minority investment in OCP Asia Limited, a leading alternative manager in private markets, providing customized secured lending solutions across the Asia-Pacific region.
In July 2021, we entered into a definitive agreement to acquire a majority equity interest in Parnassus Investments (“Parnassus”), an ESG-dedicated fund manager. Following the close of the transaction, Parnassus partners will continue to hold a substantial portion of the equity of the business and direct its day-to-day operations. The transaction, which is expected to close during the second half of 2021, is subject to customary closing conditions and regulatory approvals.
Operating Performance Measures
Under accounting principles generally accepted in the U.S. (“GAAP”), we are required to consolidate certain of our Affiliates and use the equity method of accounting for others. Whether we consolidate an Affiliate or use the equity method of accounting, we maintain the same innovative partnership approach and provide support and assistance in substantially the same manner for all of our Affiliates. Furthermore, all of our Affiliates are investment managers and are impacted by similar marketplace factors and industry trends. Therefore, our key aggregate operating performance measures are important in providing management with a more comprehensive view of the operating performance and material trends across our entire business.
The following table presents our key aggregate operating performance measures:
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