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What changed in Acadian Asset Management Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Acadian Asset Management Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+355 added−388 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in Acadian Asset Management Inc.'s 2023 10-K

355 paragraphs added · 388 removed · 313 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMany of the organizations we compete with offer investment strategies similar to those offered by Acadian, and these organizations may have greater financial resources and distribution capabilities than we offer. Some of these firms offer other products and services—in particular investment strategies such as passively managed products, including exchange traded funds, that typically carry lower fee rates.
Biggest changeWe compete globally with international and domestic investment management firms, hedge funds, and other subsidiaries of financial institutions for institutional assets. Many of the organizations we compete with offer investment strategies similar to those offered by Acadian, and these organizations may have greater financial resources and distribution capabilities than we offer.
We compete with these organizations to attract and retain institutional clients and their assets based on the following primary factors: • the investment performance records of Acadian’s strategies; • the breadth of active investment strategies and vehicle options offered by Acadian; • the alignment of Acadian’s investment strategies to the current market conditions and investment preferences and needs of potential clients; • the quality, depth, and reputation of the investment teams that executes Acadian’s strategies; • the continuity of our investment and distribution teams; • the caliber of service we provide our clients; and • Acadian brand recognition and reputation within the investment community Our History and Organizational Structure The predecessor of BSIG was formed in 1980.
We compete with these organizations to attract and retain institutional clients and their assets based on the following primary factors: • the investment performance records of Acadian’s strategies; • the breadth of active investment strategies and vehicle options offered by Acadian; • the alignment of Acadian’s investment strategies to the current market conditions and investment preferences and needs of potential clients; • the quality, depth, and reputation of the investment teams that executes Acadian’s strategies; • the continuity of our investment and distribution teams; • the caliber of service we provide our clients; and • Acadian brand recognition and reputation within the investment community 10 Our History and Organizational Structure The predecessor of BSIG was formed in 1980.
An extensive data repository, continually supplemented by an active alternative scouting effort, provides an extensive source for exploring new investment ideas. Given the size, breadth, and complexity of global equity markets, we believe that such an empirical approach is essential to exploiting behaviorally based mispricings and deliver superior risk-adjusted returns for our clients. 5 Research. Acadian is a research-focused firm.
An extensive data repository, continually supplemented by an active alternative scouting effort, provides an extensive source for exploring new investment ideas. Given the size, breadth, and complexity of global equity markets, we believe that such an empirical approach is essential to exploiting behaviorally based mispricings and deliver superior risk-adjusted returns for our clients. Research. Acadian is a research-focused firm.
Acadian Australia is subject to regulation by the Australian Securities and Investment Commission, or ASIC. Each regulatory body imposes a comprehensive system of regulation on investment advisers and the manner in which we conduct our business in that country. Employees and Human Capital We believe our ability to attract and retain employees is a key to our success.
Acadian Australia is subject to regulation by the Australian Securities and Investment Commission, or ASIC. Each regulatory body imposes a comprehensive system of regulation on investment advisers and the manner in which we conduct our business in that country. 11 Employees and Human Capital We believe our ability to attract and retain employees is a key to our success.
The common stock of BrightSphere Investment Group Inc. began trading on July 15, 2019, and our trading symbol on the NYSE remained unchanged as “BSIG.” 10 Regulation We are subject to U.S. federal securities laws, state securities and corporate laws, and the rules and regulations of U.S. regulatory and self-regulatory organizations.
The common stock of BrightSphere Investment Group Inc. began trading on July 15, 2019, and our trading symbol on the NYSE remained unchanged as “BSIG.” Regulation We are subject to U.S. federal securities laws, state securities and corporate laws, and the rules and regulations of U.S. regulatory and self-regulatory organizations.
We focus our distribution and marketing efforts on sophisticated investors and asset allocators. Our client service and distribution teams comprise knowledgeable, seasoned professionals, experienced in working across the investment spectrum of investors. 6 Our client base is highly diverse without significant concentration.
We focus our distribution and marketing efforts on sophisticated investors and asset allocators. Our client service and distribution teams comprise knowledgeable, seasoned professionals, experienced in working across the investment spectrum of investors. 6 Our client base is diverse without significant concentration.
The firm’s clients were domiciled in approximately 20 countries across Asia, Australia, Europe and North America as of December 31, 2022. The firm has over 100 investment and research professionals and manages approximately 70 distinct investment products and strategies. Competitive Strengths Experience. As a pioneer in systematic investing, Acadian has been managing systematic equity portfolios since the 1980s.
The firm’s clients were domiciled in approximately 20 countries across Asia, Australia, Europe and North America as of December 31, 2023. The firm has over 100 investment and research professionals and manages approximately 70 distinct investment products and strategies. Competitive Strengths Experience. As a pioneer in systematic investing, Acadian has been managing systematic equity portfolios since the 1980s.
This experience affords us a broad perspective and data history. Guided by the economic intuition and insights of a talented, experienced, and diverse investment team, Acadian has been at the forefront of systematic research, signal development, and portfolio construction for 36 years. Objectivity. Acadian uses a disciplined and objective process, underpinned by rich data and powerful technological tools.
This experience affords us a broad perspective and data history. Guided by the economic intuition and insights of a talented, experienced, and diverse investment team, Acadian has been at the forefront of systematic research, signal development, and portfolio construction for 37 years. Objectivity. Acadian uses a disciplined and objective process, underpinned by rich data and powerful technological tools.
We have generated strong, recurring free cash flow to our business that we can use for growth initiatives, return to shareholders through dividends and stock repurchases and to repay outstanding debt obligations. Our revenue consists largely of recurring management fees on assets under management and is not heavily dependent upon more volatile performance fees.
We have generated strong, recurring free cash flow to our business that we can use for growth initiatives, return to shareholders through dividends and stock repurchases and to repay outstanding debt obligations. Our revenue consists largely of recurring management fees on assets under management and is not heavily dependent upon performance fees.
Management undertakes detailed business case analyses with respect to all growth opportunities, and only considers those that yield an acceptable return while operating within the parameters of our risk appetite. For the period January 1, 2017 to December 31, 2022, we repurchased approximately 63% of our shares.
Management undertakes detailed business case analyses with respect to all growth opportunities, and only considers those that yield an acceptable return while operating within the parameters of our risk appetite. For the period January 1, 2019 to December 31, 2023, we repurchased approximately 63% of our shares.
Distribution Model and Client Base Our distribution is focused on the institutional and sub-advisory channels. The institutional channel accounts for approximately 80% of our AUM.
Distribution Model and Client Base Our distribution is focused on the institutional and sub-advisory channels. The institutional channel accounts for approximately 79% of our AUM.
Our profit-sharing model enables us to participate directly in margin expansion as Acadian grows. Acadian Acadian, founded in 1986, is a leading systematic investment manager of active global, international equity, and alternative strategies with approximately $94 billion in AUM as of December 31, 2022.
Our profit-sharing model enables us to participate directly in margin expansion as Acadian grows. Acadian Acadian, founded in 1986, is a leading systematic investment manager of active global, international equity, and alternative strategies with approximately $104 billion in AUM as of December 31, 2023.
While we market primarily to institutional investors, we participate in the individual investor market through the sub-advisory channel, which represented 13% of our AUM as of December 31, 2022. We manage assets for mutual funds, and other commingled products including UCITs and Collective Investment Trusts, which gives us exposure to a retail investor base and the defined contribution market.
While we market primarily to institutional investors, we participate in the individual investor market through the sub-advisory channel, which represented 12% of our AUM as of December 31, 2023. We also manage assets for mutual funds, and other commingled products including UCITs and Collective Investment Trusts, which gives us exposure to a retail investor base and the defined contribution market.
Within this channel, we have strong relationships in the public/government pension market (42% of our AUM as of December 31, 2022) and the corporate plan market (14% of our AUM as of December 31, 2022), which comprise a substantial portion of the institutional investment market overall, particularly in the U.S.
Within this channel, we have strong relationships in the public/government pension market (42% of our AUM as of December 31, 2023) and the corporate plan market (12% of our AUM as of December 31, 2023), which comprise a substantial portion of the institutional investment market overall, particularly in the U.S.
The charts below indicate that performance on a revenue-weighted basis relative to benchmark over the last five years have performed ahead of their respective benchmarks on a three-, five- and ten-year basis. 8 Data as of December 31 for the years 2018 to 2022 * Acadian assets representing 32%, 11%, 47%, 89% and 88% of revenue were outperforming benchmarks on a 1- year basis as of December 31, 2018, 2019, 2020, 2021 and 2022, respectively.
The charts below indicate that performance on a revenue-weighted basis relative to benchmark over the last five years have performed ahead of their respective benchmarks on a three-, five- and ten-year basis. 8 Data as of December 31 for the years 2019 to 2023 * Acadian assets representing 11%, 47%, 89%, 88% and 80% of revenue were outperforming benchmarks on a 1- year basis as of December 31, 2019, 2020, 2021, 2022 and 2023, respectively. 9 The chart below indicates performance on a revenue-weighted and equal-weighted basis relative to benchmark, as at December 31, 2023.
Acadian manages strategies in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies. Acadian invests on behalf of a wide range of institutional clients across the globe, including public and private funds, endowments and foundations, and retail clients through sub-advisory channels.
Acadian manages strategies in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, systematic macro, equity alternatives, and credit strategies. Acadian invests on behalf of a wide range of institutional clients across the globe, including public and private funds, endowments and foundations, and retail clients through sub-advisory channels.
Total AUM: $93.6 bn Data as of December 31, 2022 Products and Investment Performance Product Mix We offer leading strategies in global, international, U.S. and emerging markets equities, in addition to alternative investments and responsible investing. The chart below presents our wide range of offerings. These areas have the potential to provide a balanced earnings stream to our business.
Total AUM: $103.7 bn Data as of December 31, 2023 Products and Investment Performance Product Mix We offer leading strategies in global, international, U.S. and emerging markets equities, in addition to credit, and alternative investments. The chart below presents our wide range of offerings. These areas have the potential to provide a balanced earnings stream to our business.
As of December 31, 2022, our top five client relationships represented approximately 15% of total run rate gross management fee revenue, and our top 25 clients represented approximately 36% of run rate gross management fee revenue. The below graphic shows the breakdown of our assets under management as of December 31, 2022 by client type and location.
As of December 31, 2023, our top five client relationships represented approximately 14% of total run rate gross management fee revenue, and our top 25 clients represented approximately 38% of run rate gross management fee revenue. The below graphic shows the breakdown of our assets under management as of December 31, 2023 by client type and location.
As of December 31, 2022, we had 354 full-time equivalent employees, of which 22 were employees of BrightSphere Investment Group Inc. and 332 were employees of Acadian. None of these employees are represented by any collective bargaining agreements. 11 Operations, Systems and Technology Our advanced technological capabilities are one of our core strengths.
As of December 31, 2023, we had 387 full-time equivalent employees, of which 21 were employees of BrightSphere Investment Group Inc. and 366 were employees of Acadian. None of these employees are represented by any collective bargaining agreements. Operations, Systems and Technology Our advanced technological capabilities are one of our core strengths.
Item 1. Business. Overview We are a global, diversified asset management company with approximately $94 billion of assets under management as of December 31, 2022. We provide investment management services globally, predominantly to institutional investors. We historically held ownership interests in a group of investment management firms (the “Affiliates”).
Item 1. Business. Overview We are a global, diversified asset management company with approximately $104 billion of assets under management as of December 31, 2023. We provide investment management services globally, predominantly to institutional investors.
We have completed the disposition of certain Affiliates which resulted in a differentiated investment management business operating through our majority owned subsidiary, Acadian Asset Management LLC (“Acadian”), a leading systematic manager of active global and international equity, multi-asset and alternative strategies.
We operate our differentiated investment management business through our majority owned subsidiary, Acadian Asset Management LLC (“Acadian”), a leading systematic manager of active global, international equity and alternative strategies.
Acadian has competitive near- and long-term alpha performance records and is well-positioned for continued growth.
We have competitive near- and long-term alpha performance records and are well-positioned for continued growth.
Quant & Solutions Investment Performance* Data as of December 31, 2022 * * As of December 31, 2022, Acadian assets representing 88% of revenue were outperforming benchmarks on a 1- year basis. 9 Competition We face competition from many segments in the asset management industry.
Quant & Solutions Investment Performance* Data as of December 31, 2023 * * As of December 31, 2023, Acadian assets representing 80% of revenue were outperforming benchmarks on a 1- year basis. Competition We face competition from many segments in the asset management industry. We compete with other investment management firms, including investment management holding companies, insurance companies, and banks.
While we believe the first two methodologies provide better insight into our performance trends, we have also included AUM-weighted performance, as this is a more standard industry performance metric.
In addition, we have indicated the percentage of our assets beating their benchmarks over the same time periods. While we believe the first two methodologies provide better insight into our performance trends, we have also included AUM-weighted performance, as this is a more standard industry performance metric.
Its scientific approach to innovation is driven by research across signal generation, portfolio construction, implementation, and risk management. Research is data-dependent, and Acadian’s process benefits from its objectivity, breadth, and computational power. We recognize that markets are dynamic and that a robust culture of investment research is essential to maintaining a competitive edge.
Its scientific approach to innovation is driven by research across signal generation, portfolio construction, implementation, and risk management. Research is data-dependent, and Acadian’s process benefits from its objectivity, breadth, and computational power.
Capital Management Our asset management business generates significant, recurring free cash flow that can be accessed to create value for our shareholders.
We recognize that markets are dynamic and that a robust culture of investment research is essential to maintaining a competitive edge. 5 Capital Management Our asset management business generates significant, recurring free cash flow that can be accessed to create value for our shareholders.
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The chart below indicates performance on a revenue-weighted and equal-weighted basis relative to benchmark, as at December 31, 2022. In addition, we have indicated the percentage of our assets beating their benchmarks over the same time periods.
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Some of these firms offer other products and services—in particular investment strategies such as passively managed products, including exchange traded funds, that typically carry lower fee rates. Additionally, there are limited barriers to entry for new investment managers.
Removed
We compete with other investment management firms, including investment management holding companies, insurance companies, and banks. We compete globally with international and domestic investment management firms, hedge funds, and other subsidiaries of financial institutions for institutional assets.
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Additionally, there are limited barriers to entry for new investment managers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAmong the factors that may affect our stock price are the following: • the impact of the COVID-19 pandemic. • speculation in the investment community or the press about, or actual changes in, our competitive position, organizational structure, executive team, operations, financial condition, financial reporting and results, ability to maximize shareholder returns or plans to engage in strategic transactions by us or others in our industry; • the announcement of mergers, acquisitions, dispositions or new products or services by us or others in our industry; • announcements of our financial results, including changes in net client cash flows and assets under management, changes in earnings estimates by the investment community, and variations between estimated financial results and actual financial results; and • the pricing structure for products offered by us or our competitors. 29 Changes in general conditions and volatility in the economy, the financial markets and our industry, and other developments affecting us or our competitors, as well as geopolitical, regulatory, economic, and business factors unrelated to us, could cause the market price of our common stock to fluctuate substantially.
Biggest changeAmong the factors that may affect our stock price are the following: • public health emergencies; • speculation in the investment community or the press about, or actual changes in, our competitive position, organizational structure, executive team, operations, financial condition, financial reporting and results, 28 ability to maximize shareholder returns or plans to engage in strategic transactions by us or others in our industry; • the announcement of mergers, acquisitions, dispositions or new products or services by us or others in our industry; • announcements of our financial results, including changes in net client cash flows and assets under management, changes in earnings estimates by the investment community, and variations between estimated financial results and actual financial results; and • the pricing structure for products offered by us or our competitors.
The EU Data Protection Laws have a wide territorial reach and apply to data controllers and data processors which have an establishment in the EU/U.K., or which offer goods or services to, or monitor the behavior of, data subjects in the EU and U.K. The EU/U.K. Data Protection Laws impose stringent operational requirements on data controllers and data processors.
Data Protection Laws have a wide territorial reach and apply to data controllers and data processors which have an establishment in the EU/U.K., or which offer goods or services to, or monitor the behavior of, data subjects in the EU and U.K. The EU/U.K. Data Protection Laws impose stringent operational requirements on data controllers and data processors.
Risks Related to Our Tax Matters Our global effective tax rate is subject to a variety of different factors, which could create volatility in that rate, expose us to greater than anticipated tax liabilities and cause us to adjust previously recognized tax assets and liabilities. We are subject to income taxes in the U.S., U.K. and many other jurisdictions.
Risks Related to Our Tax Matters Our global effective tax rate is subject to a variety of different factors, which could create volatility in that rate, expose us to greater than anticipated tax liabilities and cause us to adjust previously recognized tax assets and liabilities. We are subject to income taxes in the U.S., the U.K. and many other jurisdictions.
If the performance or assessment of our investment strategies is seen as underperforming relative to peers, it could, among other things, result in an increase in the withdrawal of assets by existing clients and investors in mutual funds and private funds we advise or sub-advise, the termination of us as a sub-adviser to a mutual fund and the inability to attract additional investments from existing and new clients or investors.
If the performance or assessment of our systematic investment strategies is seen as underperforming relative to peers, it could, among other things, result in an increase in the withdrawal of assets by existing clients and investors in mutual funds and private funds we advise or sub-advise, the termination of us as a sub-adviser to a mutual fund and the inability to attract additional investments from existing and new clients or investors.
Conflicts may arise with respect to decisions regarding, among other things, the allocation of specific investment opportunities among accounts in which we may receive an allocation of profits and accounts in which they do not receive such an allocation or among client accounts that have overlapping investment objectives yet different fee structures, including certain accounts which may pay performance-based fees.
Conflicts may arise with respect to decisions regarding, among other things, the allocation of specific investment opportunities among accounts in which we may receive an allocation of profits and accounts in which we do not receive such an allocation or among client accounts that have overlapping investment objectives yet different fee structures, including certain accounts which may pay performance-based fees.
The performance of our investment strategies, which can be impacted by factors within and/or outside our control, including general market and economic conditions, is critical to retaining existing client assets and investors, including in mutual funds and private funds we advise or sub-advise, and attracting new client and investor assets.
The performance of our systematic investment strategies, which can be impacted by factors within and/or outside our control, including general market and economic conditions, is critical to retaining existing client assets and investors, including in mutual funds and private funds we advise or sub-advise, and attracting new client and investor assets.
As a result, we and our clients have exposure to the credit, operational and other risks posed by such counterparties, including the risk of default by or bankruptcy of a counterparty. Additionally, we hold insurance policies which cover historical and future tax benefits relating to certain of our deferred tax assets.
As a result, we and our clients have exposure to the credit, operational and other risks posed by such counterparties, including the risk of default by or bankruptcy of a counterparty. Additionally, we hold insurance policies which cover historical tax benefits relating to certain of our deferred tax assets.
Moreover, if at any time we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify material weaknesses or other deficiencies in our internal control over financial reporting, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, which would require additional financial and management resources. 31
Moreover, if at any time we are not able to comply with the requirements of Section 404 in a timely manner, or if we identify material weaknesses or other deficiencies in our internal control over financial reporting, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the NYSE, the SEC or other regulatory authorities, which would require additional financial and management resources. 30
Compliance with data privacy and security regulations can require allocation of resources as well as changes in operations and non-compliance can result in substantial fines.
Compliance with data privacy and security regulations can require allocation of significant resources as well as changes in operations and non-compliance can result in substantial fines.
Since over 95% of our total assets under management as of December 31, 2021 were invested in global, international and emerging markets equities, a significant reduction in assets under management associated with such investments could have a disproportionately adverse impact on our results of operations.
Since over 95% of our total assets under management as of December 31, 2023 were invested in global, international and emerging markets equities, a significant reduction in assets under management associated with such investments could have a disproportionately adverse impact on our results of operations.
GDPR”), along with the Data Protection Act 2018 in the U.K. (“Act”) (together “EU/U.K. Data Protection Laws”).
GDPR”), along with the Data Protection Act 2018 in the U.K. (“Act”) (together “EU/U.K. Data Protection Laws”). The EU/U.K.
A significant portion of our operations relies heavily on the secure processing, storage and transmission of confidential and other information as well as the monitoring of a large number of complex transactions. Like many other financial institutions, we have been subject to cyberattacks and will continue to subject to an increasing risk of cyber incidents from these activities.
A significant portion of our operations relies heavily on the secure processing, storage and transmission of confidential and other information as well as the monitoring of a large number of complex transactions. Like many other financial institutions, we have been subject to cyber-attacks and will continue to be subject to an increasing risk of cyber incidents from these activities.
Total run rate gross management fee revenue reflects the sum for each account at Acadian, of the product of (a) assets under management in each account at December 31, 2022, multiplied by (b) the relevant management fee rate on that account.
Total run rate gross management fee revenue reflects the sum for each account at Acadian, of the product of (a) assets under management in each account at December 31, 2023, multiplied by (b) the relevant management fee rate on that account.
In addition, the investment advisory agreements and sub-advisory agreements with respect to registered investment companies generally may be terminated by the mutual fund or, in those instances where Acadian serves as a sub-adviser, the mutual fund’s adviser, without penalty, upon 60 days’ notice and are subject to annual approval by the mutual fund’s board of directors or trustees.
In addition, the investment advisory agreements and sub-advisory agreements with respect to registered investment companies generally may be terminated by the registered investment company or, in those instances where Acadian serves as a sub-adviser, the registered investment company’s adviser, without penalty, upon 60 days’ notice and are subject to annual approval by the registered investment company’s board of directors or trustees.
Areas where the uncertainty created by the U.K’s withdrawal from the EU is relevant include, but are not limited to, trade within Europe, foreign direct investment in Europe, the scope and functioning of European regulatory frameworks, industrial policy pursued within European countries, immigration policy pursued within EU countries, the regulation of the provision of financial services within and to persons in Europe and trade policy within European countries and internationally.
Areas where the uncertainty created by the U.K’s withdrawal from the EU is relevant include, but are not limited to, trade within Europe, foreign direct investment in Europe, the scope and functioning of European regulatory frameworks (including with respect to the regulation of alternative investment fund managers and the distribution and marketing of alternative investment funds), industrial policy pursued within European countries, immigration policy pursued within EU countries, the regulation of the provision of financial services within and to persons in Europe and trade policy within European countries and internationally.
Losses on our seed capital could adversely impact our results of operations or financial condition. As of December 31, 2022, we had approximately $19 million committed to seed capital, which is currently invested in three products.
Losses on our seed capital could adversely impact our results of operations or financial condition. As of December 31, 2023, we had approximately $41 million committed to seed capital, which is currently invested in five products.
In particular, we perform system and process evaluations and we have tested our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of Sarbanes-Oxley, and obtain an auditor attestation as to the effectiveness of our internal controls. 30 Testing may reveal material weaknesses or other deficiencies in our internal control over financial reporting.
In particular, we perform system and process evaluations and we have tested our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of Sarbanes-Oxley, and obtain an auditor attestation as to the effectiveness of our internal controls.
Failure to comply with the tax laws of the U.S., the U.K. or other jurisdictions, which laws are subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis, may result in erroneous filings, adjustments to previously recognized tax assets and liabilities, negative impact to income and reputational damage.
Our actual global tax rate may vary from our expectation and that variance may be material. 27 Failure to comply with the tax laws of the U.S., the U.K. or other jurisdictions, which laws are subject to potential legislative, judicial or administrative change and differing interpretations, possibly on a retroactive basis, may result in erroneous filings, adjustments to previously recognized tax assets and liabilities, negative impact to income and reputational damage.
If we are unable to compete effectively in the market, our results of operations and potential business growth could be adversely affected. Our sole business is asset management and we have divested all of our affiliates other than Acadian.
If we are unable to compete effectively in the market, our results of operations and potential business growth could be adversely affected. Our sole business is asset management.
The failure of a counterparty to meet its obligations could affect our business adversely. 22 We routinely execute transactions with counterparties in the financial industry and for the provision of services that are important to the business, and we may engage in transactions with counterparties as part of our corporate finance management function and for the provision of services, including insurance protection.
We routinely execute transactions with counterparties in the financial industry and for the provision of services that are important to the business, and we may engage in transactions with counterparties as part of our corporate finance management function and for the provision of services, including insurance protection.
Our inability to mitigate the negative consequences of any resolution of audits and examinations could cause our global tax rate to increase, our use of cash to increase and our financial condition and results of operations to suffer.
Our inability to mitigate the negative consequences of any resolution of audits and examinations could cause our global tax rate to increase, our use of cash to increase and our financial condition and results of operations to suffer. Changes in tax laws could have an adverse impact on our business, financial condition, and results of operations.
As of December 31, 2022, $37.3 billion, or 40%, of our assets under management were concentrated across three investment strategies: Acadian’s Emerging Markets Equity ($14.7 billion, or 16%), Acadian’s All-Country World ex-US Equity ($11.5 billion, or 12%) and Acadian’s Global Equity ($11.1 billion, or 12%).
As of December 31, 2023, $44.7 billion, or 43%, of our assets under management were concentrated across three investment strategies: Acadian’s Emerging Markets Equity ($16.8 billion, or 16%), Acadian’s Global Equity ($14.1 billion, or 14%), and Acadian’s All-Country World ex-US Equity ($13.8 billion, or 13%).
Risks Related to Our Ownership Structure and Governance Paulson has meaningful ability to influence our business. 26 As of February 22, 2023, Paulson & Co. Inc. (“Paulson”) owns 21.6% of our common stock.
Risks Related to Our Ownership Structure and Governance Paulson has meaningful ability to influence our business. As of February 14, 2024, Paulson & Co. Inc. (“Paulson”) owns 23.11% of our common stock.
As of December 31, 2022, Acadian’s top five client relationships represented approximately 15% of total run rate gross management fee revenue, and Acadian’s top 25 clients represented approximately 36% of run rate gross management fee revenue.
As of December 31, 2023, our top five client relationships represented approximately 14% of total run rate gross management fee revenue, and our top 25 clients represented approximately 38% of run rate gross management fee revenue.
The amount and timing of share repurchases are subject to market conditions, stock price and other factors, including compliance with all respective laws and our applicable agreements.
Our Board of Directors may from time to time authorize us to repurchase shares of our common stock. The amount and timing of share repurchases are subject to market conditions, stock price and other factors, including compliance with all respective laws and our applicable agreements.
Regulatory scrutiny, litigation or reputational risk incurred in connection with conflicts of interest would adversely impact our business in a number of ways, including by making counterparties reluctant to do business with us, impeding our ability to retain or increase our assets under management, subjecting us to potential litigation and adversely impacting our results of operations.
Regulatory scrutiny, litigation or reputational risk incurred in connection with conflicts of interest would adversely impact our business in a number of ways, including by making counterparties reluctant to do business with us, impeding our ability to retain or increase our assets under management, subjecting us to potential litigation and adversely impacting our results of operations. 15 Equity ownership by employees of Acadian is at the level of Acadian and not at the holding company level, although employees of Acadian may acquire our common stock.
In addition, assets could be withdrawn for any number of reasons other than poor absolute or relative investment performance, including macro-economic factors unrelated to investment performance, a reduction in market demand for the asset classes, products or strategies we offer, the loss of key personnel, price declines in the securities markets generally, price declines in those assets in which client assets are concentrated or changes in investment patterns of clients, a failure by us to comply with applicable client and regulatory investment guidelines, or factors wholly unrelated to us.
If a significant portion of clients or investors decides to withdraw their investments or terminate their investment management agreements or sub-advisory agreements, our ability to generate earnings would decline and our results of operations and financial condition would be affected. 13 In addition, assets could be withdrawn for any number of reasons other than poor absolute or relative investment performance, including macro-economic factors unrelated to investment performance, a reduction in market demand for the systematic asset classes, products or strategies we offer, the loss of key personnel, price declines in the securities markets generally, price declines in those assets in which client assets are concentrated or changes in investment patterns of clients, a failure by us to comply with applicable client and regulatory investment guidelines, or factors wholly unrelated to us.
Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
Sales or distributions of substantial amounts of our common stock, including shares issued in connection with an acquisition, or the perception that such sales or distributions could occur, may cause the market price of our common stock to decline. 26 Our amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
The Exchange Act requires us to file annual, quarterly and current reports with respect to our business and financial condition. Our management and other personnel devote substantial time to compliance with our public company obligations. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly.
The Exchange Act requires us to file annual, quarterly and current reports with respect to our business and financial condition. Our management and other personnel devote substantial time to compliance with our public company obligations.
We may be exposed to potential liability as a general partner or a controlling person. 18 Acadian may serve as general partner, managing member or their equivalents for investment products that are organized as partnerships or other commingled vehicles.
Acadian may serve as general partner, managing member or their equivalents for investment products that are organized as partnerships or other commingled vehicles.
Any of these factors could have a negative impact on our results of operations and financial condition. We derive a substantial portion of our revenue from a limited number of investment strategies. In 2020 and 2021, we divested all of our affiliates with the exception of Acadian.
Any of these factors could have a negative impact on our results of operations and financial condition. We derive a substantial portion of our revenue from a limited number of investment strategies. A significant portion of our assets are invested in a limited number of investment strategies.
We believe we have strong client and consultant relationships in our core institutional marketplaces, and we depend upon these relationships to successfully market our existing products and strategies and to introduce new products and strategies.
Impairment of our relationships with clients and/or consultants may negatively impact our business and our results of operations. We believe we have strong client and consultant relationships in our core institutional marketplaces, and we depend upon these relationships to successfully market our existing products and strategies and to introduce new products and strategies.
Acadian may also be subject to the rules and regulations adopted by the Commodity Futures Trading Commission, under the Commodity Exchange Act; by the Department of Labor, under ERISA; the Financial Industry Regulatory Authority, Inc., or FINRA; and state regulators. 25 We also are subject to the regulatory environments of the non-U.S. jurisdictions in which we operate, some of which also recently implemented or are in the process of implementing changes in regulations.
Acadian may also be subject to the rules and regulations adopted by the Commodity Futures Trading Commission, under the Commodity Exchange Act; by the Department of Labor, under ERISA; the Financial Industry Regulatory Authority, Inc., or FINRA; and state regulators.
However, our technology systems may still be vulnerable to unauthorized access, computer malware or other events that have a security impact, such as an authorized employee or vendor inadvertently causing the release of confidential information or third-party unauthorized access or account takeovers, which could materially damage our operations or cause the disclosure or modification of sensitive or confidential information.
While we have implemented security measures, our technology systems, and those of our vendors, contractors, and other third-party partners who process information on our behalf, may still be vulnerable to security incidents, disruptions, cyber-attacks or similar events such as unauthorized access, computer malware, phishing attacks and other forms of social engineering, denial-of-service attacks, ransomware attacks, or other events that have a security impact, such as an authorized employee or vendor inadvertently causing the release of confidential information or third-party unauthorized access or account takeovers, which could materially damage our operations or cause the disclosure or modification of sensitive or confidential information.
Additionally, one or more of the jurisdictions in which we operate may require our stockholders to seek the approval of, or provide notice to, an applicable regulator before acquiring a substantial amount of our outstanding shares.
Additionally, one or more of the jurisdictions in which we operate may require our stockholders to seek the approval of, or provide notice to, an applicable regulator before acquiring a substantial amount of our outstanding shares. 25 Developments in the regulatory environment in the U.S. may include heightened and additional examinations and inspections by regulators and the imposition of additional reporting and disclosure obligations.
Cyber-attacks are growing in sophistication and come from a variety of sources, including criminal hackers, hactivists, state-sponsored intrusions, industrial espionage and insider threats. We take protective measures to secure information, including through system security technology.
Cyber-attacks are growing in sophistication and come from a variety of sources, including criminal hackers, hactivists, state-sponsored intrusions, industrial espionage, personnel or the personnel of third parties, and insider threats.
Some competitors may operate in a different regulatory environment than we do, which may give them certain competitive advantages in the investment products and portfolio structures that they offer.
Some competitors may operate in a different regulatory environment than we do, which may give them certain competitive advantages in the investment products and portfolio structures that they offer. 24 Furthermore, the development and use of various technologies based on machine learning and artificial intelligence is expanding rapidly in our industry.
Our compliance with Section 404 has required that we incur additional accounting expense and expend additional management time on compliance-related issues.
Testing may reveal material weaknesses or other deficiencies in our internal control over financial reporting. Our compliance with Section 404 has required that we incur additional accounting expense and expend additional management time on compliance-related issues.
We depend upon our various centers of operation, including our information technology systems, for the continued operations of our business.
We depend upon our various centers of operation, including our information technology systems and those of our vendors, contractors, and other third-party partners who process information on our behalf, for the continued operations of our business.
Our business operations are complex, and a failure to properly perform operational tasks or maintain infrastructure could have an adverse effect on our revenues and income. In addition to providing investment management services, we must have the necessary operational capabilities to manage our business effectively in accordance with client expectations and applicable law.
In addition to providing investment management services, we must have the necessary operational capabilities to manage our business effectively in accordance with client expectations and applicable law.
Certain client accounts have similar investment objectives and may engage in transactions in the same types of securities and instruments.
Certain client accounts have similar investment objectives and may engage in transactions in the same types of securities and instruments. These transactions could impact the prices and availability of the securities and instruments in which a client account invests and could have an adverse impact on an account’s performance.
Investment management strategies may be rated, ranked or assessed by independent third parties, distribution partners, and industry periodicals and services. These assessments often influence the investment decisions of our clients and investors in mutual funds and private funds we advise or sub-advise.
These assessments often influence the investment decisions of our clients and investors in mutual funds and private funds we advise or sub-advise.
Additionally, companies in which we invest may incur negative changes in their financial conditions or suffer other adverse events that could reduce the values of investments in those companies. 13 Net flows related to our investment strategies can be affected by investment performance relative to other competing investment strategies or to established benchmarks.
Poor performance can be caused by our choices in investing in sectors, industries, companies or assets that do not perform as well as others. Additionally, companies in which we invest may incur negative changes in their financial conditions or suffer other adverse events that could reduce the values of investments in those companies.
The exclusive forum provision described above does not impact the Federal courts’ exclusive jurisdiction over Exchange Act claims or the Federal and state courts’ concurrent jurisdiction over Securities Act claims.
The exclusive forum provision described above does not impact the Federal courts’ exclusive jurisdiction over Exchange Act claims or the Federal and state courts’ concurrent jurisdiction over Securities Act claims. There can be no assurance that we will repurchase shares of our common stock or that we will repurchase shares of our common stock at favorable prices.
In addition, Sarbanes-Oxley requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. 29 In addition, Sarbanes-Oxley requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures.
In addition, we may obtain additional liability insurance for our directors and officers. There have been historical periods in which directors’ and officers’ liability insurance and errors and omissions insurance have been available only with limited coverage amounts, less favorable terms or at prohibitive cost, and these conditions could recur.
There have been historical periods in which directors’ and officers’ liability insurance and errors and omissions insurance have been available only with limited coverage amounts, less favorable terms or at prohibitive cost, and these conditions could recur. 19 Our growth initiatives, including the development and introduction of new products and/or capabilities, may be unsuccessful, may expose us to risks and may not facilitate the growth of our business.
However, many EU laws have been transposed into English law and these transposed laws will continue to apply until such time that they are repealed, replaced or amended.
However, many EU laws have been assimilated into U.K. law and these assimilated laws will continue to apply until such time that they are repealed, replaced or amended. Depending on the terms of any future agreement between the EU and the U.K. on financial services, substantial amendments to U.K. law may occur.
Developments in the regulatory environment in the U.S. may include heightened and additional examinations and inspections by regulators and the imposition of additional reporting and disclosure obligations. Regulators also may take a more aggressive posture on bringing enforcement proceedings which could result in fines, penalties and additional remedial activities.
Regulators also may take a more aggressive posture on bringing enforcement proceedings which could result in fines, penalties and additional remedial activities. Policy and legislative changes in the U.S. and in other countries are affecting many aspects of financial regulation.
There is no assurance that a resolution of any conflicts of interest may be possible or the interests of all parties can be taken into account. Impairment of our relationships with clients and/or consultants may negatively impact our business and our results of operations.
There may be instances where the interests of Acadian’s key employee equity-holders may not align with ours in effecting a desired outcome. There is no assurance that a resolution of any conflicts of interest may be possible or the interests of all parties can be taken into account.
Award documents typically limit a recipient’s right to provide competitive services to our clients or solicit our employees for prescribed periods. 14 We rely upon the contributions of our senior management team to establish and implement our strategy and to manage the future growth of our business.
Additionally, key employees have the opportunity to participate in the appreciation in the value of our business. Award documents typically limit a recipient’s right to provide competitive services to our clients or solicit our employees for prescribed periods.
The volatility and uncertainty caused by the withdrawal may adversely affect the value of our investments and the ability to achieve our investment objectives. The novel coronavirus (COVID-19) pandemic has disrupted and may continue to disrupt financial markets and our business.
The volatility and uncertainty caused by the withdrawal may adversely affect the value of our investments and the ability to achieve our investment objectives. Risks Related to Our Industry We operate in a competitive environment.
Congress, the Organization for Economic Co-operation and Development (the “OECD”) and other government agencies in jurisdictions in which we invest or do business have maintained a focus on issues related to the taxation of multinational companies.
Congress, the Organization for Economic Co-operation and Development (“OECD”), and other government agencies in jurisdictions in which we conduct business have maintained a focus on the taxation of multinational companies. The OECD has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting (“BEPS”) project, and many jurisdictions have begun codifying those recommendations into law.
The amount and structure of compensation and opportunities for equity ownership we offer are key components of our ability to attract and retain qualified management personnel. There is no assurance that we will be successful in designing and implementing an attractive compensation model to attract and retain qualified personnel.
We rely upon the contributions of our senior management team to establish and implement our strategy and to manage the future growth of our business. The amount and structure of compensation and opportunities for equity ownership we offer are key components of our ability to attract and retain qualified management personnel.
Changes in tax laws could have an adverse impact on our business, financial condition, and results of operations. 28 The tax laws of the U.S., the U.K. and other jurisdictions could change in the future, and such changes could cause a material change in our effective tax rate and otherwise adversely affect our results of operations.
Changes to income tax laws and regulations, or the interpretation of such laws, in any of the jurisdictions in which we operate could significantly increase our effective tax rate and ultimately reduce our cash flows from operating activities and otherwise have a material adverse effect on our financial condition, results of operations and cash flows. The U.S.
Our outstanding indebtedness may impact our business and may restrict our growth and results of operations. As of January 31, 2022, we had $275 million of long-term bonds outstanding.
To the extent that our revenues associated with such products and/or capabilities do not increase as much as our related expenses, our profitability could be adversely affected. Our outstanding indebtedness may impact our business and may restrict our growth and results of operations. As of December 31, 2023, we had $275 million of long-term bonds outstanding.
A successful attack could result in significant adverse consequences, including regulatory inquiries or litigation, increased costs and expenses including costs related to insurance and remediation of any security vulnerabilities, reputational damage, lost revenue, and fines or penalties. Third parties with which we do business may also be sources of cybersecurity or other technological risks as we outsource certain functions.
A successful attack could result in significant adverse consequences, including regulatory inquiries or litigation, increased costs and expenses including costs related to insurance and remediation of any security vulnerabilities, reputational damage, lost revenue, and fines or penalties. 21 We are subject to data protection laws including in the European Union (“EU”), United Kingdom (“U.K.”), United States (“U.S.”) and other jurisdictions, and any failure to comply with such legislation could adversely affect our business, reputation, results of operations and financial condition.
Depending on the terms of any future agreement between the EU and the U.K. on financial services, substantial amendments to English law may occur, and it is impossible to predict the consequences of this on us and our investments.
The U.K. government has enacted legislation that will repeal, replace or otherwise make substantial amendments to the EU laws that currently apply in the U.K. It is impossible to predict the consequences of this on us and our investments.
In the United States, we are subject to the California Consumer Privacy Act (“CCPA”).
In the United States, we are subject to rules adopted pursuant to the Gramm Leach Bliley Act and an ever-increasing number of state laws and regulations, such as the California Consumer Privacy Act, as amended by the California Privacy Rights Act (together, the “CCPA”).
These transactions could impact the prices and availability of the securities and instruments in which a client account invests and could have an adverse impact on an account’s performance. 15 The SEC and other regulators have increased their scrutiny of conflicts of interest.
The SEC and other regulators have increased their scrutiny of conflicts of interest.
Any such material disruptions to our business operations could have a material adverse impact on our results of operation or financial condition. Risks Related to Our Industry 24 We operate in a competitive environment.
To the extent we do not effectively avail ourselves of new technologies, others in our industry may have a competitive advantage over us, which could have a material adverse effect on our financial condition and results of operations.
Removed
Poor performance can be caused by our choices in investing in sectors, industries, companies or assets that do not perform as well as others.
Added
Net flows related to our systematic investment strategies can be affected by investment performance relative to other competing investment strategies or to established benchmarks. Investment management strategies may be rated, ranked or assessed by independent third parties, distribution partners, and industry periodicals and services.
Removed
If a significant portion of clients or investors decides to withdraw their investments or terminate their investment management agreements or sub-advisory agreements, our ability to generate earnings would decline and our results of operations and financial condition would be affected.
Added
There is no assurance that we will be successful in designing and implementing an attractive compensation model to attract and retain qualified personnel. 14 Our business operations are complex, and a failure to properly perform operational tasks or maintain infrastructure could have an adverse effect on our revenues and income.
Removed
Accordingly, a significant portion of our assets are invested in a limited number of investment strategies.
Added
In addition, the development and use of various technologies based on machine learning and artificial intelligence is expanding rapidly in our industry.
Removed
Additionally, key employees have the opportunity to participate in the appreciation in the value of our business.
Added
Our use, directly or indirectly, of these technologies could result in new or expanded risks to our business, including but not limited to legal and regulatory risk and the risk that information generated using such technologies is inaccurate, misleading, incomplete or otherwise flawed.
Removed
Equity ownership by employees of Acadian is at the level of Acadian and not at the holding company level, although employees of Acadian may acquire our common stock. There may be instances where the interests of Acadian’s key employee equity-holders may not align with ours in effecting a desired outcome.
Added
To the extent that we do not anticipate or effectively mitigate these risks through policies, controls and procedures, and systems, there could be a material adverse effect on our financial condition and results of operations. 18 We may be exposed to potential liability as a general partner or a controlling person.
Removed
Our non-U.S. distribution initiatives may be unsuccessful, may expose us to other tax and regulatory risks and may not facilitate the growth of our business. One of the primary opportunities for growth lies in expanding the geographic regions in which our investment products and services are distributed.
Added
In addition, we may obtain additional liability insurance for our directors and officers.
Removed
The success of these non-U.S. initiatives is dependent upon our ability to structure products that appeal to the global markets.
Added
Our continued growth depends in part on our effectiveness in developing and introducing new products and/or capabilities. Such innovation may require significant time and resources, including upfront and ongoing expenses, as well as expose us to additional risks, including but not limited to legal and regulatory risks.
Removed
Our inability to successfully execute on our non-U.S. distribution plans may adversely impact our growth prospects. 19 Our non-U.S. distribution initiatives have required and will continue to require the incurrence of a number of up-front expenses, including those associated with obtaining regulatory approvals, as well as additional ongoing expenses, including those associated with the employment of additional support staff and regulatory compliance.
Added
There can be no assurances that we will correctly identify the strongest areas for growth, or that we will effectively develop and introduce products and/or capabilities in such areas and mitigate any additional risk related thereto.
Removed
Our employees travel outside the U.S. in connection with distribution efforts and may spend extended periods of time in one or more non-U.S. jurisdictions. Their activities outside the U.S. may raise both tax and regulatory issues.
Added
We are required to expend significant resources in an effort to protect against security incidents and may be required or choose to spend additional resources or modify our business activities, particularly where required by applicable data privacy and security laws or regulations or industry standards.
Removed
If we are incorrect in our analysis of the applicability or the extent of the impact of non-U.S. tax or regulatory requirements, we could incur costs, penalties or be the subject of an enforcement or other action. In addition, operating our business in non-U.S. markets generally will be more expensive than in the U.S.
Added
The CCPA regulates companies’ use and disclosure of the personal information of California residents and grants California residents several rights with respect to their personal information.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our principal executive office is located at 200 State Street, 13th Floor, Boston, Massachusetts 02109. In Boston, we lease 7,218 square feet under a lease that expires on December 31, 2023. Acadian has its own primary office in Boston, MA where core investment management activities take place.
Biggest changeItem 2. Properties. Our principal executive office is located at 200 State Street, 13th Floor, Boston, Massachusetts 02109. In Boston, we lease 7,218 square feet under a lease that expires on June 30, 2024. Acadian has its own primary office in Boston, MA where core investment management activities take place.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFinancial Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of BSIG under the Securities Act.
Biggest changeAs of December 31, 2023, $94.9 million remained available to repurchase shares under the program. 33 Financial Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of BSIG under the Securities Act.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock trades on the New York Stock Exchange under the symbol “BSIG.” As of February 27, 2023 there were two registered stockholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock trades on the New York Stock Exchange under the symbol “BSIG.” As of February 27, 2024 there were two registered stockholders of record.
The following graph compares the cumulative shareholder return on our common stock during the five-year period ending December 31, 2022, with the cumulative total return, during the same period, of the Standard & Poor’s 500 Index and the Standard & Poor’s 500 Financial Sector Index. * The Company undertook leadership changes as of April 15, 2020. 33 Item 6. [Reserved] 34
The following graph compares the cumulative shareholder return on our common stock during the five-year period ending December 31, 2023, with the cumulative total return, during the same period, of the Standard & Poor’s 500 Index and the Standard & Poor’s 500 Financial Sector Index. * The Company undertook leadership changes as of April 15, 2020. 34 Item 6. [Reserved] 35
Added
Repurchases The following table sets out information regarding repurchases of equity securities by the Company for the three months ended December 31, 2023: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value that may yet be purchased under the plans or programs (1) (in millions) October 1-31, 2023 — $ — — $ 100.0 November 1-30, 2023 — — — 100.0 December 1-31, 2023 268,800 19.03 268,800 94.9 Total 268,800 $ 19.03 268,800 (1) On December 20, 2023, we announced that our Board of Directors authorized the repurchase of up to $100.0 million of our common stock.
Added
Share repurchases are subject to a variety of factors, such as our stock price, the capital needs of our business, and economic and market conditions and may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, accelerated share repurchase transactions, exchange transactions, or any combination of such methods.
Added
The program does not obligate us to repurchase any particular amount of its common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. We repurchased 268,800 shares of common stock with an aggregate purchase price of $5.1 million under this program during the three months ended December 31, 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAdditionally, the basis points reported are fee rates based on the asset levels at the time of the transactions and do not consider the fact that client fee rates may change over the next twelve months. 42 The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated: ($ in billions, unless otherwise noted) Years ended December 31, 2022 2021 2020 Quant & Solutions Beginning balance $ 117.2 $ 107.0 $ 101.6 Gross inflows 11.1 10.6 12.9 Gross outflows (18.0) (19.7) (17.5) Reinvested income and distributions 3.8 2.7 2.8 Net flows (3.1) (6.4) (1.8) Market appreciation (depreciation) (20.5) 15.5 7.2 Other (1) — 1.1 — Ending balance $ 93.6 $ 117.2 $ 107.0 Average AUM (2) $ 98.7 $ 113.9 $ 94.5 Liquid Alpha (3) Beginning balance $ — $ 3.2 $ 58.0 Sale of Affiliates — — (50.3) Gross inflows — — 5.9 Gross outflows — — (10.8) Reinvested income and distributions — — 1.1 Net flows — — (3.8) Market depreciation — — (0.7) Other (3) — (3.2) — Ending balance $ — $ — $ 3.2 Average AUM $ — $ — $ 42.2 Average AUM of consolidated Affiliates $ — $ — $ 40.0 Other (3) Beginning balance $ — $ 5.8 $ 5.4 Sale of Affiliates — (8.9) — Gross inflows — 0.7 1.0 Gross outflows — (0.2) (0.3) Net flows — 0.5 0.7 Market appreciation (depreciation) — 0.6 (0.3) Other (1)(3) — 2.0 — Ending balance $ — $ — $ 5.8 Average AUM $ — $ 5.4 $ 5.7 Average AUM of consolidated Affiliates $ — $ 2.9 $ 5.7 Total Beginning balance $ 117.2 $ 116.0 $ 165.0 Sale of Affiliates — (8.9) (50.3) Gross inflows 11.1 11.3 19.8 Gross outflows (18.0) (19.9) (28.6) Reinvested income and distributions 3.8 2.7 3.9 Net flows (3.1) (5.9) (4.9) Market appreciation (depreciation) (20.5) 16.1 6.2 Other (4) — (0.1) — Ending balance continuing operations 93.6 117.2 116.0 Discontinued operations (3) — — 40.7 Ending balance including discontinued operations $ 93.6 $ 117.2 $ 156.7 Average AUM $ 98.7 $ 119.3 $ 142.4 Average AUM of consolidated Affiliates $ 98.7 $ 116.8 $ 140.2 Annualized basis points: inflows 46.6 46.4 34.6 Annualized basis points: outflows 39.6 36.5 39.7 Annualized revenue impact of net flows (in millions) $ (5.0) $ (10.3) $ (31.0) 43 (1) AUM representing liquid alternative strategies previously excluded from the Quant & Solutions segment has been reclassified as of January 1, 2021.
Biggest changeAdditionally, the basis points reported are fee rates based on the asset levels at the time of the transactions and do not consider the fact that client fee rates may change over the next twelve months. 42 The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated: ($ in billions, unless otherwise noted) Years ended December 31, 2023 2022 2021 Quant & Solutions Beginning balance $ 93.6 $ 117.2 $ 107.0 Gross inflows 9.3 11.1 10.6 Gross outflows (15.2) (18.0) (19.7) Reinvested income and distributions 3.6 3.8 2.7 Net flows (2.3) (3.1) (6.4) Market appreciation (depreciation) 12.4 (20.5) 15.5 Other (1) — — 1.1 Ending balance $ 103.7 $ 93.6 $ 117.2 Average AUM (2) $ 98.4 $ 98.7 $ 113.9 Liquid Alpha (3) Beginning balance $ — $ — $ 3.2 Sale of Affiliates — — — Gross inflows — — — Gross outflows — — — Reinvested income and distributions — — — Net flows — — — Market appreciation (depreciation) — — — Other (3) — — (3.2) Ending balance $ — $ — $ — Average AUM $ — $ — $ — Other (3) Beginning balance $ — $ — $ 5.8 Sale of Affiliates — — (8.9) Gross inflows — — 0.7 Gross outflows — — (0.2) Net flows — — 0.5 Market appreciation — — 0.6 Other (1)(3)(4) — — 2.0 Ending balance $ — $ — $ — Average AUM $ — $ — $ 5.4 Average AUM of consolidated Affiliates $ — $ — $ 2.9 Total Beginning balance $ 93.6 $ 117.2 $ 116.0 Sale of Affiliates — — (8.9) Gross inflows 9.3 11.1 11.3 Gross outflows (15.2) (18.0) (19.9) Reinvested income and distributions 3.6 3.8 2.7 Net flows (2.3) (3.1) (5.9) Market appreciation (depreciation) 12.4 (20.5) 16.1 Other (4) — — (0.1) Ending balance $ 103.7 $ 93.6 $ 117.2 Average AUM $ 98.4 $ 98.7 $ 119.3 Average AUM of consolidated Affiliates $ 98.4 $ 98.7 $ 116.8 Annualized basis points: inflows 48.7 46.6 46.4 Annualized basis points: outflows 42.2 39.6 36.5 Annualized revenue impact of net flows ($ in millions) $ (4.8) $ (5.0) $ (10.3) 43 (1) AUM representing liquid alternative strategies previously excluded from the Quant & Solutions segment has been reclassified as of January 1, 2021.
In addition, this section provides analysis for our business segment. • Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Working Capital and Long-Term Debt; Adjusted EBITDA; Future Capital Needs; and Commitments, Contingencies and Off-Balance Sheet Obligations.
In addition, this section provides segment analysis for our business segment. • Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Working Capital and Long-Term Debt; Adjusted EBITDA; Future Capital Needs; and Commitments, Contingencies and Off-Balance Sheet Obligations.
These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made. Overview We are a global asset management holding company headquartered in Boston, Massachusetts. We historically held interests in a group of investment management firms (the “Affiliates”) individually headquartered in the United States.
These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time the policies were applied and estimates were made. Overview We are a global asset management holding company headquartered in Boston, Massachusetts. We historically held interests in a group of investment management firms (the “Affiliates”) individually headquartered in the United States.
We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.
We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and Affiliate equity distributions, and incentivize management. It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.
Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow, including our equity-accounted Affiliate. In addition, reinvested income and distributions is multiplied by average fee rate for the respective segment to compute the revenue impact.
Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow, including our equity-accounted Affiliate. In addition, reinvested income and distributions is multiplied by the average fee rate for the respective segment to compute the revenue impact.
For the year ended December 31, 2021, $129.6 million of variable compensation expense (of the $130.5 million above) is included within economic net income, which excludes $0.9 million of variable compensation associated with restructuring at an Affiliate.
For the year ended December 31, 2021, $129.6 million of variable compensation expense (of the $130.5 million above) is included within economic net income, which excludes the variable compensation associated with restructuring at an Affiliate of $0.9 million.
General and Administrative Expense Year ended December 31, 2022 compared to year ended December 31, 2021: General and administrative expense decreased $(0.1) million, or (0.1)%, from $71.2 million for the year ended December 31, 2021 to $71.1 million for the year ended December 31, 2022.
Year ended December 31, 2022 compared to year ended December 31, 2021: General and administrative expense decreased $(0.1) million, or (0.1)%, from $71.2 million for the year ended December 31, 2021 to $71.1 million for the year ended December 31, 2022.
Interest Expense Year ended December 31, 2022 compared to year ended December 31, 2021: Interest expense decreased $4.3 million, or 17.3%, from $24.8 million for the year ended December 31, 2021 to $20.5 million for the year ended December 31, 2022, primarily reflecting a lower balance of third party borrowings in 2022, slightly offset by $1.3 million of additional interest expense related to the amortization of the cash flow hedge associated with the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that we redeemed in January 2022.
Year ended December 31, 2022 compared to year ended December 31, 2021: Interest expense decreased $(4.3) million, or (17.3)%, from $24.8 million for the year ended December 31, 2021 to $20.5 million for the year ended December 31, 2022, primarily reflecting a lower balance of third party borrowings in 2022, slightly offset by $1.3 million of additional interest expense related to the amortization of the cash flow hedge associated with the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that we redeemed in January 2022.
Gain on Sale of Subsidiaries Year ended December 31, 2022 compared to year ended December 31, 2021: Gain on sale of subsidiaries was $48.6 million for the year ended December 31, 2021 representing our gain on sale of our equity interest in ICM and Campbell Global, slightly offset by the loss on disposition of a business unit during the year ended December 31, 2021.
Year ended December 31, 2022 compared to year ended December 31, 2021: Gain on sale of subsidiaries was $48.6 million for the year ended December 31, 2021, representing our gain on sale of our equity interest in ICM and Campbell Global, slightly offset by the loss on disposition of a business unit during the year ended December 31, 2021.
However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity.
However, any equity or profit interests repurchased by BSUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity.
(2) For the year ended December 31, 2022, includes restructuring costs of $0.1 million and costs associated with the transfer of an insurance policy from our former Parent of $1.2 million.
For the year ended December 31, 2022, includes restructuring costs of $0.1 million and costs associated with the transfer of an insurance policy from our former Parent of $1.2 million.
For the year ended December 31, 2021, includes $3.8 million of restructuring costs at the Center and Affiliates and $1.2 million costs associated with the transfer of an insurance policy from our former Parent.
For the year ended December 31, 2021, includes $3.8 million of restructuring costs at the Center and the Affiliates, and $1.2 million associated with the transfer of an insurance policy from our former Parent.
At certain Affiliates with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.
At certain Affiliates with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.
Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period.
Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period.
Other ENI Expense Year ended December 31, 2022 compared to year ended December 31, 2021: Other ENI operating expense decreased $(15.4) million, or (48.1)%, from $32.0 million for the year ended December 31, 2021 to $16.6 million for the year ended December 31, 2022.
Year ended December 31, 2022 compared to year ended December 31, 2021: Other ENI operating expense decreased $(15.4) million, or (48.1)%, from $32.0 million for the year ended December 31, 2021 to $16.6 million for the year ended December 31, 2022.
For a further discussion of how we use ENI and why ENI is useful to investors, see “—Overview—How We Measure Performance.” To calculate economic net income, we re-categorize certain line items on our Consolidated Statements of Operations to reflect the following: • We exclude the effect of Funds consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders. • We include within management fee revenue any fees paid to Affiliates by consolidated Funds, which are viewed as investment income under U.S.
For a further discussion of how we use ENI and why ENI is useful to investors, see “—Overview—How We Measure Performance.” To calculate economic net income, we re-categorize certain line items on our Consolidated Statements of Operations to reflect the following: • We exclude the effect of Funds’ consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our stockholders. • We include within management fee revenue any fees paid to Affiliates by consolidated Funds, which are viewed as investment income under U.S.
Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash. 41 In the following table, we present our asset flows and market appreciation (depreciation) by segment. We also present a key metric used to better understand our asset flows, the annualized revenue impact of net client cash flows.
Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash. In the following table, we present our asset flows and market appreciation (depreciation) by segment. We also present a key metric used to better understand our asset flows, the annualized revenue impact of net client cash flows.
We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization. We also adjust our income tax expense to reflect any tax impact of our ENI adjustments. 59 Reconciliation of U.S.
We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization. We also adjust our income tax expense to reflect any tax impact of our ENI adjustments. Reconciliation of U.S.
Because the calculation of economic net income excludes certain ongoing expenses, including amortization expense and certain compensation costs, it has certain material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings. ENI Revenues The following table reconciles U.S.
Because the calculation of economic net income excludes certain ongoing expenses, including amortization expense and certain compensation costs, it has certain material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures of earnings. 60 ENI Revenues The following table reconciles U.S.
The maturity date of the Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025. 74 Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1%, plus, in each case an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio.
The maturity date of the Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025. 73 Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1%, plus, in each case an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio.
GAAP other revenue $ — $ 5.7 $ 7.3 Earnings from equity-accounted Affiliate — 2.6 2.9 Exclude Fund expenses reimbursed by customers (1) — (2.9) (4.6) ENI other income $ — $ 5.4 $ 5.6 (1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.
GAAP other revenue $ — $ — $ 5.7 Earnings from equity-accounted Affiliate — — 2.6 Exclude Fund expenses reimbursed by customers (1) — — (2.9) ENI other income $ — $ — $ 5.4 (1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.
(2) The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business without regard to our various ownership levels at each of the Affiliates. The ENI operating margin is most comparable to our U.S.
(2) The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business without regard to our various ownership levels at each of the Affiliates. The ENI operating margin is most comparable to our U.S. GAAP operating margin. Our U.S.
Revaluations of Affiliate key employee equity changed $(72.9) million in 2022, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity increased $32.9 million for the year ended December 31, 2021 and decreased $(40.0) million for the year ended December 31, 2022.
Revaluations of Affiliate key employee equity changed by $(72.9) million in 2022, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity increased $32.9 million for the year ended December 31, 2021, and decreased $(40.0) million for the year ended December 31, 2022.
We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets. iv. We exclude seed capital and co-investment gains, losses and related financing costs.
We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets. 58 iv. We exclude seed capital and co-investment gains, losses and related financing costs.
(4) Reflects the sum of line items (i), (ii), (iii), (iv) and the restructuring portion of line item (vi) taxed at the 27.3% U.S. statutory rate (including state tax). 60 The following table reconciles U.S.
(4) Reflects the sum of line items (i), (ii), (iii), (iv) and the restructuring portion of line item (vi) taxed at the 27.3% U.S. statutory rate (including state tax). The following table reconciles U.S.
Each of these categories of expense represents costs to us of doing business, and therefore any measure that excludes any or all of these categories of expense has material limitations. 77 Future Capital Needs We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements.
Each of these categories of expense represents costs to us of doing business, and therefore any measure that excludes any or all of these categories of expense has material limitations. 76 Future Capital Needs We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements.
We may also be required to consolidate Acadian’s sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds. 36 The Economics of Our Business Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure.
We may also be required to consolidate Acadian’s sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds. 37 The Economics of Our Business Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure.
For additional discussion of our compensation programs, please refer to the compensation discussions contained within our definitive proxy statement for our 2023 annual meeting of shareholders incorporated herein by reference. Supplemental Liquidity Measure—Adjusted EBITDA As supplemental information, we provide information regarding Adjusted EBITDA, which we define as economic net income before interest, income taxes, depreciation and amortization.
For additional discussion of our compensation programs, please refer to the compensation discussions contained within our definitive proxy statement for our 2024 annual meeting of shareholders incorporated herein by reference. Supplemental Liquidity Measure—Adjusted EBITDA As supplemental information, we provide information regarding Adjusted EBITDA, which we define as economic net income before interest, income taxes, depreciation and amortization.
Excludes income from discontinued operations attributable to controlling interests, as well as restructuring at the Center and Affiliate of $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of subsidiaries of $48.6 million for the year ended December 31, 2021.
Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of subsidiaries of $48.6 million for the year ended December 31, 2021.
Sales-based compensation increased $0.1 million, or 1.3%, from $7.6 million for the year ended December 31, 2021 to $7.7 million for the year ended December 31, 2022.
Sales-based compensation increased $0.1 million, or 1.3%, from $7.6 million for the years ended December 31, 2021 to $7.7 million for the year ended December 31, 2022.
GAAP expenses principally consist of: i. compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, and revaluation of key employee owned Affiliate equity and profit interests; ii. general and administrative expenses; iii. impairment of goodwill; iv. amortization of acquired intangible assets; v. depreciation and amortization charges; and vi. expenses of consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds. 50 Compensation and Benefits Expense Our most significant category of expense is compensation and benefits awarded to our and our Affiliates’ employees.
GAAP expenses principally consist of: i. compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, and revaluation of key employee owned Affiliate equity and profit interests; ii. general and administrative expenses; iii. amortization of acquired intangible assets; iv. depreciation and amortization charges; and v. expenses of consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds. 50 Compensation and Benefits Expense Our most significant category of expense is compensation and benefits awarded to our and our Affiliates’ employees.
While we believe all assumptions used in determining the fair value of the liabilities are reasonable and appropriate, certain assumptions are subjective and changes in these assumptions could result in different fair value amounts. 79 Taxation We file tax returns directly with the U.S., U.K., state tax authorities and in other foreign jurisdictions.
While we believe all assumptions used in determining the fair value of the liabilities are reasonable and appropriate, certain assumptions are subjective and changes in these assumptions could result in different fair value amounts. 78 Taxation We file tax returns directly with the U.S., U.K., state tax authorities and in other foreign jurisdictions.
GAAP Operating Metrics The following table shows our key U.S. GAAP operating metrics for the years ended December 31, 2022, 2021 and 2020. The second, third and fourth metrics below have each been adjusted to eliminate the effect of consolidated Funds to more accurately reflect the economics of our Company.
GAAP Operating Metrics The following table shows our key U.S. GAAP operating metrics for the years ended December 31, 2023, 2022 and 2021. The second, third and fourth metrics below have each been adjusted to eliminate the effect of consolidated Funds to more accurately reflect the economics of our Company.
(8) Annualized revenue impact of net flows represents the difference between annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts, less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts, plus revenue impact from reinvested income and distributions, including our equity-accounted Affiliate.
(8) Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts, less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts, plus revenue impact from reinvested income and distributions, including our equity-accounted Affiliate.
As of December 31, 2022, we were in compliance with the required covenants related to borrowings and debt facilities. Other Compensation Liabilities Other compensation liabilities principally consist of cash-settled Affiliate equity and profit interests liabilities held by certain Affiliate key employees, and voluntary deferred compensation plans.
As of December 31, 2023, we were in compliance with the required covenants related to borrowings and debt facilities. Other Compensation Liabilities Other compensation liabilities principally consist of cash-settled Affiliate equity and profit interests liabilities held by certain Affiliate key employees, and voluntary deferred compensation plans.
(4) ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue. (5) Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income from continuing operations attributable to controlling interests. 39 (6) ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue.
(4) ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue. (5) Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income from continuing operations attributable to controlling interests. 40 (6) ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue.
Our obligation in any given period in respect of funding these potential repurchases of Affiliate equity is limited to only that portion that may be put to us by Affiliate key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Affiliate key employees. 75 Certain of our and our Affiliate’s key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation.
Our obligation in any given period in respect of funding these potential repurchases of Affiliate equity is limited to only that portion that may be put to us by Affiliate key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Affiliate key employees. 74 Certain of our and Acadian’s key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation.
GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders. For example, the portion of the net income (loss) of any consolidated Funds that is attributable to the outside investors or clients of the consolidated Funds is included in “Non-controlling interests” in our Consolidated Financial Statements.
GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders. For example, the portion of the net income (loss) of any consolidated Fund that is attributable to the outside investors or clients of the consolidated Fund is included in “Non-controlling interests” in our Consolidated Financial Statements.
U.S.-based clients, where the contracting client is based in the United States, and ii. Non-U.S.-based clients, where the contracting client is based outside the United States. The following table summarizes asset flows by client location for each of the periods indicated: ($ in billions) Years ended December 31, 2022 2021 2020 U.S.
U.S.-based clients, where the contracting client is based in the United States, and ii. Non-U.S.-based clients, where the contracting client is based outside the United States. The following table summarizes asset flows by client location for each of the periods indicated: ($ in billions) Years ended December 31, 2023 2022 2021 U.S.
GAAP operating margin equals operating income from continuing operations divided by total revenue. 48 The following table reconciles our net income attributable to controlling interests to our pre-tax income from continuing operations attributable to controlling interests: Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
GAAP operating margin equals operating income from continuing operations divided by total revenue. 48 The following table reconciles our net income attributable to controlling interests to our pre-tax income from continuing operations attributable to controlling interests: Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
Refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis” for a full discussion regarding the items excluded from the calculation of economic net income. Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
Refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis” for a full discussion regarding the items excluded from the calculation of economic net income. Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
In this way, Acadian is aligned with BSUS and the public shareholders to generate profits and growth over time. 37 How We Measure Performance We manage our business based on one segment, reflecting how our management assesses the performance of our business.
In this way, Acadian is aligned with BSUS and the public shareholders to generate profits and growth over time. 38 How We Measure Performance We manage our business based on one segment, reflecting how our management assesses the performance of our business.
Seed/Co-investment (gains) losses and financings (1) 0.6 (4.0) 4.1 v. Tax benefit of goodwill and acquired intangibles deductions 1.5 1.1 1.6 vi. Discontinued operations attributable to controlling interests and restructuring (2) 1.3 (743.8) (269.6) vii.
Seed/Co-investment (gains) losses and financings (1) (1.5) 0.6 (4.0) v. Tax benefit of goodwill and acquired intangibles deductions 1.5 1.5 1.1 vi. Discontinued operations attributable to controlling interests and restructuring (2) 9.5 1.3 (743.8) vii.
We believe Adjusted EBITDA is a useful liquidity metric because it indicates our ability to make further investments in our business, service debt and meet working capital requirements. 76 The following table reconciles our U.S.
We believe Adjusted EBITDA is a useful liquidity metric because it indicates our ability to make further investments in our business, service debt and meet working capital requirements. 75 The following table reconciles our U.S.
GAAP net income attributable to controlling interests to Adjusted EBITDA. 35 • Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition.
GAAP net income attributable to controlling interests to Adjusted EBITDA. 36 • Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition.
GAAP operating expense / management fee revenue ratio. 66 (5) ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense. (6) The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation.
GAAP operating expense / management fee revenue ratio. 65 (5) ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense. (6) The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation.
This section also provides a Summary Results of Operations and information regarding our Assets Under Management by Affiliate, strategy, client type and client location, and net flows by segment, client type and client location. • U.S. GAAP Results of Operations for the years ended December 31, 2022, 2021 and 2020 includes an explanation of changes in our U.S.
This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and client location, and net flows by segment, client type and client location. • U.S. GAAP Results of Operations for the years ended December 31, 2023, 2022 and 2021 includes an explanation of changes in our U.S.
GAAP results of operations were as follows for the years ended December 31, 2022, 2021 and 2020. Years ended December 31, Increase (Decrease) ($ in millions unless otherwise noted) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 U.S.
GAAP results of operations were as follows for the years ended December 31, 2023, 2022 and 2021. Years ended December 31, Increase (Decrease) ($ in millions unless otherwise noted) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 U.S.
Borrowings and Long-Term Debt The following table summarizes our financing arrangements as of the dates indicated: ($ in millions) December 31, 2022 December 31, 2021 Interest rate Maturity Revolving credit facility: Revolving credit facility $ — $ — Variable rate March 7, 2025 Total revolving credit facility $ — $ — Third party borrowings: 4.80% Senior Notes Due 2026 $ 273.5 $ 273.1 4.80% July 27, 2026 5.125% Senior Notes Due 2031 (1) — 121.8 5.125% August 1, 2031 Total third party borrowings $ 273.5 $ 394.9 (1) On January 18, 2022, we completed the full redemption of the $125.0 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031.
Borrowings and Long-Term Debt The following table summarizes our financing arrangements as of the dates indicated: ($ in millions) December 31, 2023 December 31, 2022 Interest rate Maturity Revolving credit facility: $125 million revolving credit facility $ — $ — Variable rate March 7, 2025 Total revolving credit facility $ — $ — Third party borrowings: 4.80% Senior Notes Due 2026 $ 273.9 $ 273.5 4.80% July 27, 2026 5.125% Senior Notes Due 2031 (1) — — 5.125% August 1, 2031 Total third party borrowings $ 273.9 $ 273.5 (1) On January 18, 2022, we completed the full redemption of the $125.0 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031.
ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin is most comparable to our U.S. GAAP operating margin (excluding the effect of consolidated Funds). (7) Economic net income is the ENI measure which corresponds to U.S. GAAP net income from continuing operations attributable to controlling interests.
ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin is most comparable to our U.S. GAAP operating margin (excluding the effect of consolidated Funds). (7) Economic net income is the non-GAAP measure which is most directly comparable to U.S. GAAP net income from continuing operations attributable to controlling interests.
For the years ended December 30, 2021 and 2020, other income excludes certain Fund expenses initially paid by our previously divested Affiliate, Campbell Global, on the Funds’ behalf that are subsequently reimbursed. This recategorization is not applicable for the year ended December 31, 2022.
For the year ended December 31, 2021, other income excludes certain Fund expenses initially paid by our previously divested Affiliate, Campbell Global, on the Funds’ behalf that are subsequently reimbursed. This recategorization is not applicable for the years ended December 31, 2023 and 2022.
GAAP Net Income to Economic Net Income for the Years Ended December 31, 2022, 2021 and 2020 The following table reconciles U.S. GAAP net income attributable to controlling interests to economic net income for the years ended December 31, 2022, 2021 and 2020: Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
GAAP Net Income to Economic Net Income for the Years Ended December 31, 2023, 2022 and 2021 The following table reconciles U.S. GAAP net income attributable to controlling interests to economic net income for the years ended December 31, 2023, 2022 and 2021: Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
GAAP Revenue $ 417.2 $ 523.8 $ 499.5 Include earnings from equity-accounted Affiliate — 2.6 2.9 Exclude revenue from consolidated Funds attributable to non-controlling interests (0.4) — (5.5) Exclude Fund expenses reimbursed by customers (1) — (2.9) (4.6) ENI Revenue $ 416.8 $ 523.5 $ 492.3 (1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.
GAAP Revenue $ 426.6 $ 417.2 $ 523.8 Include earnings from equity-accounted Affiliate — — 2.6 Exclude revenue from consolidated Funds attributable to non-controlling interests (3.0) (0.4) — Exclude Fund expenses reimbursed by customers (1) — — (2.9) ENI Revenue $ 423.6 $ 416.8 $ 523.5 (1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.
The following table reconciles U.S. GAAP compensation expense to ENI fixed compensation and benefits expense for the years ended December 31, 2022, 2021 and 2020: Years ended December 31, ($ in millions) 2022 2021 2020 Total U.S.
The following table reconciles U.S. GAAP compensation expense to ENI fixed compensation and benefits expense for the years ended December 31, 2023, 2022 and 2021: Years ended December 31, ($ in millions) 2023 2022 2021 Total U.S.
GAAP management fees. (2) ENI performance fees correspond to U.S. GAAP performance fees. (3) ENI other income is comprised primarily of other revenue under U.S. GAAP, plus our earnings from our equity-accounted Affiliate of $2.6 million for the year ended December 31, 2021 and $2.9 million for the year ended December 31, 2020.
GAAP management fees. (2) ENI performance fees correspond to U.S. GAAP performance fees. (3) ENI other income is comprised primarily of other revenue under U.S. GAAP, plus our earnings from our equity-accounted Affiliate of $2.6 million for the year ended December 31, 2021.
Third party borrowings Revolving Credit Facility On March 7, 2022, we, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced our revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”).
Revolving Credit Facility On March 7, 2022, Acadian, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced our revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”).
The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes which appear in this Annual Report on Form 10-K in Item 8, Financial Statements and Supplementary Data. This discussion contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements” for more information.
The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and related notes which appear in this Annual Report on Form 10-K in Item 8, Financial Statements and Supplementary Data. This discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements” for more information.
The gain on disposal of discontinued operations, net of tax was $691.0 million for the year ended December 31, 2021 representing our gain on sale of our equity interests in Landmark and TSW. There was no gain on disposal of discontinued operations for the year ended December 31, 2020. Key U.S.
The gain on disposal of discontinued operations, net of tax was $691.0 million for the year ended December 31, 2021 representing our gain on sale of our equity interests in Landmark and TSW. There was no gain on disposal of discontinued operations for the year ended December 31, 2022. 56 Key U.S.
The decrease was due to (28.1)% lower performance fees in the year ended December 31, 2022, as well as (12.4)% lower management fees driven by lower average AUM resulting from equity market decline and net outflows in the last twelve months.
The decrease was due to (28.1)% lower performance fees in the year ended December 31, 2022, as well as (12.4)% lower management fees driven by lower average AUM resulting from equity market decline and net outflows in the year ended December 31, 2022.
Includes $5.7 million related to the cost of seed and co-investment financing and $0.6 million related to the amortization of debt issuance costs for the year ended December 31, 2020. (b) ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions.
Includes $1.7 million related to the cost of seed and co-investment financing and $0.6 million related to the amortization of debt issuance costs for the year ended December 31, 2021. (b) ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions.
Amortization of Acquired Intangibles Expense Year ended December 31, 2022 compared to year ended December 31, 2021: Amortization of acquired intangibles expense was unchanged at $0.1 million for the years ended December 31, 2021 and 2022, respectively. This account reflects the amortization of intangible assets acquired by Acadian.
There was no amortization of acquired intangibles expense for the year ended December 31, 2023. This account reflects the amortization of intangible assets acquired by Acadian. Year ended December 31, 2022 compared to year ended December 31, 2021: Amortization of acquired intangibles expense was unchanged at $0.1 million for the years ended December 31, 2022 and 2021, respectively.
It differs from economic net income because it does not include the effects of Affiliate key employee distributions, net interest expense or income tax expense. 65 The following table reconciles U.S. GAAP operating income (loss) to ENI operating earnings: Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
It differs from economic net income because it does not include the effects of Affiliate key employee distributions, net interest expense or income tax expense. 64 The following table reconciles U.S. GAAP operating income (loss) to ENI operating earnings: Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
GAAP net income and economic net income, see “—Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis.” 38 Summary Results of Operations The following table summarizes our results of operations for the years ended December 31, 2022, 2021 and 2020: Years ended December 31, Increase (Decrease) ($ in millions, unless otherwise noted) 2022 2021 2020 2022 vs. 2021 2021 vs. 2020 U.S.
GAAP net income and economic net income, see “—Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis.” 39 Summary Results of Operations The following table summarizes our results of operations for the years ended December 31, 2023, 2022 and 2021: Years ended December 31, Increase (Decrease) ($ in millions, unless otherwise noted) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 U.S.
The decrease in income tax expense is primarily related to the decrease in income from continuing operations for the year ended December 31, 2022.
The decrease in income tax expense is primarily related to the decrease in the income from continuing operations for the year ended December 31, 2022. U.S.
ENI tax normalization 0.08 (0.02) 0.04 Tax effect of above adjustments 0.21 0.04 0.74 Economic net income per share $ 1.89 $ 1.47 $ 1.08 Limitations of Economic Net Income Economic net income is the key measure our management uses to evaluate the financial performance of, and make operational decisions for, our business.
ENI tax normalization 0.06 0.08 (0.02) Tax effect of above adjustments (0.05) 0.21 0.04 Economic net income per share $ 1.78 $ 1.89 $ 1.47 Limitations of Economic Net Income Economic net income is the key measure our management uses to evaluate the financial performance of, and make operational decisions for, our business.
This recategorization is not applicable for the year ended December 31, 2022. (2) The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense: Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
This recategorization is not applicable for the years ended December 31, 2023 and 2022. (2) The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense: Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
GAAP compensation expense for the years ended December 31, 2022, 2021 and 2020: Years ended December 31, ($ in millions) 2022 2021 2020 Fixed compensation and benefits (1) $ 86.1 $ 100.2 $ 130.0 Sales-based compensation (2) 7.7 7.6 7.6 Variable compensation (3) 100.3 130.5 112.1 Affiliate key employee distributions (4) 5.1 13.4 8.5 Non-cash Affiliate key employee equity revaluations (5) (40.0) 32.9 (15.1) Total U.S.
GAAP compensation expense for the years ended December 31, 2023, 2022 and 2021: Years ended December 31, ($ in millions) 2023 2022 2021 Fixed compensation and benefits (1) $ 93.1 $ 86.1 $ 100.2 Sales-based compensation (2) 7.6 7.7 7.6 Variable compensation (3) 112.2 100.3 130.5 Affiliate key employee distributions (4) 5.1 5.1 13.4 Non-cash Affiliate key employee equity revaluations (5) (0.1) (40.0) 32.9 Total U.S.
The decrease was primarily attributable to the effect of certain assets becoming fully depreciated and the disposition of Affiliates in 2021.
The decrease was primarily attributable to the effect of certain assets becoming fully depreciated and the disposition of Affiliates in 2021. U.S.
Net cash used in financing activities, excluding consolidated Funds, consists of share repurchases, third-party borrowings, payments made to OM plc, withholding tax payments on stock option exercises and dividend payments. Net cash used in financing activities was $(233.7) million, $(1,152.4) million and $(232.2) million for the years ended December 31, 2022, 2021 and 2020, respectively.
Net cash used in financing activities, excluding consolidated Funds, consists of share repurchases, third-party borrowings, payments made to OM plc, withholding tax payments on stock option exercises and dividend payments. Net cash used in financing activities was $(8.1) million, $(233.7) million and $(1,152.4) million for the years ended December 31, 2023, 2022 and 2021, respectively.
Puts related to Affiliate equity and profits interests are also excluded on a short-term basis because they are funded through recycling. Working capital is defined as current assets less current liabilities, excluding the non-controlling interest portion of consolidated Funds. Our net working capital has been positive over the past several years and was $117.8 million at December 31, 2022.
Puts related to Affiliate equity and profits interests are also excluded on a short-term basis because they are funded through recycling. Working capital is defined as current assets less current liabilities, excluding the non-controlling interest portion of consolidated Funds. Our net working capital has been positive over the past several years and was $181.6 million at December 31, 2023.
GAAP Revenue to ENI Revenue for the years ended December 31, 2022, 2021 and 2020: Years ended December 31, ($ in millions) 2022 2021 2020 U.S.
GAAP Revenue to ENI Revenue for the years ended December 31, 2023, 2022 and 2021: Years ended December 31, ($ in millions) 2023 2022 2021 U.S.
This segment is comprised of our interest in Acadian. The corporate head office is included within the Other category, along with our previously disposed Affiliate, Campbell Global for the years ended December 31, 2021 and 2020. We completed the sale of our equity interest in Campbell Global in August 2021.
This segment is comprised of our interest in Acadian. The corporate head office is included within the Other category, along with our previously disposed Affiliate, Campbell Global, for the year ended December 31, 2021. We completed the sale of our equity interest in Campbell Global in August 2021.
Fluctuations are principally due to the timing of sale proceeds received from the sales of Landmark, TSW, Campbell Global and ICM totaling $1,010.9 million in 2021 and the sale of Barrow totaling $295.2 million in 2020. Fluctuations are also impacted by the timing of investments or redemptions of seed capital.
Fluctuations are principally due to the timing of sale proceeds received from the sales of Landmark, TSW, Campbell Global and ICM totaling $1,010.9 million in 2021. Fluctuations are also impacted by the timing of investments or redemptions of seed capital.
(5) The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions: Years ended December 31, ($ in millions) 2022 2021 2020 Operating income $ 167.9 $ 145.8 $ 131.7 Affiliate key employee distributions 5.1 13.4 8.5 Operating (income) loss of consolidated Funds — — (5.3) Operating income before Affiliate key employee distributions $ 173.0 $ 159.2 $ 134.9 Variable compensation 100.3 130.5 112.1 Operating income before variable compensation and Affiliate key employee distributions $ 273.3 $ 289.7 $ 247.0 Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis As supplemental information, we provide a non-GAAP performance measure that we refer to as economic net income, or ENI, which represents our management’s view of the underlying economic earnings generated by us.
(5) The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions: Years ended December 31, ($ in millions) 2023 2022 2021 Operating income $ 106.0 $ 167.9 $ 145.8 Affiliate key employee distributions 5.1 5.1 13.4 Operating (income) loss of consolidated Funds (0.2) — — Operating income before Affiliate key employee distributions $ 110.9 $ 173.0 $ 159.2 Variable compensation 112.2 100.3 130.5 Operating income before variable compensation and Affiliate key employee distributions $ 223.1 $ 273.3 $ 289.7 57 Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis As supplemental information, we provide a non-GAAP performance measure that we refer to as economic net income, or ENI, which represents our management’s view of the underlying economic earnings generated by us.
The corporate head office is included within the Other category, along with our previously disposed Affiliate, Campbell Global, LLC (“Campbell Global”) for the years ended December 31, 2021 and 2020. We completed the sale of our equity interest in Campbell Global in August 2021.
The corporate head office is included within the Other category, along with our previously disposed Affiliate, Campbell Global, LLC (“Campbell Global”) for the year ended December 31, 2021. We completed the sale of our equity interest in Campbell Global in August 2021.
(2) Includes income taxes receivable. 73 (3) Includes the short-term portion of our third-party borrowings. On December 17, 2021, we issued a notice for the full redemption of the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 (the “2031 Notes”). On January 18, 2022 we completed the full redemption of the 2031 Notes.
(2) Includes income taxes receivable. (3) Includes the short-term portion of our third-party borrowings. On December 17, 2021, we issued a notice for the full redemption of the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 (the “2031 Notes”).
GAAP net income attributable to controlling interests $ 100.6 $ 828.4 $ 286.7 Adjustments to reflect the economic earnings of the Company: i. Non-cash key employee-owned equity and profit interest revaluations (40.0) 32.9 (15.1) ii. Goodwill impairment and amortization of acquired intangible assets 0.1 0.1 16.8 iii. Capital transaction costs 5.2 1.8 0.8 iv.
GAAP net income attributable to controlling interests $ 65.8 $ 100.6 $ 828.4 Adjustments to reflect the economic earnings of the Company: i. Non-cash key employee-owned equity and profit interest revaluations (0.1) (40.0) 32.9 ii. Goodwill impairment and amortization of acquired intangible assets — 0.1 0.1 iii. Capital transaction costs 0.3 5.2 1.8 iv.
Non-cash key employee-owned equity and profit interest revaluations (0.92) 0.41 (0.18) ii. Goodwill impairment and amortization of acquired intangible assets — — 0.20 iii. Capital transaction costs 0.12 0.02 0.01 iv. Seed/Co-investment (gains) losses and financings 0.01 (0.05) 0.05 v. Tax benefit of goodwill and acquired intangibles deductions 0.03 0.01 0.02 vi. Discontinued operations and restructuring 0.03 (9.23) (3.29) vii.
Non-cash key employee-owned equity and profit interest revaluations — (0.92) 0.41 ii. Goodwill impairment and amortization of acquired intangible assets — — — iii. Capital transaction costs 0.01 0.12 0.02 iv. Seed/Co-investment (gains) losses and financings (0.04) 0.01 (0.05) v. Tax benefit of goodwill and acquired intangibles deductions 0.04 0.03 0.01 vi. Discontinued operations and restructuring 0.21 0.03 (9.23) vii.
We have completed the disposition of certain Affiliates and currently operate our business through the following segment: • Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies.
We have completed the disposition of certain Affiliates and currently operate our business through the following segment: • Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, systematic macro, equity alternatives, and credit strategies.
Variable compensation, calculated as described below, may be awarded in cash, equity or profit interests. The arrangements in place with Acadian result in the sharing of economics between BSUS and Acadian’s key management personnel using a profit-sharing model.
Variable compensation, calculated as described below, may be awarded in cash, equity or profit interests. The arrangement in place with Acadian results in the sharing of economics between BSUS and Acadian’s key management personnel using a profit-sharing model.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

16 edited+1 added−2 removed9 unchanged
Biggest changeWhile the analysis above assumes that market changes occur in a uniform manner across the relevant portfolio, because of our declining fee rates for larger relationships and differences in our fee rates across asset classes, a change in the composition of our assets under management, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted average fee rate.
Biggest changeAssuming the market change does not impact our relative performance, a 10% change in foreign currency exchange rates would have an approximate incremental $1 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model. 80 While the analysis above assumes that market changes occur in a uniform manner across the relevant portfolio, because of our declining fee rates for larger relationships and differences in our fee rates across asset classes, a change in the composition of our assets under management, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective fee rates, could have a material negative impact on our overall weighted average fee rate.
The impact that market changes have on performance fee eligible accounts varies due to high-water marks and other measurement hurdles which are not factored in this analysis. Changes in performance fees revenues could be significant in each period.
The impact that market changes have on performance fee eligible accounts varies due to high-water marks and other measurement hurdles which are not factored in this analysis. Changes in performance fee revenues could be significant in each period.
Any reduction in the value of our assets under management would result in a reduction in our revenues. Interest Rate Risk We are exposed to interest rate risks primarily through borrowings under our revolving credit facility. Interest on borrowings under the revolving credit facility is based upon variable interest rates.
Any reduction in the value of our assets under management would result in a reduction in our revenues. Interest Rate Risk We are exposed to interest rate risks primarily through borrowings under Acadian’s revolving credit facility. Interest on borrowings under the revolving credit facility is based upon variable interest rates.
Our model for assessing the impact of market risk on our results uses December 31, 2022 ending AUM and management fee rates as the basis for management fee revenue calculations. With respect to performance fee revenue, we assume that relative investment performance remains the same as it was on December 31, 2022.
Our model for assessing the impact of market risk on our results uses December 31, 2023 ending AUM and management fee rates as the basis for management fee revenue calculations. With respect to performance fee revenue, we assume that relative investment performance remains the same as it was on December 31, 2023.
A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $35.7 million based on our current weighted average fee rate of approximately 38 basis points.
A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $39 million based on our current weighted average fee rate of approximately 38 basis points.
The combined impact on our management fees and performance fees would have a direct impact on our earnings and result in an annual change of approximately $18.2 million in our post-tax economic net income, given our current cost structure and operating model.
The combined impact on our management fees and performance fees would have a direct impact on our earnings and result in an annual change of approximately $17 million in our post-tax economic net income, given our current cost structure and operating model.
Assuming the market change does not impact our relative performance, a 10% change in equity markets would have an approximate incremental $1.2 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model. 81 • Foreign currency AUM includes equity and alternative instruments denominated in foreign currencies.
Assuming the market change does not impact our relative performance, a 10% change in equity markets would have an approximate incremental $1 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model. • Foreign currency AUM includes equity and alternative assets denominated in foreign currencies.
The basis for the analysis is performance fees earned for the twelve months ended December 31, 2022. 80 Our profit sharing economic structure, described more fully in “Management’s Discussion and Analysis of Financial Condition and Results of Operation—The Economics of Our Business,” results in a sharing of market risk between us and our employees.
The basis for the analysis is performance fees earned for the twelve months ended December 31, 2023. 79 Our profit sharing economic structure, described more fully in “Management’s Discussion and Analysis of Financial Condition and Results of Operation—The Economics of Our Business,” results in a sharing of market risk between us and our employees.
Approximately $11.9 billion, or 13%, of our AUM, are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return that differs from the relative benchmark returns.
Approximately $14 billion, or 14%, of our AUM, are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return that differs from the relative benchmark returns.
Approximately $11.5 billion, or 12%, of our equity markets-based AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return in excess of the relative benchmark returns.
Approximately $13 billion, or 13%, of our equity markets-based AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return in excess of the relative benchmark returns.
Approximately $10.1 billion, or 14%, of our foreign currency denominated AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns.
Approximately $12 billion, or 14%, of our foreign currency denominated AUM are in accounts subject to performance fees. Of these assets, the majority are in accounts for which performance fees are calculated based on investment return that differs from the relative benchmark returns.
In modeling the impact of market risk, we assume that these operating expenses remain unchanged, but the resulting impact on profit driven by increases or decreases in revenue will change variable compensation and Acadian key employee distributions in line with their formulaic calculations.
In modeling the impact of market risk, we assume that these operating expenses remain unchanged, but the resulting impact on profit driven by increases or decreases in revenue will change variable compensation and Acadian key employee distributions in line with their formulaic calculations. Any change in pre-tax profit is tax-affected to calculate profit after tax.
A 10% increase or decrease in foreign exchange rates against the U.S. dollar would cause our $74.0 billion of foreign currency denominated AUM to increase or decrease by $7.4 billion, resulting in a change in annualized management fee revenue of $29.8 million and an annual change in post-tax economic net income of $14.2 million, based on weighted average fees earned on our foreign currency denominated AUM of 40 basis points at the mix of strategies as of December 31, 2022.
A 10% increase or decrease in foreign exchange rates against the U.S. dollar would cause our $83 billion of foreign currency denominated AUM to increase or decrease by $8 billion, resulting in a change in annualized management fee revenue of $33 million and an annual change in post-tax economic net income of $13 million, based on weighted average fees earned on our foreign currency denominated AUM of 40 basis points at the mix of strategies as of December 31, 2023.
A 10% increase or decrease in equity markets would cause our $91.4 billion of equity assets under management to increase or decrease by $9.1 billion, resulting in a change in annualized management fee revenue of $34.7 million and an annual change in post-tax economic net income of approximately $16.6 million, given our current cost structure, operating model, and weighted average equity fee rates of 38 basis points at the mix of strategies as of December 31, 2022.
A 10% increase or decrease in equity markets would cause our $101 billion of equity assets under management to increase or decrease by $10 billion, resulting in a change in annualized management fee revenue of $38 million and an annual change in post-tax economic net income of approximately $15 million, given our current cost structure, operating model, and weighted average equity fee rates of 38 basis points at the mix of strategies as of December 31, 2023.
There was no balance drawn on our revolving credit facility as of December 31, 2022. We currently do not hedge against this interest rate risk. As of December 31, 2022, a hypothetical 10% change in interest rates would have no material impact to our interest expense during the twelve months ended December 31, 2022. 82
There was no balance drawn on our revolving credit facility as of December 31, 2023. We currently do not hedge against interest rate risk. As of December 31, 2023, a hypothetical 10% change in interest rates would have resulted in an immaterial change to our interest expense during the twelve months ended December 31, 2023. 81
Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $4.9 million impact to our gross performance fees based on our trailing twelve month performance fees of $49.4 million from the Quant & Solutions segment as of December 31, 2022.
Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $5 million impact to our gross performance fees based on our trailing twelve month performance fees of $50 million as of December 31, 2023.
Removed
Any change in pre-tax profit is tax-effected at our statutory combined state and federal rate of approximately 27.3% to calculate profit after tax. The value of our assets under management was $93.6 billion as of December 31, 2022.
Added
The value of our assets under management was $103.7 billion as of December 31, 2023.
Removed
Assuming the market change does not impact our relative performance, a 10% change in foreign currency exchange rates would have an approximate incremental $0.7 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model.

Other AAMI 10-K year-over-year comparisons